CIVIL PROCEDURE NOTES COMPILED

UNIVERSITY OF SAN CARLOS COLLEGE OF LAW

Rule 03
PARTIES TO CIVIL ACTIONS
CLASSES OF PARTIES:
I. Real Parties in Interest
II. Representative Parties
III. Permissive Parties
IV. Indispensable Parties
V. Necessary Parties
Sec. 1. Who may be parties; plaintiff and
defendant. - Only natural or juridical persons,
or entities authorized by law may be parties
in a civil action. The term "plaintiff" may
refer to the original claiming party, the
counter-claimant, the cross-claimant, or the
third (fourth, etc.)-party plaintiff. The term
"defendant" may refer to the original
defending party, the defendant in a
counterclaim, the cross-defendant, or other
third (fourth, etc.)-party defendant. (1a)
Notes:
There are two main categories of parties in a civil action
namely, the plaintiff and the defendant.
The plaintiff is the claiming party or more appropriately,
the original claiming party and is the one who files the
complaint. The term however, does not exclusively apply
to the original plaintiff. It may also apply to a defendant
who files a counterclaim, a cross-claim or third party
complaint. Hence Section 1 defines “plaintiff” as the
claiming party, the counter-claimant, the cross-claimant
or the third-party plaintiff, etc.
The defendant does not only refer to the original
defending party. If a counterclaim is filed against the
original plaintiff, the latter becomes a defendant and the
former, a plaintiff in the counterclaim. Hence, in Sec. 1,
the term “defendant” refers also to a defendant in a
counterclaim, the cross-defendant or the third-party
defendant, etc.
Q: Who may be parties to a civil case?
A: Only the following may be parties to a civil action:
1) He nuts be either:
a. natural or
b. juridical persons or
c. entities authorized by law.
2) he must have the legal capacity to sue; and
3) he must be a real party-in-interest.
So, you cannot sue or be sued unless you are either a person or an
entity authorized by law.
A dead man cannot sue and he cannot be sued because he has no
more personality.
Situation: B sued “Rama Eatery.” So, it is “B vs. Rama Eatery.” It is
wrong. Rama Eatery is not a person nor an entity authorized by
law. The correct procedure is you sue the owner because he is the
real person. But the defect is not really substantial. It is only a
formal defect that can easily be corrected.
Juridical person as parties
The juridical persons who may be parties are those enumerated in
Art. 44 of the Civil Code, namely:
1.) The State and its political subdivisions;
2.) Other corporations, institutions and entities for public
interest or purpose, created by law; and
3.) Corporations, partnerships, and associations for private
interest or purpose to which the law grants a juridical
personality, separate and distinct from that of each
shareholder, partner or member.
“ENTITIES AUTHORIZED BY LAW”
The best example is Section 15 of this rule.
Section 15. Entity without juridical personality
as defendant.- When two or more persons
not organized as an entity with juridical
personality enter into a transaction, they may
be sued under the name by which they are
generally or commonly known.
In the answer of such defendant the names
and addresses of the persons composing said
entity must all be revealed.
Thus, if A, B, C, D and E without incorporating themselves or
without registering as a partnership, enter into transactions using
the common name “Ocean Quest Corporation”, they may be sued
as such. When the defendant “corporation” answers, the names of
A, B, C, D and E and their addresses must be revealed. Note
however, that the authority to be a party under this section is
confined only to being a defendant and not as a plaintiff. This is
evident from the words, “they may be sued”.
Another example of an entity authorized by law which may not be
a natural or juridical person is a labor union or organization under
the Labor Code. It is an entity authorized by law to file a case in
behalf of its members. Although it may not have been incorporated
under the Corporation Law but registered under the Labor Code. A
legitimate labor organization may sue and be sued in its registered
name (Art. 242 [e], Labor Code of the Philippines).

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What are the others?
1) An estate of a deceased person may be a party to an
action. (Limjoco v. Intestate Estate of Fragante, 8 Phil.
776; Nazareno v. CA 343 SCRA 637)
2) The Roman Catholic Church may be a party and as to its
properties, the archbishop or diocese to which they
belong may be a party. (Barlin v. Ramirez 7 Phil 47;
Verzosa v. Fernandez 49 Phil. 627)
3) A dissolved corporation may prosecute and defend suits
by or against it provided that the suits occur within 3
years after its dissolution, and the suits are in connection
with the settlement and closure of its affairs. (Sec. 122,
Corporation Code)
4) Under Sec. 21 of the Corporation Code of the Philippines,
a corporation by estoppel is precluded from denying its
existence and the members thereof can be sued and be
held liable as general partners.
