G.R. No. 107356.
 March 31, 1995.* compensated for such damages. Inasmuch as the responsibility of two or more
SINGAPORE AIRLINES LIMITED, petitioner, vs. THE COURT OF
APPEALS and PHILIPPINE AIRLINES, respondents.
Civil Procedure; Third-Party Complaint; A third-party defendant is allowed
to set up in his answer the defenses which the third-party plaintiff (original
defendant) has or may have to the plaintiff’s claim.—There is no question that a
third-party defendant is allowed to set up in his answer the defenses which the third-
party plaintiff (original defendant) has or may have to the plaintiff’s claim. There
are, however, special circumstances present in this case which preclude third-party
defendant PAL from benefitting from the said principle.
Same; Same; A third-party complaint involves an action separate and distinct
from, although related to, the main complaint. A third-party defendant who feels
aggrieved by some allegations in the main complaint should, aside from answering
the third-party complaint, also answer the main complaint.—The appellate court was
in error when it opined that SIA’s answer inured to the benefit of PAL for the simple
reason that the complaint and the third-party complaint are actually 
_______________
* April 15, 1981. As part of Aramco's policy, its employees returning to Dhahran,
 THIRD DIVISION.
144
144  SUPREME COURT REPORTS ANNOTATED  On April 1980, Rayos took a Singapore Airlines (SIA) flight to report for his new
Singapore Airlines Limited vs. Court of Appeals
two separate cases involving the same set of facts which is allowed by the
court to be resolved in a single proceeding only to avoid a multiplicity of actions.
Such a proceeding obviates the need of trying two cases, receiving the same or
similar evidence for both, and enforcing separate judgments therefor. This situation
is not, as claimed by the appellate court, analogous to a case where there are several
defendants against whom a some of the defendants inures to the benefit of those who
did not file an answer. While such a complaint speaks of a single suit, a third-party
complaint involves an action separate and distinct from, alcomplaint is filed stating a
common cause of action, where the answer of though related to, the main complaint.
A third-party defendant who feels aggrieved by some allegations in the main
complaint should, aside from answering the third-party complaint, also answer the
main complaint.
Same; Same; Torts; In an action upon a tort, defendant may file a third-party
complaint against a joint tort-feasor for contribution.—Former Chief Justice and
noted remedial law expert Manuel V. Moran opined that “in an action upon a tort,
the defendant may file a third-party complaint against a joint tort-feasor for
contribution.”
Same; Same; Same; The responsibility of two or more persons, or tort-
feasors, liable for a quasi-delict is joint and several, and the sharing as between
such solidary debtors is pro-rata.—The non-renewal of Rayos’ employment contract
was the natural and probable consequence of the separate tortious acts of SIA and
PAL. Under mandate of Article 2176 of the Civil Code, Rayos is entitled to be
persons, or tort-feasors, liable for a quasi-delict is joint and several, and the sharing
as between such solidary debtors is pro-rata, it is but logical, fair, and equitable to
require PAL to contribute to the amount awarded to the Rayos spouses and already
paid by SIA, instead of totally indemnifying the latter.
PETITION for review of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
     Bengzon, Zarraga, Narciso, Cudala, Pecson, Bengzon& Jimenez for
petitioner.
     PAL Legal Department for private respondent.
ROMERO, J.:
Sancho Rayos was an overseas contract worker who had a renewed contract with the
Arabian American Oil Company (Aramco) for the period covering April 16, 1980, to
Saudi Arabia from Manila are allowed to claim reimbursement for amounts paid for
excess baggage of up to 50 kilograms, as long as it is properly supported by receipt.
assignment, with a 50-kilogram excess baggage for which he paid P4,147.50.
Aramco reimbursed said. amount upon presentation of the excess baggage ticket.
In December 1980, Rayos learned that he was one of several employees being
investigated by Aramco for fraudulent claims. He immediately asked his wife Beatriz
in Manila to seek a written confirmation from SIA that he indeed paid for an excess
baggage of 50 kilograms. On December 10, 1980, SIA's manager, Johnny Khoo,
notified Beatriz of their inability to issue the certification requested because their
records showed that only three kilograms were entered as excess and accordingly
charged. SIA issued the certification requested by the spouses Rayos only on April 8,
1981, after its investigation of the anomaly and after Beatriz, assisted by a lawyer,
threatened it with a lawsuit. On April 14, 1981, Aramco gave Rayos his travel
documents without a return visa. His employment contract was not renewed.
On August 5, 1981, the spouses Rayos, convinced that SIA was responsible for the
non-renewal of Rayos' employment contract with Aramco, sued it for damages. SIA
claimed that it was not liable to the Rayoses because the tampering was committed
by its handling agent, Philippine Airlines (PAL). It then filed a third-party complaint
against PAL. PAL, in turn, countered that its personnel did not collect any charges
for excess baggage; that it had no participation in the tampering of any excess
baggage ticket; and that if any tampering was made, it was done by SIA's personnel.
1
Judge Jesus O. Ibay of the Regional Trial Court of Manila, Branch 30, rendered
judgment on September 9, 1988, in favor of the plaintiffs, the dispositive portion of
which reads thus:
WHEREFORE, judgment is hereby rendered in favor of the
plaintiffs and against the defendant Singapore Airlines Limited,
sentencing the latter to pay the former the following:
1. The sum of Four Hundred Thirty Thousand Nine Hundred Pesos
and Eighty Centavos (P430,900.80) as actual damages, with
interest at the legal rate from the date of the filing of the complaint
until fully paid.
2. The sum of Four Thousand One Hundred Forty-Seven Pesos and
Fifty Centavos (P4,147.50) as reimbursement for the amount
deducted from Mr. Rayos' salary, also with legal rate of interest
from the filing of the complaint until paid in full;
3. The sum of Fifty Thousand Pesos (P50,000.00) as moral
damages;
4. The sum equivalent to ten Per Cent (10th) of the total amount
due as and for attorney's fees; and
5. The cost of suit.
The defendant's counterclaim is hereby dismissed.
ON THE THIRD PARTY COMPLAINT, the third-party defendant
PAL is ordered to pay defendant and third-party plaintiff SIA
whatever the latter has paid the plaintiffs.
SO ORDERED.
In so ruling, the court a quo concluded that the excess baggage ticket of Rayos was
tampered with by the employees of PAL and that the fraud was the direct and
proximate cause of the non-renewal of Rayos' contract with Aramco.
All parties appealed to the Court of Appeals. SIA's appeal was dismissed for non-
payment of docket fees, which dismissal was eventually sustained by this Court. The
Rayos spouses withdrew their appeal when SIA satisfied the judgment totaling
P802,435.34.
In its appeal, PAL claimed that the spouses Rayos had no valid claim against SIA
because it was the inefficiency of Rayos which led to the non-renewal of his contract
with Aramco, and not the alleged tampering of his excess bagged ticket On the other
hand, SIA argued that the only issue in the said appeal is whether or not it was
entitled to reimbursement from PAL, citing
the case of Firestone Tire and Rubber Company of the Philippines v. Tempongko.1
The appellate court disagreed with SIA's contention that PAL could no longer raise
the issue of SIA's liability to the Rayoses and opined "that SIA's answer to the
complaint should inure to the benefit of PAL, and the latter may challenge the lower
court's findings against SIA in favor of plaintiffs-appellees (the Rayos spouses) for
the purpose of defeating SIA's claim against it, and not for the purpose of altering in
any way the executed judgment against SIA." In its answer to the main complaint,
SIA set up the defense that the excess baggage ticket was indeed tampered with but it
was committed by PAL's personnel. On September 21, 1992, the appellate court
granted PAL's appeal and absolved it from any liability to SIA.
In this petition for review, SIA argues that PAL cannot validly assail for the first
time on appeal the trial court's decision sustaining the validity of plaintiff's complaint
against SIA if PAL did not raise this issue in the lower court. It added that the
appellate court should have restricted its ruling on the right of SIA to seek
reimbursement from PAL, as this was the only issue raised by SIA in its third-party
complaint against PAL.
The instant appeal is impressed with merit.
The petitioner correctly pointed out that the case of Firestone squarely applies to the
case at bench. In said case, the Court expounded on the nature of a third-party
complaint and the effect of a judgment in favor of the plaintiff against the defendant
and in favor of such defendant as third-party plaintiff against, ultimately, the third-
party defendant. Speaking through then Justice and later Chief Justice Claudio
Teehankee, the Court stated:
The third-party complaint is, therefore, a procedural device
whereby a "third party" who is neither a party nor privy to the act
or deed complained of by the plaintiff, may be brought into the
case with leave of court, by the defendant, who acts as third-party
plaintiff to enforce against such third-party defendant a right for
contribution, indemnity, subrogation or any other relief, in respect
of the plaintiff's claim. The third-party complaint is actually
independent of and separate and distinct from the plaintiff's
complaint. . . . When leave to file the third-party complaint is
properly granted, the Court renders in effect two judgments in the
same case, one on the plaintiff's complaint and the other on the
2
 third-party complaint. When he finds favorably on both
complaints, as in this case, he renders judgment on the principal
complaint in favor of plaintiff against defendant and renders
another judgment on the third-party complaint in favor of
defendant as third-party plaintiff, ordering the third-party
defendant to reimburse the defendant whatever amount said
defendant is ordered to pay plaintiff in the case. Failure of any of
said parties in such a case to appeal the judgment as against him
makes such judgment final and executory. By the same token, an
appeal by one party from such judgment does not inure to the
benefit of the other party who has not appealed nor can it be
deemed to be an appeal of such other party from the judgment
against him.
It must be noted that in the proceedings below, PAL disclaimed any liability to the
Rayoses and imputed the alleged tampering to SIA's personnel. On appeal, however,
PAL changed its theory and averred that the spouses Rayos had no valid claim
against SIA on the around that the non-renewal of Sancho's contract with Aramco
was his unsatisfactory performance rather than the alleged tampering of his excess
baggage ticket. In response to PAL's appeal, SIA argued that it was improper for
PAL to question SIA's liability to the plaintiff, since this was no longer an issue on
account of the finality and, in fact, satisfaction of the judgment.
Surprisingly, the appellate court ignored the Court's pronouncements
in Firestone and declared:
[T]here is nothing in the citation which would suggest that the
appellant cannot avail of the defenses which would have been
available to the non-appealing party against the prevailing party
which would be beneficial to the appellant. After all, PAL's
liability here is premised on the liability of SIA to plaintiffs-
appellees, In its own defense, it should have the right to avail of
defenses of SIA against plaintiffs-appellees which would redound
to its benefit. This is especially true here where SIA lost the
capability to defend itself on the technicality of failure to pay
docket fee, rather than on the merits of its appeal. To hold
otherwise would be to open the door to a possible collusion
between the plaintiff and defendant which would leave the third-
party defendant holding the bag.
There is no question that a third-party defendant is allowed to set up in his answer
the defenses which the third-party plaintiff (original defendant) has or may have to
the plaintiff's claim. There are, however, special circumstances present in this case
which preclude third-party defendant PAL from benefiting from the said principle.
One of the defenses available to SIA was that the plaintiffs had no cause of action,
that is, it had no valid claim against SIA. SIA investigated the matter and discovered
that tampering was, indeed, committed, not by its personnel but by PAL's. This
became its defense as well as its main cause of action in the third-party complaint it
filed against PAL. For its part, PAL could have used the defense that the plaintiffs
had no valid claim against it or against SIA. This could be done indirectly by
adopting such a defense in its answer to the third-party complaint if only SIA had
raised the same in its answer to the main complaint, or directly by so stating in
unequivocal terms in its answer to SIA's complaint that SIA and PAL were both
blameless. Yet, PAL opted to deny any liability which it imputed to SIA's personnel.
It was only on appeal — in a complete turn around of theory — that PAL raised the
issue of no valid claim by the plaintiff against SIA. This simply cannot be allowed.
While the third-party defendant; would benefit from a victory by the third-party
plaintiff against the plaintiff, this is true only when the third-party plaintiff and third-
party defendant have non-contradictory defenses. Here, the defendant and third-party
defendant had no common defense against the plaintiffs' complaint, and they were
even blaming each other for the fiasco.
Fear of collusion between the third-party plaintiff and the plaintiffs aired by the
appellate court is misplaced if not totally unfounded. The stand of SIA as against the
plaintiffs' claim was transparent from the beginning. PAL was aware of SIA's
defense, and if it was convinced that SIA should have raised the defense of no valid
claim by the plaintiffs, it should have so stated in its answer as one of its defenses,
instead of waiting for an adverse judgment and raising it for the first time on appeal.
The judgment, therefore, as far as the Rayoses and SIA are concerned, has already
gained finality. What remains to be resolved, as correctly pointed out by petitioner, is
whether it is entitled to reimbursement from PAL, considering that PAL appealed
that part of the decision to the appellate court. This is where the rule laid down
in Firestone becomes applicable.
The trial court's decision, although adverse to SIA as defendant, made PAL
ultimately answerable for the judgment by ordering the latter to reimburse the former
for the entire monetary award. On appeal, PAL tried to exonerate itself by arguing
that the Rayoses had no valid claim against SIA. From PAL's viewpoint, this seemed
to be the only way to extricate itself from a mess which the court a quo ascribed to it.
This cannot, however, be allowed because it was neither raised by SIA in its answer
to the main complaint nor by PAL in its answer to the third-party complaint. The
prudent thing that PAL should have done was to state in its answer to the third-party
complaint filed by SIA against it everything that it may conceivably interpose by
way of its defense, including specific denials of allegations in the main complaint
which implicated it along with SIA.
3
The appellate court was in error when it opined that SIA's answer inured to the
benefit of PAL for the simple reason that the complaint and the third-party complaint
are actually two separate cases involving the same set of facts which is allowed by
the court to be resolved in a single proceeding only to avoid a multiplicity of actions.
Such a proceeding obviates the need of trying two cases, receiving the same or
similar evidence for both, and enforcing separate judgments therefor. This situation
is not, as claimed by the appellate court, analogous to a case where there are several
defendants against whom a complaint is filed stating a common cause of action,
where the answer of some of the defendants inures to the benefit of those who did
not file an answer. While such a complaint speaks of a single suit, a third-party
complaint involves an action separate and distinct from, although related to the main
complaint. A third-party defendant who feels aggrieved by some allegations in the
main complaint should, aside from answering the third-party complaint, also answer
the main complaint.
We do not, however, agree with the petitioner that PAL is solely liable for the
satisfaction of the judgment. While the trial court found, and this has not been
adequately rebutted by PAL, that the proximate cause of the non-renewal of Rayos'
employment contract with Aramco was the tampering of his excess baggage ticket by
PAL's personnel, it failed to consider that the immediate cause of such non-renewal
was SIA's delayed transmittal of the certification needed by Rayos to prove his
innocence to his employer.
SIA was informed of the anomaly in December 1980 but only issued the certification
four months later or, more specifically, on April 8, 1981, a few days before the
expiration of Rayos' contract. Surely, the investigation conducted by SIA could not
have lasted for four months as the information needed by the Rayoses could easily be
verified by comparing the duplicate excess baggage tickets which they and their
handling agent, PAL, kept the record purposes. The fact that the Rayos spouses had
to be assisted by counsel who threatened to file a damage suit against SIA if the
certification they urgently needed was not immediately issued only strengthens the
suspicion that SIA was not dealing with them in utmost good faith. The effect of
SIA's mishandling of Beatriz Rayos' request became instantly apparent when her
husband's contract was not renewed in spite of his performance which was constantly
"highly regarded" by the manager of Aramco's equipment services department.
Former Chief Justice and noted remedial law expert Manuel V. Moran opined that
"in an action upon a tort, the defendant may file a third-party complaint against a
joint tort-feasor for contribution."2
The non-renewal of Rayos employment contract was the natural and probable
consequence of the separate tortious acts of SIA and PAL. Under mandate of Article
2176 of the Civil Code, Rayos is entitled to be compensated for such damages.
Inasmuch as the responsibility of two or more persons, or tort-feasors, liable for a
quasi-delict is joint and several,3 and the sharing as between such solidary debtors is
pro-rata,4 it is but logical, fair, and equitable to require PAL to contribute to the
amount awarded to the Rayos spouses and already paid by SIA, instead of totally
indemnifying the latter.
WHEREFORE, the decision of the respondent Court of Appeals in CA-G.R. CV No.
20488 dated September 21, 1992, is hereby REVERSED and a new one is entered
ordering private respondent Philippine Airlines to pay, by way of contribution,
petitioner Singapore Airlines one-half (1/2) of the amount it actually paid to Sancho
and Beatriz Rayos in satisfaction of the judgment in Civil Case No. 142252, dated
September 9, 1988.
SO ORDERED.
G.R. No. 138822. January 23, 2001.*
EVANGELINE ALDAY, petitioner, vs. FGU INSURANCE CORPORATION,
respondent.
Actions; Jurisdiction; Estoppel; Words and Phrases; Estoppel by laches
arises from the negligence or omission to assert a right within a reasonable time,
warranting a presumption that the party entitled to assert it either has abandoned or
declined to assert it; A party cannot be considered as estopped from assailing the
trial court’s jurisdiction over the other party’s counterclaim where such issue was
raised with the trial court itself—the body where the action is pending—even before
the presentation of any evidence by the parties and definitely, way before any
judgment could be rendered by the trial court.—Before going into the substantive
issues, the Court shall first dispose of some procedural matters raised by the parties.
Petitioner claims that respondent is estopped from questioning her non-payment of
docket fees because it did not raise this particular 
_______________ 
*
 THIRD DIVISION.
114
114  SUPREME COURT REPORTS ANNOTATED 
Alday vs. FGU Insurance Corporation
issue when it filed in its first motion—the " Motion to Strike out Answer
Compulsory Counterclaim And To Declare Defendant In Default”—with the trial
court; rather, it was only nine months after receiving petitioner’s answer that
respondent assailed the trial court’s lack of jurisdiction over petitioner’s
counterclaims based on the latter’s failure to pay docket fees. Petitioner’s position is
unmeritorious. Estoppel by laches arises from the negligence or omission to assert a
right within a reasonable time, warranting a presumption that the party entitled to
assert it either has abandoned or declined to assert it. In the case at bar, respondent
cannot be considered as estopped from assailing the trial court’s jurisdiction over
petitioner’s counterclaim since this issue was raised by respondent with the trial
4
court itself—the body where the action is pending—even before the presentation of
any evidence by the parties and definitely, way before any judgment could be
rendered by the trial court.
Same; Same; Same; Although the lack of jurisdiction of a court may be raised
at any stage of the action, a party may be estopped from raising such questions if he
has actively taken part in the very proceedings which he questions, belatedly
objecting to the court’s jurisdiction in the event that the judgment or order
subsequently rendered is adverse to him.—Meanwhile, respondent questions the
jurisdiction of the Court of Appeals over the appeal filed by petitioner from the 18
September 1990 and 28 February 1991 orders of the trial court. It is significant to
note that this objection to the appellate court’s jurisdiction is raised for the first time
before this Court; respondent never having raised this issue before the appellate
court. Although the lack of jurisdiction of a court may be raised at any stage of the
action, a party may be estopped from raising such questions if he has actively taken
part in the very proceedings which he questions, belatedly objecting to the court’s
jurisdiction in the event that that the judgment or order subsequently rendered is
adverse to him. In this case, respondent actively took part in the proceedings before
the Court of Appeals by filing its appellee’s brief with the same. Its participation,
when taken together with its failure to object to the appellate court’s jurisdiction
during the entire duration of the proceedings before such court, demonstrates a
willingness to abide by the resolution of the case by such tribunal and accordingly,
respondent is now most decidedly estopped from objecting to the Court of Appeals’
assumption of jurisdiction over petitioner’s appeal.
Same; Counterclaims; Words and Phrases; “Compulsory Counterclaim,”
Explained.—The basic issue for resolution in this case is whether or not the
counterclaim of petitioner is compulsory or permissive in nature. A compulsory
counterclaim is one which, being cognizable by the 
115
VOL. 350, JANUARY 23, 2001  115  subsequently, the judgment awards a claim not specified in the pleading, or if
Alday vs. FGU Insurance Corporation
regular courts of hustice, arises out of or is connected with the transaction or
occurrence constituting the subject matter of the opposing party’s claim and does not
require for its adjudication the presence of third parties of whom the court cannot
acquire jurisdiction.
Same; Same; Criteria or Tests in Determining Whether a Counter-claim is
Compulsory or Permissive; “Compelling Test of Compulsoriness”; Words and
Phrases; Under the “compelling test of compulsoriness,” “a logical relationship
between the claim and the counterclaim is required, that is, whether conducting
separate trials of the respective claims of the parties would entail a substantial
duplication of effort and time by the parties and the court.”—In Valencia v. Court of
Appeals, this Court capsulized the criteria or tests that may be used in determining
whether a counterclaim is compulsory or permissive, summarized as follows: 1. Are
the issues of fact and law raised by the claim and counterclaim largely the same? 2.
Would res judicata bar a subsequent suit on defendant’s claim absent the compulsory
counterclaim rule? 3. Will substantially the same evidence support or refute plaintiffs
claim as well as defendant’s counter-claim? 4. Is there any logical relationbetween
the claim and the counterclaim? Another test, applied in the more recent case
of Quintanilla v. Court of Appeals, is the “compelling test of compulsoriness” which
requires “a logical relationship between the claim and counterclaim, that is, where
conducting separate trials of the respective claims of the parties would entail a
substantial duplication of effort and time by the parties and the court.”
Same; Same; Docket Fees; Rule on the Payment of Filing Fees.—There is no
need for petitioner to pay docket fees for her compulsory counterclaim. On the other
hand, in order for the trial court to acquire jurisdiction over her permissive
counterclaim, petitioner is bound to pay the prescribed docket fees. The rule on the
payment of filing fees has been laid down by the Court in the case of Sun Insurance
Office, Ltd. v. Hon. Maximiano Asuncion—1. It is not simply the filing of the
complaint or appropriate initiatory pleading, but the payment of the prescribed
docket fee, that vests a trial court with jurisdiction over the subject-matter or nature
of the action. Where the filing of the initiatory pleading is not accompanied by
payment of the docket fee, the court may allow payment of the fee within a
reasonable time but in no case beyond the applicable prescriptive or reglementary
period. 2. The same rule applies to permissive counterclaims, third-party claims and
similar pleadings, which shall not be considered filed until and unless the filing fee
prescribed therefor is paid. The court may allow payment of said fee within a
reasonable time but also in no case beyond its applicable prescriptive or
reglementary 
116
116  SUPREME COURT REPORTS ANNOTATED 
Alday vs. FGU Insurance Corporation
period 3. Where the trial court acquires jurisdiction over a claim by the filing
of the appropriate pleading and payment of the prescribed filing fee but,
specified the same has been left for determination by the court, the additional filing
fee therefor shall constitute a lien on the judgment. It shall be the responsibility of
the Clerk of Court or his duly authorized deputy to enforce said lien and assess and
collect the additional fee.
Same; Same; Same; The trial court should give the defendant a reasonable
time, but in no case beyond the applicable prescriptive or reglemen-tary period, to
pay the filing fees for her permissive counterclaim.—The above mentioned ruling
in Sun Insurance has been reiterated in the recent case of Suson v. Court of Appeals.
In Suson, the Court explained that although the payment of the prescribed docket
fees is a jurisdictional requirement, its nonpayment does not result in the automatic
dismissal of the case provided the docket fees are paid within the applicable
prescriptive or reglementary period. Coming now to the case at bar, it has not been
alleged by respondent and there is nothing in the records to show that petitioner has
attempted to evade the payment of the proper docket fees for her permissive
counterclaim. As a matter of fact, after respondent filed its motion to dismiss
5
petitioner’s counterclaim based on her failure to pay docket fees, petitioner
immediately filed a motion with the trial court, asking it to declare her counterclaim
as compulsory in nature and therefore exempt from docket fees and, in addition, to
declare that respondent was in default for its failure to answer her counterclaim.
However, the trial court dismissed petitioner’s counterclaim. Pursuant to this Court’s
ruling in Sun Insurance, the trial court should have instead given petitioner a
reasonable time, but in no case beyond the applicable prescriptive or reglementary
period, to pay the filing fees for her permissive counter-claim.
Same; Same; Same; Pleadings and Practice; There is no need to file an
answer to a permissive counterclaim until the defendant shall have paid the
prescribed docket fees for only then shall the court acquire jurisdiction over such
claim.—Petitioner asserts that the trial court should have declared respondent in
default for having failed to answer her counterclaim. Insofar as the permissive
counterclaim of petitioner is concerned, there is obviously no need to file an answer
until petitioner has paid the prescribed docket fees for only then shall the court
acquire jurisdiction over such claim. Meanwhile, the compulsory counterclaim of
petitioner for damages based on the filing by respondent of an allegedly unfounded
and malicious suit need not be answered since it is inseparable from the 
117
VOL. 350, JANUARY 23, 2001  117  petitioner's own admissions, as contained in her answer, show that her counterclaim
Alday vs. FGU Insurance Corporation
claims of respondent. If respondent were to answer the compulsory
counterclaim of petitioner, it would merely result in the former pleading the same
facts raised in its complaint.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
     Cruz, Durian, Alday & Cruz-Matters for petitioner.
     Jacinto Jimenez for respondent.
GONZAGA-REYES, J.:
On 5 May 1989, respondent FGU Insurance Corporation filed a complaint with the
Regional Trial Court of Makati1alleging that petitioner Evangeline K. Alday owed it
P114,650.76, representing unliquidated cash advances, unremitted costs of premiums
and other charges incurred by petitioner in the course of her work as an insurance
agent for respondent.2 Respondent also prayed for exemplary damages, attorney's
fees, and costs of suit.3Petitioner filed her answer and by way of counterclaim,
asserted her right for the payment of P104,893.45, representing direct commissions,
profit commissions and contingent bonuses earned from 1 July 1986 to 7 December
1986, and for accumulated premium reserves amounting to P500,000.00. In addition,
petitioner prayed for attorney's fees, litigation expenses, moral damages and
exemplary damages for the allegedly unfounded action filed by respondent.4 On 23
August 1989, respondent filed a "Motion to Strike Out Answer With Compulsory
Counterclaim And To Declare Defendant In Default" because petitioner's answer
was allegedly filed out of time.5However, the trial court denied the motion on 25
August 1989 and similarly rejected respondent's motion for reconsideration on 12
March 1990.6 A few weeks later, on 11 April 1990, respondent filed a motion to
dismiss petitioner's counterclaim, contending that the trial court never acquired
jurisdiction over the same because of the non-payment of docket fees by
petitoner.7 In response, petitioner asked the trial court to declare her counterclaim as
exempt from payment of docket fees since it is compulsory and that respondent be
declared in default for having failed to answer such counterclaim.8
In its 18 September 1990 Order, the trial court9 granted respondent's motion to
dismiss petitioner's counterclaim and consequently, denied petitioner's motion. The
court found petitioner's counterclaim to be merely permissive in nature and held that
petitioner's failure to pay docket fees prevented the court from acquiring jurisdiction
over the same.10The trial court similar denied petitioner's motion for reconsideration
on 28 February 1991.1âwphi1.nêt
On 23 December 1998, the Court of Appeals11 sustained the trial court, finding that
is merely permissive. The relevant portion of the appellate court's decision12 is
quoted herewith -
Contrary to the protestations of appellant, mere reading of the allegations in
the answer a quo will readily show that her counterclaim can in no way be
compulsory. Take note of the following numbered paragraphs in her
answer:
"(14) That, indeed, FGU's cause of action which is not supported
by any document other than the self-serving 'Statement of Account'
dated March 28, 1988 x x x
(15) That it should be noted that the cause of action of FGU is not
the enforcement of the Special Agent's Contract but the alleged
'cash accountabilities which are not based on written agreement x x
x.
x      x      x      x
(19) x x x A careful analysis of FGU's three-page complaint will
show that its cause of action is not for specific performance or
enforcement of the Special Agent's Contract rather, it is for the
payment of the alleged cash accountabilities incurred by defendant
during the period form [sic] 1975 to 1986 which claim is executory
6
 and has not been ratified. It is the established rule that
unenforceable contracts, like this purported money claim of FGU,
cannot be sued upon or enforced unless ratified, thus it is as if they
have no effect. x x x."
To support the heading "Compulsory Counterclaim" in her answer and give
the impression that the counterclaim is compulsory appellant alleged that
"FGU has unjustifiably failed to remit to defendant despite repeated
demands in gross violation of their Special Agent's Contract x x x." The
reference to said contract was included purposely to mislead. While on one
hand appellant alleged that appellee's cause of action had nothing to do with
the Special Agent's Contract, on the other hand, she claim that FGU violated
said contract which gives rise of [sic] her cause of action. Clearly,
appellant's cash accountabilities cannot be the offshoot of appellee's alleged
violation of the aforesaid contract.
On 19 May 1999, the appellate court denied petitioner's motion for
reconsideration,13 giving rise to the present petition.
Before going into the substantive issues, the Court shall first dispose of some
procedural matters raised by the parties. Petitioner claims that respondent is estopped
from questioning her non-payment of docket fees because it did not raise this
particular issue when it filed its motion - the "Motion to Strike out Answer With
Compulsory Counterclaim And To Declare Defendant In Default" - with the trial
court; rather, it was only nine months after receiving petitioner's answer that
respondent assailed the trial court's lack of jurisdiction over petitioner's
counterclaims based on the latter's failure to pay docket fees.14 Petitioner's position is
unmeritorious. Estoppel by laches arises from the negligence or omission to assert a
right within a reasonable time, warranting a presumption that the party entitled to
assert it either has abandoned or declined to assert it.15 In the case at bar, respondent
cannot be considered as estopped from assailing the trial court's jurisdiction over
petitioner's counterclaim since this issue was raised by respondent with the trial court
itself - the body where the action is pending - even before the presentation of any
evidence by the parties and definitely, way before any judgment could be rendered
by the trial court.
Meanwhile, respondent questions the jurisdiction of the Court of Appeals over the
appeal filed by petitioner from the 18 September 1990 and 28 February 1991 orders
of the trial court. It is significant to note that this objection to the appellate court's
jurisdiction is raised for the first time before this Court; respondent never having
raised this issue before the appellate court. Although the lack of jurisdiction of a
court may be raised at any stage of the action, a party may be estopped from raising
such questions if he has actively taken part in the very proceedings which he
questions, belatedly objecting to the court's jurisdiction in the event that the
judgment or order subsequently rendered is adverse to him.16 In this case, respondent
actively took part in the proceedings before the Court of Appeals by filing its
appellee's brief with the same.17 Its participation, when taken together with its failure
to object to the appellate court's jurisdiction during the entire duration of the
proceedings before such court, demonstrates a willingness to abide by the resolution
of the case by such tribunal and accordingly, respondent is now most decidedly
estopped from objecting to the Court of Appeals' assumption of jurisdiction over
petitioner's appeal.18
The basic issue for resolution in this case is whether or not the counterclaim of
petitioner is compulsory or permissive in nature. A compulsory counterclaim is one
which, being cognizable by the regular courts of justice, arises out of or is connected
with the transaction or occurrence constituting the subject matter of the opposing
party's claim and does not require for its adjudication the presence of third parties of
whom the court cannot acquire jurisdiction.19
In Valencia v. Court of Appeals,20 this Court capsulized the criteria or tests that may
be used in determining whether a counterclaim is compulsory or permissive,
summarized as follows:
1. Are the issues of fact and law raised by the claim and counterclaim
largely the same?
2. Would res judicata bar a subsequent suit on defendant's claim absent the
compulsory counterclaim rule?
3. Will substantially the same evidence support or refute plaintiff's claim as
well s defendant's counterclaim?
4. Is there any logical relation between the claim and the counterclaim?
Another test, applied in the more recent case of Quintanilla v. Court of Appeals,21 is
the "compelling test of compulsoriness" which requires "a logical relationship
between the claim and counterclaim, that is, where conducting separate trials of the
respective claims of the parties would entail a substantial duplication of effort and
time by the parties and the court."
As contained in her answer, petitioner's counterclaims are as follows:
(20) That defendant incorporates and repleads by reference all the foregoing
allegations as may be material to her Counterclaim against FGU.
7
 (21) That FGU is liable to pay the following just, valid and legitimate
claims of defendant:
(a) the sum of at least P104,893.45 plus maximum interest thereon
representing, among others, direct commissions, profit
commissions and contingent bonuses legally due to defendant; and
(b) the minimum amount of P500,000.00 plus the maximum
allowable interest representing defendant's accumulated premium
reserve for 1985 and previous years,
which FGU has unjustifiably failed to remit to defendant despite repeated
demands in gross violation of their Special Agent's Contract and in
contravention of the principle of law that "every person must, in the
exercise of his rights and in the performance of his duties, act with justice,
give everyone his due, and observe honesty and good faith."
(22) That as a result of the filing of this patently baseless, malicious and
unjustified Complaint, and FGU's unlawful, illegal and vindictive
termination of their Special Agent's Contract, defendant was unnecessarily
dragged into this litigation and to defense [sic] her side and assert her rights
and claims against FGU, she was compelled to hire the services of counsel
with whom she agreed to pay the amount of P30,000.00 as and for
attorney's fees and stands to incur litigation expenses in the amount
estimated to at least P20,000.00 and for which FGU should be assessed and
made liable to pay defendant.
(23) That considering further the malicious and unwarranted action of
defendant in filing this grossly unfounded action, defendant has suffered
and continues to suffer from serious anxiety, mental anguish, fright and
humiliation. In addition to this, defendant's name, good reputation and
business standing in the insurance business as well as in the community
have been besmirched and for which FGU should be adjudged and made
liable to pay moral damages to defendant in the amount of P300,000.00 as
minimum.
(24) That in order to discourage the filing of groundless and malicious suits
like FGU's Complaint, and by way of serving [as] an example for the public
good, FGU should be penalized and assessed exemplary damages in the
sum of P100,000.00 or such amount as the Honorable Court may deem
warranted under the circumstances.22
Tested against the abovementioned standards, petitioner's counterclaim for
commissions, bonuses, and accumulated premium reserves is merely permissive. The
evidence required to prove petitioner's claims differs from that needed to establish
respondent's demands for the recovery of cash accountabilities from petitioner, such
as cash advances and costs of premiums. The recovery of respondent's claims is not
contingent or dependent upon establishing petitioner's counterclaim, such that
conducting separate trials will not result in the substantial duplication of the time and
effort of the court and the parties. One would search the records in vain for a logical
connection between the parties' claims. This conclusion is further reinforced by
petitioner's own admissions since she declared in her answer that respondent's cause
of action, unlike her own, was not based upon the Special Agent's
Contract.23 However, petitioner's claims for damages, allegedly suffered as a result of
the filing by respondent of its complaint, are compulsory.24
There is no need for need for petitioner to pay docket fees for her compulsory
counterclaim.25 On the other hand, in order for the trial court to acquire jurisdiction
over her permissive counterclaim, petitioner is bound to pay the prescribed docket
fees.26 The rule on the payment of filing fees has been laid down by the Court in the
case of Sun Insurance Office, Ltd. V. Hon. Maximiano Asuncion27-
1. It is not simply the filing of the complaint or appropriate initiatory
pleading, but the payment of the prescribed docket fee, that vests a trial
court with jurisdiction over the subject-matter or nature of the action. Where
the filing of the initiatory pleading is not accompanied by payment of the
docket fee, the court may allow payment of the fee within a reasonable time
but in no case beyond the applicable prescriptive or reglementary period.
2. The same rule applies to permissive counterclaims, third-party claims and
similar pleadings, which shall not be considered filed until and unless the
filing fee prescribed therefor is paid. The court may allow payment of said
fee within a reasonable time but also in no case beyond its applicable
prescriptive or reglementary period.
3. Where the trial court acquires jurisdiction over a claim by the filing of the
appropriate pleading and payment of the prescribed filing fee but,
subsequently, the judgment awards a claim not specified in the pleading, or
if specified the same has been left for determination by the court, the
additional filing fee therefor shall constitute a lien on the judgment. It shall
be the responsibility of the Clerk of Court or his duly authorized deputy to
enforce said lien and assess and collect the additional fee.
The above mentioned ruling in Sun Insurance has been reiterated in the recent case
of Susan v. Court of Appeals.28In Suson, the Court explained that although the
payment of the prescribed docket fees is a jurisdictional requirement, its non-
payment does not result in the automatic dismissal of the case provided the docket
fees are paid within the applicable prescriptive or reglementary period. Coming now
8
to the case at bar, it has not been alleged by respondent and there is nothing in the
records to show that petitioner has attempted to evade the payment of the proper
docket fees for her permissive counterclaim. As a matter of fact, after respondent
filed its motion to dismiss petitioner's counterclaim based on her failure to pay
docket fees, petitioner immediately filed a motion with the trial court, asking it to
declare her counterclaim as compulsory in nature and therefore exempt from docket
fees and, in addition, to declare that respondent was in default for its failure to
answer her counterclaim.29However, the trial court dismissed petitioner's
counterclaim. Pursuant to this Court's ruling in Sun Insurance, the trial court should
have instead given petitioner a reasonable time, but in no case beyond the applicable
prescriptive or reglementary period, to pay the filing fees for her permissive
counterclaim.
Petitioner asserts that the trial court should have declared respondent in default for
having failed to answer her counterclaim.30 Insofar as the permissive counterclaim of
petitioner is concerned, there is obviously no need to file an answer until petitioner
has paid the prescribed docket fees for only then shall the court acquire jurisdiction
over such claim.31 Meanwhile, the compulsory counterclaim of petitioner for
damages based on the filing by respondent of an allegedly unfounded and malicious
suit need not be answered since it is inseparable from the claims of respondent. If
respondent were to answer the compulsory counterclaim of petitioner, it would
merely result in the former pleading the same facts raised in its complaint.32
WHEREFORE, the assailed Decision of the Court of Appeals promulgated on 23
December 1998 and its 19 May 1999 Resolution are hereby MODIFIED. The
compulsory counterclaim of petitioner for damages filed in Civil Case No. 89-3816
is ordered REINSTATED. Meanwhile, the Regional Trial Court of Makati (Branch
134) is ordered to require petitioner to pay the prescribed docket fees for her
permissive counterclaim (direct commissions, profit commissions, contingent
bonuses and accumulated premium reserves), after ascertaining that the applicable
prescriptive period has not yet set in.33
SO ORDERED.1âwphi1.nêt
G.R. No. 155173. November 23, 2004.*
LAFARGE CEMENT PHILIPPINES, INC., (formerly Lafarge Philippines,
Inc.), LUZON CONTINENTAL LAND CORPORATION, CONTINENTAL
OPERATING CORPORATION and PHILIP ROSEBERG,
petitioners, vs.CONTINENTAL CEMENT CORPORATION, GREGORY T.
LIM and ANTHONY A. MARIANO, respondents.
Actions; Counterclaims; Pleadings and Practice; Words and
Phrases; Counterclaims are defined as “any claim which a defending party may
have against an opposing party.”—Counterclaims are defined in Section 6 of Rule 6
of the Rules of Civil Procedure as “any claim which a defending party may have
against an opposing party.” They are generally allowed in order to avoid a
multiplicity of suits and to facilitate the disposition of the whole controversy in a
single action, such that the defendant’s demand may be adjudged by a counterclaim
rather than by an independent suit. The only limitations to this principle are (1) that
the court should have jurisdiction over the subject matter of the counterclaim, and (2)
that it could acquire jurisdiction over third parties whose presence is essential for its
adjudication.
Same; Same; Same; A counterclaim is permissive “if it does not arise out of
or is not necessarily connected with the subject matter of the opposing party’s
claim.”—A counterclaim may either be permissive or compulsory. It is permissive
“if it does not arise out of or is not necessarily connected with the subject matter of
the opposing party’s claim.” A permissive counterclaim is essentially an independent
claim that may be filed separately in another case. A counterclaim is compulsory
when its object “arises out of or is necessarily connected with the transaction or
occurrence constituting the subject matter of the opposing party’s claim and does not
require for its adjudication the presence of third parties of whom the court cannot
acquire jurisdiction.”
Same; Same; Same; Compelling Test of Compulsoriness; Criteria to
Determine Whether a Counterclaim is Compulsory or Permis-
9
_______________
*
 THIRD DIVISION.
523
VOL. 443, NOVEMBER 23, 2004  523  Same; Same; Same; Parties; The general rule that a defendant cannot by a
Lafarge Cement Philippines, Inc. vs. Continental Cement Corporation
sive; The “compelling test of compulsoriness” characterizes a counterclaim as
compulsory if there should exist a “logical relationship” between the main claim
and the counterclaim.—Unlike permissive counterclaims, compulsory counterclaims
should be set up in the same action; otherwise, they would be barred
forever. NAMARCO v. Federation of United Namarco Distributors laid down the
following criteria to determine whether a counterclaim is compulsory or permissive:
1) Are issues of fact and law raised by the claim and by the counterclaim largely the
same? 2) Would res judicata bar a subsequent suit on defendant’s claim, absent the
compulsory counterclaim rule? 3) Will substantially the same evidence support or
refute plaintiff’s claim as well as defendant’s counterclaim? 4) Is there any logical
relation between the claim and the counterclaim? A positive answer to all four
questions would indicate that the counterclaim is compulsory. Adopted
in Quintanilla v. CA and reiterated in Alday v. FGU Insurance Corporation, the
“compelling test of compulsoriness” characterizes a counterclaim as compulsory if
there should exist a “logical relationship” between the main claim and the
counterclaim. There exists such a relationship when conducting separate trials of the
respective claims of the parties would entail substantial duplication of time and effort
by the parties and the court; when the multiple claims involve the same factual and
legal issues; or when the claims are offshoots of the same basic controversy between
the parties.
Same; Same; Same; Damages; A counterclaim for damages allegedly
suffered by the defendant in consequence of the plaintiff’s action constitute
compulsory counterclaim.—The above allegations show that petitioners’
counterclaims for damages were the result of respondents’ (Lim and Mariano) act of
filing the Complaint and securing the Writ of Attachment in bad faith. Tiu Po v.
Bautistainvolved the issue of whether the counterclaim that sought moral, actual and
exemplary damages and attorney’s fees against respondents on account of their
“malicious and unfounded” complaint was compulsory. In that case, we held as
follows: “Petitioners’ counterclaim for damages fulfills the necessary requisites of a
compulsory counterclaim. They are damages claimed to have been suffered by
petitioners as a consequence of the action filed against them. They have to be
pleaded in the same action; otherwise, petitioners would be precluded by the
judgment from invoking the same in an independent action. The pronouncement
in Papa vs. Banaag (17 SCRA  actions. In Tramat Mercantile v. Court of Appeals, the Court held that generally, it
524
524  SUPREME COURT REPORTS ANNOTATED  circumstances may warrant the inclusion of the personal liability of a corporate
Lafarge Cement Philippines, Inc. vs. Continental Cement Corporation
1081) (1966) is in point: “Compensatory, moral and exemplary damages,
allegedly suffered by the creditor in consequence of the debtor’s action, are also
compulsory counterclaim barred by the dismissal of the debtor’s action. They cannot
be claimed in a subsequent action by the creditor against the debtor.”
counterclaim bring into the action any claim against persons other than the plaintiff
admits of an exception under Section 14, Rule 6, i.e., when the presence of parties
other than those to the original action is required for the granting of complete relief
in the determination of a counterclaim or cross-claim, and jurisdiction over such
parties can be obtained.—Among the issues raised in Sapugaywas whether
Cardenas, who was not a party to the original action, might nevertheless be
impleaded in the counterclaim. We disposed of this issue as follows: “A
counterclaim is defined as any claim for money or other relief which a defending
party may have against an opposing party. However, the general rule that a defendant
cannot by a counterclaim bring into the action any claim against persons other than
the plaintiff admits of an exception under Section 14, Rule 6 which provides that
‘when the presence of parties other than those to the original action is required for
the granting of complete relief in the determination of a counterclaim or cross-claim,
the court shall order them to be brought in as defendants, if jurisdiction over them
can be obtained.’ The inclusion, therefore, of Cardenas in petitioners’ counterclaim is
sanctioned by the rules.” The prerogative of bringing in new parties to the action at
any stage before judgment is intended to accord complete relief to all of them in a
single action and to avert a duplicity and even a multiplicity of suits thereby.
Same; Same; Same; Same; Corporation Law; Piercing the Veil Corporate
Fiction; Allegations of fraud and bad faith on the part of certain corporate officers
or stockholders may warrant the piercing of the veil of corporate fiction so that the
said individual may not seek refuge therein, but may be held individually and
personally liable for his or her actions.—The inclusion of a corporate officer or
stockholder—Cardenas in Sapugay or Lim and Mariano in the instant case—is not
premised on the assumption that the plaintiff corporation does not have the financial
ability to answer for damages, such that it has to share its liability with individual
defendants. Rather, such inclusion is based on the allegations of fraud and bad faith
on 
525
VOL. 443, NOVEMBER 23, 2004  525 
Lafarge Cement Philippines, Inc. vs. Continental Cement Corporation
the part of the corporate officer or stockholder. These allegations may warrant
the piercing of the veil of corporate fiction, so that the said individual may not seek
refuge therein, but may be held individually and personally liable for his or her
should only be the corporation that could properly be held liable. However,
director, trustee, or officer, if the said individual is found guilty of bad faith or gross
negligence in directing corporate affairs. Remo Jr. v. IAC has stressed that while a
10
corporation is an entity separate and distinct from its stockholders, the corporate
fiction may be disregarded if “used to defeat public convenience, justify a wrong,
protect fraud, or defend crime.” In these instances, “the law will regard the
corporation as an association of persons, or in case of two corporations, will merge
them into one.” Thus, there is no debate on whether, in alleging bad faith on the part
of Lim and Mariano the counterclaims had in effect made them “indispensable
parties” thereto; based on the alleged facts, both are clearly parties in interest to the
counterclaim.
Same; Same; Same; Same; Words and Phrases; Suability and liability are
two distinct matters.—Suability and liability are two distinct matters. While the
Court does rule that the counterclaims against Respondent CCC’s president and
manager may be properly filed, the determination of whether both can in fact be held
jointly and severally liable with respondent corporation is entirely another issue that
should be ruled upon by the trial court.
Same; Same; Same; Same; While a compulsory counterclaim may implead
persons not parties to the original complaint, the general rule that a defendant in a
compulsory counterclaim need not file any responsive pleading—as it is deemed to
have adopted the allegations in the complaint as its answer—does not apply; A new
party impleaded by the plaintiff in a compulsory counterclaim cannot be considered
to have automatically and unknowingly submitted to the jurisdiction of the court—
summons must be served on them for the court to obtain jurisdiction over them.—
However, while a compulsory counterclaim may implead persons not parties to the
original complaint, the general rule—a defendant in a compulsory counterclaim need
not file any responsive pleading, as it is deemed to have adopted the allegations in
the complaint as its answer—does not  same extent and in the same manner as if they had performed the wrongful act
526
526  SUPREME COURT REPORTS ANNOTATED  Each is liable for the whole damages caused by all, and all together are jointly liable
Lafarge Cement Philippines, Inc. vs. Continental Cement Corporation
apply. The filing of a responsive pleading is deemed a voluntary submission to
the jurisdiction of the court; a new party impleaded by the plaintiff in a compulsory
counterclaim cannot be considered to have automatically and unknowingly submitted
to the jurisdiction of the court. A contrary ruling would result in mischievous
consequences whereby a party may be indiscriminately impleaded as a defendant in a
compulsory counterclaim; and judgment rendered against it without its knowledge,
much less participation in the proceedings, in blatant disregard of rudimentary due
process requirements. The correct procedure in instances such as this is for the trial
court, per Section 12 of Rule 6 of the Rules of Court, to “order [such impleaded
parties] to be brought in as defendants, if jurisdiction over them can be obtained,” by
directing that summons be served on them. In this manner, they can be properly
appraised of and answer the charges against them. Only upon service of summons
can the trial court obtain jurisdiction over them.
Obligations and Contracts; Joint and Solidary Obligations; Obligations may
be classified as either joint or solidary; Petitioners’ usage of the term “joint and
solidary” is confusing and ambiguous.—Obligations may be classified as either joint
or solidary. “Joint” or “jointly” or “conjoint”
means mancum or mancomunada or pro rataobligation; on the other hand, “solidary
obligations” may be used interchangeably with “joint and several” or “several.”
Thus, petitioners’ usage of the term “joint and solidary” is confusing and ambiguous.
Same; Same; Torts; Obligations arising from tort are, by their nature, always
solidary.—The ambiguity in petitioners’ counterclaims notwithstanding,
respondents’ liability, if proven, is solidary. This characterization finds basis in
Article 1207 of the Civil Code, which provides that obligations are generally
considered joint, except when otherwise expressly stated or when the law or the
nature of the obligation requires solidarity. However, obligations arising from tort
are, by their nature, always solidary. We have assiduously maintained this legal
principle as early as 1912 in Worcester v. Ocampo, in which we held: “x x x The
difficulty in the contention of the appellants is that they fail to recognize that the
basis of the present action is tort. They fail to recognize the universal doctrine that
each joint tort feasor is not only individually liable for the tort in which he
participates, but is also jointly liable with his tort feasors. x x x “It may be stated as a
general rule that joint tort feasors 
527
VOL. 443, NOVEMBER 23, 2004  527 
Lafarge Cement Philippines, Inc. vs. Continental Cement Corporation
are all the persons who command, instigate, promote, encourage, advise,
countenance, cooperate in, aid or abet the commission of a tort, or who approve of it
after it is done, if done for their benefit. They are each liable as principals, to the
themselves. x x x “Joint tort feasors are jointly and severally liable for the tort which
they commit. The persons injured may sue all of them or any number less than all.
for the whole damage. It is no defense for one sued alone, that the others who
participated in the wrongful act are not joined with him as defendants; nor is it any
excuse for him that his participation in the tort was insignificant as compared to that
of the others. x x x “Joint tort feasors are not liable pro rata. The damages can not be
apportioned among them, except among themselves. They cannot insist upon an
apportionment, for the purpose of each paying an aliquot part. They are jointly and
severally liable for the whole amount. x x x
Same; Same; Same; The fact that the liability sought against the corporation
is for specific performance and tort, while that sought against the individual
respondents is based solely on tort does not negate the solidary nature of their
liability for alleged tortuous acts.—In a “joint” obligation, each obligor answers only
for a part of the whole liability; in a “solidary” or “joint and several” obligation, the
relationship between the active and the passive subjects is so close that each of them
must comply with or demand the fulfillment of the whole obligation. The fact that
the liability sought against the CCC is for specific performance and tort, while that
sought against the individual respondents is based solely on tort does not negate the
solidary nature of their liability for tortuous acts alleged in the counterclaims. Article
11
1211 of the Civil Code is explicit on this point: “Solidarity may exist although the
creditors and the debtors may not be bound in the same manner and by the same
periods and conditions.”
Same; Same; Same; In cases filed by the creditor, a solidary debtor may
invoke defenses arising from the nature of the obligation, from circumstances
personal to it, or even from those personal to its co-debtors.—The solidary character
of respondents’ alleged liability is precisely why credence cannot be given to
petitioners’ assertion. According to such assertion, Respondent CCC cannot move to
dis-
528
528  SUPREME COURT REPORTS ANNOTATED 
Lafarge Cement Philippines, Inc. vs. Continental Cement Corporation
miss the counterclaims on grounds that pertain solely to its individual co-
debtors. In cases filed by the creditor, a solidary debtor may invoke defenses arising
from the nature of the obligation, from circumstances personal to it, or even from
those personal to its co-debtors. Article 1222 of the Civil Code provides: “A solidary
debtor may, in actions filed by the creditor, avail itself of all defenses which are
derived from the nature of the obligation and of those which are personal to him, or
pertain to his own share. With respect to those which personally belong to the others,
he may avail himself thereof only as regards that part of the debt for which the latter
are responsible.” (Emphasis supplied). The act of Respondent CCC as a solidary
debtor—that of filing a motion to dismiss the counterclaim on grounds that pertain
only to its individual co-debtors—is therefore allowed.
Same; Same; Same; Compulsory Counterclaims; Counterclaims that are only
for damages and attorney’s fees and that arise from the filing of the complaint shall
be considered as special defenses and need not be answered.—However, a perusal of
its Motion to Dismiss the counterclaims shows that Respondent CCC filed it on
behalf of Co-respondents Lim and Mariano; it did not pray that the counterclaim
against it be dismissed. Be that as it may, Respondent CCC cannot be declared in
default. Jurisprudence teaches that if the issues raised in the compulsory
counterclaim are so intertwined with the allegations in the complaint, such issues are
deemed automatically joined. Counterclaims that are only for damages and
attorney’s fees and that arise from the filing of the complaint shall be considered as
special defenses and need not be answered.
Same; Same; Same; A corporation has a legal personality entirely separate
and distinct from that of its officers and cannot act for and on their behalf, without
being so authorized.—While Respondent CCC can move to dismiss the
counterclaims against it by raising grounds that pertain to individual defendants Lim
and Mariano, it cannot file the same Motion on their behalf for the simple reason that
it lacks the requisite authority to do so. A corporation has a legal personality entirely
separate and distinct from that of its officers and cannot act for and on their behalf,
without being so authorized. Thus, unless expressly adopted by Lim and Mariano,
the Motion to Dismiss the compulsory counterclaim filed by Respondent CCC has no
force and effect as to them.
529
VOL. 443, NOVEMBER 23, 2004  529 
Lafarge Cement Philippines, Inc. vs. Continental Cement Corporation
PETITION for review on certiorari of the orders of the Regional Trial Court of
Quezon City, Br. 80.
The facts are stated in the opinion of the Court.
     Sycip, Salazar, Hernandez and Gatmaitan for petitioners.
     Pangilinan, Britanico, Sarmiento and Franco Law Offices for respondent
Continental Cement Corporation.
PANGANIBAN, J.:
May defendants in civil cases implead in their counterclaims persons who were not
parties to the original complaints? This is the main question to be answered in this
controversy.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to
nullify the May 22, 20022 and the September 3, 2002 Orders3 of the Regional Trial
Court (RTC) of Quezon City (Branch 80) in Civil Case No. Q-00-41103. The
decretal portion of the first assailed Order reads:
"WHEREFORE, in the light of the foregoing as earlier stated, the plaintiff's
motion to dismiss claims is granted. Accordingly, the defendants' claims
against Mr. Lim and Mr. Mariano captioned as their counterclaims are
dismissed."4 
The second challenged Order denied petitioners' Motion for Reconsideration.
The Facts
Briefly, the origins of the present controversy can be traced to the Letter of Intent
(LOI) executed by both parties on August 11, 1998, whereby Petitioner Lafarge
Cement Philippines, Inc. (Lafarge) -- on behalf of its affiliates and other qualified
entities, including Petitioner Luzon Continental Land Corporation (LCLC) -- agreed
to purchase the cement business of Respondent Continental Cement Corporation
(CCC). On October 21, 1998, both parties entered into a Sale and Purchase
Agreement (SPA). At the time of the foregoing transactions, petitioners were well
aware that CCC had a case pending with the Supreme Court. The case was docketed
12
as GR No. 119712, entitled Asset Privatization Trust (APT) v. Court of Appeals and
Continental Cement Corporation.
In anticipation of the liability that the High Tribunal might adjudge against CCC, the
parties, under Clause 2 (c) of the SPA, allegedly agreed to retain from the purchase
price a portion of the contract price in the amount of P117,020,846.84 -- the
equivalent of US$2,799,140. This amount was to be deposited in an interest-bearing
account in the First National City Bank of New York (Citibank) for payment to APT,
the petitioner in GR No. 119712.
However, petitioners allegedly refused to apply the sum to the payment to APT,
despite the subsequent finality of the Decision in GR No. 119712 in favor of the
latter and the repeated instructions of Respondent CCC. Fearful that nonpayment to
APT would result in the foreclosure, not just of its properties covered by the SPA
with Lafarge but of several other properties as well, CCC filed before the Regional
Trial Court of Quezon City on June 20, 2000, a "Complaint with Application for
Preliminary Attachment" against petitioners. Docketed as Civil Case No. Q-00-
41103, the Complaint prayed, among others, that petitioners be directed to pay the
"APT Retained Amount" referred to in Clause 2 (c) of the SPA.
Petitioners moved to dismiss the Complaint on the ground that it violated the
prohibition on forum-shopping. Respondent CCC had allegedly made the same claim
it was raising in Civil Case No. Q-00-41103 in another action, which involved the
same parties and which was filed earlier before the International Chamber of
Commerce. After the trial court denied the Motion to Dismiss in its November 14,
2000 Order, petitioners elevated the matter before the Court of Appeals in CA-GR
SP No. 68688.
In the meantime, to avoid being in default and without prejudice to the outcome of
their appeal, petitioners filed their Answer and Compulsory Counterclaims ad
Cautelam before the trial court in Civil Case No. Q-00-41103. In their Answer, they
denied the allegations in the Complaint. They prayed -- by way of compulsory
counterclaims against Respondent CCC, its majority stockholder and president
Gregory T. Lim, and its corporate secretary Anthony A. Mariano -- for the sums of
(a) P2,700,000 each as actual damages, (b) P100,000,000 each as exemplary
damages, (c) P100,000,000 each as moral damages, and (d) P5,000,000 each as
attorney's fees plus costs of suit.
Petitioners alleged that CCC, through Lim and Mariano, had filed the "baseless"
Complaint in Civil Case No. Q-00-41103 and procured the Writ of Attachment in
bad faith. Relying on this Court's pronouncement in Sapugay v. CA,5 petitioners
prayed that both Lim and Mariano be held "jointly and solidarily" liable with
Respondent CCC.
On behalf of Lim and Mariano who had yet to file any responsive pleading, CCC
moved to dismiss petitioners' compulsory counterclaims on grounds that essentially
constituted the very issues for resolution in the instant Petition.
Ruling of the Trial Court
On May 22, 2002, the Regional Trial Court of Quezon City (Branch 80) dismissed
petitioners' counterclaims for several reasons, among which were the following: a)
the counterclaims against Respondents Lim and Mariano were not compulsory; b)
the ruling in Sapugay was not applicable; and c) petitioners' Answer with
Counterclaims violated procedural rules on the proper joinder of causes of action.6 
Acting on the Motion for Reconsideration filed by petitioners, the trial court -- in an
Amended Order dated September 3, 20027 -- admitted some errors in its May 22,
2002 Order, particularly in its pronouncement that their counterclaim had been
pleaded against Lim and Mariano only. However, the RTC clarified that it was
dismissing the counterclaim insofar as it impleaded Respondents Lim and Mariano,
even if it included CCC.
Hence this Petition.8 
Issues
In their Memorandum, petitioners raise the following issues for our consideration:
"[a] Whether or not the RTC gravely erred in refusing to rule that
Respondent CCC has no personality to move to dismiss petitioners'
compulsory counterclaims on Respondents Lim and Mariano's behalf.
"[b] Whether or not the RTC gravely erred in ruling that (i) petitioners'
counterclaims against Respondents Lim and Mariano are not compulsory;
(ii) Sapugay v. Court of Appeals is inapplicable here; and (iii) petitioners
violated the rule on joinder of causes of action."9 
For clarity and coherence, the Court will resolve the foregoing in reverse order.
The Court's Ruling
The Petition is meritorious.
First Issue:
13
 Counterclaims and Joinder of Causes of Action.
Petitioners' Counterclaims Compulsory
Counterclaims are defined in Section 6 of Rule 6 of the Rules of Civil Procedure as
"any claim which a defending party may have against an opposing party." They are
generally allowed in order to avoid a multiplicity of suits and to facilitate the
disposition of the whole controversy in a single action, such that the defendant's
demand may be adjudged by a counterclaim rather than by an independent suit. The
only limitations to this principle are (1) that the court should have jurisdiction over
the subject matter of the counterclaim, and (2) that it could acquire jurisdiction over
third parties whose presence is essential for its adjudication. 10  Mariano was motivated by his sense of personal loyalty to Gregory T. Lim,
A counterclaim may either be permissive or compulsory. It is permissive "if it does
not arise out of or is not necessarily connected with the subject matter of the
opposing party's claim."11 A permissive counterclaim is essentially an independent
claim that may be filed separately in another case.
A counterclaim is compulsory when its object "arises out of or is necessarily
connected with the transaction or occurrence constituting the subject matter of the
opposing party's claim and does not require for its adjudication the presence of third
parties of whom the court cannot acquire jurisdiction."12 
Unlike permissive counterclaims, compulsory counterclaims should be set up in the
same action; otherwise, they would be barred forever. NAMARCO v. Federation of
United Namarco Distributors13 laid down the following criteria to determine whether
a counterclaim is compulsory or permissive: 1) Are issues of fact and law raised by
the claim and by the counterclaim largely the same? 2) Would res judicata bar a
subsequent suit on defendant's claim, absent the compulsory counterclaim rule? 3)
Will substantially the same evidence support or refute plaintiff's claim as well as
defendant's counterclaim? 4) Is there any logical relation between the claim and the
counterclaim? A positive answer to all four questions would indicate that the
counterclaim is compulsory.
Adopted in Quintanilla v. CA14 and reiterated in Alday v. FGU Insurance
Corporation,15 the "compelling test of compulsoriness" characterizes a counterclaim
as compulsory if there should exist a "logical relationship" between the main claim
and the counterclaim. There exists such a relationship when conducting separate
trials of the respective claims of the parties would entail substantial duplication of
time and effort by the parties and the court; when the multiple claims involve the
same factual and legal issues; or when the claims are offshoots of the same basic
controversy between the parties.
We shall now examine the nature of petitioners' counterclaims against respondents
with the use of the foregoing parameters.
Petitioners base their counterclaim on the following allegations:
"Gregory T. Lim and Anthony A. Mariano were the persons responsible for
making the bad faith decisions for, and causing plaintiff to file this baseless
suit and to procure an unwarranted writ of attachment, notwithstanding their
knowledge that plaintiff has no right to bring it or to secure the writ. In
taking such bad faith actions, Gregory T. Lim was motivated by his
personal interests as one of the owners of plaintiff while Anthony A.
for which reason he disregarded the fact that plaintiff is without any valid
cause.
"Consequently, both Gregory T. Lim and Anthony A. Mariano are the
plaintiff's co-joint tortfeasors in the commission of the acts complained of in
this answer and in the compulsory counterclaims pleaded below. As such
they should be held jointly and solidarily liable as plaintiff's co-defendants
to those compulsory counterclaims pursuant to the Supreme Court's
decision in Sapugay v. Mobil.
xxx    xxx    xxx
"The plaintiff's, Gregory T. Lim and Anthony A. Mariano's bad faith filing
of this baseless case has compelled the defendants to engage the services of
counsel for a fee and to incur costs of litigation, in amounts to be proved at
trial, but in no case less than P5 million for each of them and for which
plaintiff Gregory T. Lim and Anthony A. Mariano should be held jointly
and solidarily liable.
"The plaintiff's, Gregory T. Lim's and Anthony A. Mariano's actions have
damaged the reputations of the defendants and they should be held jointly
and solidarily liable to them for moral damages of P100 million each.
"In order to serve as an example for the public good and to deter similar
baseless, bad faith litigation, the plaintiff, Gregory T. Lim and Anthony A.
Mariano should be held jointly and solidarily liable to the defendants for
exemplary damages of P100 million each." 16 
The above allegations show that petitioners' counterclaims for damages were the
result of respondents' (Lim and Mariano) act of filing the Complaint and securing the
Writ of Attachment in bad faith. Tiu Po v. Bautista17 involved the issue of whether
14
the counterclaim that sought moral, actual and exemplary damages and attorney's
fees against respondents on account of their "malicious and unfounded" complaint
was compulsory. In that case, we held as follows:
"Petitioners' counterclaim for damages fulfills the necessary requisites of a
compulsory counterclaim. They are damages claimed to have been suffered
by petitioners as a consequence of the action filed against them. They have
to be pleaded in the same action; otherwise, petitioners would be precluded
by the judgment from invoking the same in an independent action. The
pronouncement in Papa vs. Banaag (17 SCRA 1081) (1966) is in point:
"Compensatory, moral and exemplary damages, allegedly suffered by the
creditor in consequence of the debtor's action, are also compulsory
counterclaim barred by the dismissal of the debtor's action. They cannot be
claimed in a subsequent action by the creditor against the debtor."
"Aside from the fact that petitioners' counterclaim for damages cannot be
the subject of an independent action, it is the same evidence that sustains
petitioners' counterclaim that will refute private respondent's own claim for
damages. This is an additional factor that characterizes petitioners'
counterclaim as compulsory."18  rule that a defendant cannot by a counterclaim bring into the action any
Moreover, using the "compelling test of compulsoriness," we find that, clearly, the
recovery of petitioners' counterclaims is contingent upon the case filed by
respondents; thus, conducting separate trials thereon will result in a substantial
duplication of the time and effort of the court and the parties.
Since the counterclaim for damages is compulsory, it must be set up in the same
action; otherwise, it would be barred forever. If it is filed concurrently with the main
action but in a different proceeding, it would be abated on the ground of litis
pendentia; if filed subsequently, it would meet the same fate on the ground of res
judicata.19  duplicity and even a multiplicity of suits thereby.
Sapugay v. Court of Appeals Applicable to the Case at Bar
Sapugay v. Court of Appeals finds application in the present case. In Sapugay,
Respondent Mobil Philippines filed before the trial court of Pasig an action for
replevin against Spouses Marino and Lina Joel Sapugay. The Complaint arose from
the supposed failure of the couple to keep their end of their Dealership Agreement.
In their Answer with Counterclaim, petitioners alleged that after incurring expenses
in anticipation of the Dealership Agreement, they requested the plaintiff to allow
them to get gas, but that it had refused. It claimed that they still had to post a surety
bond which, initially fixed at P200,000, was later raised to P700,000.
The spouses exerted all efforts to secure a bond, but the bonding companies required
a copy of the Dealership Agreement, which respondent continued to withhold from
them. Later, petitioners discovered that respondent and its manager, Ricardo P.
Cardenas, had intended all along to award the dealership to Island Air Product
Corporation.
In their Answer, petitioners impleaded in the counterclaim Mobil Philippines and its
manager -- Ricardo P. Cardenas -- as defendants. They prayed that judgment be
rendered, holding both jointly and severally liable for pre-operation expenses, rental,
storage, guarding fees, and unrealized profit including damages. After both Mobil
and Cardenas failed to respond to their Answer to the Counterclaim, petitioners filed
a "Motion to Declare Plaintiff and its Manager Ricardo P. Cardenas in Default on
Defendant's Counterclaim."
Among the issues raised in Sapugay was whether Cardenas, who was not a party to
the original action, might nevertheless be impleaded in the counterclaim. We
disposed of this issue as follows:
"A counterclaim is defined as any claim for money or other relief which a
defending party may have against an opposing party. However, the general
claim against persons other than the plaintiff admits of an exception under
Section 14, Rule 6 which provides that 'when the presence of parties other
than those to the original action is required for the granting of complete
relief in the determination of a counterclaim or cross-claim, the court shall
order them to be brought in as defendants, if jurisdiction over them can be
obtained.' The inclusion, therefore, of Cardenas in petitioners' counterclaim
is sanctioned by the rules."20 
The prerogative of bringing in new parties to the action at any stage before judgment
is intended to accord complete relief to all of them in a single action and to avert a
In insisting on the inapplicability of Sapugay, respondents argue that new parties
cannot be included in a counterclaim, except when no complete relief can be had.
They add that "[i]n the present case, Messrs. Lim and Mariano are not necessary for
petitioners to obtain complete relief from Respondent CCC as plaintiff in the lower
court. This is because Respondent CCC as a corporation with a separate [legal
personality] has the juridical capacity to indemnify petitioners even without Messrs.
Lim and Mariano."21 
We disagree. The inclusion of a corporate officer or stockholder -- Cardenas in
Sapugay or Lim and Mariano in the instant case -- is not premised on the assumption
that the plaintiff corporation does not have the financial ability to answer for
15
damages, such that it has to share its liability with individual defendants. Rather,
such inclusion is based on the allegations of fraud and bad faith on the part of the
corporate officer or stockholder. These allegations may warrant the piercing of the
veil of corporate fiction, so that the said individual may not seek refuge therein, but
may be held individually and personally liable for his or her actions.
In Tramat Mercantile v. Court of Appeals,22 the Court held that generally, it should
only be the corporation that could properly be held liable. However, circumstances
may warrant the inclusion of the personal liability of a corporate director, trustee, or
officer, if the said individual is found guilty of bad faith or gross negligence in
directing corporate affairs.
Remo Jr. v. IAC23 has stressed that while a corporation is an entity separate and
distinct from its stockholders, the corporate fiction may be disregarded if "used to
defeat public convenience, justify a wrong, protect fraud, or defend crime." In these
instances, "the law will regard the corporation as an association of persons, or in case
of two corporations, will merge them into one." Thus, there is no debate on whether,
in alleging bad faith on the part of Lim and Mariano the counterclaims had in effect
made them "indispensable parties" thereto; based on the alleged facts, both are
clearly parties in interest to the counterclaim.24  counterclaim against him on the ground of lack of jurisdiction. While it is a
Respondents further assert that "Messrs. Lim and Mariano cannot be held personally
liable [because their assailed acts] are within the powers granted to them by the
proper board resolutions; therefore, it is not a personal decision but rather that of the
corporation as represented by its board of directors."25 The foregoing assertion,
however, is a matter of defense that should be threshed out during the trial; whether
or not "fraud" is extant under the circumstances is an issue that must be established
by convincing evidence.26  both Mobil and Cardenas and that the latter had adopted as his answer the
Suability and liability are two distinct matters. While the Court does rule that the
counterclaims against Respondent CCC's president and manager may be properly
filed, the determination of whether both can in fact be held jointly and severally
liable with respondent corporation is entirely another issue that should be ruled upon
by the trial court.
However, while a compulsory counterclaim may implead persons not parties to the
original complaint, the general rule -- a defendant in a compulsory counterclaim need
not file any responsive pleading, as it is deemed to have adopted the allegations in
the complaint as its answer -- does not apply. The filing of a responsive pleading is
deemed a voluntary submission to the jurisdiction of the court; a new party
impleaded by the plaintiff in a compulsory counterclaim cannot be considered to
have automatically and unknowingly submitted to the jurisdiction of the court. A
contrary ruling would result in mischievous consequences whereby a party may be
indiscriminately impleaded as a defendant in a compulsory counterclaim; and
judgment rendered against it without its knowledge, much less participation in the
proceedings, in blatant disregard of rudimentary due process requirements.
The correct procedure in instances such as this is for the trial court, per Section 12 of
Rule 6 of the Rules of Court, to "order [such impleaded parties] to be brought in as
defendants, if jurisdiction over them can be obtained," by directing that summons be
served on them. In this manner, they can be properly appraised of and answer the
charges against them. Only upon service of summons can the trial court obtain
jurisdiction over them.
In Sapugay, Cardenas was furnished a copy of the Answer with Counterclaim, but he
did not file any responsive pleading to the counterclaim leveled against him.
Nevertheless, the Court gave due consideration to certain factual circumstances,
particularly the trial court's treatment of the Complaint as the Answer of Cardenas to
the compulsory counterclaim and of his seeming acquiescence thereto, as evidenced
by his failure to make any objection despite his active participation in the
proceedings. It was held thus:
"It is noteworthy that Cardenas did not file a motion to dismiss the
settled rule that the issue of jurisdiction may be raised even for the first time
on appeal, this does not obtain in the instant case. Although it was only
Mobil which filed an opposition to the motion to declare in default, the fact
that the trial court denied said motion, both as to Mobil and Cardenas on the
ground that Mobil's complaint should be considered as the answer to
petitioners' compulsory counterclaim, leads us to the inescapable conclusion
that the trial court treated the opposition as having been filed in behalf of
allegations raised in the complaint of Mobil. Obviously, it was this
ratiocination which led the trial court to deny the motion to declare Mobil
and Cardenas in default. Furthermore, Cardenas was not unaware of said
incidents and the proceedings therein as he testified and was present during
trial, not to speak of the fact that as manager of Mobil he would necessarily
be interested in the case and could readily have access to the records and the
pleadings filed therein.
"By adopting as his answer the allegations in the complaint which seeks
affirmative relief, Cardenas is deemed to have recognized the jurisdiction of
the trial court over his person and submitted thereto. He may not now be
heard to repudiate or question that jurisdiction."27 
Such factual circumstances are unavailing in the instant case. The records
do not show that Respondents Lim and Mariano are either aware of the
counterclaims filed against them, or that they have actively participated in
16
 the proceedings involving them. Further, in dismissing the counterclaims
against the individual respondents, the court a quo -- unlike in Sapugay --
cannot be said to have treated Respondent CCC's Motion to Dismiss as
having been filed on their behalf.
Rules on Permissive Joinder of Causes
of Action or Parties Not Applicable
Respondent CCC contends that petitioners' counterclaims violated the rule on joinder
of causes of action. It argues that while the original Complaint was a suit for specific
performance based on a contract, the counterclaim for damages was based on the
tortuous acts of respondents.28 In its Motion to Dismiss, CCC cites Section 5 of Rule
2 and Section 6 of Rule 3 of the Rules of Civil Procedure, which we quote:
"Section 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:
(a) The party joining the causes of action shall comply with the rules on
joinder of parties; x x x"
Section 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."
The foregoing procedural rules are founded on practicality and convenience. They
are meant to discourage duplicity and multiplicity of suits. This objective is negated
by insisting -- as the court a quo has done -- that the compulsory counterclaim for
damages be dismissed, only to have it possibly re-filed in a separate proceeding.
More important, as we have stated earlier, Respondents Lim and Mariano are real
parties in interest to the compulsory counterclaim; it is imperative that they be joined
therein. Section 7 of Rule 3 provides:
"Compulsory joinder of indispensable parties. – Parties in interest without whom no
final determination can be had of an action shall be joined either as plaintiffs or
defendants."
Moreover, in joining Lim and Mariano in the compulsory counterclaim, petitioners
are being consistent with the solidary nature of the liability alleged therein.
Second Issue:
CCC's Personality to Move to Dismiss the Compulsory Counterclaims
Characterizing their counterclaim for damages against Respondents CCC, Lim and
Mariano as "joint and solidary," petitioners prayed:
"WHEREFORE, it is respectfully prayed that after trial judgment be
rendered:
"1. Dismissing the complaint in its entirety;
"2. Ordering the plaintiff, Gregory T. Lim and Anthony A. Mariano jointly
and solidarily to pay defendant actual damages in the sum of at least
P2,700,000.00;
"3. Ordering the plaintiff, Gregory T. Lim and Anthony A, Mariano jointly
and solidarily to pay the defendants LPI, LCLC, COC and Roseberg:
"a. Exemplary damages of P100 million each;
"b. Moral damages of P100 million each; and
"c. Attorney's fees and costs of suit of at least P5 million each.
Other reliefs just and equitable are likewise prayed for."29 
Obligations may be classified as either joint or solidary. "Joint" or "jointly" or
"conjoint" means mancum or mancomunada or pro rata obligation; on the other hand,
"solidary obligations" may be used interchangeably with "joint and several" or
"several." Thus, petitioners' usage of the term "joint and solidary" is confusing and
ambiguous.
The ambiguity in petitioners' counterclaims notwithstanding, respondents' liability, if
proven, is solidary. This characterization finds basis in Article 1207 of the Civil
Code, which provides that obligations are generally considered joint, except when
otherwise expressly stated or when the law or the nature of the obligation requires
solidarity. However, obligations arising from tort are, by their nature, always
17
solidary. We have assiduously maintained this legal principle as early as 1912 in
Worcester v. Ocampo,30 in which we held:
"x x x The difficulty in the contention of the appellants is that they fail to
recognize that the basis of the present action is tort. They fail to recognize
the universal doctrine that each joint tort feasor is not only individually
liable for the tort in which he participates, but is also jointly liable with his
tort feasors. x x x
"It may be stated as a general rule that joint tort feasors are all the persons
who command, instigate, promote, encourage, advise, countenance,
cooperate in, aid or abet the commission of a tort, or who approve of it after
it is done, if done for their benefit. They are each liable as principals, to the
same extent and in the same manner as if they had performed the wrongful
act themselves. x x x
"Joint tort feasors are jointly and severally liable for the tort which they
commit. The persons injured may sue all of them or any number less than
all. Each is liable for the whole damages caused by all, and all together are
jointly liable for the whole damage. It is no defense for one sued alone, that
the others who participated in the wrongful act are not joined with him as
defendants; nor is it any excuse for him that his participation in the tort was
insignificant as compared to that of the others. x x x
"Joint tort feasors are not liable pro rata. The damages can not be
apportioned among them, except among themselves. They cannot insist
upon an apportionment, for the purpose of each paying an aliquot part. They
are jointly and severally liable for the whole amount. x x x
"A payment in full for the damage done, by one of the joint tort feasors, of
course satisfies any claim which might exist against the others. There can be
but satisfaction. The release of one of the joint tort feasors by agreement
generally operates to discharge all. x x x
"Of course the court during trial may find that some of the alleged tort
feasors are liable and that others are not liable. The courts may release some
for lack of evidence while condemning others of the alleged tort feasors.
And this is true even though they are charged jointly and severally."
In a "joint" obligation, each obligor answers only for a part of the whole liability; in a
"solidary" or "joint and several" obligation, the relationship between the active and
the passive subjects is so close that each of them must comply with or demand the
fulfillment of the whole obligation.31 The fact that the liability sought against the
CCC is for specific performance and tort, while that sought against the individual
respondents is based solely on tort does not negate the solidary nature of their
liability for tortuous acts alleged in the counterclaims. Article 1211 of the Civil Code
is explicit on this point:
"Solidarity may exist although the creditors and the debtors may not be
bound in the same manner and by the same periods and conditions."
The solidary character of respondents' alleged liability is precisely why credence
cannot be given to petitioners' assertion. According to such assertion, Respondent
CCC cannot move to dismiss the counterclaims on grounds that pertain solely to its
individual co-debtors.32 In cases filed by the creditor, a solidary debtor may invoke
defenses arising from the nature of the obligation, from circumstances personal to it,
or even from those personal to its co-debtors. Article 1222 of the Civil Code
provides:
"A solidary debtor may, in actions filed by the creditor, avail itself of all
defenses which are derived from the nature of the obligation and of those
which are personal to him, or pertain to his own share. With respect to those
which personally belong to the others, he may avail himself thereof only as
regards that part of the debt for which the latter are responsible." (Emphasis
supplied).
The act of Respondent CCC as a solidary debtor -- that of filing a motion to dismiss
the counterclaim on grounds that pertain only to its individual co-debtors -- is
therefore allowed.
However, a perusal of its Motion to Dismiss the counterclaims shows that
Respondent CCC filed it on behalf of Co-respondents Lim and Mariano; it did not
pray that the counterclaim against it be dismissed. Be that as it may, Respondent
CCC cannot be declared in default. Jurisprudence teaches that if the issues raised in
the compulsory counterclaim are so intertwined with the allegations in the complaint,
such issues are deemed automatically joined.33 Counterclaims that are only for
damages and attorney's fees and that arise from the filing of the complaint shall be
considered as special defenses and need not be answered.34 
CCC's Motion to Dismiss the Counterclaim on Behalf of Respondents Lim and
Mariano Not Allowed
While Respondent CCC can move to dismiss the counterclaims against it by raising
grounds that pertain to individual defendants Lim and Mariano, it cannot file the
same Motion on their behalf for the simple reason that it lacks the requisite authority
to do so. A corporation has a legal personality entirely separate and distinct from that
of its officers and cannot act for and on their behalf, without being so authorized.
Thus, unless expressly adopted by Lim and Mariano, the Motion to Dismiss the
18
compulsory counterclaim filed by Respondent CCC has no force and effect as to
them.
In summary, we make the following pronouncements:
1. The counterclaims against Respondents CCC, Gregory T. Lim and
Anthony A. Mariano are compulsory.
2. The counterclaims may properly implead Respondents Gregory T. Lim
and Anthony A. Mariano, even if both were not parties in the original
Complaint.
3. Respondent CCC or any of the three solidary debtors (CCC, Lim or
Mariano) may include, in a Motion to Dismiss, defenses available to their
co-defendants; nevertheless, the same Motion cannot be deemed to have
been filed on behalf of the said co-defendants.
4. Summons must be served on Respondents Lim and Mariano before the
trial court can obtain jurisdiction over them.
WHEREFORE, the Petition is GRANTED and the assailed Orders REVERSED. The
court of origin is hereby ORDERED to take cognizance of the counterclaims pleaded
in petitioners' Answer with Compulsory Counterclaims and to cause the service of
summons on Respondents Gregory T. Lim and Anthony A. Mariano. No costs.
SO ORDERED.
G.R. No. 147394. August 11, 2004.*
SPOUSES MANUEL and ROSEMARIE WEE, petitioners, vs. ROSARIO D.
GALVEZ, respondent.
Actions; Civil Procedure; Forum Shopping; Pleadings and
Practice; Pursuant to Administrative Circular No. 04-94, which extended the
requirement of a certification on non-forum shopping to all initiatory pleadings filed
in all courts and quasi-judicial agencies, as well as Rule 7, Section 5 of the 1997
Rules of Civil Procedure, “all papers, documents, and pleadings” an attorney-in-
fact was authorized and empowered to sign, must necessarily include the
certification on non-forum shopping; To conclude otherwise would render nugatory
the special power of attorney and also render the constitution of an attorney-in-fact
inutile.—It is indisputable that Grace Galvez, as attorney-in-fact of the respondent,
was duly authorized and empowered not just to initiate complaints, whether criminal
or civil, to enforce and protect the respondent’s rights, claims, and interests in this
jurisdiction, but is specifically authorized to sign all “papers, documents, and
pleadings” necessarily connected with the filing of a complaint. Pursuant to
Administrative Circular No. 04-94, which extended the requirement of a certification
on non-forum shopping to all initiatory pleadings filed in all courts and quasi-judicial
agencies, as well as Rule 7, Section 5 of the 1997 Rules of Civil Procedure, the
aforementioned papers and documents, which Grace Galvez was authorized and
empowered to sign, must necessarily include the certification on non-forum
shopping. To conclude otherwise would render nugatory the Special Power of
Attorney and also render respondent’s constitution of an attorney-in-fact inutile.
Same; Same; Same; Same; The rationale against forum shopping is that a
party should not be allowed to pursue simultaneous remedies in two different fora;
Filing multiple petitions or complaints constitutes abuse of court processes, which
tends to degrade the administration of justice, wreaks havoc upon orderly judicial
procedure, and adds to the congestion of the heavily burdened dockets of the courts.
—Forum shopping “occurs when a party attempts to have his action tried in a
particular court or jurisdiction where he feels he will receive the most favorable
judgment or verdict.” In our jurisdiction, it has taken the form of filing multiple
petitions or complaints involving the same issues before two or more tribunals or
agencies in the hope that one or the other court would make a favorable disposition.
There is also forum shopping when, because of an adverse decision in one forum, a
party seeks a favorable opinion (other than by appeal or certiorari) in another. The
rationale against forum shopping is that a party should not be allowed to pursue
simultaneous remedies in two 
_______________
*
 FIRST DIVISION.
97
VOL. 436, AUGUST 11, 2004 97
Wee vs. Galvez
different fora. Filing multiple petitions or complaints constitutes abuse of court
processes, which tends to degrade the administration of justice, wreaks havoc upon
orderly judicial procedure, and adds to the congestion of the heavily burdened
dockets of the courts. Thus, the rule proscribing forum shopping seeks to promote
candor and transparency among lawyers and their clients in the pursuit of their cases
before the courts to promote the orderly administration of justice, prevent undue
inconvenience upon the other party, and save the precious time of the courts. It also
aims to prevent the embarrassing situation of two or more courts or agencies
rendering conflicting resolutions or decisions upon the same issue. It is in this light
that we must look at the propriety and correctness of the Certificate of Non-Forum
Shopping signed by Grace Galvez on the respondent’s behalf. We have examined
said Certificateand find that under the circumstances, it does not negate but instead
serves the purpose of the rule against forum shopping, namely to promote and
facilitate the orderly administration of justice.
Same; Same; Same; Same; The certification of non-forum shopping should be
signed by the petitioner or principal party himself who has actual knowledge of
whether or not he has initiated similar actions or proceedings in different courts or
19
agencies.—Rule 7, Section 5 of the Rules of Court, requires that the certification
should be signed by the “petitioner or principal party” himself. The rationale behind
this is “because only the petitioner himself has actual knowledge of whether or not
he has initiated similar actions or proceedings in different courts or agencies.”
However, the rationale does not apply where, as in this case, it is the attorney-in-fact
who instituted the action. The Special Power of Attorney in this instance was
constituted precisely to authorize Grace Galvez to file and prosecute suits on behalf
of respondent, who was no longer resident of the Philippines but of New York,
U.S.A. As respondent points out, it is Grace Galvez, as attorney-in-fact for her, who
has actual and personal knowledge whether she initiated similar actions or
proceedings before various courts on the same issue on respondent’s behalf. Said
circumstance constitutes reasonable cause to allow the attorney-in-fact, and not the
respondent, as plaintiff in Civil Case No. Q-99-37372 to personally sign the
Certificate of Non-Forum Shopping. Under the circumstances of this case, we hold
that there has been proper compliance with the rule proscribing forum shopping.
Same; Same; Same; Same; The rule requiring a certification of non-forum
shopping to accompany every initiatory pleading should not be interpreted with such
absolute literalness as to subvert its own ultimate and legitimate objective or the
goal of all rules of procedure—which is to achieve substantial justice as
expeditiously as possible.—Administrative Circular No. 04-94 is now incorporated
in the 1997 Rules of Civil Procedure, as Rule 7, Section 5. It is basic that the Rules
“shall be liberally construed in  earnest
98
98 SUPREME COURT REPORTS ANNOTATED
Wee vs. Galvez
order to promote their objective of securing a just, speedy and inexpensive
disposition of every action and proceeding.” Otherwise put, the rule requiring a
certification of forum shopping to accompany every initiatory pleading, “should not
be interpreted with such absolute literalness as to subvert its own ultimate and
legitimate objective or the goal of all rules of procedure—which is to achieve
substantial justice as expeditiously as possible.”
Family Code; Compromise Agreements; The attempt to compromise as well
as its failure or inability to succeed is a condition precedent to the filing of a suit
between members of the same family.—Under Article 151 of the Family Code, a suit
between members of the same family shall not be entertained, unless it is alleged in
the complaint or petition that the disputants have made earnest efforts to resolve their
differences through compromise, but these efforts have not succeeded. The attempt
to compromise as well as its failure or inability to succeed is a condition precedent to
the filing of a suit between members of the same family. Rule 8, Section 3 of the
1997 Rules of Civil Procedure provides that conditions precedent may be generally
averred in the pleadings. Applying the foregoing to the instant case, we have to ask:
Is there a sufficient general averment of the condition precedent required by the
Family Code in the Amended Complaint in Civil Case No. Q-99-37372?
Same; Same; The sentence “earnest efforts towards have been made but the
same have failed” may be incomplete or even grammatically incorrect, a lacking
word like “compromise” could be supplied by the rest of the paragraph which must
necessarily be construed in its entirety in order to properly derive the message
sought to be conveyed.—Our examination of paragraph 9-A of the Amended
Complaint shows that respondent has complied with this requirement of a general
averment. It is true that the lead sentence of paragraph 9-A, which reads “Earnest
efforts towards have been made but the same have failed” may be incomplete or even
grammatically incorrect as there might be a missing word or phrase, but to our mind,
a lacking word like “compromise” could be supplied by the rest of the paragraph. A
paragraph is “a distinct section or subdivision of a written or printed composition
that consists of from one to many sentences, forms a rhetorical unit (as by dealing
with a particular point of the subject or by comprising the words of a distinct
speaker).” As a “short composition consisting of a group of sentences dealing with a
single topic,” a paragraph must necessarily be construed in its entirety in order to
properly derive the message sought to be conveyed. In the instant case, paragraph 9-
A of the Amended Complaint deals with the topic of efforts made by the respondent
to reach a compromise between the parties. Hence, it is in this light that the defective
lead sentence must be understood or construed. Contrary to what petitioners claim,
there is no need for guesswork or complicated deductions in order to derive the point
sought to be made by respondent in paragraph 9-A of the Amended Complaint, that
 