5) A contract of partnership having a capital of three
thousand pesos or more but which fails to comply with
the registration requirements is nevertheless liable as a
partnership to third persons(Art. 1772 in relation to Art.
1768 Civil Code).
6) A political party incorporated under Act 1459 (now BP
68, Corporation Code)
Remedy when a party impleaded is not authorized to be a party-
As to plaintiff:
Where the plaintiff is not a natural or a juridical person or an entity
authorized by law, a motion to dismiss may be filed on the ground
that “the plaintiff has no legal capacity to sue.” (Sec. 1[d] R 16)
When plaintiff is not the real party in interest:
Also, if the plaintiff has capacity to sue but he is not the ‘real party
in interest’, the ground for dismissal is a ‘failure to state a cause of
action (Aguila vs. CA 319 SCRA 246; Balagtas vs. CA 317 SCRA 69)
not lack of legal capacity to sue.’
As to defendant:
Where it is the defendant who is not any of the above, the
complaint may be dismissed on the ground that the “pleading
asserting the claim states no cause of action” or “failure to state a
cause of action” (Sec. 1[g], R 16) because there cannot be a cause
of action against one who cannot be a party to a civil action.
I. REAL PARTIES IN INTEREST
Sec 2. Parties in interest. - A real party in
interest is the party who stands to be
benefited or injured by the judgment in the
suit, or the party entitled to the avails of the
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suit. Unless otherwise authorized by law or
these Rules, every action must be prosecuted
or defended in the name of the real party in
interest. (2a)
Q: Who is a real party in interest?
A: A real party in interest is the party who stands to be benefited or
injured by the judgment in the suit or the party entitled to the avails
of the suit. (Section 2)
That definition is taken from the leading case of SALONGA VS.
WARNER BARNES & CO. (88 Phil. 125). That is exactly how it is
defined and that definition has been repeated through the years.
To be a real party- in- interest, the interest must be “real”, which is
present substantial interest as distinguished from a mere
expectancy or a future, contingent, subordinate or consequential
interest. (Rayo v. Metrobank, 539 SCRA 571; Fortich v. Corona 289
SCRA 624; Figuracion v. Libi 539 SCRA 50. It is an interest that is
material and direct, as distinguished from a mere incidental
interest in the question. (Samaniego v. Aguila 334 SCRA 438; Mayor
Rhustom Dagadag v. Tongnawa 450 SCRA 437).
The determination of who the real party-in-interest is requires
going back to the elements of a cause of action. Evidently the
owner of the right violated stands to be the real party-in-interest
as plaintiff and the person responsible for the violation is the real
party-in-interest as defendant.(Lee v. Romillo 161 SCRA 589). Thus,
in a suit for violation of a contract, the parties-in-interest would be
those covered by the operation of the doctrine of relativity of
contracts under Art. 1311 of the Civil Code, namely, the parties,
their assignees and heirs. Likewise in a suit for annulment of a
contract, the real parties in interest would be those who are
principally or subsidiarily bound by the contract. (Art. 1397 Civil
Code)
every action must be prosecuted or defended in the name of the
real party in interest
So a complaint is dismissible if it is not made in the name of the
real party in interest.
In an action to recover ownership over or title to a piece of land ,
you do not file a case against the tenant. He is not the real party in
interest. You must file the case against the owner of the land.
Neither can your boyfriend file the case.
When you are riding in a common carrier which collided and you
were injured, do not file a case against the driver for damages. Your
contract is not with the driver. Your contract is with the operator.
So you file a case of culpa contractual against the owner or
operator.
GENERAL RULE: In a breach of contract, the real parties in interest
are the parties to the contract. So strangers, as a rule, have no
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business suing in a contract because they are not real parties in
interest.
BALIWAG TRANSIT vs. CA - 169 SCRA 649 [1989 BAR]
FACTS: A student who was riding in one of the Baliwag buses
met an accident. So, an action was filed where the parents
and the injured boy were the co-plaintiffs against Baliwag
Transit. While the case was going on, the boy entered into
amicable settlement with the bus company. Based on the
settlement, Baliwag moved to dismiss the case. The parents
objected, “We are objecting because we are also plaintiffs.
We didn’t know about the settlement. We were the ones who
spent money, therefore it should not be dismissed simply
because our son is withdrawing the case.”
HELD: The parents are not the real party in interest. They
were not the passengers. The real parties in a contract of
carriage are the parties to the contract itself. “In the absence
of any contract of carriage between the transportation
company and the parents of the injured party, the parents are
not real parties in interest in an action for breach of contract.”
Of course, if the child is a minor the parents can file as
representatives but not as principal party.
EXCEPTION: When there is a stipulation in the contract favorable to
a third person (stipulation pour autrui – Art. 1311, NCC)
Example: Third-Party Liability (TPL) in insurance. A insured his car
with B for TPL. A bumped C. C can file a case against A and B to
recover from the insurance contract. In other words, while only A
and B are the parties to the insurance contract yet the third party
liability stipulation is intended to benefit a third party who may be
damaged by A while driving his car.
Also parties who have not taken part in a contract may show that
they have a real interest affected by its performance or annulment.
In other words, those who are not principally or subsidiarily
obligated in a contract, in which they had no intervention, may
show their detriment that could result from it. Thus, Article 1313 of
the Civil Code provides that “creditors are protected in cases of
contracts intended to defraud them.” Further, Article 1381 of the
Civil Code provides that contracts entered into in fraud of creditors
may be rescinded when the creditors cannot in any manner collect
the claims due them. Thus, a creditor who is not a party to a
contract can sue to rescind the contract to redress the fraud
committed upon him.
A mere agent, who is not an assignee of the principal cannot bring
suit under a deed of sale entered into in behalf of his principal
because it is the principal, not the agent who is the real party in
interest (Uy vs. CA 314 SCRA 69). In case the action is brought
against the agent, the action must be brought against an agent
acting in his own name and for the benefit of an undisclosed
principal without joining the principal, except when the contract
involves things belonging to the principal. The real party-in-interest
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is the party who would be benefited or injured by the judgment or
is the party entitled to the avails of the suit. An attorney-in-fact is
not a real party-in-interest and that there is no law permitting an
action to be brought by and against an attorney-in-fact (Carillo vs.
CA 503 SCRA 66).
SALONGA vs. WARNER BARNES – 88 Phil. 125 [Bar Problem]
FACTS: A decided to go abroad but she has properties in the
Philippines. So she executed a special power of attorney in
favor of K giving the latter “full power to administer, to collect
all my money; to withdraw my money in the bank; with full
power to sue these people who owe me; with the authority to
hire a lawyer; and enter into a contract. Practically, you are
my alter ego.” And then A went abroad.
K started to manage the property. One of the tenants failed to
pay rentals. So in accordance with the authority, he hired a
lawyer. In preparation of the complaint, it was stated in the
caption, “K, plaintiff vs. L, defendant.”
ISSUE: Is the action properly filed?
HELD: NO. The real property in interest is the principal, the
owner of the property. K is only an attorney-in-fact. An
attorney-in-fact cannot use in his own name because he is not
the real party in interest. K is given the authority to sue, to
manage, hire a lawyer but not as the plaintiff because the real
party in interest is A. The complaint should be captioned as
“A, plaintiff vs. L, defendant.”
Q: Suppose the caption will read: “K, as attorney-in-fact of A,
plaintiff vs. L, defendant” is the complaint properly filed?
A: NO. This is even worse because K is admitting that he is only an
attorney-in-fact so it becomes more obvious that he is not the real
party in interest. If K wants to include his name, it should read: “A,
plaintiff, represented by K, his attorney-in-fact vs. L, defendant.”
Q: Does the law require A to come here to file the case?
A: NO. Take note that the law does not require the principal (A) to
come back to file the case because the plaintiff can invoke the
jurisdiction of the court by filing the complaint and paying the
docket fee.
Should a lawful possessor be disturbed in his possession, it is the
possessor, not necessarily the owner of the property, who can
bring the action to recover the possession. The argument that the
complaint states no cause of action because the suit was filed by a
mere possessor and not by the owner is not correct (Phil. Trust
Company vs. CA 320 SCRA 719).
Suits for corporations:
When the corporate offices have been illegally searched, the
corporate officer is not the real party in interest to question the
search. The right to contest the transgression belongs to the
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corporation alone which has a personality of its own separate and
distinct from that of an officer or a stockholder. The objection to an
unlawful search and seizure is purely personal and cannot be
availed of by third persons (Stonehill vs. Diokno 20 SCRA 383).
Derivative suit:
However, even if the cause of action belongs to the corporation, if
the board refuses to sue despite demand by the stockholders to
sue and protect or vindicate corporate rights, a stockholder is
allowed by law to file a derivative suit in the corporate name. In
such a suit, the real party-in-interest is actually the corporation and
the stockholder filing the action is a mere nominal party (Asset
Privatization Trust vs. CA 300 SCRA 579)
Partnerships:
Under Art. 1768 of the Civil Code a partnership has a juridical
personality separate and distinct from that of each of the partners.