99
VOL. 436, AUGUST 11, 2004 99
Wee vs. Galvez
efforts to compromise the differences between the disputants were made but to
no avail. The petitioners’ stance that the defective sentence in paragraph 9-A of the
Amended Complaint fails to state a cause of action, thus, has no leg to stand on.
Having examined the Amended Complaint in its entirety as well as the documents
attached thereto, following the rule that documents attached to a pleading are
considered both as evidence and as part of the pleading, we find that the respondent
has properly set out her cause of action in Civil Case No. Q-99-37372.
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.
     Gil Venerando R. Racho for petitioners.
     Gatmaytan Law Office for private respondent.
QUISUMBING, J.:
For review is the Decision1 dated December 4, 2000 of the Court of Appeals in CA-
G.R. SP No. 55415, which denied special civil action for certiorari, prohibition, and
mandamus filed by petitioners Manuel and Rosemarie Wee. In said petition, the
20
Wees sought to (1) annul and set aside the Order dated July 29, 1999 of the Regional
Trial Court (RTC) of Quezon City, Branch 80, denying their prayer to dismiss Civil
Case No. Q-99-37372, as well as the Order of September 20, 1999 denying their
motion for reconsideration; (2) order the trial court to desist from further proceedings
in Civil Case No. Q-99-37372; and (3) order the trial court to dismiss the said action.
Also assailed by the Wees is the Resolution2 of the Court of Appeals, promulgated
March 7, 2001, denying their motion for reconsideration.
The antecedent facts in this case are not complicated.
In accordance with her agreement with Rosario, Rosemarie gave Manolito his
monthly allowance ranging from P2,000 to P4,000 a month from 1993 to January
1999. However, sometime in 1995, Rosario asked for the return of the US$20,000
and for an accounting. Rosemarie promised to comply with the demand but failed to
do so.
In January 1999, Rosario, through her attorney-in-fact, Grace Galvez, sent
Rosemarie a written demand for her US$20,000 and an accounting. Again,
Rosemarie ignored the demand, thus causing Rosario to file suit.

Petitioner Rosemarie Wee and respondent Rosario D. Galvez are sisters. 3 Rosemarie
lives with her husband, petitioner Manuel Wee, in Balanga, Bataan, while Rosario
resides in New York, U.S.A. The present controversy stemmed from an investment
agreement between the two sisters, which had gone sour along the way.
On April 20, 1999, Rosario, represented by Grace Galvez as her attorney-in-fact,
filed a complaint before the RTC of Quezon City to collect a sum of money from
Manuel and Rosemarie Wee. The amount for collection was US$20,000 at the
exchange rate of P38.30 per dollar. The complaint, which was docketed as Civil Case
No. Q-99-37372, alleged that Rosario and Rosemarie entered into an agreement
whereby Rosario would send Rosemarie US$20,000, half of said amount to be
deposited in a savings account while the balance could be invested in the money
market. The interest to be earned therefrom would be given to Rosario's son,
Manolito Galvez, as his allowance.
Rosario claimed that pursuant to their agreement, she sent to Rosemarie on various
dates in 1993 and 1994, five (5) Chemical Bank checks, namely:
CHECK No. DATE
CB No. 97  5/24/93 US$1,550.00
CB No. 101  6/11/93
CB No. 104 11/12/93
CB No. 105 2/1/94
CB No. 123 3/3/94
TOTAL US$20,050.00
Rosario further alleged that all of the aforementioned checks were deposited and
encashed by Rosemarie, except for the first check, Chemical Bank Check No. 97,
which was issued to one Zenedes Mariano, who gave the cash equivalent of
US$2,000 to Rosemarie.
On May 18, 1999, the Wees moved to dismiss Civil Case No. Q-99-37372 on the
following grounds: (1) the lack of allegation in the complaint that earnest efforts
toward a compromise had been made in accordance with Article 1515 of the Family
Code; (2) failure to state a valid cause of action, the action being premature in the
absence of previous earnest efforts toward a compromise; and (3) the certification
against forum shopping was defective, having been executed by an attorney-in-fact
and not the plaintiff, as required by Rule 7, Section 56 of the 1997 Rules of Civil
Procedure.
Conformably with Rule 10, Sections 17 and 38 of the 1997 Rules of Civil Procedure,
Rosario amended her complaint with the addition of the following paragraph:
9-A. Earnest efforts towards (sic) have been made but the same have failed.
As a matter of fact, plaintiff thru her daughter as Attorney-In-Fact caused
the sending of a Demand Letter dated January 4, 1999 and the last
paragraph of which reads as follows:
...
AMOUNT
Trusting this will merit your utmost preferential attention and
consideration in as much as you and our client are sisters and in
10,000.00 order that [earnest] efforts toward a compromise could be
5,500.00 obtained.9 
2,000.00
The Wees opposed Rosario's motion to have the Amended Complaint admitted. They
1,000.00 contended that said motion was a mere scrap of paper for being in violation of the
three-day notice requirement of Rule 15, Section 410 of the 1997 Rules of Civil
Procedure and for having the notice of hearing addressed to the Clerk of Court and
not to the adverse party as required by Section 511 of the same Rule.
On July 29, 1999, the trial court came out with an Order denying the Wees' motion to
dismiss for being "moot and academic," thus:

21
 WHEREFORE, premises considered, the amended complaint is hereby
admitted. Defendant-spouses are hereby directed to file their Answer within
the reglementary period provided by the Rules of Court.
SO ORDERED.12  We shall now resolve these issues seriatim.
The Wees duly moved for reconsideration, but the motion was denied on September
20, 1999, for lack of merit.
On October 18, 1999, the Wee couple brought the matter to the Court of Appeals via
a special civil action for certiorari, prohibition, and mandamus, docketed as CA-G.R.
SP No. 55415. The petition assailed the trial court for having acted with grave abuse
of discretion amounting to lack or excess of jurisdiction for issuing the interlocutory
orders of July 29, 1999 and September 20, 1999, instead of dismissing Civil Case
No. Q-99-37372 outright.
On December 4, 2000, the appellate court decided CA-G.R. SP No. 55415 in this
wise:
WHEREFORE, the instant petition for certiorari, prohibition and mandamus
is DENIED.
SO ORDERED.13  G.R. SP No. 55415 did not dispose of the case on the merits, as the orders of the trial
The Court of Appeals held that the complaint in Civil Case No. Q-99-37372, as
amended, sufficiently stated a cause of action. It likewise held that the questioned
certification against forum shopping appended thereto was not so defective as to
warrant the dismissal of the complaint.
On January 9, 2001, the petitioners herein moved for reconsideration of the appellate
court's decision, but this was denied on March 7, 2001.
Hence, the instant petition, raising the following issues:
1. WHETHER OR NOT THE INSTANT PETITION FOR REVIEW ON
CERTIORARI UNDER RULE 45 OF THE REVISED RULES OF COURT
IS THE PROPER REMEDY FOR PETITIONERS UPON THE DENIAL
OF THEIR PETITION FOR CERTIORARI, PROHIBITION AND
MANDAMUS BY THE COURT OF APPEALS;
2. WHETHER OR NOT THE CERTIFICATION OF NON-FORUM
SHOPPING EXECUTED BY THE PLAINTIFF'S ATTORNEY-IN-FACT
IS DEFECTIVE; AND
3. WHETHER OR NOT THE AMENDED COMPLAINT BEFORE THE
REGIONAL TRIAL COURT SUFFICIENTLY STATES A CAUSE OF
ACTION AGAINST THE DEFENDANTS.14 
On the first issue, the petitioners argue that the present appeal by certiorari filed with
this Court assailing the dismissal of their special civil action for certiorari,
prohibition, and mandamus by the appellate court is meritorious. After all, according
to petitioners, a petition for review under Rule 45, Section 1,15 of the 1997 Rules of
Civil Procedure could be brought before us, regardless of whether the assailed
decision of the appellate court involves an appeal on the merits from the trial court's
judgment or the dismissal of a special civil action questioning an interlocutory order
of the trial court. What is important under Rule 45, Section 1, is that the assailed
decision of the appellate court is final and that the petition before this Court should
raise only questions of law.
Respondent, in turn, point out that the dismissal by the Court of Appeals of herein
petitioners' special civil action for certiorari, prohibition, and mandamus in CA-G.R.
SP No. 55415 is not the final judgment or order, which could be the subject of an
appeal by certiorari under Rule 45. This is because, according to respondent,
certiorari as a mode of appeal involves the review of a judgment, final order, or
award on the merits. Respondent contends that the appellate court's ruling in CA-
court subject of CA-G.R. SP No. 55415 were all interlocutory. In other words, the
ruling of the appellate court did not put an end to Civil Case No. Q-99-37372, which
is still pending before the trial court. Hence, a petition for review on certiorari will
not lie to assail the judgment of the Court of Appeals in CA-G.R. SP No. 55415,
according to respondent.
We find no basis for respondent's contention that the decision of the Court of
Appeals in CA-G.R. SP No. 55415, dismissing the petitioners' special civil action
for certiorari, prohibition, and mandamus is interlocutory in nature. The CA's
decision on said petition is final for it disposes of the original action for certiorari,
prohibition, and mandamus directed against the interlocutory orders of the trial court
in Civil Case No. Q-99-37372. In other words, having dismissed the said action,
there is nothing more left to be done in CA-G.R. SP No. 55415 as far as the appellate
court is concerned.
Nor can we sustain respondent's argument that the appellate court's decision in CA-
G.R. SP No. 55415 is not on the merits. In special civil actions for certiorari, such as
CA-G.R. SP No. 55415, the only issue before the appellate court is whether the
lower court acted without or in excess of jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction. Stated differently, in a
22
certiorari petition the appellate court is not tasked to adjudicate the merits of the
respondent's claims before the trial court. Resolving such claims on the merits
remains the proper province of the trial court in Civil Case No. Q-99-37372. The
appellate court properly ruled in CA-G.R. SP No. 55415 that the trial court
committed no grave abuse of discretion amounting to lack or excess of jurisdiction
so as to warrant the issuance of writs of certiorari, prohibition, and mandamus that
petitioners sought. In so limiting itself to and addressing squarely only the issue of
grave abuse of discretion or lack or excess of jurisdiction, the Court of Appeals, in
CA-G.R. SP No. 55415, precisely decided the matter on the merits. In other words, it
found that the special civil action of petitioners before it had no merit.
Now, as to whether the Court of Appeals decided the matter in CA-G.R. SP No.
55415 in a manner contrary to law or established jurisprudence remains precisely for
us to determine in this review on certiorari. Considering the factual and procedural
circumstances of this case, the present petition is petitioners' proper remedy to
challenge the appellate court's judgment in CA-G.R. SP No. 55415 now.
Anent the second issue, the petitioners aver that the Court of Appeals gravely erred
in finding that the certification against forum shopping in Civil Case No. Q-99-
37372 was valid, notwithstanding that it was not the plaintiff below, Rosario D.
Galvez, who executed and signed the same, but her attorney-in-fact, Grace Galvez.
Petitioners insist that there was nothing in the special power of attorney executed by
Rosario D. Galvez in favor of Grace Galvez, which expressly conferred upon the
latter the authority to execute and sign, on behalf of the former, the certificate of
non-forum shopping. Petitioners point out that under Rule 7, Section 5 of the 1997
Rules of Civil Procedure, it is the "plaintiff" or "principal party" who must sign the
certification. They rely on our ruling in BA Savings Bank v. Sia,16 that where the
parties in an action are natural persons, the party himself is required to sign the
certification, and where a representative is allowed in case of artificial persons, he
must be specifically authorized to execute and sign the certification. The petitioners
stress that Rosario D. Galvez failed to show any justifiable reason why her attorney-
in-fact should be the one to sign the certification against forum shopping, instead of
herself as the party, as required by Santos v. Court of Appeals.17  documents, and pleadings" necessarily connected with the filing of a complaint.
Respondent counters that petitioners' contention has no basis. The Special Power of
Attorney executed by her in favor of Grace Galvez, if subjected to careful scrutiny
would clearly show that the authority given to the latter is not only broad but also all
encompassing, according to respondent. By virtue of said document, Grace Galvez is
given the power and authority to institute both civil and criminal actions against any
person, natural or juridical, who may be obliged or answerable to the respondent.
Corollary with this power is the authority to sign all papers, documents, and
pleadings necessary for the accomplishment of the said purpose. Respondent
likewise stresses that since Grace Galvez is the one authorized to file any action in
the Philippines on behalf of her principal, she is in the best position to know whether
there are other cases involving the same parties and the same subject matter
instituted with or pending before any other court or tribunal in this jurisdiction.
Moreover, as an attorney-in-fact, Grace Galvez is deemed to be a party, pursuant to
Rule 3, Section 318 of the 1997 Rules of Civil Procedure. Hence, petitioners'
argument that Grace Galvez is not specifically authorized to execute and sign the
certification of non-forum shopping deserves scant consideration.
We find for the respondent. Noteworthy, respondent in the instant case is already a
resident of the United States, and not of the Philippines. Hence, it was proper for her
to appoint her daughter, Grace Galvez, to act as her attorney-in-fact in the
Philippines. The Special Power of Attorney granted by the respondent to her
attorney-in-fact, Grace Galvez, categorically and clearly authorizes the latter to do
the following:
1. To ask, demand and claim any sum of money that is duly [due] from any
person natural, juridical and/or corporation in the Philippines;
2. To file criminal and/or civil complaints before the courts of justice in the
Philippines to enforce my rights and interest[s];
3. To attend hearings and/or Preliminary Conference[s], to make
stipulations, adjust claims, to settle and/or enter into Compromise
Agreement[s], to litigate and to terminate such proceedings; [and]
4. To sign all papers, documents and pleadings necessary for the
accomplishment of the above purposes.19 
From the foregoing, it is indisputable that Grace Galvez, as attorney-in-fact of the
respondent, was duly authorized and empowered not just to initiate complaints,
whether criminal or civil, to enforce and protect the respondent's rights, claims, and
interests in this jurisdiction, but is specifically authorized to sign all "papers,
Pursuant to Administrative Circular No. 04-94,20 which extended the requirement of a
certification on non-forum shopping to all initiatory pleadings filed in all courts and
quasi-judicial agencies,21 as well as Rule 7, Section 5 of the 1997 Rules of Civil
procedure, the aforementioned papers and documents, which Grace Galvez was
authorized and empowered to sign, must necessarily include the certification on non-
forum shopping. To conclude otherwise would render nugatory the Special Power of
Attorney and also render respondent's constitution of an attorney-in-fact inutile.
Forum shopping "occurs when a party attempts to have his action tried in a particular
court or jurisdiction where he feels he will receive the most favorable judgment or
verdict."22 In our jurisdiction, it has taken the form of filing multiple petitions or
complaints involving the same issues before two or more tribunals or agencies in the
23
hope that one or the other court would make a favorable disposition.23 There is also
forum shopping when, because of an adverse decision in one forum, a party seeks a
favorable opinion (other than by appeal or certiorari) in another.24 The rationale
against forum shopping is that a party should not be allowed to pursue simultaneous
remedies in two different fora. Filing multiple petitions or complaints constitutes
abuse of court processes,25 which tends to degrade the administration of justice,
wreaks havoc upon orderly judicial procedure, and adds to the congestion of the
heavily burdened dockets of the courts.26 Thus, the rule proscribing forum shopping
seeks to promote candor and transparency among lawyers and their clients in the
pursuit of their cases before the courts to promote the orderly administration of
justice, prevent undue inconvenience upon the other party, and save the precious
time of the courts. It also aims to prevent the embarrassing situation of two or more
courts or agencies rendering conflicting resolutions or decisions upon the same
issue.27 It is in this light that we must look at the propriety and correctness of the
Certificate of Non-Forum Shopping signed by Grace Galvez on the respondent's
behalf. We have examined said Certificate28 and find that under the circumstances, it
does not negate but instead serves the purpose of the rule against forum shopping,
namely to promote and facilitate the orderly administration of justice.
Rule 7, Section 5 of the Rules of Court, requires that the certification should be
signed by the "petitioner or principal party" himself. The rationale behind this is
"because only the petitioner himself has actual knowledge of whether or not he has
initiated similar actions or proceedings in different courts or agencies." 29 However,
the rationale does not apply where, as in this case, it is the attorney-in-fact who
instituted the action. The Special Power of Attorney in this instance was constituted
precisely to authorize Grace Galvez to file and prosecute suits on behalf of
respondent, who was no longer resident of the Philippines but of New York, U.S.A.
As respondent points out, it is Grace Galvez, as attorney-in-fact for her, who has
actual and personal knowledge whether she initiated similar actions or proceedings
before various courts on the same issue on respondent's behalf. Said circumstance
constitutes reasonable cause to allow the attorney-in-fact, and not the respondent, as
plaintiff in Civil Case No. Q-99-37372 to personally sign the Certificate of Non-
Forum Shopping. Under the circumstances of this case, we hold that there has been
proper compliance with the rule proscribing forum shopping. As we previously held
concerning Administrative Circular No. 04-94:
The fact that the Circular requires that it be strictly complied with merely
underscores its mandatory nature in that it cannot be dispensed with or its
requirements altogether disregarded, but it does not thereby interdict
substantial compliance with its provisions under justifiable circumstances. 30  a lacking word like "compromise" could be supplied by the rest of the paragraph. A
Administrative Circular No. 04-94 is now incorporated in the 1997 Rules of Civil
Procedure, as Rule 7, Section 5. It is basic that the Rules "shall be liberally construed
in order to promote their objective of securing a just, speedy and inexpensive
disposition of every action and proceeding." 31 Otherwise put, the rule requiring a
certification of forum shopping to accompany every initiatory pleading, "should not
be interpreted with such absolute literalness as to subvert its own ultimate and
legitimate objective or the goal of all rules of procedure – which is to achieve
substantial justice as expeditiously as possible."32 
On the third issue, petitioners submit that the amended complaint in Civil Case No.
Q-99-37372 violates Rule 8, Section 133 of the 1997 Rules of Civil Procedure, as
there is no plain and direct statement of the ultimate facts on which the plaintiff
relies for her claim. Specifically, petitioners contend that the allegation in paragraph
9-A34 of the amended complaint that "Earnest efforts towards have been made but the
same have failed" is clearly insufficient. The sentence is incomplete, thus requires
the reader of the pleading to engage in deductions or inferences in order to get a
complete sense of the cause of action, according to petitioners.
Respondent rebuts petitioners' contention by stating that the amended complaint as
well as the annexes attached to the pleadings should be taken in their entirety in
determining whether a cause of action was validly stated in the complaint. Thus
taken together, in their entirety, the amended complaint and the attachments to the
original complaint, clearly show that a sufficient cause of action as it is shown and
stated that earnest efforts towards a compromise have been made, according to
respondent.
Under Article 151 of the Family Code, a suit between members of the same family
shall not be entertained, unless it is alleged in the complaint or petition that the
disputants have made earnest efforts to resolve their differences through
compromise, but these efforts have not succeeded. The attempt to compromise as
well as its failure or inability to succeed is a condition precedent to the filing of a suit
between members of the same family.35 Rule 8, Section 336 of the 1997 Rules of Civil
Procedure provides that conditions precedent may be generally averred in the
pleadings. Applying the foregoing to the instant case, we have to ask: Is there a
sufficient general averment of the condition precedent required by the Family Code
in the Amended Complaint in Civil Case No. Q-99-37372?
We find in the affirmative. Our examination of paragraph 9-A of the Amended
Complaint shows that respondent has complied with this requirement of a general
averment. It is true that the lead sentence of paragraph 9-A, which reads "Earnest
efforts towards have been made but the same have failed" may be incomplete or even
grammatically incorrect as there might be a missing word or phrase, but to our mind,
paragraph is "a distinct section or subdivision of a written or printed composition that
consists of from one to many sentences, forms a rhetorical unit (as by dealing with a
particular point of the subject or by comprising the words of a distinct speaker)." 37 As
a "short composition consisting of a group of sentences dealing with a single
24
topic,"38 a paragraph must necessarily be construed in its entirety in order to properly
derive the message sought to be conveyed. In the instant case, paragraph 9-A of the
Amended Complaint deals with the topic of efforts made by the respondent to reach
a compromise between the parties. Hence, it is in this light that the defective lead
sentence must be understood or construed. Contrary to what petitioners claim, there
is no need for guesswork or complicated deductions in order to derive the point
sought to be made by respondent in paragraph 9-A of the Amended Complaint, that
earnest efforts to compromise the differences between the disputants were made but
to no avail. The petitioners' stance that the defective sentence in paragraph 9-A of the
Amended Complaint fails to state a cause of action, thus, has no leg to stand on.
Having examined the Amended Complaint in its entirety as well as the documents
attached thereto, following the rule that documents attached to a pleading are
considered both as evidence and as part of the pleading,39 we find that the respondent
has properly set out her cause of action in Civil Case No. Q-99-37372.  shopping, specially when majority of the principal parties had signed the same and
WHEREFORE, the instant petition is DENIED for lack of merit. The Decision
dated December 4, 2000 of the Court of Appeals in CA-G.R. SP No. 55415, as well
as its Resolution dated March 7, 2001, are hereby AFFIRMED. Costs against the
petitioners.
SO ORDERED.
G.R. No. 163039. April 6, 2011.*
HEIRS OF FRANCISCO RETUYA, FELICITAS R. PINTOR, HEIRS OF
EPIFANIA R. SEMBLANTE, namely, PREMILINO SEMBLANTE,
LUCIFINA S. TAGALOG, URSULINA S. ALMACEN; HEIRS OF JUAN
RETUYA, namely, BALBINA R. RODRIGUEZ, DOLORES R. RELACION,
SINFOROSA R. BASUBAS, TEOPISTA R. BASUBAS, FERNANDO
RETUYA, BALDOMERO RETUYA, TEOFILO RETUYA, LEONA COLINA,
FIDELA R. RAMIREZ, MARTINA R. ALBAÑO, SEVERINA R. CABAHUG;
HEIRS OF RAFAELA VILLAMOR; ELIZABETH V. ALESNA; HEIRS OF
QUINTIN RETUYA, namely, FELIMON RETUYA, SOFIA RETUYA,
RUDOLFA RETUYA and ELISA RETUYA, petitioners, vs.HONORABLE
COURT OF APPEALS, HON. ULRIC CAÑETE as Presiding Judge of
REGIONAL TRIAL COURT Branch 55, Mandaue City, NICOLAS RETUYA;
HEIRS OF EULOGIO RETUYA, namely, MIGUEL RETUYA, RAMON
RETUYA, GIL RETUYA, PIO RETUYA, MELANIO
_______________
* SECOND DIVISION.
300
300 SUPREME COURT REPORTS ANNOTATED
Heirs of Francisco Retuya vs. Court of Appeals
RETUYA, NICANOR RETUYA, LEONILA RETUYA, AQUILINA RETUYA,
LUTGARDA RETUYA and PROCOPIO VILLANUEVA, respondents.
Remedial Law; Actions; Forum Shopping; Court has in a number of cases
applied the substantial compliance rule on the filing of the certification of non-forum
who shared a common interest; Such leniency finds no applicability in this case
because of petitioners’ dishonesty committed against the appellate court.—As
correctly observed by the CA, while we have in a number of cases applied the
substantial compliance rule on the filing of the certification of non-forum shopping,
specially when majority of the principal parties had signed the same and who shared
a common interest, We agree with the CA that such leniency finds no applicability in
this case because of petitioners’ dishonesty committed against the appellate court. A
perusal of the verification and certification against forum shopping attached to the
petition for annulment of judgment filed in the CA would show that there was a
signature above the typewritten name of Quintin. In fact, written below the signature
of Quintin was Community Tax Certificate (CTC) No. 06570132, issued on January
8, 2003 in Mandaue City. Thus, it would appear that Quintin, who was already dead
at the time the petition was filed, had signed the verification and certification of non-
forum shopping and he was even in possession of a CTC. Petitioners’ actuation
showed their lack of forthrightness to the CA which the latter correctly found to be a
dishonest act committed against it.
Same; Same; Attorneys; Substitution of Counsel; Requirements for a Valid
Substitution of Counsel.—Under Section 26, Rule 138 of the Rules of Court and
established jurisprudence, a valid substitution of counsel has the following
requirements: (1) the filing of a written application for substitution; (2) the client’s
written consent; (3) the consent of the substituted lawyer if such consent can be
obtained; and, in case such written consent cannot be procured, (4) a proof of service
of notice of such motion on the attorney to be substituted in the manner required by
the Rules. In this case, petitioners failed to comply with the above requirements.
PETITION for review on certiorari of the resolutions of the Court of Appeals.301
VOL. 647, APRIL 6, 2011 301
Heirs of Francisco Retuya vs. Court of Appeals
   The facts are stated in the opinion of the Court.
  Steplaw Firm Cebu for petitioners.
  Zosa & Quijano Law Offices for respondents.
PERALTA, J.:
25
 Assailed in this petition for review on certiorari are the Resolutions dated
November 28, 20031 and March 3, 20042of the Court of Appeals (CA) in CA-G.R.
SP No. 76235, which dismissed petitioners’ Petition for Annulment of Judgment and
their Motion for Reconsideration, respectively.
Severo Retuya (Severo) and Maxima Mayol Retuya (Maxima) were husband and
wife without any children. Severo left several parcels of land registered under his
name which are located in Mandaue City, to wit:
“A parcel of land situated in Barangay Tipolo, City of Mandaue, known as Lot
No. 113-U of the Subdivision Plan, Psd -07-016382 being a portion of Lot No. 113,
II-5121 Amd. (Hacienda Mandaue) LRC Rec. 4030, containing an area of Two
Hundred and Eighty-One (281) sq. meters described in the Transfer Certificate of
Title No. 26728 in the Office of the Registry of Land Title and Deeds of Mandaue
City.
A parcel of land located in Barangay Tipolo, Mandaue City, known as Lot No. 5
of the consolidation of Lot No. 122-Q, 122–R,
_______________
1 Penned by Associate Justice Remedios Salazar-Fernando, with Associate
Justices Delilah Vidallon-Magtolis and Edgardo F. Sundiam, concurring: Rollo, pp.
35-36.
2 Id., at pp. 47-50.
302
302 SUPREME COURT REPORTS ANNOTATED
Heirs of Francisco Retuya vs. Court of Appeals
122-S, 122-T, 122-U, 122-V, 122-W, 122-X, 122-U, 122-AA, Psd 07-05-12450,
LRC Rec. No. 4030, containing an area of Five Hundred Seventy-Four (574) sq.
meters, described in the Transfer Certificate of Title No. 25213 of the Office of the
Registry of Land Title and Deeds of Mandaue City.
A parcel of land located in Barangay Tipolo, Mandaue City, known as Lot No.
10 of the consolidation of Lot No. 122-Q, 122-R, 122-S, 122-T, 122-U, 122-V, 122-
W, 122-X, 122-Y and 122-AA, Psd 07-05-12450, LRC Rec. No. 4030, containing an
area of Four Hundred Forty-Two (442) sq. meters, described in the Transfer
Certificate of Title No. 25218 of the Office of the Registry of Land Title and Deeds
of Mandaue City.
A parcel of land, Lot No. 121-1-10 of the subdivision plan, Psd 07-023191, being
a portion of Lot 121-1, LRC Psd. 262374, LRC Rec. No. 4030 located in Banilad,
Mandaue City, containing an area of One Thousand Five Hundred (1,500) sq. meters
described under TCT 32718 of the Registry of Land Title and Deeds of Mandaue
City.
A parcel of land, Lot No. 47-L of the subdivision plan Psd. 07-05-012479, being
a portion of Lot 47-11-5121 Amd Hacienda Mandaue LRC Rec. No. 4030, situated
in Barangay Banilad, Mandaue City, covered by TCT 21687 in the Registry of Land
Titles and Deeds for the City of Mandaue.”3
Some of these parcels of land were covered by a lease contract, the rentals of
which were received by respondents Nicolas Retuya and Procopio Villanueva, while
Lot No. 47-L, covered by TCT No. 21687, was previously sold by the Heirs of
Severo and Maxima Retuya to third persons.
On June 14, 1961, Severo died intestate, survived by his wife Maxima and by
Severo’s full blood brothers and sisters, namely, Nicolas, Francisco, Quintin,
Eulogio, Ruperto, Epifania, Georgia and the Heirs of Juan Retuya (Severo’s brother
who had died earlier), as well as Severo’s half-blood siblings, namely, Romeo,
Leona, Rafaela, Fidela, Severina and Martina.
Sometime in 1971, Maxima also died intestate, survived by her siblings, namely,
Fructuoso, Daniel, Benjamin, Lorenzo, Concepcion and Teofila.
In 1996, Severo and Maxima’s siblings and their nephews and nieces, herein
petitioners, filed with the Regional Trial Court (RTC) of Mandaue City, an
action4 for judicial partition
_______________
3 Records, pp. 2-3.
4 Docketed as Civil Case No. MAN-2602; raffled off to Branch 55.
303
VOL. 647, APRIL 6, 2011 303
Heirs of Francisco Retuya vs. Court of Appeals
of the above-mentioned real properties registered under the names of Severo and
Maxima, and the accounting of the rentals derived therefrom against Severo’s two
other brothers, respondents Nicolas and his son Procopio Villanueva, and Eulogio,
who was represented by the latter’s heirs.
Respondents Heirs of Eulogio filed their Answer 5claiming that Severo had
already sold the subject lands to their father Eulogio by virtue of a notarized Deed of
Absolute Sale of Interests and Pro Indiviso Shares to Lands dated March 29, 1961;
thus, petitioners have no right to ask for the partition of the subject properties, as
respondents heirs are the owners of the same. On the other hand, respondents Nicolas
and his son Procopio filed their Answer6 admitting to have collected rentals on some
of the subject properties and that such rentals were still intact and ready for partition;
and that they were willing to partition the properties but were opposed by their co-
respondents.
After trial, the RTC rendered a Decision 7 dated August 9, 2001, the dispositive
portion of which reads as follows:
“WHEREFORE, premises considered, judgment is rendered declaring the heirs
of Eulogio Retuya as owners of the 1/16 share of Severo Retuya to ½ of the subject
properties representing the shares of the late Severo Retuya which he inherited from
his deceased father, Esteban Retuya and which he sold to Eulogio Retuya as follows:
Lot 113-U                - 48.78 sq. meters
      Lot 5                        - 99.65 sq. meters
      Lot 121-1-10-260       - 42 sq. meters.
26
and that the remaining areas of these properties, which have not been sold to
defendants Heirs of Eulogio Retuya, as well as the rental, be partitioned among the
herein parties in accordance with law.
_______________
5 Records, pp. 13-16.
6 Id., at pp. 24-26.
7 Per Judge Ulric R. Cañete; Rollo, pp. 73-80.
304
304 SUPREME COURT REPORTS ANNOTATED
Heirs of Francisco Retuya vs. Court of Appeals
Lot No. 10 is a road right of way and should not be partitioned.”8
Respondents Heirs of Eulogio filed a Motion for Correction 9 of Mathematical
Computation of their share in Lot 121-1-10 alleging that their correct share should be
255 sq. meters, instead of 42 sq. meters.
Petitioners, through their then counsel, Atty. Ernesto B. Mayol, filed a
Comment10 manifesting that they will submit and abide by whatever resolution the
RTC may adopt or render in relation to the Motion for Correction of Mathematical
Computation. The other respondents, represented by Atty. Basilio Duaban, did not
file any comment despite receipt of the Order11 to do so.
On October 23, 2001, the RTC issued an Order, 12 the dispositive portion of
which reads:
“WHEREFORE, the decision dated August 9, 2001 is amended by changing the
area of 42 sq. meters to 255 sq. meters, and the dispositive portion of said decision
will now read as follows:
WHEREFORE, premises considered, judgment is rendered declaring the
Heirs of Eulogio Retuya as owners of the 1/16 share of Severo Retuya to the
½ of the subject properties representing the shares of the late Severo Retuya,
which he inherited from his deceased father, Esteban Retuya and which he
sold to Eulogio Retuya as follows:
Lot 113-U                 48.78 sq. meters
      Lot 5                         99.65 sq. meters
      Lot 121-1-10-260        255 sq. meters
and that the remaining areas of these properties, which have not been sold to
defendants Heirs of Eulogio Retuya as well as
_______________
8  Id., at pp. 79-80.
9  Records, pp. 193-194.
10 Id., at p. 197.
11 Id., at pp. 198-199.
12 Id.
305
VOL. 647, APRIL 6, 2011 305
Heirs of Francisco Retuya vs. Court of Appeals
the rental be partitioned among the herein parties in accordance with law.
Lot No. 10 is a road right of way and should not be partitioned.
Furnish parties, through counsels, copy of this Order for their information.”13
The RTC decision became final and executory.14
Respondents Heirs of Eulogio filed a Motion for the Issuance of a Writ of
Execution, which the RTC granted in its Order15 dated March 15, 2002.
Petitioners, through Atty. Norberto Luna, Jr., as collaborating counsel, filed a
Motion to Hold in Abeyance the Implementation of the Writ of Execution with
Motion for Clarification and Precautionary Reservation to File Pertinent Pleadings
and Legal Remedies.16 Respondents Heirs of Eulogio filed their Opposition17 thereto.
In an Order18 dated June 14, 2002, the RTC denied the motion, and the Writ of
Execution19 was issued.
Respondents Heirs of Eulogio filed a Motion to Authorize the Branch Clerk of
Court to Enforce the Amended Decision. 20 Petitioners were ordered by the RTC to
file their Comment thereto.21
Petitioners filed their Comment with Prayer for the Issuance of a Clarificatory
Order22 as to how the RTC arrived at
_______________
13 Id.
14 Id., at p. 205.
15 Id., at p. 208.
16 Id., at pp. 210-212.
17 Id., at pp. 214-215.
18 Id., at p. 218.
19 Id., at pp. 220-221.
20 Id.
21 Id., at p. 233.
22 Id., at pp. 235-237.
306
306 SUPREME COURT REPORTS ANNOTATED
Heirs of Francisco Retuya vs. Court of Appeals
the new computation of 255 sq. meters from the original award of 42 sq. meters for
Lot No. 121-1-10-260.
In an Order23 dated February 17, 2003, the RTC, after finding that what was at
issue was just the matter of mathematical computation of the area adjudicated to the
parties, and in the interest of substantial justice, set a conference to settle once and
for all the exact computation of the parties’ respective shares.
On February 24, 2003, petitioners filed with the CA a Petition for Annulment of
Judgment of the RTC Order dated October 23, 2001, amending the decision dated
August 9, 2001, claiming that the questioned Order was a patent nullity for want of
jurisdiction and utter lack of due process.
27
 On April 30, 2003, petitioners filed with the RTC a Manifestation 24 submitting
the mathematical computation and/or mode of partitioning the shares of the opposing
parties.
As the RTC was in receipt of a copy of the Petition for Annulment of Judgment
filed with the CA, it issued an Order 25 holding in abeyance the resolution of
respondents’ Motion to Authorize the Branch Clerk of Court to enforce the RTC
decision pending such petition.
In a Resolution26 dated April 24, 2003, the CA outrightly dismissed the Petition
for Annulment of Judgment. It found that three of the petitioners, namely, Promilino
Semblante, Salome Retuya and Fernando Retuya, did not sign the certification of
non-forum shopping; and that the payment of the docket fee was short of P480.00.
_______________
23 Id., at p. 239.
24 Id., at pp. 270-273.
25 Id., at pp. 274-275.
26 Rollo, pp. 83-84.
307
VOL. 647, APRIL 6, 2011 307
Heirs of Francisco Retuya vs. Court of Appeals
     Petitioners filed their Motion for Reconsideration, which the CA granted in a
Resolution27 dated July 3, 2003 and reinstated the petition.
On July 22, 2003, respondents Heirs of Eulogio filed a Motion for
Reconsideration of the July 3, 2003 Resolution,28on the ground that it was made to
appear in the Petition for Annulment of Judgment that Quintin Retuya, one of the
petitioners, had signed the certification against forum shopping on March 18, 2003,
when he had already died on July 29, 1996; that the signature of co-petitioner Romeo
Retuya in the certification against forum shopping was not his, as compared to his
signature in the letter which respondents attached to the motion for reconsideration;
and that Romeo suffered a stroke in January 2003 and was bedridden until he died on
April 28, 2003.
In a Resolution dated November 28, 2003, the CA granted respondents’ Motion
for Reconsideration and dismissed the petition, as no Comment was filed by
petitioners. The CA said that Section 5, Rule 7 of the Rules of Court provides that
the principal party shall sign the certification against forum shopping, as the
attestation requires personal knowledge by the party who executed the same,
otherwise, it would cause the dismissal of the petition. Considering that Quintin, one
of the parties to the petition, died on July 29, 1996, it could have been impossible for
him to sign the Petition dated March 18, 2003.
A Motion for Reconsideration29 was filed by Atty. Renante dela Cerna as counsel
for petitioners, contending that there was substantial compliance with the rule on
certification against forum shopping when majority of the principal parties were able
to sign the verification and certification against forum shopping. Attached in the
motion for reconsideration
_______________
27 Id., at pp. 99-101.
28 Rollo, pp. 103-104.
29 Id., at pp. 37-44.
308
308 SUPREME COURT REPORTS ANNOTATED
Heirs of Francisco Retuya vs. Court of Appeals
was the affidavit of the Heirs of Quintin acknowledging said mistake and submitted a
verification and certification duly signed by the heirs.
On March 3, 2004, the CA issued a Resolution denying petitioners’ motion for
reconsideration. In so ruling, the CA said:
“While it may be true that when majority of the parties have signed the
certification against non-forum shopping would constitute “substantial compliance,”
this Court cannot apply the same rule to petitioners. First, petitioners’ counsel failed
to explain why a dead person/party was able to sign the certification against non-
forum shopping. The issue is not the parties’ substantial compliance, but the
dishonesty committed by the parties and/or their counsel when they made it appear
that one of the listed parties signed the certification when in fact he died long before
the petition was filed. Under Circular No. 28-91 of the Supreme Court and Section 5,
Rule 7 of the Rules of Court, the attestation contained in the certification on non-
forum shopping requires personal knowledge by the party who executed the same.
The liberal interpretation of the rules cannot be accorded to parties who commit
dishonesty and falsehood in court.
Second, records reveal that this Motion for reconsideration was signed by a
certain Atty. Renante A. Dela Cerna as counsel for the petitioners without the
counsel of record, Atty. Norberto A. Luna’s formal withdrawal. No notice of
substitution of counsel was filed by the petitioners and Atty. Dela Cerna never
entered his appearance as counsel for petitioner.
x x x x
There being no formal withdrawal or substitution of counsel made, Atty.
Norberto A. Luna remains the counsel of record for petitioners. Atty. Luna may not
be presumed substituted by Atty. Renante Dela Cerna merely by the latter’s filing or
signing of the motion for reconsideration. In the absence of compliance with the
essential requirements for valid substitution of counsel of record, the court can
presume that Atty. Luna continuously represents the petitioners. Hence, Atty.
Renante Dela Cerna has no right to represent the petitioners in this case.” 30
_______________
30 Id., at pp. 47-48.
309
VOL. 647, APRIL 6, 2011 309
Heirs of Francisco Retuya vs. Court of Appeals
Hence, this petition wherein petitioners raise the sole ground that:
28
 THE RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN
DISMISSING THE PETITIONERS’ PETITION BY RULING AGAINST THE
PETITIONERS’ SUBSTANTIAL COMPLIANCE TO THE CERTIFICATION
AGAINST NON-FORUM SHOPPING FOR THE ALLEGED DISHONESTY
COMMITTED BY THE PARTIES AND/OR THEIR COUNSEL WHEN THEY
MADE IT APPEAR THAT ONE OF THE LISTED PARTIES SIGNED THE
CERTIFICATION, WHEN IN FACT HE DIED BEFORE THE PETITION WAS
FILED.31
The CA dismissed the Petition for Annulment of Judgment after it found that
Quintin, one of the parties to the petition, had already died on July 29, 1996, thus, it
was impossible for him to have signed the verification and certification of non-forum
shopping attached to the petition filed on March 18, 2003. The CA found petitioners
to have committed dishonesty and falsehood to the court, thus, it could not apply the
liberal interpretation of the rule on certification against forum shopping.
We found no reversible error committed by the CA.
As correctly observed by the CA, while we have in a number of cases 32 applied
the substantial compliance rule on the filing of the certification of non-forum
shopping, specially when majority of the principal parties had signed the same and
who shared a common interest, We agree with the CA that such leniency finds no
applicability in this case because of petitioners’ dishonesty committed against the
appellate court. A perusal of the verification and certification against forum shopping
attached to the petition for annulment of
_______________
31 Id., at p. 26.
32 Heirs of Agapito T. Olarte v. Office of the President of the Philippines, G.R.
No. 165821, June 21, 2005, 460 SCRA 561; Cavile v. Heirs of Clarita Cavile, 448
Phil. 302, 311; 400 SCRA 255, 262 (2003).
310
310 SUPREME COURT REPORTS ANNOTATED
Heirs of Francisco Retuya vs. Court of Appeals
judgment filed in the CA would show that there was a signature above the
typewritten name of Quintin. In fact, written below the signature of Quintin was
Community Tax Certificate (CTC) No. 06570132, issued on January 8, 2003 in
Mandaue City. Thus, it would appear that Quintin, who was already dead at the time
the petition was filed, had signed the verification and certification of non-forum
shopping and he was even in possession of a CTC. Petitioners’ actuation showed
their lack of forthrightness to the CA which the latter correctly found to be a
dishonest act committed against it.
Petitioners allege that the explanation of their former counsel on record, Atty.
Luna, to the show cause order issued by the CA to him that: (1) he had no intention
to make it appear that a dead man in the person of Quintin was able to sign the
verification and certification against forum shopping; (2) when he entered his
appearance as counsel for petitioners before the RTC, he, the RTC, the co-petitioners
and the other respondents, as well as their counsel, knew of the fact of Quintin’s
death and the status of Felimon Retuya who immediately substituted his father, and
in behalf of his siblings; (3) that in his entry of appearance filed before the RTC, it
was Felimon, one of Quintin’s heirs, who signed in the above typewritten name of
Quintin, were found by the CA to be meritorious and noted the same. Thus,
petitioners claim that they also have no intention of deceiving respondents, since as
explained by Atty. Luna, all the parties and counsels knew of the death of Quintin.
We are not persuaded.
Notwithstanding that the CA had found the explanation of Atty. Luna to be
meritorious, the CA did not err when it dismissed the petition. Notably, there was a
signature above the typewritten name of Quintin without any showing that it was
signed by another person for or in behalf of Quintin. In the absence of such
qualification, it appeared before the CA that Quintin was the one who signed the
same, especially since the CA did not know of the fact of Quintin’s death. There was 
311
VOL. 647, APRIL 6, 2011 311
Heirs of Francisco Retuya vs. Court of Appeals
nothing in the petition for annulment of judgment which alleged such information. In
fact, we do not find any sufficient explanation given by petitioners as to why there
was a signature of Quintin appearing in the verification and certification against
forum shopping.
We also find that the CA correctly denied the motion for reconsideration on the
ground that Atty. Renante dela Cerna, the lawyer who filed the motion for
reconsideration, had no right to represent petitioners.
Under Section 26, Rule 138 of the Rules of Court and established jurisprudence,
a valid substitution of counsel has the following requirements: (1) the filing of a
written application for substitution; (2) the client’s written consent; (3) the consent of
the substituted lawyer if such consent can be obtained; and, in case such written
consent cannot be procured, (4) a proof of service of notice of such motion on the
attorney to be substituted in the manner required by the Rules. 33 In this case,
petitioners failed to comply with the above requirements.
Atty. Dela Cerna, as counsel for petitioners, filed the motion for reconsideration
on December 22, 2003. However, he is not the counsel on record of petitioners, but
Atty. Luna. Petitioners did not file a motion for substitution of counsel on record
before the filing of the motion for reconsideration. It is worthy to mention that Atty.
Dela Cerna did not even file a notice of appearance. If it has been held that courts
may not presume that the counsel of record has been substituted by a second counsel
merely from the filing of a formal appearance by the
_______________
33 See Bernardo v. Court of Appeals (Special Sixth Division), G.R. No. 106153,
July 14, 1997, 275 SCRA 413, 427, citing Yu v. Court of Appeals, 135 SCRA 181,
189-190 (1985), citing Aban v. Enage, 120 SCRA 778 (1983) and Phil. Apparel
Workers Union v. National Labor Relations Commission, 125 SCRA 391 (1983).
29
312
312 SUPREME COURT REPORTS ANNOTATED
Heirs of Francisco Retuya vs. Court of Appeals
latter,34 then with more reason that Atty. Dela Cerna could not be considered to have
substituted Atty. Luna as there was no notice of his entry of appearance at all.
The fact that Atty. Luna was still the counsel on record at the time Atty. Dela
Cerna filed his motion for reconsideration was established in Atty. Luna’s
Explanation dated March 19, 2004 to the CA’s Show Cause Order to him wherein he
prayed therein that an Order be issued relieving him of his legal obligations to
petitioners. Moreover, on April 30, 2004, petitioners through their counsel on record,
Atty. Luna, filed a motion for substitution of counsels wherein they alleged that they
engaged the services of Atty. Jorge Esparagosa as their new counsel and relieved
Atty. Luna of all his legal obligations to them. Notably, there was no mention at all
of Atty. Dela Cerna. Indeed, there was no showing of the authority of Atty. Dela
Cerna to file the motion for reconsideration for petitioners. Thus, the CA correctly
found that Atty. Dela Cerna has no personality to represent petitioners and file the
motion for reconsideration.
WHEREFORE, the petition is DENIED. The Resolutions dated November 28,
2003 and March 3, 2004 of the Court of Appeals are AFFIRMED.
SO ORDERED. G.R. No. 159648. July 27, 2007.*
Carpio (Chairperson), Abad, Mendoza and Sereno,**JJ., concur. FLUOR DANIEL, INC.-PHILIPPINES, petitioner, vs. E.B. VILLAROSA &
Petition denied, resolutions affirmed. PARTNERS CO., LTD., respondent.
_______________ Remedial Law; Actions; Causes of Action; Essential Elements of a Cause of
Action; The test of sufficiency of facts alleged in the complaint as constituting a
34 Id., citing Sumadchat v. Court of Appeals, 111 SCRA 488, 499 (1982). cause of action is whether or not admitting the facts alleged, the court could render
**  Designated as an additional member in lieu of Associate Justice Antonio a valid verdict in accordance with the prayer of the complaint.—The essential
Eduardo B. Nachura, per Special Order No. 978, dated March 30, 2011. elements of a cause of action are as follows: 1) A right in favor of the plaintiff by
313 whatever means and under whatever law it arises or is created; 2) An obligation on
VOL. 647, APRIL 6, 2011 313 the part of the defendant not to violate such right; and 3) An act or omission on the
Heirs of Francisco Retuya vs. Court of Appeals part of the defendant in violation of the right of the plaintiff or constituting a breach
Note.—Although the submission of a certificate against forum shopping is of the obligation of the defendant to the plaintiff for which the latter may maintain an
deemed obligatory, it is not jurisdictional. (In-N-Out Burger, Inc. vs. Sehwani action for recovery of damages or other relief. It is, thus, only upon the occurrence of
Incorporated, 575 SCRA 535 [2008]) the last element that a cause of action arises, giving the plaintiff a right to file an
——o0o——  action in court for recovery of damages or other relief. The test of sufficiency of facts
alleged in the complaint as constituting a cause of action is whether or not admit-
_______________
*
 SECOND DIVISION.
322
322  SUPREME COURT REPORTS ANNOTATED 
Fluor Daniel, Inc.-Philippines vs. E.B. Villarosa & Partners Co., Ltd.
ting the facts alleged, the court could render a valid verdict in accordance with
the prayer of the complaint. That in determining sufficiency of cause of action, the

30
court takes into account only the material allegations of the complaint and no other,
is not a hard and fast rule. In some cases, the court considers the documents attached
to the complaint to truly determine sufficiency of cause of action.
Same; Same; Same; A complaint should not be dismissed for insufficiency of
cause of action if it appears clearly from the complaint and its attachments that the
plaintiff is entitled to relief.—We have ruled that a complaint should not be
dismissed for insufficiency of cause of action if it appears clearly from the complaint
and its attachments that the plaintiff is entitled to relief. The converse is also true.
The complaint may be dismissed for lack of cause of action if it is obvious from the
complaint and its annexesthat the plaintiff is not entitled to any relief.
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.
     Angara, Abello, Concepcion, Regala and Cruz for petitioner.
     A. Tan, Zoleta & Associates Law Firm for respondent.
QUISUMBING, J.:
For review on certiorari are the Decision1 dated October 24, 2002 and the
Resolution2 dated August 25, 2003 of the Court of Appeals in CA-G.R. SP No.
52897, which had affirmed the November 19, 19983 and March 24, 19994Orders of
the Regional Trial Court of Makati City, Branch 58, in Civil Case No. 98-1342.
The pertinent facts, borne by the records, are as follows.
Petitioner Fluor Daniel, Inc.-Philippines is a domestic corporation providing
construction and program management services. Sometime in 1996, petitioner
entered into an agreement with Fil-Estate Properties, Inc. (Fil-Estate) for the
construction of the Fairways & Bluewater, Newcoast Island Resort in Boracay
Island. Respondent E.B. Villarosa & Partners Co., Ltd. was one of the contractors
engaged by petitioner to provide services for the said project.
On May 6, 1997, petitioner and respondent executed a separate contract for civil
structure and architecture, for plumbing and fire protection, and for millworks.
However, Fil-Estate failed to satisfy petitioner’s monthly progress billing. Hence,
petitioner did not pay respondent.
Petitioner apprised Fil-Estate that the project would have to be suspended. Petitioner
likewise issued a notice of suspension of work to all its contractors, including
respondent. In response, respondent informed petitioner that it deemed the contracts
between them good as terminated. Thus, respondent demanded payment for
suspension cost and for work so far performed.
Believing that petitioner was in bad faith, respondent also filed with the Regional
Trial Court of Makati City, Branch 58, a complaint5 for a sum of money and
damages, docketed as Civil Case No. 98-1342.
Petitioner filed a motion to dismiss6 on the ground that the complaint failed to state a
cause of action. The trial court denied the motion in its first assailed Order, to wit:
WHEREFORE, foregoing considered, defendant’s motion to dismiss is hereby
DENIED.
Pursuant to Section 4 of Rule 16, 1997 Rules of Civil Procedure, defendant-movant
shall file its answer within the balance of the period prescribed by Rule 11, same
Rules, to which defendant was entitled at the time of serving its motion, but not less
than five (5) days in any event, computed from receipt of this order.
SO ORDERED.7
Petitioner’s motion for reconsideration was likewise denied in the trial court’s
second impugned Order, thus:
WHEREFORE, foregoing considered, defendant’s Motion for Reconsideration is
hereby DENIED.
The filing of the last pleading and the consequent joinder of issues has ripened this
case for pre-trial which is hereby set…
Let notices of pre-trial be sent to the parties and their counsel.
SO ORDERED.8
Respondent subsequently filed a motion to amend its complaint followed by its
amended complaint. Petitioner, on the other hand, filed a motion to suspend
proceedings. The trial court granted respondent’s, but denied petitioner’s motion, to
wit:
WHEREFORE, in view of the foregoing:
1) Plaintiff’s Urgent Motion to Amend Complaint With Leave of Court is
hereby GRANTED. Accordingly, plaintiff’s Amended Complaint filed on
May 07, 1999 is hereby admitted in lieu of the original complaint which is
hereby deemed withdrawn for all intents and purposes. Consequently,
31
 defendant is given fifteen (15) days after receipt of this Order within which
to file its Amended Answer to plaintiff’s Amended Complaint.
2) Defendant’s Motion to Suspend Proceedings is hereby DENIED.
SO ORDERED.9
Petitioner filed with the Court of Appeals a special civil action for certiorari assailing
the November 19, 1998 and March 24, 1999 Orders of the court a quo and praying
for a temporary restraining order and/or writ of preliminary injunction. The appellate
court decreed:
WHEREFORE, the Order dated 19 November 1998 issued by the Regional Trial
Court of Makati, Branch 58 in Civil Case No. 98-1342 entitled "E.B. Villarosa &
Partners Co., Inc. vs. Fluor Daniel, Inc. –Philippines" denying petitioner’s Motion To
Dismiss as well as its order of 24 March 1999 denying reconsideration thereof, are
both affirmed.
Accordingly, the temporary restraining order issued by the Ninth Division of this
Court as contained in Resolution dated 25 May 2000 … is hereby lifted.
Costs against petitioner.
SO ORDERED.10
Hence, the instant petition, raising the following issues:
I.
Whether or not the Complaint sufficiently states a cause of action against FDIP
[PETITIONER] in light of the jurisprudential tests and guidelines laid down by this
Honorable Court.
II.
Whether or not the annexes attached to the Complaint should be considered in
determining whether or not VILLAROSA’s [RESPONDENT’S] Complaint
sufficiently stated a cause of action against FDIP in light of jurisprudential tests and
guidelines laid down by this Honorable Court.
III.
Whether or not the Court of Appeals, in refusing to consider the annexes to the
Complaint, erred in failing to appreciate the clear admission of VILLAROSA
[RESPONDENT] that payment of its billings was subject to the condition of timely
receipt of similar payments from FIL-ESTATE.
IV.
Whether or not the Court of Appeals, in refusing to consider the annexes to the
Complaint, failed to appreciate the significance of VILLAROSA’s
[RESPONDENT’S] failure to satisfy the required criteria to justify payment under its
monthly progress billings.11
Petitioner contends that the complaint utterly and miserably failed to state the
operative facts which would give rise to a cause of action against it. Petitioner insists
that the annexes attached to respondent’s complaint and other pleadings should be
considered in determining respondent’s cause of action, or lack of it, against
petitioner. Petitioner maintains that the Court of Appeals committed manifest error
when it refused to consider the annexes to the complaint, showing respondent’s
admission that payment of its billings was subject to the condition of timely receipt
of similar payments from petitioner.
Respondent, however, counters that its complaint sufficiently stated a cause of action
against petitioner and that the annexes attached to the complaint bear no relevance,
not having been admitted by stipulation. Respondent asserts that the three elements
of a cause of action are all present in this case, namely: (i) legal right of respondent
to demand payment from petitioner; (ii) obligation of petitioner to pay respondent;
and (iii) failure of petitioner to pay respondent. Respondent stresses that petitioner
cannot evade its liability to pay by claiming that payments to respondent are subject
to timely receipt of similar payments from Fil-Estate.
The petition is impressed with merit.
Section 2, Rule 2 of the Rules of Civil Procedure provides:
SEC. 2. Cause of action, defined. – A cause of action is the act or omission by which
a party violates a right of another.
The essential elements of a cause of action are as follows: 1) A right in favor of the
plaintiff by whatever means and under whatever law it arises or is created; 2) An
obligation on the part of the defendant not to violate such right; and 3) An act or
omission on the part of the defendant in violation of the right of the plaintiff or
constituting a breach of the obligation of the defendant to the plaintiff for which the
latter may maintain an action for recovery of damages or other relief. 12
32
It is, thus, only upon the occurrence of the last element that a cause of action arises,
giving the plaintiff a right to file an action in court for recovery of damages or other
relief.13 The test of sufficiency of facts alleged in the complaint as constituting a
cause of action is whether or not admitting the facts alleged, the court could render a
valid verdict in accordance with the prayer of the complaint.14 That in determining
sufficiency of cause of action, the court takes into account only the material
allegations of the complaint and no other, is not a hard and fast rule. In some cases,
the court considers the documents attached to the complaint to truly determine
sufficiency of cause of action.15
We thus hold that respondent’s complaint, taken with the contracts annexed to it,
failed to pass the test of sufficiency of cause of action. Thus, the said complaint
should have been dismissed on the ground of failure to state a cause of action.
WHEREFORE, the petition is GRANTED. The assailed Decision dated October
24, 2002 and the Resolution dated August 25, 2003 of the Court of Appeals in CA-
G.R. SP No. 52897, which affirmed the November 19, 1998 and March 24, 1999
Orders of the Regional Trial Court of Makati City, Branch 58 in Civil Case No. 98-
1342, are REVERSED AND SET ASIDE.

We have ruled that a complaint should not be dismissed for insufficiency of cause of Costs against respondent.
action if it appears clearly from the complaint and its attachments that the plaintiff is
entitled to relief.16 The converse is also true. The complaint may be dismissed for SO ORDERED.
lack of cause of action if it is obvious from the complaint and its annexes that the
plaintiff is not entitled to any relief.

In this case, we note that annexed to the subject complaint are the three contracts
governing the rights and obligations between petitioner and respondent, namely the
contract for civil structure and architecture, the contract for plumbing and fire
protection, and the contract for millworks. Records show that recurring in each of the
said contracts is the provision that payment by petitioner shall be subject to its timely
receipt of similar payments from Fil-Estate. The said provision, found in each of the
aforesaid contracts, is quoted below:

2.0 PRICING BASIS

The Contract Price set forth herein is firm for the duration of the Work and includes
all Contractor’s costs, expenses, overhead and profit for complete performance of the
Work.

xxxx

…Payment of the billings shall be subject to the timely receipt of similar

payments from the client by Fluor Daniel. Any prolonged delay in payment by
Fluor Daniel is subject to a suspension of activities by EBV within five (5) work
days after proper written notice is provided by contractor to Fluor
Daniel.17 (Emphasis supplied.)

On their face, the said attached contracts, which define and delimit the rights and
obligations of the parties, clearly require a specific condition before petitioner may
be held liable for payment. The complaint, however, failed to state that the said
condition had been fulfilled. Without the said condition having taken place,
petitioner cannot be said to have breached its obligation to pay.