Hence, if the contract was entered into by the partnership in its
name, it is the partnership, not its officers or agents which should
be impleaded in any litigation involving property registered in its
name. A violation of this rule will result in dismissal of the
complaint for failure to state a cause of action (Aguila vs. CA 319
SCRA 345).
Failure to include the name of a party in the pleading
The mere failure to include the name of a party in the title of the
complaint is not fatal because the Rules of Court requires the
courts to pierce the form and go into the substance and not be
misled by a false or wrong name in the pleadings. The averments
are controlling and not the title. Hence, if the body indicates the
defendant as a party to the action, his omission in the title is not
fatal (Vlasons Enterprises vs. CA 310 SCRA 26).
Rule on ‘standing’ as distinguished from the concept or ‘real
party-in-interest’
Locus standi is defined as a right of appearance in a court of justice
on a given question. IN private suits, standing is governed by the
‘real party-in-interest’ rule found in Section 2 Rule 3 of the Rules
of Court which provides that ‘every action must be prosecuted or
defended in the name of the real party-in-interest’(Baltazar vs.
Ombudsman GR No. 136433 December 6, 2006)
However, the concept of ‘standing’ because of its constitutional
underpinnings is very different from questions relating to whether
or not a particular party is a real party-in-interest. Although both
are directed towards ensuring that only certain parties can
maintain an action, the concept of standing requires an analysis
of broader policy concerns. The question as to who the real party-
in-interest is involves only a question on whether a person would
be benefitted or injured by the judgment or whether or not he is
entitled to the avails of the suit (Kilosbayan Inc. vs. Morato 246
SCRA 540).
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II. REPRESENTATIVE PARTY
Sec. 3. Representatives as parties. - Where the
action is allowed to be prosecuted or
defended by a representative or someone
acting in a fiduciary capacity, the beneficiary
shall be included in the title of the case and
shall be deemed to be the real party in
interest. A representative may be a trustee
of an express trust, a guardian, an executor
or administrator, or a party authorized by law
or these Rules. An agent acting in his own
name and for the benefit of an undisclosed
principal may sue or be sued without joining
the principal except when the contract
involves things belonging to the principal.
(3a)
Section 3 is consistent with Section 2 because under Section 2, you
cannot sue and be sued if you are not the real party in interest.
Section 3 allows one who is not a real party in interest to sue and
be sued in behalf of somebody else but requires the beneficiary to
be named in the Complaint being the real party in interest.
Example: GUARDIAN. Suppose J, a minor was injured, a case for
damages can be filed in behalf of the minor. A minor cannot sue
and be sued but she is the real party in interest. The law allows the
parents to come in and also be the plaintiff. The parents are what
we the representative party. The law still requires for the minor to
be included in the case. The law states that “the beneficiary shall
be included in the title of the case and shall be deemed to be the
real party in interest.”
In Oposa vs. Factoran GR No. 101083, 1993, minors represented by
their parents were held as real parties in interest to file an action to
annul timber license agreements issued by the state under the
following principles:
1. inter-generational responsibility;
2. inter-generational justice;
3. the right of the Filipinos to a balnced and healthful
ecology; and
4. minors repersent themselves and the generation to
come.
Example: TRUSTEE; EXECUTOR; ADMINISTRATOR. Another example
is a trustee of an express trust, or executor or administrator of the
estate of a deceased person. When a person dies, what survives
after him is his estate which represents everything that is left
behind. This later on will be given to his heirs. But for the
meantime under the law on succession, the executor or
administrator will take charge of his property.
Q: If the estate of the deceased has some collectibles, who will file
the case?
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A: The administrator or executor as the representative party. If you
want to sue the estate, you should sue the estate through the
administrator or executor.
CHING vs. CA– 181 SCRA 9
FACTS: A wanted to sue D, who owes her a sum of money.
The problem is, she cannot locate D’s whereabouts. Also, A is
not certain whether D is dead or alive. So, to play it safe, what
A did was to file a case against the “defendant and/or the
estate of defendant.” A obtained a judgment against the
‘defendant and/or the estate of defendant.’
Later on when the judgment was enforced, it turned out that
D was already dead but he has properties left behind. So, they
started to take hold of his properties. Now, the heirs of D
challenged the decision.
ISSUE: Whether or not there was a valid judgment against the
‘defendant/or the estate of the defendant.”