33

G.R. No. L-45107 November 11, 1991
BENEDICTO RAMOS, petitioner,  possession thereof on May 16, 1976. In his letter-reply, petitioner reminded Mr.
vs.
HON. ELVIRO L. PERALTA, Presiding Judge, Branch XVII, Court of First
Instance of Manila, SPOUSES JUVENCIO ORTANEZ and JULIANA S.
ORTANEZ, MINDANAO INSURANCE CO., INC. and P. R. ROMAN,
INC.,respondents.
Angel Suntay, Jr. and Renato M. Coronado for petitioner.
Tolentino, Garcia, Cruz & Reyes for respondents Ortanez.
FERNAN, C.J.:
Put in issue in this petition for review on certiorari is the propriety of the dismissal
by the then Court of First Instance of (CFI) of Manila, Branch XVII of petitioner's
action for consignation of the sum of P70,000.00 representing advance rentals for the
101-hectare Salgado fishpond located in Bo. Balut, Pilar, Bataan.
Petitioner started occupying the Salgado fishpond in 1964 by virtue of a lease
contract executed in his favor by private respondents spouses Juvencio and Juliana
Ortanez. The original lease for a term of five (5) years from January 1, 1964 to
January 1, 1990, was renewed several times, the last renewal being on June 28, 1974
under a "Kasunduan sa Pag-upa" for a period of three (3) years starting January 1,
1975 to December 31, 1977.
Unknown to petitioner, title 1 to said property was in the name of Philippine
International Surety Co., Inc., a corporation founded, organized and 99.5%-owned by
the Salgado spouses. Later renamed Mindanao Insurance Co., Inc., 2 said corporation
was placed under receivership and liquidation on June 20, 1968 in Civil Case No. Q-
10664 of the then CFI of Rizal, Branch IV, Quezon City, upon application of
Insurance Commissioner Gregoria Cruz-Ansaldo who was appointed receiver.
Thereafter on February 23, 1976, respondent P. R. Roman, Inc. purchased from
Mindanao Insurance the Salgado fishpond for P950,000.00. The deed of sale was
signed by the receiver and duly approved by the liquidation court.
Apparently due to this development, the spouses Ortanez refused to accept from
petitioner the advance rentals on the fishpond due on March 15, 1976 in the amount
of P30,000.00.
On or about May 1, 1976, petitioner received a letter from Don Pablo R. Roman
informing him of the latter's acquisition of the fishpond and intention to take
Roman of his lease contract over the fishpond and refused to consent to the intended
take over. Notwithstanding petitioner's objection, P. R. Roman, Inc. took over
possession of the fishpond.
On August 2, 1976, petitioner filed before the CFI of Manila the aforesaid complaint,
docketed as Civil Case No. 103647, 3 against private respondents Juvencio and
Juliana Ortanez, Mindanao Insurance and P. R. Roman, Inc. for consignation of the
sum of P70,000.00 representing advance rentals on the fishpond in the amounts of
34
P30,000.00 and P40,000.00 respectively due on March 15, 1976 and June 15, 1976,
which he had previously tendered to, but refused by the spouses Ortanez and Pablo
Roman.
P. R. Roman, Inc. filed a motion to dismiss on the grounds that venue was
improperly laid, the complaint states no cause of action and the court has no
jurisdiction over the subject of the action or suit. In its motion to dismiss, P. R.
Roman, Inc. cited the pendency before the then CFI of Bataan of Civil Case No 4102
instituted by P.R. Roman, Inc. against petitioner Benedicto Ramos on August 13,
1976 to quiet its title over the Salgado fishpond.
On August 27, 1976, respondent CFI of Manila issued an order 4 dismissing Civil
Case No. 103647, stating in part:
Without discussing in detail the grounds mentioned above, the Court really
sees that this case should be dismissed not only insofar as against P. R.
Roman, Inc. but also as against the other defendants mentioned above for
the reason, principally, that there is already a case pending between the
same parties and for the same cause in Civil Case No. 4102 of Branch II of
the Court of First Instance of Bataan, entitled P. R. Roman, Inc. vs.
Benedicto Roman, which is precisely for the ownership of the subject matter
of the property allegedly leased to the plaintiff herein (Exhibit "A"-Motion).
In the said case, the defendant therein, Benedicto Ramos, who is the
plaintiff in the case at bar, filed a motion for leave to file a third-party
complaint against the spouses surnamed Ortanez and the Mindanao
Insurance Company Inc. All the issues respecting the fishpond, including
the lease contract, are necessarily involved in the case pending now in
Bataan. Aside from the above, the Court cannot decide this case because it
cannot pre-empt the Court of Bataan on whether or nor the P. R. Roman,
Inc. is already the owner because if it finds that the said defendant P. R.
Roman, Inc. is really the owner of the fishpond, there is no more lease for
which rentals are to be paid.
Petitioner moved for reconsideration, but was unsuccessful, the court a quo, standing
"pat on its previous order and reiterat(ing) its dismissal of the case, without costs." 5
Hence this petition anchored on the following ascribed errors of law: 6
1. The respondent court erred in not holding that the only issue in
consignation of funds is whether the defendant is willing to accept the
proffered payment or not.
2. The respondent court erred in not holding that the prerogative of
choosing the proper venue belongs to the plaintiff.
3. The respondent court erred in holding that the subsequent filing of Civil
Case No. 4102 before the Court of First Instance of Bataan is a bar to the
prosecution of Civil Case No. 103647 before it.
Petitioner contends that the Bataan quieting-of-title Civil Case No. 4102 cannot serve
as a bar to his Manila consignation Civil Case No. 103647 because they involve
different issues. Civil Case No. 4102 deals with the question of ownership while the
only issue involved in his consignation case is whether or not the defendant is willing
to accept the proffered payment. In fact, petitioner posits, the action to quiet title is a
useless futile exercise as he does not question P. R. Roman Inc.'s ownership of the
fishpond under consideration, but merely wishes to assert his leasehold and
possessory rights over said property under the "Kasunduan sa Pag-upa." He further
contends that compelling him to litigate before the Bataan court would render
nugatory his right as a plaintiff to choose the venue of his action. Besides, Civil Case
No. 103647 was filed on August 2, 1976, ahead of Civil Case No. 4102 which was
filed on a much later date, August 13, 1976, after the Manila CFI had already
acquired jurisdiction over Civil Case No. 103647.
Private respondents counter that the view taken by petitioner of the Manila
consignation case is quite limited and bookish, because while it may be true that
theoretically, the main issue involved in a consignation case is whether or not the
defendant is willing to accept the proffered payment, in the consignation case
brought by petitioner, other issues were pleaded by petitioner himself, such as the
validity and binding effect of the lease contract and the existence of the supposed
obligor-obligee relationship. They further contend that a plaintiffs right of choice of
venue is not absolute, but must invariably how to the dismissal of the case because
of litis pendentia which, in refutation of petitioner's argument, does not require that
there is a prior pending action, merely that there is a pending action.
We find for respondents.
Under the rules and jurisprudence, for litis pendentia to be invoked as a ground for
the dismissal of an action, the concurrence of the following requisites is necessary:
(a) Identity of parties or at least such as represent the same interest in both actions;
(b) Identity of rights asserted and relief prayed for, the relief being founded on the
same facts; and (c) The identity in the two cases should be such that the judgment
that may be rendered in one would, regardless of which party is successful, amount
to res judicata in the other. 7
These requisites are present in the case at bar. It is worthwhile mentioning that in his
basic petition for review, one of the assigned errors of petitioner is that the
35
respondent court erred in not holding that the parties in Civil Case No. 4102 are not
the same as the parties in Civil Case No. 103647. 8 However, in his brief, no further
mention of this assigned error was made; a clear indication of petitioner's admission
of the identity of parties in Civil Case No. 4102 and Civil Case No. 103647,
particularly as he filed a third party complaint in Civil Case No. 4102 against the
spouses Ortanez and Mindanao Insurance.
Anent the second element, we agree with private respondents' observation that
petitioner's approach to his consignation case is quite constricted. His contention that
the only issue in a consignation case is whether or not the defendant is willing to
accept the proffered payment is true only where there is no controversy with respect
to the obligation sought to be discharged by such payment. His consignation case,
however, is not as simple. While ostensibly, the immediate relief sought for in his
consignation case is to compel therein defendants to accept his advance rentals, the
ultimate purpose of such action is to compel the new owner of the fishpond to
recognize his leasehold rights and right of occupation. In the last analysis, therefore,
the issue involved in Civil Case No. 103647 is the right of possession over the
fishpond intertwined with the validity and effectivity of the lease contract.
This is the same issue involved in Civil Case No. 4102. Although an action for
quieting of title refers to ownership, P. R. Roman, Inc. in its  petitioner can compel it to accept his proffered payment of rentals; otherwise, he may
complaint 9 in Civil Case No. 4102 alleged:
5. There is a cloud on the aforesaid titles of plaintiff on the said agricultural
land, marked Annexes "A", "B" and "C" hereof, as well as on its right of
possession over that real property by reason of a certain "Kasunduan sa
Pagupa" (Contract of Lease) dated June 28, 1974 executed by and between
the spouses Jovencio Ortanez and Juliana S. Ortanez purportedly as "may-
ari/Nagpapaupa" (owner/lessor) and the defendant as lessee, which
instrument is apparently valid or effective but in truth and in fact invalid,
ineffective, voidable or unenforceable, and is prejudicial to the said titles of
plaintiff as well as to its right of possession over the same
fishpond/agricultural land in Barrio Balut, Pilar, Bataan.
Thus, while the respondent court in the assailed order of dismissal dated August 27,
1976 described Civil Case No. 4102 as "precisely for the ownership of the subject
matter of the property allegedly leased to the plaintiff herein," 10its order dated
October 22, 1976 denying petitioner's motion for reconsideration, more perceptively
stated: 11
In Civil Case No. 4102 of the Court of First Instance of Bataan, entitled P.
R. Roman, Inc. vs. Benedicto Ramos one of the principal issues is the
possession of the fishpond subject matter of the lease supposed rents of
which are supposed to be consignated in the instant case, plaintiff P. R.
Roman, Inc. there, claiming to be entitled to the possession of said property
as owner under a certificate of title and defendant Benedicto Ramos,
plaintiff here, anchoring his claim of possession upon his lease with the
Ortanez spouses against whom, on his motion, he filed a third party
complaint in which he prayed in the alternative, that should he lose
possession of the fishpond in favor of P. R. Roman, Inc., the Ortanezes
should be condemned to reimburse him the rentals he has already paid for
the unexpired portion of the lease. The issue of whether or not the lease
subsists even as regards P. R. Roman, Inc., for it is the view of Ramos that
it bought the property with knowledge of the lease, is squarely planted in
the case before the Court of First Instance of Bataan, and, consequently, the
more appropriate court with which rents are to be consignated. . . .
That whatever decision may be handed down in Civil Case No. 4102 would
constitute res judicata in Civil Case No. 103647 is beyond cavil. Should the Bataan
court rule that the lease contract is valid and effective against P. R. Roman, Inc., the
not do so.
Petitioner next contends that the dismissal of Civil Case No. 103647 deprived him of
his right to choose the venue of his action. Verily, the rules on the venue of personal
actions are laid down generally for the convenience of the plaintiff and his witnesses.
But, as observed by private respondents, this right given to the plaintiff is not
immutable. It must yield to the greater interest of the orderly administration of
justice, which as in this case, may call for the dismissal of an action on the basis
of litis pendentia to obviate the possibility of conflicting decisions being rendered by
two different courts. 12
As private respondents would put it, "(T)he Rules of Court are not perfect. It does
not pretend to be able to make everyone happy simultaneously or consecutively or all
the time. Even the Rules of Court has hierarchy of values; thus, the choice of venue
may bow to dismissal of the case because of litis pendentia. 13 At any rate, petitioner
cannot complain of any inconvenience arising from the dismissal of Civil Case No.
103647. Being the defendant in Civil Case No. 4102, he cannot but litigate before the
Bataan court, and bringing his consignation case before the same court would
actually save him time, effort and litigation expenses.
36
Finally, the rule on litis pendentia does not require that the later case should yield to
the earlier case. What is required merely is that there be another pending action, not
a prior pending action. Considering the broader scope of inquiry involved in Civil
Case No. 4102 and the location of the property involved, no error was committed by
the lower court in deferring to the Bataan court's jurisdiction.
WHEREFORE, the assailed decision dated August 27, 1976 of the then Court of
First Instance of Manila, Branch XVII, is AFFIRMED in toto. This decision is
immediately executory, with costs against petitioner.
SO ORDERED.
No. L-30523. April 22, 1977.
LEE BUN TING and ANG CHIA, petitioners, vs. HON. JOSE A. ALIGAEN,
Judge of the Court of First Instance of Capiz, 11th Judicial District, Branch II;
ATTY. ANTONIO D. AMOSIN, as court-appointed Receiver; RAFAEL A.
DINGLASAN, FRANCISCO A. DINGLASAN, CARMEN A. DINGLASAN,
RAMON A. DINGLASAN, LOURDES A. DINGLASAN, MERCEDES A.
DINGLASAN, CONCEPCION A. DINGLASAN, MARIANO A. DINGLASAN,
JOSE A. DINGLASAN, LORETO A. DINGLASAN, RIZAL A. DINGLASAN,
JIMMY DINGLASAN, and JESSE DINGLASAN, respondents.
Res judicata; A case that has become final and executory cannot be re-opened
on account of a decision of the Supreme Court subsequently promulgated
enunciating a different doctrine regarding the effects of a sales of lands to aliens.—
The issue posed before us is whether the questions which were decided in Rafael
Dinglasan, et al. vs. Lee Bun Ting, et al., supra, could still be re-litigated in Civil
Case No. V-3064, in view of the subsequent decision of this Court in Philippine
Banking Corporation vs. Lui She, supra. We resolve the issue in the negative. The
decision of this Court in G.R. No. L-5996, “Rafael Dinglasan, et al. vs. Lee Bun
Ting, et al.” constitutes a bar to Civil Case No. V-3064 before the respondent, court.
Said civil case,  On June 27, 1956, this Court rendered judgment in G. R. No. L-5996, entitled Rafael
417
VOL. 76, APRIL 22, 1977  417 
Lee Bun Ting vs. Aligaen
therefore, should have been dismissed because it is a mere relitigation of the
same issues previously adjudged with finality, way back in 1956, between the same
parties or their privies and concerning the same subject matter. We have consistently
held that the doctrine of res judicata applies where, between a pending action and
one which has been finally and definitely settled, there is identity of parties, subject
matter and cause of action.
Same; Posterior changes in the Supreme Court’s doctrine cannot be applied
retroactively to nullify a prior final ruling.—Contrary to the contentions of private
respondents, there has been no change in the facts or in the conditions of the parties.
Neither do we find our ruling in the Philippine Banking Corporation case applicable
to the case at bar, considering the rule that posterior changes in the doctrine of this
Court cannot retroactively be applied to nullify a prior final ruling in the same
proceeding where the prior adjudication was had, whether the case should be civil or
criminal in nature. The determination of the questions of fact and of law by this
Court on June 27, 1956 in case No. L-5996 has become the law of the case, and may
not now be disputed or relitigated by a reopening of the same questions in a
subsequent litigation between the same parties and their privies over the same subject
matter.
Same; Stability must be accorded to final judgments of the highest court.—
Reasons of public policy, judicial orderliness, economy and judicial time and the
interests of litigants, as well as the peace and order of society, all require that
stability be accorded the solemn and final judgments of the courts or tribunals of
competent jurisdiction. There can be no question that such reasons apply with greater
force on final judgments of the highest Court of the land.
ORIGINAL PETITION in the Supreme Court. Certiorari with preliminary
injunction.
The facts are stated in the opinion of the Court.
     Norberto J. Quisumbing and Humberto V. Quisumbing for petitioners.
     Rafael A. Dinglasan for respondents.
ANTONIO, J.:
Petition for certiorari to annul the Orders of respondent court dated October 10, 1968
and November 10, 1968 and other related Orders in Civil Case No. V-3064,
entitled Rafael A. Dinglasan, et al., vs. Lee Bun Ting, et al., with prayer for the
issuance of writ of preliminary injunction. The antecedent facts are as
follows: chanrobles virtual law library
Dinglasan, et al. vs. Lee Bun Ting, et al.,  1 In that case, We found that: 
In the month of March, 1936, petitioners-appellants sold to Lee Liong, a Chinese
citizen, predecessor in interest of respondents-appellees, a parcel of land situated on
the corner of Roxas Avenue and Pavia Street, Capiz (now Roxas City), Capiz,
designated as lot 398 and covered by Original Certificate of Title No. 3389. The cost
was P6,000.00 and soon after the sale Lee Liong constructed thereon a concrete
building which he used as a place for his lumber business and in part as residence for
himself and family. Petitioners had contended that the sale was a conditional sale, or
one with the right of repurchase during the last years of a ten-year period, but the
trial court and the Court of Appeals found that the sale was an absolute one. Another
contention of the petitioners-appellants is that the sale is null and void as it was made
37
in violation of the provision contained in the Constitution (Article XIII, section 5),
but the Court of Appeals found that the purchaser was not aware of the constitutional
prohibition while petitioners-appellants were because the negotiations for the sale
were conducted with the knowledge and direct intervention of Judge Rafael
Dinglasan, one of the plaintiffs, who was at that time an assistant attorney in the
Department of Justice. ... (P. 42-Q)  the property in question and renders unnecessary the consideration of the other
In reply to the contention of appellants therein that as the sale to Lee Liong is
prohibited by the Constitution, title to the land did not pass to said alien because the
sale did not produce any juridical effect in his favor, and that the constitutional
prohibition should be deemed self-executing in character in order to give effect to the
constitutional mandate, this Court said:  had already elapsed from the time the cause of action accrued when the action was
... In answer we state that granting the sale to be null and void and can not give title
to the vendee, it does not n necessarily follow therefrom that the title remained in the
vendor, who had also violated the constitutional prohibition, or that he (vendor) has
the right to recover the title of which he has divested himself by his act in ignoring
the prohibition. In such contingency another principle of law sets in to bar to equally
guilty vendor from recovering the title which he had voluntarily conveyed for a
consideration, that of pan delicto We have applied this principle as a bar to the
present action in a series of cases thus: chanrobles virtual law library
xxx xxx xxxchanrobles virtual law library
We can, therefore, say that even if the plaintiffs can still invoke the Constitution, or
the doctrine in the Krivenko case, to set aside the sale in question, they are now
prevented from doing so if their purpose is to recover the lands that they have
voluntarily parted with, because of their guilty knowledge that what they were doing
was in violation of the Constitution. They cannot escape the law. As this Court well
said: A party to an illegal contract cannot come into a court of law and ask to have
his illegal objects carried out. The law will not aid either party to an illegal
agreement; it leaves the parties where it finds them. The rule is expressed in the
maxims: Ex dolo malo non oritur actio and In pari delicto potior eat conditio
defendentis ....  the property in question; that defendants be ordered to vacate the premises, to
It is not necessary for us to re-examine the doctrine laid down by us in the above
cases. We must add in justification of the adoption of the doctrine that the scope of
our power and authority is to interpret the law merely, leaving to the proper
coordinate body the function of laying down the policy that should be followed in
relation to conveyances in violation of the constitutional prohibition and in
implementing said policy. The situation of these prohibited conveyances is not
different from that of homestead sold within five yearn from and after the issuance of
the patent, (Section 118, C.A. 141, otherwise known as the Public Land Law), for
which situation the legislature has adopted the policy, not of returning the homestead
sold to the original homesteader but of forfeiting the homestead and returning it to
the public domain again subject to disposition in accordance with law. (Section 124,
Id.) chanrobles virtual law library
The doctrine of in pari delicto bars petitioners-appellants from recovering the title to
arguments presented in appellants brief.chanroblesvirtualawlibrarychanrobles virtual
law library
There is one other cause why petitioner' remedy cannot be entertained, that is the
prescription of the action. As the sale occurred in March, 1936, more than ten years
filed (1948). (pp. 431-432) 
Noting the absence of policy governing lands sold to aliens in violation of the
constitutional prohibition, We further said: 
We take this occasion to call the attention of the legislature to the absence of a law or
policy on sales in violation of the Constitution; this Court would have filled the void
were we not aware of the fact that the matter falls beyond the scope of oar authority
and properly belongs to a co-ordinate power. (P. 432) 
Accordingly, the petition in the foregoing case was
denied.chanroblesvirtualawlibrarychanrobles virtual law library
Twelve (12) years later, on the basis of the decision of this Court in Philippine
Banking Corporation vs. Lui She, 2private respondents Rafael A. Dinglasan, et al.
filed a complaint on July 1, 1968 for the recovery of the same parcel of land subject
matter of the first-mentioned case. Said complaint was docketed as Civil Case No.
V-3064 before respondent court. Private respondents (plaintiffs before the court a
quo) reiterated their contention that the sale made to Lee Liong, predecessor-in-
interest of petitioners (defendants a quo), was null and void for being violative of the
Constitution, and prayed that plaintiffs be declared as the rightful and legal owners of
surrender possession thereof to plaintiffs and to receive the amount of P6,000.00
from the plaintiffs as restitution of the purchase price; and that defendants be ordered
to pay damages to the plaintiffs in the amount of P2,000.000 a month from the time
of the filing of the complaint until the property is returned to them, as well as the
costs of suit.chanroblesvirtualawlibrarychanrobles virtual law library
A motion to dismiss, dated September 23, 1968, was filed by defendants- petitioners
on the ground of res judicata, alleging that the decision in the case of "Rafael
Dinglagan, et al. vs. Lee Bun Ting, et al.", supra, promulgated on June 27, 1956, has
definitely settled the issues between the parties. An opposition thereto was filed by
38
plaintiffs, with the averment that the decision in the prior case "cannot be pleaded in
bar of the instant action because of new or additional facts or grounds of recovery
and because of change of law or jurisprudence. 3 In support of the change in
jurisprudence asserted, the decision of this Court in Philippine Banking Corporation
vs. Lui She, supra, was advanced, upon the contention that said decision warrants a
reopening of the case and the return of the parcel of land involved to the plaintiffs, A
reply to the opposition was filed by defendants by registered mall on October 16,
1968, alleging that the decision in Philippine Banking Corporation vs. Lui She,
which was promulgated in 1967, "cannot affect the outcome of the instant case. Said
1967 decision cannot be applied to the instant case where there had been already a
final and conclusive determination some twelve years earlier. While a doctrine laid
down in previous cases may be overruled, the previous cases themselves cannot
thereby be reopened. The doctrine may be changed for future cases but it cannot
reach back into the past and overturn finally settled cases. 4 chanrobles virtual law
library
However, on October 10, 1968, before the filing of the above reply, respondent court
had issued an Order denying the motion to dismiss. The court said:  involved in said case, and not the land subject of the present action. Moreover, it was
A copy of the decision rendered in the case of Rafael Dinglasan, et al. vs. Lee Bun
Ting, et al., G. R. No. L-5996 is attached to the motion to
dismiss.chanroblesvirtualawlibrarychanrobles virtual law library
In that case, the Supreme Court ruled that both parties violated the constitutional
prohibition (Article XIII, see. 9) for the purchaser was an alien and prohibited to
acquire residential lot while the vendors, Filipino citizens, can not also recover the
property for having violated the constitutional prohibition, under the principle
of pari delicto. The vendee cannot own the property, neither ran the vendor recover
what he sold.chanroblesvirtualawlibrarychanrobles virtual law library
To fill the void, the Supreme Court pointed out that the coordinate body - Congress
of the Philippines - can pass remedial
legislation.chanroblesvirtualawlibrarychanrobles virtual law library
But Congress failed to act, Neither was there any proceeding after almost twenty
years for escheat or reversion instituted by the Office of the Solicitor General after
the Krivenko decision which prohibits the transfer to aliens of any private
agricultural land including residential lands whatever its origin might have
been.chanroblesvirtualawlibrarychanrobles virtual law library
But the Supreme Court took a decisive step and in bold relief dispelled darkening
clouds in the case of Philippine Banking Corporations vs. Lui She, promulgated
September 12, 1967, ... .chanroblesvirtualawlibrarychanrobles virtual law library
The concurring opinion of Justice Fernando is very enlightening and elucidating.
...chanroblesvirtualawlibrarychanrobles virtual law library
The Court wishes to refer to the concurring opinion of Justice Fernando as an
additional authority supporting the herein
order.chanroblesvirtualawlibrarychanrobles virtual law library
PREMISES CONSIDERED, the Court finds the motion to dismiss unmeritrious and
holds that the same be as it is hereby DENIED. 5chanrobles virtual law library
A motion for reconsideration of the foregoing Order was filed by defendants,
alleging that their reply to plaintiffs' opposition to the motion to dismiss was not even
considered by the court a quo because the Order was issued before said reply Could
reach the court, Further, it was asserted that the Philippine Banking Corporation vs.
Lui She case had the effect of annulling and setting aside only the contracts subject
matter thereof "and no other contracts, certainly not contracts outside the issues in
said judgment as that in the instant case", and of ordering the return only of the lands
averred that "Nowhere in the majority opinion nor in the concurring opinion in said
decision of Philippine Banking Corporation vs. Lui She does there appear any
statement which would have the effect of reopening and changing previously
adjudicated rights of parties and finally settled cases" and that the principle
enunciated in such case "should apply after, not on or before, September 12, 1967".
The motion for reconsideration was found to have not been well taken and,
consequently, was denied by respondent court on November 9, 1968. Defendants
were given ten (10) days from receipt of the Order within which to file their answer
to the complaint, Which defendants complied
with.chanroblesvirtualawlibrarychanrobles virtual law library
Defendants' answer, dated December 5, 1968, contained the following allegations,
among others: 
(a) The sale of the parcel of land involved was made in 1935 before the promulgation
of the Constitution.chanroblesvirtualawlibrarychanrobles virtual law library
(b) Said conveyance ' as an absolute sale, not subject to any right or repurchase
...chanroblesvirtualawlibrarychanrobles virtual law library
(c) Upon the purchase of the said parcel of land by the deceased Lee Liong, he and
defendant Ang Chia constructed thereon a camarin for lumber business and later a
two-storey five door accessoria with an assessed-valuation of P35,000.00, which said
improvements were destroyed during the Japanese entry into the municipality of
Capiz in April 1942, thereafter, the same improvements were
rebuilt.chanroblesvirtualawlibrarychanrobles virtual law library
39
(d) In July 1947, the said Lee Liong being already deceased, defendants as his legal
heirs entered into an extrajudicial settlement of said property, there being no
creditors or other heirs, and by virtue of said extra-judicial settlement, approximately
two-thirds of said property was adjudicated to defendant Ang Chia and Lee Bing
Hoo as co-owners and the remaining one-third to defendant Lee Bun Ting chanrobles
virtual law library
(e) The deceased Lee Liong and defendants have been declaring and paying real
estate taxes on the said property since 1935 and up to the present
year.chanroblesvirtualawlibrarychanrobles virtual law library
xxx xxx xxx
In addition to the foregoing, defendants reiterated their defense of res judicata, on
the basis of the decision of the Supreme Court of June 27, 1956. It was, therefore,
prayed that the complaint be dismissed, with counterclaim for attorney's fees and
expenses of litigation or, in case of adverse judgment, that plaintiffs be ordered to
pay the reasonable equivalent of the value of the property at the time of the
restoration, plus reimbursement of improvements
thereon.chanroblesvirtualawlibrarychanrobles virtual law library
A reply and answer to the counterclaim, dated December 14, 1968, was filed by
plaintiffs. On March 31, 1969, respondent court issued an Order denying a motion
filed by petitioners for simplification of the issues and for the striking out from the
records of the declaration of Rafael Dinglasan under the Survivorship
Disqualification Rule. A motion for reconsideration of the foregoing Order was
denied on May 7, 1969.chanroblesvirtualawlibrarychanrobles virtual law library
During the pendency of the trial, plaintiffs filed a petition for the appointment of a
receiver "to receive, collect and hold in trust all income of the property in the form of
monthly rentals of P2,000.00", on the premise that defendants have no other visible
property which will answer for the payment of said rentals. This petition was
opposed by defendants, alleging that plaintiffs will not suffer any irreparable injury
or grave damage if the petition for receivership is not granted, particularly as
defendants are solvent and further considering that defendants have a building on the
parcel of land, the value of which must likewise be considered before plaintiffs can
be awarded possession of the land. The matter of receivership was heard by
respondent court and on May 17, 1969, it issued an Order appointing respondent
Atty. Antonio D. Amosin, Deputy Clerk of Court, as receiver with instructions to
take immediate possession of the property in litigation and to preserve, administer
and dispose of the same in accordance with law and order of the court, upon the
posting of a bond in the amount of P500.00. On May 17, 1969, the appointed
receiver took his oath. Hence, the instant
petition.chanroblesvirtualawlibrarychanrobles virtual law library
Petitioners herein pray that judgment be rendered annulling and setting aside
respondent court's complained of Orders (rated October 10, 1968. November 9,
1968, March 31, 1969, May 7, 1969 and May 17, 1969, and ordering the dismissal of
Civil Case no. L-3064 of respondent court on the ground of res judicata Petitioners
further prayed for the issuance of a writ of preliminary injunction to restrain
respondent court from proceeding with the scheduled hearings of the case, and
respondent receiver from executing the order to take immediate possession of the
property in litigation.chanroblesvirtualawlibrarychanrobles virtual law library
On June 16, 1969, this Court issued the writ of preliminary injunction prayed for,
restraining respondent court from continuing with the scheduled trial of the case and
respondent receiver from executing the order to take immediate possession of the
property in litigation and/or otherwise discharging or performing his function as
receiver.chanroblesvirtualawlibrarychanrobles virtual law library
The issue posed before Us is whether the questions which were decided in Rafael
Dinglagan, et al. vs. Lee Bun Ting et al., supra, could still be relitigated in Civil Case
No. V-3064, in view of the subsequent decision of this Court in Philippine Banking
Corporation vs. Lui She, supra.chanroblesvirtualawlibrarychanrobles virtual law
library
We resolve the issue in the negative. The decision of this Court in G. R. No. L-
5996, "Rafael Dinglasan, et al. vs. Lee Bun Ting, et al." constitutes a bar to Civil
Case No. V-3064 before the respondent court. Said Civil case, therefore, should have
been dismissed because it is a mere relitigation of the same issues previously
adjudged with finality, way back in 1956, between the same parties or their privies
and concerning the same subject matter. We have consistently held that the doctrine
of res judicata applies where, between a pending action and one which has been
finally and definitely settled, there is Identity of parties, subject matter and cause of
action.chanroblesvirtualawlibrarychanrobles virtual law library
The concept of res judicata as a "bar by prior judgment" was explained in Comilang
vs. Court of Appeals, et al., promulgated on July 15, 1975, 6 thus: 
The fundamental principle upon which the doctrine of res judicata rests is that
parties ought not to be permitted to litigate the same issue more than once; that, when
a right or fact has been jurisdically tried and determined by a court of competent
jurisdiction, or an opportunity for such trial has been given, the judgment of the
court, so long as is remains unreversed, should be conclusive upon the parties and
those in privity with them in law or estate. ...chanroblesvirtualawlibrarychanrobles
virtual law library
xxx xxx xxxchanrobles virtual law library
40
This principle of res judicata is embodied in Rule 39, Sec. 49(b) and (c) of the Rules
oil' Court, as follows; chanrobles virtual law library
(b) In other cases the judgment or order is, with respect to the matter directly
adjudged or as to any other matter that could have been raised in relation thereto,
conclusive between the parties and their successors in interest by title subsequent to
the commencement of the action or special proceeding, litigating for the same title
and in the same capacity.chanroblesvirtualawlibrarychanrobles virtual law library
(c) In any other litigation between the same parties or their successors-in- interest,
that only is deemed to have been adjudged in a former judgment which appears upon
its face to have been so adjudged, or was actually and necessarily included therein or
necessary thereto.chanroblesvirtualawlibrarychanrobles virtual law library
Sec. 49(b) enunciates that concept of res judicata known as 'bar by prior judgment'
while Sec. 49(c) refers to 'Conclusiveness of judgment.' There is bar by prior
judgment' when, between the first case where the judgment was rendered and the
second case which is sought to be barred, there is Identity of parties, subject matter
and cause of action. The judgment in the first case constitutes an absolute bar to the
subsequent action. It is final as to the claim or demand in controversy, including the
parties and those in privity with them, not only as to every matter which was offered
and received to sustain or defeat the claim or demand, but as to any other admissible
matter which might have been offered for that purpose and of all matters that could
have been adjudged in that case. But where between the first and second cases, there
is Identity of parties but no Identity or cause of action, the first judgment is
conclusive in the second case, only as to those matters actually and directly
controverted and determined and not as to matters merely involved therein. (pp. 76-
78).  law may be applied to new cases bat certainly not to an old one finally and
A comparison between the earlier case of "Rafael Dinglasan, et al. vs. Lee Bun Ting,
et al." (G. R. No. L-5996) and the case pending before respondent court 7 reveals that
the requisites for the application of the doctrine of res judiciata are present. It is
undisputed that the first case was tried and decided by a court of compentent
jurisdiction, whose decision was affirmed on appeal by this Tribunal. The parties to
the two cases are substantially the same, namely, as plaintiffs, Rafael A. Dinglasan,
Carmen A. Dinglasan, Francisco A. Dinglasan, Jr., Ramon A. Dinglasan, Lourdes A.
Dinglasan, Mercedes A. Dinglasan, Concepcion A. Dinglasan, Mariano A.
Dinglasan, Jose A. Dinglasan, Loreto A. Dinglasan, Manuel A. Dinglasan, Rizal A.
Dinglasan and Jimmy Dinglasan (the differences being the inclusions of the minor
Vicente Dinglasan in L-5996 and Jesse Dinglasan in the case before respondent
court), against defendants Lee Bun Ting and Ang Chia, in her capacity as Widow of
the deceased Lee Liong (and Administratrix of his estate in L-5996). The subject
matter of the two actions are the same, namely, that "parcel of land, Cadastral Lot
No. 398, located at Trece de Agosto Street, now Roxas Avenue, corner of Pavia St.,
in the municipality of Capiz, now Roxas City, covered by Original Certificate of
Title No. 3389 of the Office of Register of Deeds of Capiz in the name of ...
Francisco Dinglasan and originally declared under Tax (Declaration) No. 19284 also
in his name in the municipality of Capiz, but now declared as Cadastral Lots Nos.
398-A and 398-B respectively under Tax Declarations Nos. 7487 and 7490 in the
City of Roxas in the names of Ang Chia Vda. de Lee and Lee Bun Ting
respectively ... " The causes of action and the reliefs prayed for are identical - the
annulment of the sale and the recovery of the subject parcel of
land.chanroblesvirtualawlibrarychanrobles virtual law library
Notwithstanding the mode of action taken by private respondents, We find that in the
ultimate analysis, Civil Case No. V-3064 is but an attempt to reopen the issues which
were resolved in the previous case. Contrary to the contentions of private
respondents, there has been no change in the facts or in the conditions of the parties.
Neither do We find Our ruling in the Philippine Banking Corporation case
applicable to the case at bar, considering the rule that posterior changes in the
doctrine of this Court cannot retroactively be applied to nullify a prior final ruling in
the same proceeding where the prior adjudication was had, whether the case should
be civil or criminal in nature. The determination of the questions of fact and of law
by this Court on June 27, 1956 in case No. L-5996 has become the law of the case,
and may not now be disputed or relitigated by a reopening of the same questions in a
subsequent litigation between the same parties and their privies the same subject
matter. Thus, in People vs. Olarte, 8 We explained this doctrine, as follows: 
Suffice it to say that our ruling in Case L-13027, rendered on the first appeal,
constitutes the law of the case, and, even if erroneous it may no longer be disturbed
or modified since it has become final long ago. A subsequent reinterpretation of the
conclusively determined (People, vs. Pinuila, G. R. No. L-11374, May 30, 1958; 55
O.G. 4228).
Law of the case' has been defined as the opinion delivered on a former appeal. More
specifically, it means that whatever is once irrevocably established the controlling
legal rule of decision Between the same parties in the same case continues to 1)(, the
law of the case whether correct on general principles or not, so long as the facts on
which such decision was predicated continue to be the facts of the case before the
court. (21 C.J.S. 330). (cited in Pinuila
case, supra).chanroblesvirtualawlibrarychanrobles virtual law library
As a general rule a decision on a prior appeal of the same case is held to be the law
of the case whether that decision is right or wrong, the remedy of the party being to
seek a rehearing. (5 C.J.S. 1277). (also cited in Pinuila case) 
It is also aptly held in another case that: 
41
It need not be stated that the Supreme Court, being the court of last resort, is the final the prior adjudication was had, whether the case should be civil or criminal in
arbiter of all legal questions properly brought before it and that its decision in any nature. 9chanrobles virtual law library
given case constitutes the law of that particular case. Once its judgment becomes
final it is binding on all inferior courts, and hence beyond their power and authority Reasons of public policy, judicial orderliness, economy and judicial time and the
to alter or modify Kabigting vs. Acting Director of Prisons, G. R. No. L-15548, interests of litigants, as well as the peace and order of society, all require that
October 30, 1962).  stability be accorded the solemn and final judgments of the courts or tribunals of
competent jurisdiction. There can be no question that such reasons apply with greater
More categorical still is the pronouncement of this Court in Pomeroy vs. Director of force on final judgments of the highest Court of the
Prisons,L-14284-85, February 24, 1960:  land.chanroblesvirtualawlibrarychanrobles virtual law library

It will be seen that the prisoner's stand assumes that doctrines and rulings of the WHEREFORE, certiorari is granted, the Orders complained of are hereby annulled
Supreme Court operate retrospectively and that they can claim the benefit of and set aside, and respondent Judge is directed to issue an Order dismissing Civil
decisions in People vs, Hernandez; People vs. Geronimo, and People vs. Case No. V-3064. With costs against private respondents.
Dugonon (L-6025-26, July 18, 1956; L-8936, Oct. 31, 1956; and L-8926, June 29,
1957, respectively), promulgated four or more years after the prisoner applicants had
been convicted by final j judgment and started serving sentence. However, the rule
adopted by this Court (and by the Federal Supreme Court) is that judicial doctrines
have only prospective operation and do not apply to cases previously decided
(People vs. Pinuila, L-11374, promulgated May 30, 1958) 

In the foregoing decision, furthermore, this Court quoted and reiterated the rule in
the following excerpts from People vs. Pinuila, G.R No. L-11374, jam
cit.: chanrobles virtual law library

The decision of this Court on that appeal by the government from the order of
dismissal, holding that said appeal did not place the appellants, including Absalong
Bignay in double jeopardy, signed and concurred in by six justices as against three
dissenters headed by the Chief Justice, promulgated way back in the year 1952, has
long become the latter of the curse. It may be erroneous, judge by the law on double
jeopardy as recently interpreted by this same. Tribunal. Even so, it may not be
disturbed and modified. Our recent interpretation of the law may be applied to new
cases, but certainly not to an old one finally and conclusively determined. As already
stated, the majority opinion in that appeal is now the law of the
case.chanroblesvirtualawlibrarychanrobles virtual law library

The same principle, the immutability of the law of the case notwithstanding
subsequent changes of judicial opinion, has been followed in civil cases: 

Fernando vs. Crisostomo, 90 Phil. 585; Padilla vs. Paterno, 93 Phil. 884; Samahang
Magsasaka, Inc. vs. Chua Guan, L-7252, February,
1955.chanroblesvirtualawlibrarychanrobles virtual law library

It is thus clear that posterior changes in the doctrine of this Court can not
retroactively be applied to nullify a prior final ruling in the same proceeding where
42
G.R. No. 109068. January 10, 1994.*
GAUDENCIO GUERRERO, petitioner, vs. REGIONAL TRIAL COURT OF
ILOCOS NORTE, BR. XVI, JUDGE LUIS B. BELLO, JR., PRESIDING, AND
PEDRO G. HERNANDO, respondents.
Civil Procedure; Action; The requirement that the complaint or petition
should allege that earnest efforts towards a compromise have been made but that the
same failed is mandatory.—Considering that Art. 151 herein-quoted starts with the
negative word “No,” the requirement is mandatory that the complaint or petition,
which must be verified, should allege that earnest efforts towards a compromise have
been made but that the same failed, so that, “[i]f it is shown that no such efforts were
in fact made, the case must be dismissed.”
Same; Same; Same; The enumeration of “brothers and sisters” as members of
the same family does not comprehend “sisters-in-law”.—But the instant case
presents no occasion for the application of the above-quoted provisions. As early as
two decades ago, we already ruled in Gayon v. Gayon that the enumeration of
“brothers and sisters” as members of the same family does not comprehend “sisters-
in-law.” In that case, then Chief Justice Concepcion emphasized that “sisters-inlaw”
(hence, also “brothers-in-law”) are not listed under Art. 217 of the New Civil Code
as members of the same family. Since Art. 150 of the Family Code repeats
essentially the same enumeration of “members of the family,” we find no reason to
alter existing jurisprudence on the matter.
______________
*
 FIRST DIVISION.
275
VOL. 229, JANUARY 10, 1994  275  holding that "[f]ailure to allege that earnest efforts towards a compromise is
Guerrero vs. RTC, Ilocos Norte, Br. XVI
Same; Same; Same; The attempt to compromise as well as the inability to
succeed is a condition precedent to the filing of a suit between members of the same
family.—As regards the second issue, we need only reiterate our ruling in O’Laco v.
Co Cho Chit, citing Mendoza v. Court of Appeals, that the attempt to compromise as
well as the inability to succeed is a condition precedent to the filing of a suit between
members of the same family, the absence of such allegation in the complaint being
assailable at any stage of the proceeding, even on appeal, for lack of cause of action.
PETITION for review of the orders of the Regional Trial Court of Ilocos Norte, Br.
16. Bello, Jr., J.
The facts are stated in the opinion of the Court.
     Juan Jacinto for petitioner.
     Alipio V. Flores for private respondent.
BELLOSILLO, J.:
Filed by petitioner as an accion publicana1 against private respondent, this case
assumed another dimension when it was dismissed by respondent Judge on the
ground that the parties being brother-in-law the complaint should have alleged that
earnest efforts were first exerted towards a compromise.
Admittedly, the complaint does not allege that the parties exerted earnest towards a
compromise and that the same failed. However, private respondent Pedro G.
Hernando apparently overlooked this alleged defect since he did not file any motion
to dismiss nor attack the complaint on this ground in his answer. It was only on 7
December 1992, at the pre-trial conference, that the relationship of petitioner
Gaudencio Guerrero and respondent Hernando was noted by respondent Judge Luis
B. Bello, Jr., they being married to half-sisters hence are brothers-in-law, and on the
basis thereof respondent Judge gave petitioner five (5) days "to file his motion and
amended complaint" to allege that the parties were very close relatives, their
respective wives being sisters, and that the complaint to be maintained should allege
that earnest efforts towards a compromise were exerted but failed. Apparently,
respondent Judge considered this deficiency a jurisdictional defect.
On 11 December 1992, Guerrero moved to reconsider the 7 December 1992 Order
claiming that since brothers by affinity are not members of the same family, he was
not required to exert efforts towards a compromise. Guerrero likewise argued that
Hernando was precluded from raising this issue since he did not file a motion to
dismiss nor assert the same as an affirmative defense in his answer.
On 22 December 1992, respondent Judge denied the motion for reconsideration
jurisdictional such that for failure to allege same the court would be deprived of its
jurisdiction to take cognizance of the case." He warned that unless the complaint was
amended within five (5) days the case would be dismissed.
On 29 January 1993, the 5-day period having expired without Guerrero amending his
complaint, respondent Judge dismissed the case, declaring the dismissal however to
be without prejudice.
Guerrero appeals by way of this petition for review the dismissal by the court a quo.
He raises these legal issues: (a) whether brothers by affinity are considered members
of the same family contemplated in Art. 217, par. (4), and Art. 222 of the New Civil
Code, as well as under Sec. 1, par. (j), Rule 16, of the Rules of Court requiring
earnest efforts towards a compromise before a suit between them may be instituted
and maintained; and, (b) whether the absence of an allegation in the complaint that
earnest efforts towards a compromise were exerted, which efforts failed, is a ground
for dismissal for lack of jurisdiction.
43
The Constitution protects the sanctity of the family and endeavors to strengthen it as
a basic autonomous social institution.2 This is also embodied in Art. 149,3 and given
flesh in Art. 151, of the Family Code, which provides:
Art. 151. No suit between members of the same family shall
prosper unless it should appear from the verified complaint or
petition that earnest efforts toward a compromise have been made,
but that the same had failed. If it is shown that no such efforts were
in fact made, the case must be dismissed.
This rule shall not apply to cases which may not be the subject of
compromise under the Civil Code.
Considering that Art. 151 herein-quoted starts with the negative word "No", the
requirement is mandatory4 that the complaint or petition, which must be verified,
should allege that earnest efforts towards a compromise have been made but that the
same failed, so that "[i]f it is shown that no such efforts were in fact made, the case
must be dismissed."
Further, Art. 151 is contemplated by Sec. 1, par. (j), Rule 16, of the Rules of Court
which provides as a ground for motion to dismiss "(t)hat the suit is between members
of the same family and no earnest efforts towards a compromise have been made."
The Code Commission, which drafted the precursor provision in the Civil Code,
explains the reason for the requirement that earnest efforts at compromise be first
exerted before a complaint is given due course —
This rule is introduced because it is difficult to imagine a sadder
and more tragic spectacle than a litigation between members of the
same family. It is necessary that every effort should be made
toward a compromise before a litigation is allowed to breed hate
and passion in the family. It is known that a lawsuit between close
relatives generates deeper bitterness than between strangers . . . A
litigation in a family is to be lamented far more than a lawsuit
between strangers . . . 5
But the instant case presents no occasion for the application of the  amend the complaint otherwise, the court will have to dismiss the case (emphasis
above-quoted provisions. As early as two decades ago, we already ruled in Gayon
v. Gayon6 that the enumeration of "brothers and sisters" as members of the same
family does not comprehend "sisters-in-law". In that case, then Chief Justice
Concepcion emphasized that "sisters-in-law" (hence, also "brothers-in-law") are not
listed under Art. 217 of the New Civil Code as members of the same family. Since
Art. 150 of the Family Code repeats essentially the same enumeration of "members
of the family", we find no reason to alter existing jurisprudence on the matter.
Consequently, the court a quo erred in ruling that petitioner Guerrero, being a
brother-in-law of private respondent Hernando, was required to exert earnest efforts
towards a compromise before filing the present suit.
In his Comment, Hernando argues that ". . . although both wives of the parties were
not impleaded, it remains a truism that being spouses of the contending parties, and
the litigation involves ownership of real property, the spouses' interest and
participation in the land in question cannot be denied, making the suit still a suit
between half-sisters . . ."7
Finding this argument preposterous, Guerrero counters in his Reply that his "wife has
no actual interest and participation in the land subject of the . . . suit, which the
petitioner bought, according to his complaint, before he married his wife." 8 This
factual controversy however may be best left to the court a quo to resolve when it
resumes hearing the case.
As regards the second issue, we need only reiterate our ruling in 
O'Laco v. Co Cho Chit,9 citing Mendoza v. Court of Appeals, 10 that the attempt to
compromise as well as the inability to succeed is a condition precedent to the filing
of a suit between members of the same family, the absence of such allegation in the
complaint being assailable at any stage of the proceeding, even on appeal, for lack of
cause of action.
It is not therefore correct, as petitioner contends, that private respondent may be
deemed to have waived the aforesaid defect in failing to move or dismiss or raise the
same in the Answer. On the other hand, we cannot sustain the proposition of private
respondent that the case was, after all, also dismissed pursuant to Sec. 3, Rule 17, of
the Rules of Court 11 for failure of petitioner to comply with the court's order to
amend his complaint.
A review of the assailed orders does not show any directive which Guerrero
supposedly defied. The Order of 7 December 1992 merely gave Guerrero five (5)
days to file his motion and amended complaint with a reminder that the complaint
failed to allege that earnest efforts were exerted towards a compromise. The Order of
22 December 1992, which denied Guerrero's motion for reconsideration, simply
stated that "Plaintiff if it (sic) so desire must 
supplied) . . ." The Order of 29 January 1993 dismissing the case without prejudice
only made reference to an earlier order "admonishing" counsel for Guerrero to
amend the complaint, and an "admonition" is not synonymous with "order".
Moreover, since the assailed orders do not find support in our jurisprudence but, on
the other hand, are based on an erroneous interpretation and application of the law,
petitioner could not be bound to comply with them. 12
44
WHEREFORE, the petition is GRANTED and the appealed Orders of 
7 December 1992, 22 December 1992 and 29 January 1993 are SET ASIDE. The
Regional Trial Court of Laoag City, Branch 16, or whichever branch of the court the
case may now be assigned, is directed to continue with Civil Case 
No. 10084-16 with deliberate dispatch.

SO ORDERED.

G.R. No. 88586. April 27, 1990.*

CONTINENTAL CEMENT CORPORATION, petitioner, vs.COURT OF
APPEALS and MUNICIPALITY OF NORZAGARAY, respondents.
Motions; Pleadings; Rules as to filing of a Motion to dismiss by the defendant.
—On the basis of the above doctrines, the Court recapitulates the rules as follows: 1.
The trial court may in its discretion and on proper motion extend the 15-day
reglementary period for the filing of responsive pleadings. 2. During the original
reglementary 15-day period, or any extension of such period, the defendant may file
a motion to dismiss the complaint. 3. If the motion to dismiss is denied, the
defendant is allowed another fifteen days from notice of the denial to file the
responsive pleading. The full 15-day reglementary period starts all over again.
Same; Same; Same; Default; Default order was a total nullity and produced
no legal effect whatsoever because it was issued even before the petitioner could file
its answer.—Accordingly, we hold that in 
_______________
*
 FIRST DIVISION.
729
VOL. 184, APRIL 27, 1990  729 
Continental Cement Corporation vs. Court of Appeals
issuing the order of default before the expiration of the period for the filing of
its answer, the trial court deprived the petitioner of the opportunity to be heard in its
defense. The judgment by default thereafter rendered, on the basis only of the
evidence of the plaintiff, was therefore also invalid. We do not agree with the
respondent court that the petitioner should have first filed a motion to set aside the
default order before challenging the judgment by default on appeal. The evidence

45
that the default order was not served on the petitioner has not been refuted. It is not
explained why the default judgment was served on the correct counsel of the
petitioner but the default order was not. At any rate, the default order was a total
nullity and produced no legal effect whatsoever because it was issued even before
the petitioner could file its answer. This was clearly a violation of due process.
PETITION to review the decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
     Gil Venerando R. Racho for petitioner.
     Ponciano G. Hernandez for private respondent.
CRUZ, J.:
The question involved in this case is quite simple and not even new. A little research
could have easily resolved it and avoided this litigation that has come up all the way
to this Court. If we are rendering a full-blown decision instead of disposing of the
issue by a short resolution, it is not only because we see the need to reiterate certain
basic rules that should be well-settled by now. What we especially intend is to
impress upon bench and bar the value of keeping abreast of the doctrines announced
by the Court in the interpretation of its Rules.
The facts are easily recounted.
On February 1, 1985, the Municipality of Norzagaray filed a complaint for recovery
of taxes against the petitioner in the Regional Trial Court of Malolos, Bulacan.
Before the expiration of the 15-day reglementary period to answer, the petitioner
filed two successive motions for extension of time to file responsive pleadings,
which were both granted. The last day of the second extension was May 28, 1985.
On May 25, 1985, the petitioner filed a motion to dismiss the complaint on the
ground of the plaintiffs lack of capacity to sue and lack of a cause of action. The
motion was denied on July 16, 1985, "both for lack of merit and for having been
improperly filed." On July 25, 1985, the plaintiff moved to declare the petitioner in
default for having filed only the motion to dismiss and not a responsive pleading
during the extension granted. This declaration was made on August 2, 1985, and
evidence for the plaintiff was thereafter received ex parte resulting in a judgment in
its favor on February 4, 1986. The judgment was affirmed by the respondent court in
its decision dated April 7, 1989, 1 which is the subject of the present petition.
Our ruling follows.
The default order was clearly erroneous and should not have been sustained on
appeal. There is no question that the motion to dismiss was filed seasonably, within
the period of the second extension granted by the trial court. It is true that such a
motion could not be considered a responsive pleading as we have held in many
cases. 2Nevertheless, it is also true that in Section 1 of Rule 16 of the Rules of Court,
it is provided that "within the time for pleading, a motion to dismiss the action may
be made" on the grounds therein enumerated, including the grounds invoked by the
petitioner.
Moreover, it is clearly provided in Section 4 of the same Rule that:
Sec. 4. Time to plead. — If the motion to dismiss is denied or if
determination thereof is deferred, the movant shall file his answer within the
period prescribed by Rule 11, computed from the time he received notice of
denial or deferment, unless the court provides a different period.
The motion to dismiss was filed on May 25, 1985, three days before the expiration of
the second extension. Notice of its denial was served on the petitioner on July 29,
1985. From that date, the petitioner had 15 days within which to file its answer, or
until August 13, 1985. It was unable to do so, however, because of the default order
issued by the trial court on August 2, 1985. On that date, the petitioner still had
eleven days before the expiration of the 15-day reglementary period during which the
petitioner was supposed to file his answer.
The respondents are reminded of our ruling in Barraza v. Campos, 3 to wit:
Under the facts of the case at bar, respondent judge had granted petitioners
an extension of fifteen (15) days to file their answer, or up to November 18,
1978. Instead of filing the answer, petitioners filed a Motion to Dismiss the
Complaint on November 17, 1978, one (1) day before the expiration of the
period as extended by the court. This is clearly allowed under Section 1,
Rule 16, Rules of Court. A motion to dismiss is the usual, proper and
ordinary method of testing the legal sufficiency of a complaint. The issue
raised by a motion to dismiss is similar to that formerly raised by a
demurrer under the Code of Civil Procedure. (Zobel v. Abreu, 98 Phil. 343).
A motion to dismiss under any of the grounds enumerated in Section 1,
Rule 8 (now Section 1, Rule 16) of the Rules of Court, must be filed within
the time for pleading that is, within the time to answer. (J.M. Tuason v.
Rafor, L-15537, June 30, 1962, 5 SCRA 478.)
Private respondents' argument that although a motion to dismiss interrupts
the running of the period within which to file an answer, this refers to the
original period of fifteen (15) days within which to file the responsive
pleading and not to the extension of time within which to file the answer, is
without merit. There is nothing in the Rules which provides, directly or
indirectly, that the interruption of the running of the period within which to
file an answer when a motion to dismiss the complaint is filed and pending
46
 before the court, refers only to the original period of fifteen (15) days and
not to the extension of time to file the answer as granted by the court. It may
be true that under Section 4 of Rule 16, if the motion to dismiss is denied or
if the termination thereof is deferred, the movant shall file his answer within
the time prescribed by Rule 11, computed, from the time he received notice
of the denial or deferment, unless the court provides a different period.
This Section 1 of Rule 11 in relation to Section 4 of Rule 16 allows the
defendant to file his answer not only within the original fifteen (15) days
period but also within "a different period (as) fixed by the court." (Emphasis
supplied.)
The above ruling was a reiteration of Mandac v. Gumarad, 4 where we also set aside
a default order upon a showing that the motion to dismiss was filed before the
expiration of the extension granted by the trial court for the filing of the answer.
As for the period allowed the defendant to file its answer following the denial of the
motion to dismiss, the Court clearly held thus in Acosta-Ofalia v. Sundiam: 5
. . . the period for filing a responsive pleading commences to run all over
again from the time the defendant receives notice of the denial of his motion
to dismiss.
In the case at bar, the petitioners received the notice of the denial of their
motion to dismiss on September 24, 1975. Hence, they had fifteen (15) days
from said date or up to October 9, 1975, within which to file their answer.
The petitioners were declared in default on September 29, 1975, i.e., ten
(10) days before the expiration of the time for filing their answer.
Obviously, the order of default made on September 19, 1975, was
premature and is, therefore, null and void as well as the reception of private
respondents' evidence ex parte, the decision rendered thereon, and the writ
of execution, having been predicated on a void order of default.
Manifestly, respondent Judge acted with grave abuse of discretion when he
declared the petitioners in default. (Emphasis supplied.)
On the basis of the above doctrines, the Court recapitulates the rules as follows:
1. The trial court may in its discretion and on proper motion extend the 15-
day reglementary period for the filing of responsive pleadings.
2. During the original reglementary 15-day period, or any extension of such
period, the defendant may file a motion to dismiss the complaint.
3. If the motion to dismiss is denied, the defendant is allowed another
fifteen days from notice of the denial to file the responsive pleading. The
full 15-day reglementary period starts all over again.
Accordingly, we hold that in issuing the order of default before the expiration of the
period for the filing of its answer, the trial court deprived the petitioner of the
opportunity to be heard in its defense. The judgment by default thereafter rendered,
on the basis only of the evidence of the plaintiff, was therefore also invalid.
We do not agree with the respondent court that the petitioner should have first filed a
motion to set aside the default order before challenging the judgment by default on
appeal. The evidence that the default order was not served on the petitioner has not
been refuted. It is not explained why the default judgment was served on the correct
counsel of the petitioner but the default order was not. 6 At any rate, the default order
was a total nullity and produced no legal effect whatsoever because it was issued
even before the petitioner could file its answer. This was clearly a violation of due
process.
We come finally to the timeliness of the present petition.
The private respondent contends that it was filed out of time on July 22, 1989,
because the appealed decision had already become final and executory before that
date.
The record shows that the decision of the Court of Appeals was rendered on April 7,
1989, and notice thereof was served on the petitioner on April 17, 1989. On April 28,
1989, the petitioner filed a motion for reconsideration, which was denied on June 1,
1989. Notice of the denial was served on June 8, 1989, and on June 21, 1989, the
petitioner asked this Court for a 30-day extension within which to file the present
petition. The extension was granted up to July 23, 1989.
The private respondent contends that the petition was filed late because the 15-day
reglementary period should be counted from April 17, 1989, when the decision of the
respondent court was served on the petitioner. Its reason is that the motion for
reconsideration was pro forma and did not suspend the running of the said period,
which thus expired on May 3, 1989. The basis of this argument is the wording of the
denial, which ran as follows:
The issues raised and the arguments contended in the Motion for
Reconsideration of defendant-appellant are the same issues and arguments
presented in the appellant's brief, reply brief and supplemental reply brief,
which have been discussed in plaintiff-appellee's brief and resolved in the
decision of this Court dated April 7, 1989.
47
 After close scrutiny of the Motion for Reconsideration, We find no cogent
reason to reverse Our decision.
WHEREFORE, the Motion for Reconsideration is DENIED for lack of
merit. 7
While mindful of the decision cited by the private respondent, 8 we call attention to
our later pronouncement on this matter, in the case of Siy v. Court of Appeals: 9
In the first place, the very purpose of a motion for reconsideration is to
point out the findings and conclusions of the decision which in the movant's
view, are not supported by law or the evidence. The movant, therefore, is
very often confined to the amplification on further discussion of the same
issues already passed upon by the court. Otherwise, his remedy would not
be a reconsideration of the decision but a new trial or some other remedy.
Conformably, we must hold that the motion for reconsideration was not pro forma.
Hence, it did have the effect of suspending the reglementary period of appeal until
the denial of the motion was notified to the petitioner.
The rest of the petition deals with the substantive issue of whether the respondent
Municipality of Norzagaray has the power to impose business taxes on the petitioner
as a manufacturer and distributor of cement. This issue involves not only legal but
also factual considerations that have not been fully examined because the petitioner
was not given its day in court. A fair resolution of this issue requires a healing where
both parties will be given an opportunity to present their respective sides in
accordance with the procedure prescribed by the Rules of Court. No less than full
compliance with procedural due process will suffice. Hence, it is imperative that this
case be remanded to the court a quo for a full trial on the merits.
WHEREFORE, the decision of the respondent court dated April 7, 1989, the default
order of the trial court dated August 2, 1985, and the judgment by default dated
February 4, 1986, are SET ASIDE. Civil Case No. 7971-M is REMANDED to the
Regional Trial Court of Malolos, Bulacan, for further proceedings in accordance
with the rules laid down in this decision. Costs against respondent Municipality of
Norzagaray.
SO ORDERED.
No. L-48315. February 27, 1979.*
ATTY. DOMINADOR B. BORJE, petitioner, vs. HON. COURT OF FIRST
INSTANCE OF MISAMIS OCCIDENTAL, BRANCH II, VIOLETA
GALICINAO; MISAMIS OCCIDENTAL WATER DISTRICT, and THE
CHAIRMAN OF THE BOARD, respondents.
Actions; The dismissal of an action on a ground not cited in the motion to
dismiss is improper because the Court thereby prevents the plaintiff from arguing
the point in question.—Indeed, respondent Court acted with grave abuse of
discretion if not in excess of its jurisdiction in dismissing the case. Firstly, the said
order of dismissal dated March 9, 1978 is not premised on lack of jurisdiction or on
the pendency of another case between the same parties for the same cause—the
grounds alleged by private respondents in their motion to dismiss. On this score, it
has been held in the case of Malig, et al. vs. Bush, that dismissal of actions on
grounds not alleged in the motion to dismiss is improper for in so doing, a court in
effect dismisses an action motu proprio without giving the plaintiffs a chance to
argue the point and without receiving any arguments or evidence on the question.
Same; Except on grounds allowed by the Rules of Court a Trial Court cannot
order the dismissal of an action unless a motion to dismiss is filed.—In the light of
this express requirement we do not believe that the court had power to dismiss the
case without the requisite motion duly presented. x x x The only instance in which,
according to said Rules, the court may dismiss upon the court’s own motion an
action is, when the “plaintiff fails to appear at the time of the trial or to prosecute his
action for an unreasonable length of time or to comply with the Rules or any order of
the court.
Same; A trial court may not order a complaint dismissed without first ordering
a heaving where there are factual issues involved. A trial of the case on the merits
should be ordered.—Verily, the above discussion shows the need of presentation of
proof for the respective allegations of the parties. For the respondent Court to make a
summary finding of lack of malice or bad faith on the part of private respondents
from those controverted facts and then decree the dismissal of the case is, therefore,
violative of due process. In view of 
_______________
* FIRST DIVISION.
577
VOL. 88, FEBRUARY 27, 1979  577 
Borje vs. CFI of Misamis Occidental, Br. II
the exercise-of sound discretion, should have refused to consider and decide in
a summary manner and should have allowed the parties to present proof in support of
their respective stand. This is because the right to a hearing, which is the right of the
parties interested or affected to present their respective cases and submit evidence in
support thereof, is one of the primary cardinal rights of litigants.
ORIGINAL ACTION for certiorari and/or mandamus.
The facts are stated in the opinion of the Court.
     Dominador B. Borje in his own behalf.
48
GUERRERO, J.: Surprisingly though, respondent Court, through Hon. Melecio A. Genato, a
temporary judge the real issued an order dated March 9, 1978 dismissing the case not
The cause for certiorari and/or mandamus brought to the attention of this Court in on the basis of the grounds alleged by Private respondents in their motion to dismiss
this case is the alleged grave abuse of discretion amounting to lack of jurisdiction of but on the grounds that there was no malice or bad faith in the severance of the water
respondent Court of First Instance of Misamis Occidental Branch II, for dismissing coon of petitioner and that private respondent had already reconnected the same. The
the complaint for damages of petitioner in Civil Case No. OZ 686, entitled "Atty. dispositive portion thereof states :
Dominador B. Borje vs. Violets Galicinao et al." without conducting any hearing
despite the existence of controverted facts that needed to be proved.  WHEREFORE, the above entitled case is hereby for being moot
and academic without pronouncement as to cost.
Petitioner alleged that he is the counsel of the water consuming public of Ozamiz
City who were indignant against the increase of water rates imposed by respondent SO ORDERED. 2
Misamis Occidental Water District and who thereby resorted to court action for
redress and/or remedy. After acceptance of the retainer as counsel plus the A motion for reconsideration was thus filed by petitioner where he assailed the said
consequent representation of the consumers also in debates and discussions in the air, order of dismissal for having been rendered in violation of Section 1, Rule 36,
he allegedly received water bills from the Water District without indication of the Revised Rules of Court and for not being correct because although his water service
meter readings, the number of cubic meters consumed and the amounts to be paid. So has been reconnected, he has suffered damages which could be proved by him in an
he refused to pay the "blank bills." For such failure, petitioner's water service was cut impartial proceeding. He also assailed the said order, denominating it as a "midnight
on February 6, 1978.  order" because on March 9, 1978, "the Clerk of Court officially showed Hon.
Melecio A. Genato the telegram of Hon. Bienvenido A. Ebarle to schedule trials
By reason of these acts of "harassment" of private respondents resulting in his from March 10, 1978 to March 17, 1978 indicating that he has already and
"humiliation" as well as unlawful deprivation of a life's necessity, petitioner brought previously taken his oath. 3
Special Civil Case No. OZ 686, an action for damages with mandatory injunction,
before respondent Court.  An opposition thereto was filed by private respondents disputing only the claim of
petitioner that the order dated March 9, 1978 was a midnight order. Petitioner filed a
Acting on the prayer incorporated therein for pre mandatory injunction, respondent "rejoinder" reiterating that the order of dismissal is a midnight order citing the cases
Court issued an order dated February 8, 1978 enjoining respondents from of Siazon vs. Hon. Judge of CFI of Cotabato, Branch II, L-29354, January 27, 1969,
disconnecting the water service of petitioner. Upon learning that the same was 26 SCRA 664 and Li Siu Liat vs. Republic of the Philippines, L-25356, November
already cut, the Court issued another order reconnect it immediately.  26, 1967, 21 SCRA 1039. By reason of the number of arguments on the issue of
whether the order dated March 9, 1978 is a midnight order or not, the respondent
On February 15, 1978, private respondents filed a motion to dismiss the complaint Court, through Hon. Bienvenido A. Ebarle, considered the motion for
on two grounds, namely: a lack of jurisdiction of respondent Court allegedly because reconsideration as mainly anchored on the lack of authority of Judge Genato In
the "Main thrust of the subject and nature of the action or suit appearing in the denying the said motion, the Court held in an order dated April 18, 1978, as follows: 
complaint is clearly within the field of special civil action or suit action or special
proceeding 1 and (b) there is another action pending between the same parties for the While it may be true that Judge Genato might not have the
same cause, referring to Special Civil Case No. 0390.  authority anymore to issue the said order in view of the pertinent
citations made by plaintiff, the more important thing to consider is
On February 27, 1978, petitioner filed an opposition thereto stating that the issues the intrinsic merit of the complaint in relation to the order of
raised are justiciable and a court of general jurisdiction has the authority to try the dismiss The Court has gone over the pleadings of both parties,
case. He further contended that Special Civil Case No. 0390, which questioned the closely studied the issues involved, and weighed the preponderance
increased water rates unilaterally imposed by the Misamis Occidental Water District, of their implication carefully. 
the constitutionality of Presidential Decree No. 198 and the selection of the members
of the Board of Directors, is entirely different from Civil Case No. OZ-686, which is The cause of action as admitted by plaintiff is the alleged arbitrary
an action for damages due to the harassment committed by private respondents on petition by defendants of plaintiff's water pipes. However, it
petitioner.  appears that plaintiff was not singled out in the matter of water
49
 pipes disconnection, for aside from him there were three other
consumers whose connections were ordered cut and in fact
disconnected about the same time and/or occasion, an official act
of defendants indicating absence of malice. 4
In assailing the order of dismissal dated March 9, 1978 which was affirmed in the
order dated April 18, 1978, petitioner contends in this instant petition for certiorari
and/or mandamus with this Court that said dismissal cannot be on lack of cause of
action because the complaint alleged sufficient facts to show that his rights have
been seriously violated by private respondents. He also argues that it cannot be a
judgment on the pleadings because the facts are controverted. He thereby concludes
that respondent Court has gravely abused its discretion amounting to lack or excess
of jurisdiction when it dismissed the case without any evidence presented by both
parties in support of their respective positions considering that the allegations of that
he has no appeal nor any plain, speedy and adequate remedy in the ordinary course
of law, except this present petition.  District claims it has been subrogated. The said contract provides the following:
Indeed, respondent Court acted with grave abuse of discretion if not in excess of its
jurisdiction in dismissing the case. Firstly, the said order of dismissal dated March 9,
1978 is not premises on lack of jurisdiction or on the pendency of another case
between the same parties for the same cause — the grounds alleged by private
respondents m their motion to dismiss. On this score, it has been hold in the case
of Malig, et al. v Bush 5 that dismissal of actions on grounds not. alleged in the
motion to dismiss is improper for in so doing, a court in effect dismisses an
action motu proprio without giving the plaintiffs a chance to argue the point and
without receiving any arguments or evidence on the question.  In addition to the said contract, private respondents also presented their "Notice to
But while in the aforecited Malig, case, the order of is based on one of the grounds
enumerated in on I of Rule 16, Revised Rule of Court, namely: prescription the order
herein brought to Us for review is not based on any of them. In a rather fashion,
respondent Court made a on the basis merely of the pleadings filed and without
conducting any hearing, that there is no malice or bad faith on the part of private
respondents in their act of severing petitioner's water supply. Respondent court also
noted the fact that private respondents had reconnected the water pipes or water
service of petitioner and erroneously concluded that the case has become moot and
academic.  not there is really failure to pay on his part. It is his contention that there is no failure
To all intents and purposes, respondent Court decreed the dismissal on its own
initiative as in the case of Manila Herald Publishing Co., Inc, vs. Ramos, et
al, 6 where neither a motion to dismiss nor an answer had been made when the
decision was handed down. In granting the writ of certiorari, this Court ruled therein
that: "Section 1 of Rule 8 (now Section 1 of Rule 16) enumerates the grounds upon
which an action may be dismissed, and it specifically ordains that a motion to this
end be filed. In the light of this express requirement we do not believe that the court
had power to dismiss the case without the requisite motion duly presented. ... The
only instance in which, according to said Rules, the court may dismiss upon the
court's own motion on action is, when the "plaintiff falls to appear at the time of the
trial or to the prosecute his action for an unreasonable length of time or to comply
with the Rules or any order of the court. 
The real cause for concern, though, is not so much the dismissal of the case for lack
of presentation of the requisite motion but rather the dismissal thereof without
affording petitioner an opportunity to be heard despite the presence of factual issues
that needed to be proved. 
In the case at bar, respondents premised their right to cut off the water service
connection on the violation of petitioner's water service contract 7 which is the
contract signed by petitioner with the National Waterworks and Sewerage Authority
on September 16, 1958 to which private respondent Misamis Occidental Water
 