HELD: The decision is void. “The decision of the lower court
insofar as the deceased is concerned, is void for lack of
jurisdiction over his person. He was not, and he could not
have been validly served with summons. He had no more civil
personality. His juridical personality, that is fitness to be
subject of legal relations, was lost through death (Arts. 37 and
42 Civil Code).”
“The same conclusion would still inevitably be reached
notwithstanding joinder of B’s estate as co-defendant. It is a
well-settled rule that an estate can sue or be sued through an
executor or administrator in his representative capacity.”
So, the Court cited Section 3. In order to bind the estate, you
should sue the executor or the administrator of his estate. So,
either way, the case cannot prosper.
The last sentence of Section 3:
An agent acting in his own name and for the
benefit of an undisclosed principal may sue
or be sued without joining the principal
except when the contract involves things
belonging to the principal.
The agent cannot sue because the principal is the real party in
interest. But when an agent acts in his own name and for the
benefit of an undisclosed principal, he may sue and be sued,
EXCEPT when the contract involves things belonging to the
principal. Under the exception, the principal has really to be
included. The agent cannot file a case where the principal will lose
his property without being named as part to the case.
Sec 4. Spouses as parties. - Husband and wife
shall sue or be sued jointly, except as
provided by law. (4a)
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Normally, the husband and the wife should sue and be sued
together. Even if the wife borrowed money alone and you want to
sue the woman, still the husband should be included. Why? In the
property relationship between the husband and wife, they are
governed by absolute community or conjugal partnership. Whether
you like it or not, the implication of the wife is also the implication
of the husband because of the property relationship.
In the same manner, if the wife wants to collect, even if the
husband does not know anything about it, the husband should still
be named as party plaintiff, on the ground again that the income
that she can get redounds to the benefit of the conjugal
partnership.
And there were decided cases in the past where even if for
example, a wife sues without the husband, the defect is not fatal
but merely formal. The complaint should not be dismissed. All that
is to be done is to amend the complaint impleading the husband.
(Cuyugan vs. Dizon, 76 Phil. 80)
Q: Give an exception to that general rule that husband and wife
shall sue or be sued jointly.
A: The EXCEPTIONS are:
1) in case of Complete Separation of Property (Article 145,
Family Code), and
2) under Article 111, Family Code:
Art. 111. A spouse of age may mortgage,
alienate, encumber or otherwise dispose of
his or her exclusive property without the
consent of the other spouse and appear
alone in court to litigate with regard to the
same. (Family Code)
3) Another is when a spouse without just cause
abandons the other or fails to comply with his
or her obligations to the family with respect to
the marital, parental or property relations.
Sec 5. Minor or incompetent persons. - A
minor or a person alleged to be incompetent,
may sue or be sued, with the assistance of his
father, mother, guardian, or if he has none, a
guardian ad litem. (5a)
Section 5 is related to Section 3. The minor or incompetent person
must be assisted by the parents and considered as representative
party. Incompetent persons include insane people or mentally
retarded people. They are supposed to be under the custody of
other persons, the guardians. If no guardian, the court has to
appoint a guardian called the guardian ad litem.
A person need not be judicially declared incompetent it being
sufficient that his incompetency be alleged in the corresponding
pleading.
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III. PERMISSIVE PARTY
Sec 6. Permissive joinder of parties. - All
persons in whom or against whom any right
to relief in respect to or arising out of the
same transaction or series of transactions is
alleged to exist, whether jointly, severally, or
in the alternative, may, except as otherwise
provided in these Rules, join as plaintiffs or
be joined as defendants in one complaint,
where any question of law or fact common to
all such plaintiffs or to all such defendants
may arise in the action; but the court may
make such orders as may be just to prevent
any plaintiff or defendant from being
embarrassed or put to expense in connection
with any proceedings in which he may have
no interest. (6)
Section 6 is known as permissive joinder of parties. This is related
to Section 5 [a] of Rule 2 on joinder of causes of action.
Q: May two or more persons join in one complaint as plaintiffs? Or
can two or more persons be joined together as defendants?
A: YES, under two conditions, to wit:
1.) There is a right to relief in favor of or against the
parties joined in respect to or arising out of the
same transaction or series of transactions; and
2.) There is a question of law or fact common to the
parties joined in the action.
An additional condition is that the such joinder is not otherwise
proscribed by the provision of the rules on jurisdiction and venue.
Series of Transactions
This pertains to transactions connected with the same subject
matter of the suit.
PROBLEM: Suppose some passengers riding a particular common
carrier are injured because of an accident. All of them want to sue
the operator of the carrier for damages arising out of the breach of
contract of carriage. Under the Law on Transportation, it is possible
for each passenger to file his own case because their causes of
action are different from each other. But can they be joined
together in one complaint against the common carrier?