3. To pay monthly the NWSA for the water service furnished upon
presentation of the bill or within thirty (30) days from its
presentation. 
6. That the NWSA may disconnect the service upon violation of
the term of the contract. 
the Public 8 where the water consumers were likewise informed that upon failure to
settle their bills within the collection period, their water service will be shut off.
Thirdly, they annexed to their comment on this petition a facsimile copy of the
monthly bill 9 furnished each water consumer wherein it is stated that "service may
be disconnected immediately if payment of the bill is not made to the field collector
after due date. 
Indeed, all these empower the private respondents to disconnect the water service of
the consumers upon failure to pay. But the question posed by petitioner is whether or
as he was sent water bills that did not indicate the meter readings, the number of
cubic meters consumed and the amount to be paid. 
Inasmuch as private respondents deny these allegations of petitioner, an issue of fact
exists that requires presentation of proof. If the allegations of petitioner are true:
private respondents are not at all authorized to cut off his water service as the
collection period as to him would not have even started yet. For an obligation to
become due there must be a demand. 10 Default generally begins from the moment
50
the creditor demands the performance of the obligation. Without such demand, fact which cannot be decided without a trial of the case on the merits. Similarly,
judicial or extra-judicial the effects of default will not arise.  in Constantine v Estenzo 13 citing Garanciang, et al. v Garanciang, et
al 14 and Botiaga v Soler, 15 this Court held as follows: 
It is to be noted that private respondents attached to their comment on this petition
only a facsimile copy of the water bill issued to consumers while they presented to ... Summary or outright dismissals of actions are not proper where
this Court a xerox copy of the contract between NWSA and the petitioner, and a there are factual matters in dispute which need presentation and
xerox copy of the final notice, not just facsimiles thereof. Although the issue of the appreciation of evidence. The demands of a fair, and wise
effectivity of the denial of private respondents as to the alleged sending of blank bins administration of justice call for faithful adherence to legal
is not for this Court to determine, it would not be amiss to state that private precepts on procedure which ensure to litigants the opportunity to
respondents could have easily annexed also a xerox copy of the water bill sent to present their evidence and secure a ruling on all the issues
petitioner, if only to belie the latter's claims.  presented in their respective pleadings. 'Short cuts in judicial
processes are to be avoided where they impede rather than promote
At any rate, private respondents also argue that petitioner could have paid his a judicious dispensation of justice. 
account when the final notice 11 to pay was sent him since he was then already
certain of the amount of the bill. This final notice is the notice of disconnection, WHEREFORE, the petition for certiorari and/or mandamus is hereby GRANTED,
served on the day the service was cut off.  the Orders dated March 9,1978 and April 18, 1978 dismissing the complaint of
petitioner for damages and denying the motion for reconsideration thereof,
Petitioner, however, contends that this was the first time he ever came to know of the respectively, are set aside for being null and void, and respondent Court of First
sum due from him and besides, he claims that only the total amount due for the Instance of Misamis Occidental Branch II is hereby ordered to try the case on the
months of November and December, 1977 was stated. There is no specification of merits after conducting a pre-tried conference. 
the amount due for each month, the meter readings and the number of cubic meters
consumed, thus, leaving him uncertain as to how the amount was arrived at.
Assuming the truth of these allegations, private respondents would not have been G.R. No. 161309. February 23, 2005.*
entitled still to cut off petitioner's water supply at the time they cut if off as the DOUGLAS LU YM, petitioner, vs. GERTRUDES NABUA, GEORGE N. LU,
demand did not contain the requisite details and hence, improper. And even if the ALEX N. LU, CAYETANO N. LU, JR., JULIETA N. LU AND BERNADITA N.
sufficiency of the demand is conceded, petitioner has still thirty days from date of LU, respondents.
such knowledge within which to pay the same in accordance with the contract and Remedial Law; Certiorari; Motion to Dismiss; The general rule is that the
the avowed policy of the water district.  denial of a motion to dismiss cannot be questioned in a special civil action for
certiorari which is a remedy designed to correct errors of jurisdiction and not errors
Verily, the above discussion shows the need of presentation of proof for the of judgment; In order to justify the grant of the extraordinary remedy of certiorari,
respective allegations of the parties. For the respondent Court to make a finding of the denial of the motion to dismiss must have been tainted with grave abuse of
lack of malice or bad faith on the part of private respondents from those controverted discretion amounting to lack or excess of jurisdiction.—An order denying a motion
facts and then decree the dismissal of the case is, therefore, violative of due process. to dismiss is an interlocutory order which neither terminates nor finally disposes of a
In view of the doubtful question of facts presented herein, respondent court, in the case, as it leaves something to be done by the court before the case is finally decided
exercise of sound discretion, should have refused to consider and decide in a on the merits. As such, the general rule is that the denial of a motion to dismiss
summary manner and should have allowed the parties to present proof in support of cannot be questioned in a special civil action for certiorari which is a remedy 
their respective stand. This is because the right to a hearing, which is the right of the _______________
parties interested or affected to present their respective cages and submit evidence in
*
support thereof, is one of the primary cardinal rights of litigants.   SECOND DIVISION.
299
The importance of this right has been underscored in several cases of this nature VOL. 452, FEBRUARY 23, 2005  299 
decided by this Court. In one of such cases, De Leon v Henson, 12 this Court ruled Lu Ym vs. Nabua
that the dismissal of an action upon a motion to dismiss constitutes a denial of due designed to correct errors of jurisdiction and not errors of judgment. Neither
process, if, from a consideration of the pleadings, it appears that there are issues of can a denial of a motion to dismiss be the subject of an appeal unless and until a final
51
judgment or order is rendered. In order to justify the grant of the extraordinary
remedy of certiorari, the denial of the motion to dismiss must have been tainted with
grave abuse of discretion amounting to lack or excess of jurisdiction.
Same; Same; Same; There are three (3) courses of action which the trial court
may take in resolving a motion to dismiss, i.e., to grant, to deny, or to allow
amendment of the pleading.—Under this provision, there are three (3) courses of
action which the trial court may take in resolving a motion to dismiss, i.e., to grant,
to deny, or to allow amendment of the pleading. Deferment of the resolution of a
motion to dismiss if the ground relied upon is not indubitable is now disallowed in
view of the provision requiring presentation of all available arguments and evidence.
Thus, there is no longer any need to defer action until the trial as the evidence
presented, and such additional evidence as the trial court may require, would already
enable the trial court to rule upon the dubitability of the ground alleged.
Same; Same; Same; The questioned order of the trial court denying the
motion to dismiss with a mere statement that there are justiciable questions which
require a full blown trial falls short of the requirement of Rule 16.—The questioned
order of the trial court denying the motion to dismiss with a mere statement that there
are justiciable questions which require a full blown trial falls short of the requirement
of Rule 16 set forth above. Owing to the terseness of its expressed justification, the
challenged order ironically suffers from undefined breadth which is a hallmark of
imprecision. With its unspecific and amorphous thrust, the issuance is inappropriate
to the grounds detailed in the motion to dismiss.
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.
     Calderon, Davide, Trinidad & Tolentino Law
Offices;Sycip, Salazar, Hernandez & Gatmaitan for petitioner.
     M. B. Mahinay & Associates for respondents.
TINGA, J.:
One of the innovations introduced by the 1997 Rules of Civil Procedure is that the
resolution of a motion to dismiss shall state clearly and distinctly the reasons
therefor. In the case at bar, the Court is provided with the opportunity and task to
elucidate on the meaning and application of the new requirement.
Before us is a Petition for Review on Certiorari1 dated February 11, 2004 filed by
Douglas Lu Ym assailing the Court of
Appeals’ Decision2 and Resolution3 respectively dated August 20, 2003 and
December 16, 2003. The questioned Decision dismissed petitioner’s Petition4 and
affirmed the trial court’s orders dated September 16, 20025 and October 16,
20026 which respectively denied petitioner’s Omnibus Motion to Dismiss the
Amended Complaint7 and Motion for Reconsideration.8 
The facts9 as succinctly summarized by the Court of Appeals are as follows:
The instant petition stemmed from an Amended Complaint filed by the private
respondents against the petitioner, for Accounting with TRO and Injunction, on May
15, 2002.
On August 16, 2002, the petitioner filed an Omnibus Motion to Dismiss the
Amended Complaint based on the following grounds:
A. Plaintiffs’ claims are barred by a prior judgment or by the statute of
limitations {Rule 16, Sec. 1 (f)}.
B. Plaintiffs have no legal capacity to sue and/or do not have a cause of
action {Rule 16, Sec. 1(d) and/or 1(g)}.
C. Fraud and equity.
D. Docket fees not deemed paid, therefore, a condition precedent for filing
the claim has not been complied with {Rule 16, Sec. 1(j)}.
On August 29, 2002, the private respondents filed their Opposition to the Omnibus
Motion to Dismiss Amended Complaint alleging the following:
1. Plaintiffs’ claims are not barred by prior judgment nor by statute of
limitations;
2. Plaintiffs have the legal capacity to sue and have valid cause of action;
3. Docket fees have been paid by plaintiffs.
After the filing of petitioner’s Reply to the Opposition to the Motion to Dismiss
Amended Complaint, the incident was submitted for resolution pursuant to the
August 30, 2002 Order of the court a quo.
In resolving the Omnibus Motion to Dismiss the Amended Complaint, the lower
court ruled as follows:
52
There are justiciable questions raised in the pleadings of the herein parties which
are proper subject of a full blown trial. The Omnibus Motion to Dismiss Amended
Complaint is hereby denied.
SO ORDERED.
The Motion for Reconsideration filed by the petitioner was resolved by the trial court
in this wise:
An attempt to discuss on the merit of the case might be interpreted as prejudgment. It
is the better part of discretion, for the Court to deny the Motion Reconsideration of
the order denying the Motion to Dismiss.
WHEREFORE, the Motion for Reconsideration is hereby denied.
SO ORDERED.
Petitioner filed a Petition for Certiorari and Prohibition Under Rule 65 With Prayer
for the Issuance of Temporary Restraining Order and/or Writ of Preliminary
Injunction, contending that the trial court committed grave abuse of discretion in
denying his motion to dismiss. The appellate court dismissed the petition holding
that the assailed orders may only be reviewed in the ordinary course of law by an
appeal from the judgment after trial. Thus, the proper recourse was for petitioner to
have filed an answer and proceeded to trial since the issues raised in his motion to
dismiss require presentation of evidence aliunde. An exception is when the trial court
acts with grave abuse of discretion in denying the motion to dismiss, in which case a
petition for certiorari under Rule 65 may be proper. This, the trial court did not
commit. Moreover, the Court of Appeals declared that although the assailed orders
were briefly phrased, the trial court complied with the requirements set forth under
Rule 16 of the 1997 Rules of Civil Procedure (Rules) on the resolution of motions to
dismiss.
With the denial of his Motion for Reconsideration, petitioner is now before this
Court seeking a review of the appellate court’s Decision and Resolution claiming that
the denial of his motion to dismiss was a disguised deferment of the resolution of the
said motion and that the trial court failed to discuss and address each of the grounds
cited therein contrary to the express mandate of Section 3, Rule 16 of the Rules.
Petitioner further argues that the trial court committed grave abuse of discretion in
refusing to address his grounds to dismiss and thereby postponing their proper
ventilation until trial. According to him, Section 2 of the Rules provides that all
available evidence on the question of fact involved in the motion to dismiss may be
presented including evidence aliunde.Thus, the grounds for dismissal raised in his
motion to dismiss could have been resolved in a hearing prior to a full-blown trial.
Even assuming that the presentation of evidence aliunde is not allowed, petitioner
contends that the trial court and the Court of Appeals both erred in refusing to rule on
the other grounds to dismiss which do not require presentation of
evidence aliunde such as failure of the Amended Complaint to state a cause of
action/the application of the "clean hands" doctrine, and the trial court’s lack of
jurisdiction for failure of the respondents to pay the proper filing and docket fees.
Petitioner also avers that there are other grounds to dismiss the case such as res
judicata, respondents’ lack of capacity to sue/waiver and prescription, all of which
are allegedly supported by evidence on record. It is petitioner’s theory that
the Amended Complaint is a collateral attack on the duly probated and fully
implemented Last Will and Testament of Cayetano Ludo.10 According to petitioner,
Cayetano Ludo’s estate had been distributed by virtue of a Project of
Partition11 approved by the estate court in its Order12 dated January 18, 1984 in Sp.
Proc. No. 167-CEB. There are, between the estate case and Civil Case No. 27717,
identity of parties, subject matter and cause of action. Hence, any further issue
regarding the recovery of respondents’ supposed shares in Mr. Ludo’s estate through
Civil Case No. 27717 is precluded by the estate court’s final and fully executed
orders.
Petitioner moreover contends that respondents George, Alex, Cayetano, Jr., Julieta
and Bernadita Lu have lost standing to sue as a result of the document
entitled Assignment of Rights and Interests to the Inheritance from Don Cayetano
Ludo13 by which they supposedly conveyed their interest to their inheritance to Ludo
and Lu Ym Corporation. As regards respondent Gertrudes Nabua, petitioner alleges
that the Amended Complaint fails to plead his actual contribution to the properties
acquired by Mr. Ludo as required by Article 148 of the Family Code. Hence, she too
lacks capacity to sue.
Finally, petitioner claims that the case is already barred by prescription and laches.
Petitioner asserts that nearly 20 years had passed since (i) Mr. Ludo passed away on
April 14, 1983; (ii) petitioner and respondents George, Alex, Cayetano, Jr., Julieta
and Bernadita Lu executed the Project of Partition dated November 25, 1983; (iii)
respondents George, Alex, Cayetano, Jr., Julieta and Bernadita Lu executed
the Assignment of Rights and Interests to the Inheritance from Don Cayetano
Ludo dated February 22, 1984; and (iv) the estate court issued its (a) July 6,
1983 Order14 admitting Mr. Ludo’s Will to probate; (b) January 18,
1984 Order15 approving the Project of Partition and terminating the estate case; and
(c) May 18, 1984 Order16 discharging petitioner and Silvano Ludo from all their
duties, liabilities and responsibilities as executors of Mr. Ludo’s estate.
In their Comment17 dated May 28, 2004, respondents contend that the trial court did
not defer the resolution of petitioner’s motion to dismiss. On the contrary, the trial
court denied the motion considering that there are justiciable questions raised in the
53
pleadings of the parties which require a full-blown trial. According to respondents,
the appellate court properly considered this a sufficient disposition of the motion
because the Rules do not require courts at all times to cite the law and the facts upon
which a resolution is based, it being sufficient, in case of resolutions that do not
finally dispose of a case such as the denial of a motion to dismiss, to cite the legal
basis therefor.
Moreover, the estate proceedings allegedly do not bar the instant case. Having
hypothetically admitted that Mr. Ludo’s Will was simulated, respondents contend
that petitioner cannot invoke the finality of the probate proceedings as a shield
against the instant case because the simulation and fraud attendant in the execution
of the Will are personal to petitioner. Besides, the properties included in Mr. Ludo’s
Will are not the same properties sought to be accounted in the instant case.
Allegedly, the properties subject of this case are those which petitioner excluded
from Mr. Ludo’s Will during the probate proceedings, whose titles and evidence of
ownership were earlier transferred to petitioner for him to hold in trust for
respondents.
Respondents contend that the issue as to respondent Gertrudes Nabua’s shares in Mr.
Ludo’s properties as the latter’s common law wife, raised as a specific allegation in
the Amended Complaint, has been joined by petitioner’s denial. Hence, a hearing on
this matter is necessary.
Moreover, respondents insist that the trial court correctly declared that there are
justiciable questions necessitating trial on the merits because the Assignment of
Rights and Interests to the Inheritance from Don Cayetano Ludo dated February 22,
1984, by which respondents George, Alex, Cayetano, Jr., Julieta and Bernadita Lu
allegedly transferred their interest in Mr. Ludo’s estate to Ludo and Lu Ym
Corporation, was allegedly not offered and admitted in evidence. Hence, any
conclusion drawn from this document would be unwarranted.
Finally, respondents contend that petitioner never raised the issues of prescription
and laches in his motion to dismiss.
18  and distinctly state the reasons therefor. This proscribes the common practice of
In his Reply dated September 30, 2004, petitioner reiterates his submissions.
At issue is whether the Court of Appeals erred in dismissing the petition
for certiorari and in holding that the trial court did not commit grave abuse of
discretion in denying petitioner’s motion to dismiss.
An order denying a motion to dismiss is an interlocutory order which neither
terminates nor finally disposes of a case, as it leaves something to be done by the
court before the case is finally decided on the merits. As such, the general rule is that
the denial of a motion to dismiss cannot be questioned in a special civil action
for certiorari which is a remedy designed to correct errors of jurisdiction and not
errors of judgment. Neither can a denial of a motion to dismiss be the subject of an
appeal unless and until a final judgment or order is rendered. In order to justify the
grant of the extraordinary remedy of certiorari, the denial of the motion to dismiss
must have been tainted with grave abuse of discretion amounting to lack or excess of
jurisdiction.19 
At the core of the present petition is the question of whether the trial court’s denial of
petitioner’s motion to dismiss on the ground that "[T]here are justiciable questions
raised in the pleadings of the herein parties which are proper subject of a full blown
trial"20 contravenes Sec. 3, Rule 16 of the Rules and constitutes grave abuse of
discretion on the part of the trial court.
Sec. 3, Rule 16 of the Rules provides:
Sec. 3. Resolution of motion.—After the hearing, the court may dismiss the action or
claim, deny the motion or order the amendment of the pleading.
The court shall not defer the resolution of the motion for the reason that the ground
relied upon is not indubitable.
In every case, the resolution shall state clearly and distinctly the reasons therefor.
Under this provision, there are three (3) courses of action which the trial court may
take in resolving a motion to dismiss, i.e., to grant, to deny, or to allow amendment
of the pleading. Deferment of the resolution of a motion to dismiss if the ground
relied upon is not indubitable is now disallowed in view of the provision21 requiring
presentation of all available arguments and evidence. Thus, there is no longer any
need to defer action until the trial as the evidence presented, and such additional
evidence as the trial court may require, would already enable the trial court to rule
upon the dubitability of the ground alleged.22 
Further, it is now specifically required that the resolution on the motion shall clearly
perfunctorily dismissing the motion for "lack of merit." Such cavalier dispositions
can often pose difficulty and misunderstanding on the part of the aggrieved party in
taking recourse therefrom and likewise on the higher court called upon to resolve the
same, usually on certiorari.23 
The questioned order of the trial court denying the motion to dismiss with a mere
statement that there are justiciable questions which require a full blown trial falls
short of the requirement of Rule 16 set forth above. Owing to the terseness of its
expressed justification, the challenged order ironically suffers from undefined
54
breadth which is a hallmark of imprecision. With its unspecific and amorphous
thrust, the issuance is inappropriate to the grounds detailed in the motion to dismiss.
While the requirement to state clearly and distinctly the reasons for the trial court’s
resolutory order under Sec. 3, Rule 16 of the Rules does call for a liberal
interpretation, especially since jurisprudence dictates that it is decisions on cases
submitted for decision that are subject to the stringent requirement of specificity of
rulings under Sec. 1, Rule 3624 of the Rules, the trial court’s order in this case leaves
too much to the imagination.
It should be noted that petitioner raised several grounds in his motion to
dismiss, i.e., bar by prior judgment or by the statute of limitations, lack of capacity to
sue, lack of cause of action, and non-payment of docket fees.
Specifically, petitioner sought the dismissal of the complaint, arguing as follows:
A. Plaintiffs’ claims are barred by a prior judgment or by the statute of limitations
(Rule 16, Sec. 1(f))
….
5. Plaintiffs now raise the issue that Cayetano Ludo, allegedly then
"in failing health" was unduly influenced by the defendant to
execute a "simulated will" to cheat the government of enormous
amounts of estate and inheritance taxes.
6. Plaintiffs may no longer do so, for, subject to the right to appeal,
the allowance of a will is conclusive as to its due execution, Rule
75, Sec. 1. "Due execution" settles the extrinsic validity of the
will, i.e., whether the testator, being of sound mind freely
executed the will in accordance with the formalities by
law.1ªvvphi1.nét
7. It was conclusively established by the allowance of the will,
which plaintiffs did not appeal, that the following circumstances
were not present:
Rule 76, Sec. 9
(b) …the testator was insane, or otherwise mentally incapable to
make a will, at the time of its execution;
(c) …(the will) was executed under duress, or the influence of fear,
or threats;
(d) …(the will) was procured by undue and improper pressure and
influence, on the part of the beneficiary, or of some other person
for his benefit;
8. The foregoing are the precise sort of questions and issues plaintiffs
Nabua and her children are illicitly seeking to try by independent action in a
different sala. Why are they doing this? Because the time for them to bring
their claims in the probate court has prescribed. The judicial decree of
distribution vests title in the distributees and any objections thereto should
be raised in a seasonable appeal, otherwise it will have binding effect like
any other judgment in rem.
. . . . 
B. Plaintiffs have no legal capacity to sue and/or do not have a cause of action (Rule
16, Secs. 1(d) and/or 1(g))
12. The following documents reveal that the plaintiff Nabua could never
have been the common-law wife that she claims to be, because Cayetano
Ludo was married to someone else:
(a) Petition for Naturalization by Cayetano Ludo filed in 1946,
wherein he declares in paragraph FIFTH that he is married to Uy
Ching Gee (ANNEX "J");
(b) Order of the Court of First Instance dated June 7, 1949,
wherein it is stated that Cayetano Ludo has established in open
court that he is married to Uy Ching Gee, a native of Amoy, China,
who likewise lived with him in the Philippines and that they have
three legitimate children born 1937, 1939 and 1942 (ANNEX
"K");
(c) Identification Certificate No. 5697 issued by the Bureau of
Immigration to Liong Cheng on November 18, 1957, also known
as Visitacion Uy Ching Gui, recognizing her as a citizen of the
Philippines being the lawful wife of Cayetano Ludo (ANNEX
"L");
55
 (d) Death Certificate of Visitacion Uy dated August 7, 1969,
wherein it is indicated that her civil status is married and the
surviving spouse is Cayetano Ludo (ANNEX "M");
(e) Death Certificate of Cayetano Ludo dated July 16, 1986,
wherein it is indicated that his surviving spouse is Florame delos
Reyes Ludo (ANNEX "B").
13. Plaintiffs-children of Nabua do not have legal capacity or cause of
action because they are not the real parties in interest.
13. [sic] Their distributive share in the estate of Cayetano Ludo having been
assigned to Ludo and LuYm Corporation (ANNEX "G"), plaintiffs-
children of Nabua are not real parties in interest; Ludo & LuYm Corp.
is. Every action must be prosecuted or defended in the name of the real
party in interest.
. . . .  the trial court should be given the opportunity to correct itself by evaluating the
C. Fraud and Equity
14. The "fraud" (confused by plaintiffs to mean undue influence) of
"imposing" a "stimulated will" on Cayetano Ludo has
been conclusively negated by the allowance of the will, as provided in Rule
75, Sec. 1, above discussed.
15. Furthermore, an action for fraud prescribes 4 years from the execution
of the "fraudulent" or "simulated will," which was long ago in this case.
16. But more important than any of the foregoing is that plaintiffs who
participated in the probate proceedings and signed the settlement are
precluded by "dirty hands" from claiming relief.
17. By their own admission (to which they are bound by Rule 130, Sec. 26),
plaintiffs were parties to a settlement pursuant to a fraudulent "simulated
will" which they portrayed as a massive scheme to defraud the government
of estate and inheritance taxes.
. . . . 25 (Emphases in the original.)
Having raised substantial grounds for dismissal, the trial court should have, at the
very least, specified which of these grounds require a full-blown trial. This would
have enabled the defendant to determine the errors that should be the subject of his
motion for reconsideration or petition for certiorari, and given the appellate court
sufficient basis for determining the propriety of the denial of the motion to dismiss.
In this regard, judges should be reminded to take pains in crafting their orders,
stating therein clearly and comprehensively the reasons for their issuance, which are
necessary for the full understanding of the action taken.26 
Accordingly, considering that the order of the trial court is a patent nullity for failure
to comply with a mandatory provision of the Rules, petitioner was correct in directly
assailing the order on certiorari before the Court of Appeals.1awphi1.nét
However, while it was error for the appellate court to rule that the trial court did not
commit grave abuse of discretion in denying petitioner’s motion to dismiss, it does
not necessarily follow that the motion to dismiss should have been
granted.l^vvphi1.net The instant petition raises significant factual questions as
regards petitioner’s claim that the Amended Complaint should have been dismissed
which are properly addressed to the trial court. Moreover, it cannot be gainsaid that
evidence, applying the law and making an appropriate ruling.27 A remand of the case
to the trial court for further proceedings is, therefore, in order.
WHEREFORE, the petition is GRANTED in part. The Decision of the Court of
Appeals dated August 20, 2003 sustaining the trial court’s denial of petitioner’s
motion to dismiss, as well as its Resolution dated December 16, 2003 denying
reconsideration, is REVERSED and SET ASIDE. The case is REMANDED to the
Regional Trial Court of Cebu City for further proceedings to resolve anew with
deliberate dispatch the motion to dismiss in accordance with Section 3, Rule 16 of
the 1997 Rules of Civil Procedure as elucidated in this Decision.
SO ORDERED.
56

G.R. No. 153567. February 18, 2008.*
LIBRADA M. AQUINO, petitioner, vs. ERNEST S. AURE,1respondent.
Actions; Barangay Justice System; Katarungang Pambarangay Law (P.D.
1508); The barangay justice system was established primarily as a means of easing
up the congestion of cases in the judicial courts; The primordial objective of
Presidential Decree No. 1508 is to reduce the number of court litigations and
prevent the deterioration of the quality of justice which has been brought by the
indiscriminate filing of cases in the courts; P.D. No. 1508 is now incorporated in
R.A. No. 7160, otherwise known as The Local Government Code, which took effect
on 1 January 1992.—The barangay justice system was established primarily as a
means of easing up the congestion of cases in the judicial courts. This could be
accomplished through a proceeding before the barangay courts which, according to
the conceptor of the system, the late Chief Justice Fred Ruiz Castro, is essentially
arbitration in character, and to make it truly effective, it should also be compulsory.
With this primary objective of the barangay justice system in mind, it would be
wholly in keeping with the underlying philosophy of Presidential Decree No. 1508,
otherwise known as the Katarungang Pambarangay Law, and the policy behind it
would be better served if an out-of-court settlement of the case is reached voluntarily
by the parties. The primordial objective of Presidential Decree No. 1508 is to reduce
the number of court litigations and prevent the deterioration of the quality of justice
which has been brought by the indiscriminate filing of cases in the courts. To ensure
this objective, Section 6 of Presidential Decree No. 1508 requires the parties to
undergo a conciliation process before the Lupon Chairman or the Pangkat ng
Tagapagkasundo as a precondition to filing a complaint in court subject to certain
exceptions which are inapplicable to this case. The said section has been declared
compulsory in nature. Presidential Decree No. 1508 is now incorporated in Repub-
_______________
* THIRD DIVISION.
1 Substituted by his heirs: Agnes J. Aure, Ma. Cecilia Aure-Quinsay, Ma.
Concepcion Criselda Aure-Barrion, Ma. Erna J. Aure, Ernest Michael J. Aure and
Ma. Melissa J. Aure; Rollo, p. 159.
72lic Act No. 7160, otherwise known as The Local Government Code, which
took effect on 1 January 1992.
Same; Same; Jurisdictions; Exhaustion of Administrative Remedies; While it is
true that the precise technical effect of failure to comply with the requirement of
Section 412 of the Local Government Code on barangay conciliation is much the
same effect produced by non-exhaustion of administrative remedies—the complaint
becomes afflicted with the vice of pre-maturity—the conciliation process is not a
jurisdictional requirement, so that non-compliance therewith cannot affect the
jurisdiction which the court has otherwise acquired over the subject matter or over
the person of the defendant.—It is true that the precise technical effect of failure to
comply with the requirement of Section 412 of the Local Government Code
on barangay conciliation (previously contained in Section 5 of Presidential Decree
No. 1508) is much the same effect produced by non-exhaustion of administrative
remedies—the complaint becomes afflicted with the vice of pre-maturity; and the
controversy there alleged is not ripe for judicial determination. The complaint
becomes vulnerable to a motion to dismiss. Nevertheless, the conciliation process is
not a jurisdictional requirement, so that non-compliance therewith cannot affect the
jurisdiction which the court has otherwise acquired over the subject matter or over
the person of the defendant.
Same; Same; Same; Pleadings and Practice; The fact that the defendant raised
the issue of non-recourse to barangay mediation proceedings during the pre-trial
and in her Position Paper is of no moment, for the same should be impleaded in her
Answer.—By Aquino’s failure to seasonably object to the deficiency in the
Complaint, she is deemed to have already acquiesced or waived any defect attendant
thereto. Consequently, Aquino cannot thereafter move for the dismissal of the
ejectment suit for Aure and Aure Lending’s failure to resort to
the barangay conciliation process, since she is already precluded from doing so. The
fact that Aquino raised such objection during the pre-trial and in her Position Paper is
of no moment, for the issue of non-recourse to barangaymediation proceedings
should be impleaded in her Answer.
Same; Same; Same; Same; Statutory Construction; It is clear and categorical
in Section 1, Rule 9 of the Revised Rules of Court that failure to raise defense and
objections in a motion to dismiss or in an answer is deemed a waiver thereof—and
basic is the rule in statutory 73construction that when the law is clear and free from
any doubt or ambiguity, there is no room for construction or interpretation.—The
spirit that surrounds the foregoing statutory norm is to require the party filing a
pleading or motion to raise all available exceptions for relief during the single
opportunity so that single or multiple objections may be avoided. It is clear and
categorical in Section 1, Rule 9 of the Revised Rules of Court that failure to raise
defenses and objections in a motion to dismiss or in an answer is deemed a waiver
thereof; and basic is the rule in statutory construction that when the law is clear and
free from any doubt or ambiguity, there is no room for construction or interpretation.
As has been our consistent ruling, where the law speaks in clear and categorical
language, there is no occasion for interpretation; there is only room for application.
Thus, although Aquino’s defense of non-compliance with Presidential Decree No.
1508 is meritorious, procedurally, such defense is no longer available for failure to
plead the same in the Answer as required by the omnibus motion rule.
Same; Same; Same; A court may not motu proprio dismiss a case on the
ground of failure to comply with the requirement for barangay conciliation, this
57
ground not being among those mentioned for the dismissal by the trial court of a
case on its own initiative.—Neither could the MeTC dismiss Civil Case No.
17450 motu proprio.The 1997 Rules of Civil Procedure provide only three instances
when the court may motu proprio dismiss the claim, and that is when the pleadings
or evidence on the record show that (1) the court has no jurisdiction over the subject
matter; (2) there is another cause of action pending between the same parties for the
same cause; or (3) where the action is barred by a prior judgment or by a statute of
limitations. Thus, it is clear that a court may not motu proprio dismiss a case on the
ground of failure to comply with the requirement for barangay conciliation, this
ground not being among those mentioned for the dismissal by the trial court of a case
on its own initiative.
Jurisdictions; Ejectment; Jurisdiction in ejectment cases is determined by the
allegations pleaded in the complaint.—Jurisdiction in ejectment cases is determined
by the allegations pleaded in the complaint. As long as these allegations demonstrate
a cause of action either for forcible entry or for unlawful detainer, the court acquires
jurisdiction over the subject matter. This principle holds, even if the 74facts proved
during the trial do not support the cause of action thus alleged, in which instance the
court—after acquiring jurisdiction—may resolve to dismiss the action for
insufficiency of evidence.
Same; Same; Ownership; Inferior courts are now conditionally vested with
adjudicatory power over the issue of title or ownership raised by the parties in an
ejectment suit.—This Court ruled in Hilario v. Court of Appeals, 260 SCRA 420
(1996): Thus, an adjudication made therein regarding the issue of ownership should
be regarded as merely provisional and, therefore, would not bar or prejudice an
action between the same parties involving title to the land. The foregoing doctrine is
a necessary consequence of the nature of forcible entry and unlawful detainer cases
where the only issue to be settled is the physical or material possession over the real
property, that is, possession de facto and not possession de jure.” In other words,
inferior courts are now “conditionally vested with adjudicatory power over the issue
of title or ownership raised by the parties in an ejectment suit.” These courts shall
resolve the question of ownership raised as an incident in an ejectment case where a
determination thereof is necessary for a proper and complete adjudication of the
issue of possession.
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.
    Benigno M. Puno for petitioner.
    M.C. Santos Law Office for respondent.  as collateral and turn over the proceeds thereof to the spouses Aquino. However,
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari2under Rule 45 of the
Revised Rules of Court filed by petitioner Librada M. Aquino (Aquino), seeking the
reversal and the
_______________
2 Rollo, pp. 8-21.
75setting aside of the Decision3 dated 17 October 2001 and the Resolution 4 dated 8
May 2002 of the Court of Appeals in CA-G.R. SP No. 63733. The appellate court, in
its assailed Decision and Resolution, reversed the Decision 5 of the Regional Trial
Court (RTC) of Quezon City, Branch 88, affirming the Decision 6 of the Metropolitan
Trial Court (MeTC) of Quezon City, Branch 32, which dismissed respondent Ernesto
Aure’s (Aure) complaint for ejectment on the ground, inter alia, of failure to comply
with barangay conciliation proceedings.
The subject of the present controversy is a parcel of land situated in Roxas
District, Quezon City, with an area of 449 square meters and covered by Transfer
Certificate of Title (TCT) No. 205447 registered with the Registry of Deeds of
Quezon City (subject property).7
Aure and E.S. Aure Lending Investors, Inc. (Aure Lending) filed a Complaint for
ejectment against Aquino before the MeTC docketed as Civil Case No. 17450. In
their Complaint, Aure and Aure Lending alleged that they acquired the subject
property from Aquino and her husband Manuel (spouses Aquino) by virtue of a Deed
of Sale8 executed on 4 June 1996. Aure claimed that after the spouses Aquino
received substantial consideration for the sale of the subject property, they refused to
vacate the same.9
In her Answer,10 Aquino countered that the Complaint in Civil Case No. 17450
lacks cause of action for Aure and Aure Lending do not have any legal right over the
subject property.
_______________
3 Penned by Associate Justice Ramon Mabutas, Jr. with Associate Justices
Roberto A. Barrios and Edgardo P. Cruz, concurring. Rollo, pp. 21-26.
4 Id., at p. 28.
5 Records, pp. 514-515.
6 Id., at pp. 436-439.
7 Id., at pp. 482-483.
8 Id.
9 Id., at pp. 1-7.
10 Id., at pp. 11-15. 
76Aquino admitted that there was a sale but such was governed by the Memorandum
of Agreement11 (MOA) signed by Aure. As stated in the MOA, Aure shall secure a
loan from a bank or financial institution in his own name using the subject property
even after Aure successfully secured a loan, the spouses Aquino did not receive the
proceeds thereon or benefited therefrom.
On 20 April 1999, the MeTC rendered a Decision in Civil Case No. 17450 in
favor of Aquino and dismissed the Complaint for ejectment of Aure and Aure
Lending for non-compliance with the barangay conciliation process, among other
grounds. The MeTC observed that Aure and Aquino are residents of the
same barangay but there is no showing that any attempt has been made to settle the
58
case amicably at the barangay level. The MeTC further observed that Aure Lending
was improperly included as plaintiff in Civil Case No. 17450 for it did not stand to
be injured or benefited by the suit. Finally, the MeTC ruled that since the question of
ownership was put in issue, the action was converted from a mere detainer suit to one
“incapable of pecuniary estimation” which properly rests within the original
exclusive jurisdiction of the RTC. The dispositive portion of the MeTC Decision
reads:
“WHEREFORE, premises considered, let this case be, as it is, hereby ordered
DISMISSED. [Aquino’s] counterclaim is likewise dismissed.”12  jurisdiction over the ejectment case for jurisdiction over the subject matter is
On appeal, the RTC affirmed the dismissal of the Complaint on the same ground
that the dispute was not brought before the Barangay Council for conciliation before
it was filed in court. In a Decision dated 14 December 2000, the RTC stressed that
the barangay conciliation process is a conditio sine qua non for the filing of an
ejectment complaint involving
_______________
11 Id., at pp. 14-15.
12 Id., at p. 439.  Reconsideration interposed by Aquino for it was merely a rehash of the arguments
77residents of the same barangay, and failure to comply therewith constitutes
sufficient cause for the dismissal of the action. The RTC likewise validated the ruling
of the MeTC that the main issue involved in Civil Case No. 17450 is incapable of
pecuniary estimation and cognizable by the RTC. Hence, the RTC ruled:
“WHEREFORE, finding no reversible error in the appealed judgment, it is
hereby affirmed in its entirety.”13  WHETHER
Aure’s Motion for Reconsideration was denied by the RTC in an Order 14 dated
27 February 2001.
Undaunted, Aure appealed the adverse RTC Decision with the Court of Appeals
arguing that the lower court erred in dismissing his Complaint for lack of cause of
action. Aure asserted that misjoinder of parties was not a proper ground for dismissal
of his Complaint and that the MeTC should have only ordered the exclusion of Aure
Lending as plaintiff without prejudice to the continuation of the proceedings in Civil
Case No. 17450 until the final determination thereof. Aure further asseverated that
mere allegation of ownership should not divest the MeTC of jurisdiction over the
ejectment suit since jurisdiction over the subject matter is conferred by law and
should not depend on the defenses and objections raised by the parties. Finally, Aure
contended that the MeTC erred in dismissing his Complaint with prejudice on the
ground of non-compliance with barangay conciliation process. He was not given the
opportunity to rectify the procedural defect by going through the barangay mediation
proceedings and, thereafter, refile the Complaint.15
On 17 October 2001, the Court of Appeals rendered a Decision, reversing the
MeTC and RTC Decisions and remanding the case to the MeTC for further
proceedings and final deter-
_______________
13 Id., at p. 516.
14 Id., at p. 537.
15 Id., at pp. 465-480.
78mination of the substantive rights of the parties. The appellate court declared that
the failure of Aure to subject the matter to barangay conciliation is not a
jurisdictional flaw and it will not affect the sufficiency of Aure’s Complaint since
Aquino failed to seasonably raise such issue in her Answer. The Court of Appeals
further ruled that mere allegation of ownership does not deprive the MeTC of
conferred by law and is determined by the allegations advanced by the plaintiff in his
complaint. Hence, mere assertion of ownership by the defendant in an ejectment case
will not oust the MeTC of its summary jurisdiction over the same. The decretal part
of the Court of Appeals Decision reads:
“WHEREFORE, premises considered, the petition is hereby GRANTED—and
the decisions of the trial courts below REVERSED and SET ASIDE. Let the records
be remanded back to the court aquo for further proceedings—for an eventual
decision of the substantive rights of the disputants.”16 
In a Resolution dated 8 May 2002, the Court of Appeals denied the Motion for
set forth in her previous pleadings which were already considered and passed upon
by the appellate court in its assailed Decision.
Aquino is now before this Court via the Petition at bar raising the following
issues: 
I.
OR NOT NON-COMPLIANCE WITH
THE BARANGAY CONCILIATION PROCEEDINGS IS A JURISDICTIONAL
DEFECT THAT WARRANTS THE DISMISSAL OF THE COMPLAINT.
II.
WHETHER OR NOT ALLEGATION OF OWNERSHIP OUSTS THE MeTC OF
ITS JURISDICTION OVER AN EJECTMENT CASE.
_______________
16 Rollo, p. 25.
79
The barangay justice system was established primarily as a means of easing up
the congestion of cases in the judicial courts. This could be accomplished through a
proceeding before the barangay courts which, according to the conceptor of the
system, the late Chief Justice Fred Ruiz Castro, is essentially arbitration in character,
and to make it truly effective, it should also be compulsory. With this primary
objective of the barangay justice system in mind, it would be wholly in keeping with
the underlying philosophy of Presidential Decree No. 1508, otherwise known as
the Katarungang Pambarangay Law, and the policy behind it would be better served
if an out-of-court settlement of the case is reached voluntarily by the parties. 17
59
 The primordial objective of Presidential Decree No. 1508 is to reduce the
number of court litigations and prevent the deterioration of the quality of justice
which has been brought by the indiscriminate filing of cases in the courts. 18To ensure
this objective, Section 6 of Presidential Decree No. 150819
_______________
17 People v. Caruncho, Jr., 212 Phil. 16, 27; 127 SCRA 16, 29 (1984).
18 Galuba v. Laureta, G.R. No. 71091, 29 January 1988, 157 SCRA 627, 634.
19 SECTION 6. Conciliation, pre-condition to filing of complaint.—No
complaint, petition, action or proceeding involving any matter within the authority of
the Lupon as provided in Section 2 hereof shall be filed or instituted in court or any
other government office for adjudication unless there has been a confrontation of the
parties before the LuponChairman or the Pangkat and no conciliation or settlement
has been reached as certified by the Lupon Secretary or the Pangkat Secretary
attested by the Lupon or Pangkat Chairman, or unless the settlement has been
repudiated. However, the parties may go directly to court in the following cases:
[1] Where the accused is under detention;
[2] Where a person has otherwise been deprived of personal liberty calling
for habeas corpus proceedings;
80requires the parties to undergo a conciliation process before the Lupon Chairman
or the Pangkat ng Tagapagkasundoas a precondition to filing a complaint in court
subject to certain exceptions20 which are inapplicable to this case. The said section
has been declared compulsory in nature.21
Presidential Decree No. 1508 is now incorporated in Republic Act No. 7160,
otherwise known as The Local Government Code, which took effect on 1 January
1992.
The pertinent provisions of the Local Government Code making conciliation a
precondition to filing of complaints in court, read:
“SEC. 412. Conciliation.—(a) Pre-condition to filing of complaint in court.—
No complaint, petition, action, or proceeding involving any matter within the
authority of the lupon shall be filed or instituted directly in court or any other
government office for adjudication, unless there has been a confrontation between
the parties before the lupon chairman or the pangkat, and that no conciliation or
settlement has been reached as certified by the luponsecretary or pangkat secretary as
attested to by the lupon chairman or pangkat
_______________
[3]  Actions coupled with provisional remedies such as preliminary injunction,
attachment, delivery of personal property and support pendente lite; and
[4] Where the action may otherwise be barred by the Statute of Limitations.
20 Paragraph 2, Section 6, PD No. 1508.
However, the parties may go directly to court in the following cases:
[1] Where the accused is under detention;
[2] Where a person has otherwise been deprived of personal liberty calling
for habeas corpus proceedings;
[3]  Actions coupled with provisional remedies such as preliminary injunction,
attachment, delivery of personal property and support pendente lite; and
[4] Where the action may otherwise be barred by the Statute of Limitations.
21 Morata v. Go, 210 Phil. 367, 372; 125 SCRA 444, 453 (1983). 
81chairman or unless the settlement has been repudiated by the parties thereto.
 (b) Where parties may go directly to court.—The parties may go directly to
court in the following instances:
(1) Where the accused is under detention;
(2) Where a person has otherwise been deprived of personal liberty calling
for habeas corpus proceedings;
(3) Where actions are coupled with provisional remedies such as preliminary
injunction, attachment, delivery of personal property, and support pendente lite; and
(4) Where the action may otherwise be barred by the statute of limitations.
(c) Conciliation among members of indigenous cultural communities.—The
customs and traditions of indigenous cultural communities shall be applied in settling
disputes between members of the cultural communities.
SEC. 408. Subject Matter for Amicable Settlement; Exception Therein.—
The lupon of each barangay shall have authority to bring together the parties actually
residing in the same city or municipality for amicable settlement of all disputes
except:
(a) Where one party is the government or any subdivision or instrumentality
thereof;
(b) Where one party is a public officer or employee, and the dispute relates to
the performance of his official functions;
(c) Offenses punishable by imprisonment exceeding one (1) year or a fine
exceeding Five thousand pesos (P5,000.00);
(d) Offenses where there is no private offended party;
(e) Where the dispute involves real properties located in different cities or
municipalities unless the parties thereto agree to submit their differences to amicable
settlement by an appropriate lupon;
(f) Disputes involving parties who actually reside in barangaysof different
cities or municipalities, except where such barangayunits adjoin each other and the
parties thereto agree to submit their differences to amicable settlement by an
appropriate lupon;82
(g) Such other classes of disputes which the President may determine in the
interest of justice or upon the recommendation of the Secretary of Justice.” 
There is no dispute herein that the present case was never referred to
the Barangay Lupon for conciliation before Aure and Aure Lending instituted Civil
Case No. 17450. In fact, no allegation of such barangay conciliation proceedings
was made in Aure and Aure Lending’s Complaint before the MeTC. The only issue
to be resolved is whether non-recourse to the barangay conciliation process is a
jurisdictional flaw that warrants the dismissal of the ejectment suit filed with the
MeTC.
60
 Aquino posits that failure to resort to barangayconciliation makes the action for
ejectment premature and, hence, dismissible. She likewise avers that this objection
was timely raised during the pre-trial and even subsequently in her Position Paper
submitted to the MeTC.
We do not agree.
It is true that the precise technical effect of failure to comply with the
requirement of Section 412 of the Local Government Code on barangay conciliation
(previously contained in Section 5 of Presidential Decree No. 1508) is much the
same effect produced by non-exhaustion of administrative remedies—the complaint
becomes afflicted with the vice of pre-maturity; and the controversy there alleged is
not ripe for judicial determination. The complaint becomes vulnerable to a motion to
dismiss.22Nevertheless, the conciliation process is not a jurisdictional
requirement, so that non-compliance therewith cannot affect the jurisdiction
which the court has otherwise acquired over the subject matter or over the
person of the defendant.23
_______________
22 Uy v. Contreras, G.R. Nos. 111416-17, 26 September 1994, 237 SCRA 167,
170.
23 Presco v. Court of Appeals, G.R. No. 82215, 10 December 1990, 192 SCRA
232, 240-241.
83As enunciated in the landmark case of Royales v. Intermediate Appellate
Court:24
“Ordinarily, non-compliance with the condition precedent prescribed by P.D.
1508 could affect the sufficiency of the plaintiff's cause of action and make his
complaint vulnerable to dismissal on ground of lack of cause of action or
prematurity; but the same would not prevent a court of competent jurisdiction
from exercising its power of adjudication over the case before it, where the
defendants, as in this case, failed to object to such exercise of jurisdiction in
their answer and even during the entire proceedings a quo.
While petitioners could have prevented the trial court from exercising
jurisdiction over the case by seasonably taking exception thereto, they instead
invoked the very same jurisdiction by filing an answer and seeking affirmative relief
from it. What is more, they participated in the trial of the case by cross-examining
respondent Planas. Upon this premise, petitioners cannot now be allowed
belatedly to adopt an inconsistent posture by attacking the jurisdiction of the
court to which they had submitted themselves voluntarily. x x x” (Emphasis
supplied.)
In the case at bar, we similarly find that Aquino cannot be allowed to attack the
jurisdiction of the MeTC over Civil Case No. 17450 after having submitted herself
voluntarily thereto. We have scrupulously examined Aquino’s Answer before the
MeTC in Civil Case No. 17450 and there is utter lack of any objection on her part to
any deficiency in the complaint which could oust the MeTC of its jurisdiction.
We thus quote with approval the disquisition of the Court of Appeals:
“Moreover, the Court takes note that the defendant [Aquino] herself did not raise
in defense the aforesaid lack of conciliation proceedings in her answer, which raises
the exclusive affirmative defense of simulation. By this acquiescence, defendant
[Aquino] is deemed to have waived such objection. As held in a case of similar
_______________
24 212 Phil. 432, 435-436; 127 SCRA 470, 473-474 (1984).
84circumstances, the failure of a defendant [Aquino] in an ejectment suit to
specifically allege the fact that there was no compliance with
the barangay conciliation procedure constitutes a waiver of that defense. x x x.”25 
By Aquino’s failure to seasonably object to the deficiency in the Complaint, she
is deemed to have already acquiesced or waived any defect attendant thereto.
Consequently, Aquino cannot thereafter move for the dismissal of the ejectment suit
for Aure and Aure Lending’s failure to resort to the barangay conciliation process,
since she is already precluded from doing so. The fact that Aquino raised such
objection during the pre-trial and in her Position Paper is of no moment, for the issue
of non-recourse to barangaymediation proceedings should be impleaded in
her Answer.
As provided under Section 1, Rule 9 of the 1997 Rules of Civil Procedure:
“Section 1. Defenses and objections not pleaded.—Defenses and objections
not pleaded either in a motion to dismiss or in the answer are deemed
waived. However, when it appears from the pleadings or the evidence on record that
the court has no jurisdiction over the subject matter, that there is another action
pending between the same parties for the same cause, or that the action is barred by a
prior judgment or by statute of limitations, the court shall dismiss the claim.”
(Emphasis supplied.) 
While the aforequoted provision applies to a pleading (specifically, an Answer)
or a motion to dismiss, a similar or identical rule is provided for all other motions in
Section 8 of Rule 15 of the same Rule which states:
“Sec. 8. Omnibus Motion.—Subject to the provisions of Section 1 of Rule 9, a
motion attacking a pleading, order, judgment, or proceeding shall include all
objections then available, and all objections not so included shall be deemed
waived.”
_______________
25 Rollo, p. 24.
85
The spirit that surrounds the foregoing statutory norm is to require the party
filing a pleading or motion to raise all available exceptions for relief during the
single opportunity so that single or multiple objections may be avoided. 26 It is clear
and categorical in Section 1, Rule 9 of the Revised Rules of Court that failure to raise
defenses and objections in a motion to dismiss or in an answer is deemed a waiver
thereof; and basic is the rule in statutory construction that when the law is clear and
61
free from any doubt or ambiguity, there is no room for construction or
interpretation.27 As has been our consistent ruling, where the law speaks in clear and
categorical language, there is no occasion for interpretation; there is only room for
application.28 Thus, although Aquino’s defense of non-compliance with Presidential
Decree No. 1508 is meritorious, procedurally, such defense is no longer available for
failure to plead the same in the Answer as required by the omnibus motion rule.
Neither could the MeTC dismiss Civil Case No. 17450 motu proprio. The 1997
Rules of Civil Procedure provide only three instances when the court may motu
propriodismiss the claim, and that is when the pleadings or evidence on the record
show that (1) the court has no jurisdiction over the subject matter; (2) there is another
cause of action pending between the same parties for the same cause; or (3) where
the action is barred by a prior judgment or by a statute of limitations. Thus, it is clear
that a court may not motu proprio dismiss a case on the ground of failure to comply
with the requirement for barangay conciliation, this ground not being among those
mentioned for the dismissal by the trial court of a case on its own initiative.
_______________
26 Manacop v. Court of Appeals, G.R. No. 104875, 13 November 1992, 215
SCRA 773, 778.
27 Twin Ace Holdings Corporation v. Rufina and Company, G.R. No. 160191, 8
June 2006, 490 SCRA 368, 376.
28 Id.
86
Aquino further argues that the issue of possession in the instant case cannot be
resolved by the MeTC without first adjudicating the question of ownership, since the
Deed of Sale vesting Aure with the legal right over the subject property is simulated.
Again, we do not agree. Jurisdiction in ejectment cases is determined by the
allegations pleaded in the complaint. As long as these allegations demonstrate a
cause of action either for forcible entry or for unlawful detainer, the court acquires
jurisdiction over the subject matter. This principle holds, even if the facts proved
during the trial do not support the cause of action thus alleged, in which instance the
court—after acquiring jurisdiction—may resolve to dismiss the action for
insufficiency of evidence.
The necessary allegations in a Complaint for ejectment are set forth in Section 1,
Rule 70 of the Rules of Court, which reads:
“SECTION 1. Who may institute proceedings, and when.—Subject to the
provisions of the next succeeding section, a person deprived of the possession of any
land or building by force, intimidation, threat, strategy, or stealth, or a lessor, vendor,
vendee, or other person against whom the possession of any land or building is
unlawfully withheld after the expiration or termination of the right to hold
possession, by virtue of any contract, express or implied, or the legal representatives
or assigns of any such lessor, vendor, vendee, or other person may at any time within
one (1) year after such unlawful deprivation or withholding of possession, bring an
action in the proper Municipal Trial Court against the person or persons unlawfully
withholding or depriving of possession, or any person or persons claiming under
them, for the restitution of such possession, together with damages and costs.” 
In the case at bar, the Complaint filed by Aure and Aure Lending on 2 April
1997, alleged as follows:
“2. [Aure and Aure Lending] became the owners of a house and lot located at No.
37 Salazar Street corner Encarnacion Street, B.F. Homes, Quezon City by virtue of a
deed of absolute sale exe-87cuted by [the spouses Aquino] in favor of [Aure and
Aure Lending] although registered in the name of x x x Ernesto S. Aure; title to the
said property had already been issued in the name of [Aure] as shown by a transfer
Certificate of Title, a copy of which is hereto attached and made an integral part
hereof as Annex “A”;
3. However, despite the sale thus transferring ownership of the subject
premises to [Aure and Aure Lending] as above-stated and consequently terminating
[Aquino’s] right of possession over the subject property, [Aquino] together with her
family, is continuously occupying the subject premises notwithstanding several
demands made by [Aure and Aure Lending] against [Aquino] and all persons
claiming right under her to vacate the subject premises and surrender possession
thereof to [Aure and Aure Lending] causing damage and prejudice to [Aure and Aure
Lending] and making [Aquino’s] occupancy together with those actually occupying
the subject premises claiming right under her, illegal.”29 
It can be inferred from the foregoing that Aure, together with Aure Lending,
sought the possession of the subject property which was never surrendered by
Aquino after the perfection of the Deed of Sale, which gives rise to a cause of action
for an ejectment suit cognizable by the MeTC. Aure’s assertion of possession over
the subject property is based on his ownership thereof as evidenced by TCT No.
156802 bearing his name. That Aquino impugned the validity of Aure’s title over the
subject property and claimed that the Deed of Sale was simulated should not divest
the MeTC of jurisdiction over the ejectment case.30
As extensively discussed by the eminent jurist Florenz D. Regalado in Refugia v.
Court of Appeals:31
“As the law on forcible entry and unlawful detainer cases now stands, even
where the defendant raises the question of ownership in his pleadings and the
question of possession cannot be resolved
_______________
29 Records, pp. 1-2.
30 Tecson v. Gutierez, G.R. No. 152928, 4 March 2005, 452 SCRA 781, 786.
31 327 Phil. 982, 1001-1002; 258 SCRA 347 (1996). 
88without deciding the issue of ownership, the Metropolitan Trial Courts, Municipal
Trial Courts, and Municipal Circuit Trial Courts nevertheless have the undoubted
competence to resolve the issue of ownership albeit only to determine the issue of
possession.
x x x. The law, as revised, now provides instead that when the question of
possession cannot be resolved without deciding the issue of ownership, the issue
62
of ownership shall be resolved only to determine the issue of possession. On its the barangay level to reduce the deterioration of the quality of justice due to
face, the new Rule on Summary Procedure was extended to include within the indiscriminate filing of court cases. (Quiros vs. Arjona, 425 SCRA 57 [2004])
jurisdiction of the inferior courts ejectment cases which likewise involve the issue of ——o0o——
ownership. This does not mean, however, that blanket authority to adjudicate the
issue of ownership in ejectment suits has been thus conferred on the inferior courts.
At the outset, it must here be stressed that the resolution of this particular issue
concerns and applies only to forcible entry and unlawful detainer cases where the
issue of possession is intimately intertwined with the issue of ownership. It finds no
proper application where it is otherwise, that is, where ownership is not in issue, or
where the principal and main issue raised in the allegations of the complaint as well
as the relief prayed for make out not a case for ejectment but one for recovery of
ownership.”
Apropos thereto, this Court ruled in Hilario v. Court of Appeals:32
“Thus, an adjudication made therein regarding the issue of ownership should be
regarded as merely provisional and, therefore, would not bar or prejudice an action
between the same parties involving title to the land. The foregoing doctrine is a
necessary consequence of the nature of forcible entry and unlawful detainer cases
where the only issue to be settled is the physical or material possession over the real
property, that is, possession de facto and not possession de jure.” 
In other words, inferior courts are now “conditionally vested with adjudicatory
power over the issue of title or ownership raised by the parties in an ejectment suit.”
These