A: YES because there is a common question of law or fact in the
causes of actions of the injured passengers: the evidence is
identical; the issues whether the carrier is at fault are the came;
the witnesses for both parties will be the same; the report will be
the same; the defense of the operator against one party will be
the same defense as against the other passenger. So, since there is
a common denominator on their causes of action, they can be
joined.
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It would be different if the passengers were riding on different
buses belonging to the same company, and all of them met an
accident. What happened to Passenger No. 1 does not concern
Passenger No. 2. The evidence will not be the same. So, there is no
common denominator – no common question of fact. Therefore,
they cannot be joined.
PROBLEM: Suppose a story appeared in the Inquirer where 5
people were called as jueteng kings. They were allegedly involved
in jueteng. Now, the five of them want to sue the Inquirer for
damages arising from libel. Is it possible for the five (5) people
named in the article to file only one complaint against the editor
and publisher of the Inquirer?
A: YES because it is of the same story. Their names appeared in the
same story. It is not a different issue. So there is a common
question of fact and law in their cause of action.
PROBLEM: M, while driving a car, bumped another vehicle, injuring
the driver and causing injury to other passengers. So, there are
three offended parties : the owner of the vehicle, the driver of the
vehicle , and the passenger. There are three(3) causes of action.
Can they join in one complaint against Myra, the owner of the car
which bumped them?
A: YES because there is a common question of fact and law. There
is only one accident.
Q: But suppose the three of them will file 3 separate cases against
M, can it be done?
A: yes, because it is a permissive joinder of parties, not mandatory.
Q: Why does the law encourage joinder of parties?
A: The following are the reasons:
1) to promote convenience in trial;
2) to prevent multiplicity of suits;
3) to expedite the termination of the litigation; and
4) to attain economy of procedure under which several demands
arising out of the same occurrence may be tried together thus
avoiding the repetition of evidence relating to facts common
to the general demands.
Now, take note that when there is joinder of parties, there is
automatically a joinder of causes of action. That is why one of the
conditions or limitations in joinder of causes of action is you must
observe the rule on joinder of parties. If joinder of parties is
improper under Rule 3, the joinder of causes of action is also
proper under Rule 2, Section 5
Principle: WHEN THERE IS JOINDER OF PARTIES, THERE IS ALSO A
JOINDER OF CAUSES OF ACTION. BUT THERE CAN BE A JOINDER
OF CAUSES OF ACTION WITHOUT A JOINDER OF PARTIES.
EXAMPLE: When there is only one plaintiff and one defendant:
Suppose Melissa will secure three (3) loans from me.
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Q: How many causes of action do I have if M will not pay me?
A: Three
Q: Now, can I join them in one complaint?
A: Yes.
Q: Is there joinder of causes of action?
A: Yes.
Q: Is there joinder of parties?
A: NONE, because there is only one plaintiff and one defendant.
So, there can be joinder of causes of action without joinder of
parties because there is only one plaintiff and one defendant. But if
you join parties in Rule 3, automatically, there is joinder of causes
of action. This is the relationship of these two provisions.
Finally, the last two types of parties to the action are the so-called
indispensable parties and necessary parties. (Section 7 and Section
8, respectively)
INDISPENSABLE PARTY and NECESSARY PARTIES
Sec. 7. 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. (7)
Sec. 8. Necessary party. A necessary party is
one who is not indispensable but who ought
to be joined as a party if complete relief is to
be accorded as to those already parties, or
for a complete determination or settlement
of the claim subject of the action. (8a)
Notes:
An indispensable party is a real party in interest without
whom no final determination can be had of an action.
(Sec. 7) Without the presence of this party, the judgment
cannot attain real finality. (Servicewide Specialists, Inc.
v. CA 318 SCRA 493; De Castro v. CA 384 SCRA 607)
(See also Lucman vs. Malawi GR No. 159794 December 19, 2006)
A person is not an indispensable party, however, if his interest in
the controversy or subject matter is separable from the interest of
the other parties, so that it will not necessarily be directly or
injuriously affected by a decree which does complete justice
between them. Also, a person is not an indispensable party if his
presence would merely permit complete relief between him and
those already parties to the action, or if he has no interest in the
subject matter of the action. It is not a sufficient reason to declare
a person to be an indispensable party that his presence will avoid
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multiple litigation. In a joint obligation for instance, the interest of
one debtor is separate and distinct from that of his co-debtor and a
suit against one debtor does not make the other an indispensable
party to the suit.
Compulsory joinder of indispensable parties
Although normally, a joinder of parties is permissive (Sec. 6 Rule 3),
the joinder of a party becomes compulsory when the one involved
is an indispensable party. Clearly, the rule directs a compulsory
joinder of indispensable parties (Sec. 7, Rule 3).
The presence of all indispensable parties is a condition sine qua
non for the existence of judicial power. It is precisely when an
indispensable party is not before the court that the action should
be dismissed. Thus, the plaintiff is mandated to implead all the
indispensable parties considering that the absence of one such
party renders all subsequent actions of the court null and void for
want of authority to act, not only as to their absent parties but
even as to those present. One who is not a party to a case is not
bound by the decision of the court; otherwise, he will be deprived
of his right to due process (Sepulveda, Sr. vs. Pelaez 450 SCRA 302).
Dismissal for failure to implead an indispensable party
It has been ruled on various occasions that since the joinder of
indispensable parties is compulsory, the action should be dismissed
when indispensable parties are not impleaded or are not before
the court. The absence of indispensable parties renders all
subsequent actions of the trial court null and void for want of
authority to act, not only as to the absent parties but even as to
those present (MWSS vs. CA 297 SCRA 287).
Need of an order to implead an indispensable party
It is noteworthy that the Court in its rulings did not hold that the
failure to join an indispensable party results in the outright
dismissal of the action. An outright dismissal is not the immediate
remedy authorized by the Rules because under the Rules a non-
joinder (or misjoinder) of parties is not a ground for dismissal of
an action. Instead, parties may be dropped or added by the court
on motion of any party or on its own initiative at any stage of the
action and on such terms as are just (Sec. 11 Rule 3). It is when the
order of the court to implead an indispensable party goes
unheeded may the case be dismissed. The court is fully clothed
with the authority to dismiss a complaint due to the fault of the
plaintiff as when, among others, he does not comply with any
order of the court (Sec. 3 Rule 17; Plasabas vs. CA GR No. 166519,
March 31, 2009). (See also Pamplona Plantation Co. vs. Tinghil
450 SCRA 421).
Effect of absence of indispensable party
In a relatively recent case, the Court held that whenever it appears
to the court in the course of a proceeding that an indispensable
party has not been joined, it is the duty of the court to stop the trial
and to order the inclusion of such party. The absence of an
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indispensable party renders all subsequent actuations of the court
null and void, for want of authority to act not only as to the absent
parties, but even as to those present. Accordingly, the
responsibility of impleading all the indispensable parties rests on
the plaintiff. The defendant does not have the right to compel the
plaintiff to prosecute the action against a party if he does not wish
to do so, but the plaintiff will have to suffer the consequences of
any error he might commit in exercising his option (Uy vs. CA 494
SCRA 535).
Q: Distinguish indispensable from necessary party.
A: An INDISPENSABLE PARTY must be joined under any and all
conditions, his presence being a sine qua non of the exercise of
judicial power, for without him, no final determination can be had
of the action. (Borlasa vs. Polistico, 47 Phil. 345) Stated otherwise,
an indispensable party must be joined because the court cannot
proceed without him. Hence, his presence is mandatory.
A NECESSARY PARTY ought to be joined whenever possible in
order to adjudicate the whole controversy and avoid multiplicity
of suits, but if for some reason or another he cannot be joined, the
court may proceed without him and the judgment shall not
prejudice his rights. (Ibid.) His presence is not mandatory because
his interest is separable from that of the indispensable party. He
has to be joined whenever possible to afford complete relief to
those who are already parties.
Q: Give examples of indispensable party.
A: In an action for partition of land, all the co-owners thereof are
indispensable parties. (De Lara vs. De Lara, 2 Phil. 294) In an action
for annulment of partition, all of the heirs must be made parties.
(Caram vs. CA, 101 Phil. 315) In an action for recovery of ownership
of land, the person who claims to be the owner of the land is the
indispensable party defendant and not the one in possession as
tenant. (Sanidad vs. Cabotaje, 5 Phil. 204; Manza vs. Santiago, 96
Phil. 938)
Joint debtor
He is an indispensable party in a suit against him but a necessary
party in a suit against his co-debtor.
Solidary debtor
In a suit brought by a creditor against one solidary debtor, the
other solidary debtor is neither indispensable nor a necessary
party.
Q: Give examples of necessary party.
A: In an action for collection of debt instituted by the creditor
against the surety, the principal debtor is merely a necessary party.