_______________

32 329 Phil. 202, 208; 260 SCRA 420, 426 (1996), as cited in Oronce v. Court of
Appeals, 358 Phil. 616; 298 SCRA 133 (1998). 
89courts shall resolve the question of ownership raised as an incident in an ejectment
case where a determination thereof is necessary for a proper and complete
adjudication of the issue of possession.33
WHEREFORE, premises considered, the instant Petition is DENIED. The Court
of Appeals Decision dated 17 October 2001 and its Resolution dated 8 May 2002 in
CA-G.R. SP No. 63733 are hereby AFFIRMED. Costs against the petitioner.
SO ORDERED.
Ynares-Santiago (Chairperson), Austria-Martinez, Nachura and Reyes, JJ.,
concur.
Petition denied, judgment and resolution affirmed.
Notes.—Non-exhaustion of administrative remedies is not jurisdictional—it only G.R. No. 185922. January 15, 2014.*
renders the action premature, i.e., the claimed cause of action is not ripe for judicial HEIRS OF DR. MARIANO FAVIS, SR., represented by their co-heirs and
determination and for that reason a party has no cause of action to ventilate in court. Attorneys-in-Fact MERCEDES A. FAVIS and NELLY FAVIS-
(Carale vs. Abarintos, 269 SCRA 132 [1997]) VILLAFUERTE, petitioners, vs. JUANA GONZALES, her son MARIANO G.
Cognizant of the beneficial effects of amicable settlements, the Katarungang FAVIS, MA. THERESA JOANA D. FAVIS, JAMES MARK D. FAVIS, all
Pambarangay Law (P.D. 1508) and later the Local Government Code provide for a minors represented herein by their parents, SPS. MARIANO FAVIS and
mechanism for conciliation where party-litigants can enter into an agreement in LARCELITA D. FAVIS, respondents.

63
 Remedial Law; Civil Procedure; Dismissal of Actions; Under the new rules, a
court may motu proprio dismiss a claim when it  a complaint among members of the same family, is not a jurisdictional defect but
_______________
* SECOND DIVISION.  case as an instance analogous to one where the conciliation process at
569appears from the pleadings or evidence on record that it has no
jurisdiction over the subject matter; when there is another cause of action pending
between the same parties for the same cause, or where the action is barred by a
prior judgment or by statute of limitations.—Section 1, Rule 9 provides for only four
instances when the court may motu proprio dismiss the claim, namely: (a) lack of
jurisdiction over the subject matter; (b) litis pendentia; (c) res judicata; and (d)
prescription of action. Specifically in Gumabon v. Larin, 370 SCRA 638 (2001) cited
in Katon v. Palanca, Jr., 437 SCRA 565 (2004), the Court held: x x x [T]he motu
proprio dismissal of a case was traditionally limited to instances when the court
clearly had no jurisdiction over the subject matter and when the plaintiff did not
appear during trial, failed to prosecute his action for an unreasonable length of time
or neglected to comply with the rules or with any order of the court. Outside of these
instances, any motu proprio dismissal would amount to a violation of the right of the
plaintiff to be heard. Except for qualifying and expanding Section 2, Rule 9, and
Section 3, Rule 17, of the Revised Rules of Court, the amendatory 1997 Rules of
Civil Procedure brought about no radical change. Under the new rules, a court
may motu proprio dismiss a claim when it appears from the pleadings or evidence on
record that it has no jurisdiction over the subject matter; when there is another cause
of action pending between the same parties for the same cause, or where the action is
barred by a prior judgment or by statute of limitations.
Same; Same; Pleadings and Practice; No suit between members from the same
family shall prosper unless it should appear from the verified complaint that earnest
efforts toward a compromise have been made but had failed.—That a condition
precedent for filing the claim has not been complied with, a ground for a motion to
dismiss emanating from the law that no suit between members from the same family
shall prosper unless it should appear from the verified complaint that earnest efforts
toward a compromise have been made but had failed, is, as the Rule so words, a
ground for a motionto dismiss. Significantly, the Rule requires that such a motion
should be filed “within the time for but before filing the answer to the complaint or
pleading asserting a claim.” The time frame indicates that thereafter, the motion to
dismiss based on the absence of the condition precedent is barred. It is so inferable
from the opening sentence of Section 1 of Rule 9 stating that defense and objections
not pleaded either in a motion to dismiss or in the answer are
570deemed waived. There are, as just noted, only four exceptions to this Rule,
namely, lack of jurisdiction over the subject matter; litis pendentia; res judicata; and
prescription of action. Failure to allege in the complaint that earnest efforts at a
compromise has been made but had failed is not one of the exceptions. Upon such
failure, the defense is deemed waived.
Same; Same; Same; Cause of Action; A failure to allege earnest but failed
efforts at a compromise in a complaint among members of the same family, is not a
jurisdictional defect but merely a defect in the statement of a cause of action.—Thus
was it made clear that a failure to allege earnest but failed efforts at a compromise in
merely a defect in the statement of a cause of action. Versoza was cited in a later
the barangay level was not priorly resorted to. Both were described as a “condition
precedent for the filing of a complaint in Court.” In such instances, the consequence
is precisely what is stated in the present Rule. Thus: x x x The defect may however
be waived by failing to make seasonable objection, in a motion to dismiss or
answer, the defect being a mere procedural imperfection which does not affect the
jurisdiction of the court.
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.
  Maria Cecilia I. Olivas for petitioners. 
  Benjamin P. Quitoriano for respondents. 
PEREZ, J.:
Before this Court is a petition for review assailing the 10 April 2008
Decision[1] and 7 January 2009 Resolution[2] of the
_______________
[1] Penned by Associate Justice Vicente S.E. Veloso with Associate Justices
Rebecca De Guia-Salvador and Apolinario D. Bruselas, Jr., concurring. Rollo, pp.
87-102.
571Court of Appeals in CA-G.R. CV No. 86497 dismissing petitioners’ complaint
for annulment of the Deed of Donation for failure to exert earnest efforts towards a
compromise.
Dr. Mariano Favis, Sr. (Dr. Favis) was married to Capitolina Aguilar (Capitolina)
with whom he had seven children named Purita A. Favis, Reynaldo Favis,
Consolacion Favis-Queliza, Mariano A. Favis, Jr., Esther F. Filart, Mercedes A.
Favis, and Nelly Favis-Villafuerte. When Capitolina died in March 1944, Dr. Favis
took Juana Gonzales (Juana) as his common-law wife with whom he sired one child,
Mariano G. Favis (Mariano). When Dr. Favis and Juana got married in 1974, Dr.
Favis executed an affidavit acknowledging Mariano as one of his legitimate children.
Mariano is married to Larcelita D. Favis (Larcelita), with whom he has four children,
named Ma. Theresa Joana D. Favis, Ma. Cristina D. Favis, James Mark D. Favis and
Ma. Thea D. Favis.
Dr. Favis died intestate on 29 July 1995 leaving the following properties:
1. A parcel of residential land located at Bonifacio St. Brgy. 1, Vigan,
Ilocos Sur, consisting an area of 898 square meters, more or less, bounded on
the north by Salvador Rivero; on the East by Eleutera Pena; on the South by
Bonifacio St., and on the West by Carmen Giron; x x x;
2. A commercial building erected on the aforesaid parcel of land with an
assessed value of P126,000.00; x x x;
3. A parcel of residential land located in Brgy. VII, Vigan, Ilocos Sur,
containing an area of 154 sq. ms., more or less, bounded on the North by the
64
 High School Site; on the East by Gomez St., on the South by Domingo [G]o;
and on the West by Domingo Go; x x x;
4. A house with an assessed value of P17,600.00 x x x;
_______________
[2] Id., at pp. 103-106.
572
5. A parcel of orchard land located in Brgy. VI, Vigan, Ilocos Sur,
containing an area of 2,257 sq. ma. (sic) more or less, bounded on the North
by Lot 1208; on the East by Mestizo River; on the South by Lot 1217 and on
the West by Lot 1211-B, 1212 and 1215 x x x.[3]
Beginning 1992 until his death in 1995, Dr. Favis was beset by various illnesses,
such as kidney trouble, hiatal hernia, congestive heart failure, Parkinson’s disease
and pneumonia. He died of “cardiopulmonary arrest secondary to multi-organ/system
failure secondary to sepsis secondary to pneumonia.”[4]
On 16 October 1994, he allegedly executed a Deed of Donation[5] transferring
and conveying properties described in (1) and (2) in favor of his grandchildren with
Juana.
Claiming that said donation prejudiced their legitime, Dr. Favis’ children with
Capitolina, petitioners herein, filed an action for annulment of the Deed of Donation,
inventory, liquidation and partition of property before the Regional Trial Court
(RTC) of Vigan, Ilocos Sur, Branch 20 against Juana, Spouses Mariano and Larcelita
and their grandchildren as respondents. In their Answer with Counterclaim,
respondents assert that the properties donated do not form part of the estate of the
late Dr. Favis because said donation was made inter vivos, hence petitioners have no
stake over said properties.[6]
The RTC, in its Pre-Trial Order, limited the issues to the validity of the deed of
donation and whether or not respondent Juana and Mariano are compulsory heirs of
Dr. Favis.[7]  justified its order of dismissal by invoking its authority to review rulings of the trial
_______________
[3] Id., at pp. 123-124.
[4] Records, p. 338.
[5] Id., at pp. 339-340.
[6] Id., at p. 34.
[7] Rollo, p. 172.   compulsory heirs. In the instant case, the appellate court observed that while the
573In a Decision dated 14 November 2005, the RTC nullified the Deed of
Donation and cancelled the corresponding tax declarations. The trial court found that
Dr. Favis, at the age of 92 and plagued with illnesses, could not have had full control
of his mental capacities to execute a valid Deed of Donation. Holding that the
subsequent marriage of Dr. Favis and Juana legitimated the status of Mariano, the
trial court also declared Juana and Mariano as compulsory heirs of Dr. Favis. The
dispositive portion reads:
WHEREFORE, in view of all the foregoing considerations, the Deed of
Donation dated October 16, 1994 is hereby annulled and the corresponding
tax declarations issued on the basis thereof cancelled. Dr. Mariano Favis, Sr.
having died without a will, his estate would result to intestacy. Consequently,
plaintiffs Heirs of Dr. Mariano Favis, Sr., namely Purita A. Favis, Reynaldo
A. Favis, Consolacion F. Queliza, Mariano A. Favis, Jr., Esther F. Filart,
Mercedes A. Favis, Nelly F. Villafuerte and the defendants Juana Gonzales
now deceased and Mariano G. Favis, Jr. shall inherit in equal shares in the
estate of the late Dr. Mariano Favis, Sr. which consists of the following:
1. A parcel of residential land located at Bonifacio St. Brgy. 1, Vigan City,
Ilocos Sur, consisting an area of 89 sq. meters more or less, bounded on the
north by Salvador Rivero; on the East by Eleutera Pena; on the South by
Bonifacio St., and on the West by Carmen Giron;
2. A commercial building erected on the aforesaid parcel of land with an
assessed value of P126,000.00;
3. One-half (1/2) of the house located in Brgy. VI, Vigan City, Ilocos Sur[,]
containing an area of 2,257 sq. meters more or less, bounded on the north by
Lot 1208; on the east by Mestizo River; on the South by Lot 1217 and on the
West by Lot 1211-B, 1212 and 1215.
4. The accumulated rentals of the new Vigan Coliseum in the amount of
One Hundred Thirty [Thousand] 
574(P130,000.00) pesos per annum from the death of Dr. Mariano Favis, Sr.
[8]
Respondents interposed an appeal before the Court of Appeals challenging the
trial court’s nullification, on the ground of vitiated consent, of the Deed of Donation
in favor of herein respondents. The Court of Appeals ordered the dismissal of the
petitioners’ nullification case. However, it did so not on the grounds invoked by
herein respondents as appellant.
The Court of Appeals motu proprio ordered the dismissal of the complaint for
failure of petitioners to make an averment that earnest efforts toward a compromise
have been made, as mandated by Article 151 of the Family Code. The appellate court
court even if they are not assigned as errors in the appeal.
Petitioners filed a motion for reconsideration contending that the case is not
subject to compromise as it involves future legitime.
The Court of Appeals rejected petitioners’ contention when it ruled that the
prohibited compromise is that which is entered between the decedent while alive and
present action is between members of the same family it does not involve a testator
and a compulsory heir. Moreover, the appellate court pointed out that the subject
properties cannot be considered as “future legitime” but are in fact, legitime, as the
instant complaint was filed after the death of the decedent.
Undaunted by this legal setback, petitioners filed the instant petition raising the
following arguments:
1. The Honorable Court of Appeals GRAVELY and SERIOUSLY ERRED
in DISMISSING the COMPLAINT.
_______________
[8] Id., at pp. 208-209.
575
65
 2. Contrary to the finding of the Honorable Court of Appeals, the
verification of the complaint or petition is not a mandatory requirement.
3. The Honorable Court of Appeals seriously failed to appreciate that the
filing of an intervention by Edward Favis had placed the case beyond the
scope of Article 151 of the Family Code.
4. Even assuming arguendo without admitting that the filing of intervention
by Edward Favis had no positive effect to the complaint filed by petitioners,
it is still a serious error for the Honorable Court of Appeals to utterly
disregard the fact that petitioners had substantially complied with the
requirements of Article 151 of the Family Code.
5. Assuming arguendo that petitioners cannot be construed as complying
substantially with Article 151 of the Family Code, still, the same should be
considered as a nonissue considering that private respondents are in estoppel.
6. The dismissal of the complaint by the Honorable Court of Appeals
amounts to grave abuse of discretion amounting to lack and excess of
jurisdiction and a complete defiance of the doctrine of primacy of substantive
justice over strict application of technical rules.
7. The Honorable Court of Appeals gravely and seriously erred in not
affirming the decision of the Court a quo that the Deed of Donation is void.
[9]
In their Comment, respondents chose not to touch upon the merits of the case,
which is the validity of the deed of donation. Instead, respondents defended the
ruling the Court of Appeals that the complaint is dismissible for failure of petitioners
to allege in their complaint that earnest efforts towards a compromise have been
exerted.
_______________
[9] Id., at pp. 61-71.
576
The base issue is whether or not the appellate court may dismiss the order of
dismissal of the complaint for failure to allege therein that earnest efforts towards a
compromise have been made.
The appellate court committed egregious error in dismissing the complaint. The
appellate courts’ decision hinged on Article 151 of the Family Code, viz.:
Art. 151. No suit between members of the same family shall prosper
unless it should appear from the verified complaint or petition that earnest
efforts toward a compromise have been made, but that the same have failed.
If it is shown that no such efforts were in fact made, the case must be
dismissed.
This rule shall not apply to cases which may not be the subject of
compromise under the Civil Code.
The appellate court correlated this provision with Section 1, par. (j), Rule 16 of
the 1997 Rules of Civil Procedure, which provides:
Section 1. Grounds.—Within the time for but before filing the answer
to the complaint or pleading asserting a claim, a motion to dismiss may be
made on any of the following grounds:
xxxx
(j) That a condition precedent for filing the claim has not been complied
with.
The appellate court’s reliance on this provision is misplaced. Rule 16 treats of the
grounds for a motion to dismiss the complaint. It must be distinguished from the
grounds provided under Section 1, Rule 9 which specifically deals with dismissal of
the claim by the court motu proprio. Section 1, Rule 9 of the 1997 Rules of Civil
Procedure provides:577
Section 1. Defenses and objections not pleaded.—Defenses and
objections not pleaded either in a motion to dismiss or in the answer are
deemed waived. However, when it appears from the pleadings or the
evidence on record that the court has no jurisdiction over the subject matter,
that there is another action pending between the same parties for the same
cause, or that the action is barred by a prior judgment or by statute of
limitations, the court shall dismiss the claim.
Section 1, Rule 9 provides for only four instances when the court may motu
proprio dismiss the claim, namely: (a) lack of jurisdiction over the subject matter;
(b) litis pendentia; (c) res judicata; and (d) prescription of action.[10]Specifically
in Gumabon v. Larin,[11] cited in Katon v. Palanca, Jr.,[12] the Court held:
x x x [T]he motu proprio dismissal of a case was traditionally limited to
instances when the court clearly had no jurisdiction over the subject matter
and when the plaintiff did not appear during trial, failed to prosecute his
action for an unreasonable length of time or neglected to comply with the
rules or with any order of the court. Outside of these instances, any motu
proprio dismissal would amount to a violation of the right of the plaintiff to
be heard. Except for qualifying and expanding Section 2, Rule 9, and Section
3, Rule 17, of the Revised Rules of Court, the amendatory 1997 Rules of
Civil Procedure brought about no radical change. Under the new rules, a
court may motu proprio dismiss a claim when it appears from the pleadings
or evidence on record that it has no jurisdiction over the subject matter; when
there is another cause of action pending between the same parties
_______________
[10] P.L. Uy Realty Corporation v. ALS Management and Development Corp.,
G.R. No. 166462, 24 October 2012, 684 SCRA 453, 464-465.
[11] 422 Phil. 222, 230; 370 SCRA 638, 643-644 (2001).
[12] 481 Phil. 168, 180; 437 SCRA 565, 573-574 (2004).
578for the same cause, or where the action is barred by a prior judgment or
by statute of limitations. x x x.[13]
The error of the Court of Appeals is evident even if the consideration of the issue
is kept within the confines of the language of Section 1(j) of Rule 16 and Section 1
of Rule 9. That a condition precedent for filing the claim has not been complied with,
a ground for a motion to dismiss emanating from the law that no suit between
66
members from the same family shall prosper unless it should appear from the
verified complaint that earnest efforts toward a compromise have been made but had
failed, is, as the Rule so words, a ground for a motion to dismiss. Significantly, the
Rule requires that such a motion should be filed “within the time for but before filing
the answer to the complaint or pleading asserting a claim.” The time frame indicates
that thereafter, the motion to dismiss based on the absence of the condition precedent
is barred. It is so inferable from the opening sentence of Section 1 of Rule 9 stating
that defense and objections not pleaded either in a motion to dismiss or in the answer
are deemed waived. There are, as just noted, only four exceptions to this Rule,
namely, lack of jurisdiction over the subject matter; litis pendentia; res judicata; and
prescription of action. Failure to allege in the complaint that earnest efforts at a
compromise has been made but had failed is not one of the exceptions. Upon such
failure, the defense is deemed waived.
It was in Heirs of Domingo Valientes v. Ramas[14] cited in P.L. Uy Realty
Corporation v. ALS Management and Development Corporation[15] where we noted
that the second sentence of Section 1 of Rule 9 does not only supply exceptions to
the rule that defenses not pleaded either in a motion to dismiss or in the answer are
deemed waived, it also allows courts to dismiss cases motu propio on any of the
enumerated
_______________
[13] Gumabon v. Larin, supra note 11 at p. 230; pp. 643-644.
[14] G.R. No. 157852, 15 December 2010, 638 SCRA 444, 451.
[15] Supra note 10 at p. 465.
579grounds. The tenor of the second sentence of the Rule is that the allowance of
a motu propio dismissal can proceed only from the exemption from the rule on
waiver; which is but logical because there can be no ruling on a waived ground.
Why the objection of failure to allege a failed attempt at a compromise in a suit
among members of the same family is waivable was earlier explained in the case
of Versoza v. Versoza,[16] a case for future support which was dismissed by the trial
court upon the ground that there was no such allegation of infringement of Article
222 of the Civil Code, the origin of Article 151 of the Family Code. While the Court
ruled that a complaint for future support cannot be the subject of a compromise and
as such the absence of the required allegation in the complaint cannot be a ground for
objection against the suit, the decision went on to state thus:
The alleged defect is that the present complaint does not state a cause of
action. The proposed amendment seeks to complete it. An amendment to the
effect that the requirements of Article 222 have been complied with does not
confer jurisdiction upon the lower court. With or without this amendment, the
subject-matter of the action remains as one for support, custody of children,
and damages, cognizable by the court below.
To illustrate, Tamayo v. San Miguel Brewery, Inc.,[17]allowed an
amendment which “merely corrected a defect in the allegation of plaintiff-
appellant’s cause of action, because as it then stood, the original complaint
stated no cause of action.” We there ruled out as inapplicable the holding
in Campos Rueda Corporation v. Bautista,[18] that an amendment cannot be
made so as to confer jurisdiction on the court x x x. (Italics supplied).
_______________
[16] 135 Phil. 84, 94; 26 SCRA 78, 87 (1968).
[17] 119 Phil. 368; 10 SCRA 115 (1964).
[18] 116 Phil. 546; 6 SCRA 240 (1962).
580Thus was it made clear that a failure to allege earnest but failed efforts at a
compromise in a complaint among members of the same family, is not a
jurisdictional defect but merely a defect in the statement of a cause of
action. Versoza was cited in a later case as an instance analogous to one where the
conciliation process at the barangay level was not priorly resorted to. Both were
described as a “condition precedent for the filing of a complaint in Court.”[19] In
such instances, the consequence is precisely what is stated in the present Rule. Thus:
x x x The defect may however be waived by failing to make
seasonable objection, in a motion to dismiss or answer, the defect being a
mere procedural imperfection which does not affect the jurisdiction of the
court.[20] (Underscoring supplied).
In the case at hand, the proceedings before the trial court ran the full course. The
complaint of petitioners was answered by respondents without a prior motion to
dismiss having been filed. The decision in favor of the petitioners was appealed by
respondents on the basis of the alleged error in the ruling on the merits, no mention
having been made about any defect in the statement of a cause of action. In other
words, no motion to dismiss the complaint based on the failure to comply with a
condition precedent was filed in the trial court; neither was such failure assigned as
error in the appeal that respondent brought before the Court of Appeals.
Therefore, the rule on deemed waiver of the non-juris-dictional defense or
objection is wholly applicable to respondent. If the respondents as parties-defendants
could not, and
_______________
[19] Peregrina v. Hon. Panis, 218 Phil. 90, 92; 133 SCRA 72, 75 (1984).
[20] Agbayani v. Hon. Belen, 230 Phil. 39, 42; 145 SCRA 635, 638 (1986)
citing Catorce v. Court of Appeals, 214 Phil. 181; 129 SCRA 210 (1984).
581did not, after filing their answer to petitioner’s complaint, invoke the objection of
absence of the required allegation on earnest efforts at a compromise, the appellate
court unquestionably did not have any authority or basis to motu propio order the
dismissal of petitioner’s complaint.
Indeed, even if we go by the reason behind Article 151 of the Family Code,
which provision as then Article 222 of the New Civil Code was described as “having
been given more teeth”[21] by Section 1(j), Rule 16 of the Rules of Court, it is safe
to say that the purpose of making sure that there is no longer any possibility of a
compromise, has been served. As cited in commentaries on Article 151 of the Family
Code —
This rule is introduced because it is difficult to imagine a sudden and
more tragic spectacle than a litigation between members of the same family.
It is necessary that every effort should be made towards a compromise before
67
 a litigation is allowed to breed hate and passion in the family. It is known that
a lawsuit between close relatives generates deeper bitterness than between
strangers.[22]
The facts of the case show that compromise was never an option insofar as the
respondents were concerned. The impossibility of compromise instead of litigation
was shown not alone by the absence of a motion to dismiss but on the respondents’
insistence on the validity of the donation in their favor of the subject properties. Nor
could it have been otherwise because the Pre-trial Order specifically limited the
issues to the validity of the deed and whether or not respondent Juana and Mariano
are compulsory heirs of Dr. Favis. Respondents not only confined their arguments
within the pre-trial order; after losing their case, their appeal was based on the
proposition that it was error for the trial court to have
_______________
[21] Verzosa v. Verzosa, supra note 16 at p. 88; p. 82.
[22] Paras, Report of the Code Commission, Code Commission of the Philippines
Annotated, 14th Ed., Vol. 1, p. 579.
582relied on the ground of vitiated consent on the part of Dr. Favis.
The Court of Appeals ignored the facts of the case that clearly demonstrated the
refusal by the respondents to compromise. Instead it ordered the dismissal of
petitioner’s complaint on the ground that it did not allege what in fact was shown
during the trial. The error of the Court of Appeals is patent.
Unfortunately for respondents, they relied completely on the erroneous ruling of
the Court of Appeals even when petitioners came to us for review not just on the
basis of such defective motu proprio action but also on the proposition that the trial
court correctly found that the donation in question is flawed because of vitiated
consent. Respondents did not answer this argument.
The trial court stated that the facts are:
x x x To determine the intrinsic validity of the deed of donation subject of the
action for annulment, the mental state/condition of the donor Dr. Mariano
Favis, Sr. at the time of its execution must be taken into account. Factors such
as his age, health and environment among others should be considered. As
testified to by Dr. Mercedes Favis, corroborated by Dr. Edgardo Alday and
Dra. Ofelia Adapon, who were all presented as expert witnesses, Dr. Mariano
Favis, Sr. had long been suffering from Hiatal Hernia and Parkinson’s disease
and had been taking medications for years. That a person with Parkinson’s
disease for a long time may not have a good functioning brain because in the
later stage of the disease, 1/3 of death develop from this kind of disease, and
or dementia. With respect to Hiatal Hernia, this is a state wherein organs in
the abdominal cavity would go up to the chest cavity, thereby occupying the
space for the lungs causing the lungs to be compromised. Once the lungs are
affected, there is less oxygenation to the brain. The Hernia would cause the
heart not to pump enough oxygen to the brain and the effect would be
chronic, meaning, longer lack of oxygenation to the brain will  and treatment one have received for those illnesses, yet claim that his mind
583make a person not in full control of his faculties. Dr. Alday further
testified that during his stay with the house of Dr. Mariano Favis, Sr. (1992-
1994), he noticed that the latter when he goes up and down the stairs will stop
after few seconds, and he called this pulmonary cripple — a very advanced
stage wherein the lungs not only one lung, but both lungs are compromised.
That at the time he operated on the deceased, the left and right lung were
functioning but the left lung is practically not even five (5%) percent
functioning since it was occupied by abdominal organ. x x x.
Dr. Mariano Favis, Sr. during the execution of the Deed of Donation was
already 92 years old; living with the defendants and those years from 1993 to
1995 were the critical years when he was sick most of the time. In short, he’s
dependent on the care of his housemates particularly the members of his
family. It is the contention of the defendants though that Dr. Mariano Favis,
Sr. had full control of his mind during the execution of the Deed of Donation
because at that time, he could go on with the regular way of life or could
perform his daily routine without the aid of anybody like taking a bath, eating
his meals, reading the newspaper, watching television, go to the church on
Sundays, walking down the plaza to exercise and most importantly go to the
cockpit arena and bet. Dr. Ofelia Adapon, a neurology expert however,
testified that a person suffering from Parkinson’s disease when he goes to the
cockpit does not necessarily mean that such person has in full control of his
mental faculties because anyone, even a retarded person, a person who has
not studied and have no intellect can go to the cockpit and bet. One can do
everything but do not have control of his mind. x x x That Hiatal Hernia
creeps in very insidiously, one is not sure especially if the person has not
complained and no examination was done. It could be there for the last time
and no one will know. x x x.
The Deed of Donation in favor of the defendants Ma. Theresa, Joana D.
Favis, Maria Cristina D. Favis, James Mark D. Favis and Maria Thea D.
Favis, all of 
584whom are the children of Mariano G. Favis, Jr. was executed on [16
October] 1994, seven (7) months after Dra. Mercedes Favis left the house of
Dr. Favis, Sr. at Bonifacio St., Vigan City, Ilocos Sur, where she resided with
the latter and the defendants.
Putting together the circumstances mentioned, that at the time of the
execution of the Deed of Donation, Dr. Mariano Favis, Sr. was already at an
advanced age of 92, afflicted with different illnesses like Hiatal hernia,
Parkinsons’ disease and pneumonia, to name few, which illnesses had the
effects of impairing his brain or mental faculties and the deed being executed
only when Dra. Me[r]cedes Favis had already left his father’s residence when
Dr. Mariano Favis, Sr. could have done so earlier or even in the presence of
Dra. Mercedes Favis, at the time he executed the Deed of Donation was not
in full control of his mental faculties. That although age of senility varies
from one person to another, to reach the age of 92 with all those medications
68
 remains unimpaired, would be unusual. The fact that the Deed of Donation
was only executed after Dra. Mercedes Favis left his father’s house
necessarily indicates that they don’t want the same to be known by the first
family, which is an indicia of bad faith on the part of the defendant, who at
that time had influence over the donor.[23]

The correctness of the finding was not touched by the Court of Appeals. The
respondents opted to rely only on what the appellate court considered, erroneously
though, was a procedural infirmity. The trial court’s factual finding, therefore, stands
unreversed; and respondents did not provide us with any argument to have it
reversed.
The issue of the validity of donation was fully litigated and discussed by the trial
court. Indeed, the trial court’s findings were placed at issue before the Court of
Appeals but the appellate court chose to confine its review to the procedural
_______________
[23] Rollo, pp. 433-435.
585aspect. The judgment of the Court of Appeals, even if it dealt only with
procedure, is deemed to have covered all issues including the correctness of the
factual findings of the trial court. Moreover, remanding the case to the Court of
Appeals would only constitute unwarranted delay in the final disposition of the case.
WHEREFORE, the Decision of the Court of Appeals is REVERSED and SET
ASIDE and the Judgment of the Regional Trial Court of Vigan, Ilocos Sur, Branch
20 is AFFIRMED. 
SO ORDERED. 
Carpio (Chairperson), Brion, Del Castillo and Perlas-Bernabe, JJ., concur.
Judgment reversed and set aside.
Notes.—To be a sufficient ground for dismissal, delay must not only be lengthy
but also unnecessary resulting in the trifling of court processes. (Republic vs. Heirs
of Enrique Oribello, Jr., 692 SCRA 645 [2013])
Not all petitions or complaints reach reply or memorandum stage. Depending on
the merits of the case, the Court has the discretion either to proceed with the case by
first requiring the parties to file their respective responsive pleadings or to dismiss
the same outright. (Rodica vs. Lazaro, 693 SCRA 273 [2013])
——o0o—— 

69