(Vaño vs. Alo, 95 Phil. 495) In an action for recovery of debt
instituted by the creditor against the debtor, the guarantor or
surety is merely a necessary property. (Ibid.) In an action for
foreclosure of a real estate mortgage instituted by the first
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mortgagee, the second mortgagee is merely a necessary party.
(Somes vs. Gov’t of Phil., 62 Phil. 432)
REVIEW: What is the difference between a surety and a guarantor?
The liability of guarantor to the creditor is only secondary.
Meaning, the guarantor is only liable to the creditor if the principal
debtor cannot pay like when the debtor is insolvent. On the other
hand, a surety is principally liable to the creditor whether or not
the debtor can pay.
PROBLEM: In credit transactions, there is a creditor, debtor and
surety. Debtor borrowed money from the creditor, then another
acted as the surety. Now, suppose the debtor will not pay, the
creditor files now a case against the surety without the debtor. The
debtor was not included in the case.
Q: Can the case proceed even without the debtor being sued?
A: YES, the case may proceed.
Now, the surety may be ordered to pay who can sue the principal
debtor for reimbursement. Meaning, there is still a future case.
Thus, there could be no complete relief between those who are
parties. So, the debtor is a necessary party, and not indispensable.
But it is advisable to join the debtor in one case, so that when the
creditor claims from the surety, the latter can automatically claim
from the debtor. Multiplicity of suits is then, avoided.
A and B are the signatories in a PN which reads: “We promise to
pay to the order of C P1M on February 27, 2009. On due date the
debtors failed to pay.
(a) May C sue A alone?
Yes. The cause of action against A is separate and distinct
from the cause of action against B. The tenor of the note
discloses merely a joint obligation. In a joint obligation the
credit or debt shall be divided into as many equal shares as
there are creditors and debtors, the credits or debts being
considered distinct from each other. (Art. 1208 CC). Being
debtors in a joint obligation, the debtors then are liable
separately for P500,000.00 each.
(b) Is A in a suit against him by C a necessary or an
indispensable party? He is an indispensable party.
Without him being impleaded as defendant, C cannot
collect the P500,000.00 share of A. Without A there
cannot be a final determination of the case against him.
(c) In the suit by C against A is B a necessary or an
indispensable party? B is not an indispensable party. C
can collect from A P500,000.00 without impleading B. He
is only a necessary party. Without B being made a party
to the action, C cannot have a complete relief, i.e., he
cannot collect his entire credit of P1M. If he desires a
complete recovery, B must be impleaded.
(3) In the above example, assuming that the debtors bound
themselves to pay the P1M solidarily, would B an indispensable or
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necessary party to a suit by C against A? He would not be a
necessary party. Complete relief could be had by C without joining
B because the obligation is solidary. A could be ordered to pay the
entire obligation of P1M. Neither is B an indispensable party. There
could be a complete and final determination of the action for a sum
of money without B being joined.
Solidarity does not make a solidary debtor an indispensable party in
a suit filed by the creditor against another solidary debtor.
(Republic v. Sandiganbayan 173 SCRA 72; Operators Inc. v.
American Biscuit Company 154 SCRA 738)
(4) B Bought a car from S on an installment basis. A chattel
mortgage was executed on the car in favor of S to secure the
obligation. Before the payment was completed, B sold the car to D.
It was agreed between B and D that D would be responsible for the
monthly installments. D failed to pay three installments.
May S sue D alone in the foreclosure or replevin suit? He cannot. B
must be made defendant. B is an indispensable party in relation to
S. The foreclosure or replevin is premised on the default of B, the
debtor. S would have no right to foreclose the mortgage or
repossess the car without establishing the default of B unless the
obligation of B to S was assigned to D with the consent of S
thereby novating the obligation.
PROBLEM: K borrowed money from D. A is the guarantor. D filed a
case against K. She did not include the guarantor.
Q: Can the case proceed even without the guarantor?
A: YES because the guarantor is merely a necessary party. And if
the debtor turns out to be insolvent, the creditor will now file
another case against the guarantor.
REVIEW: What is the difference between joint debtors and solidary
debtors? In solidary, the creditor can collect the whole obligation
from any of the debtors without prejudice to the right of the latter
for reimbursement of his share in the obligation from his co-
debtors. On the other hand, in joint obligation, the creditor can
only get from a debtor the latter’s share in the whole obligation.
Meaning, the creditor cannot compel the debtor to pay the share
of his co-debtor. Kanya-kanya tayo.
PROBLEM: M and C are JOINT debtors of P100,000 (50-50 sharing).
D is the creditor. Both did not pay D.
Q: If D files a case against M only, can the case proceed without C?
A: YES but D can only collect from M up to P50,000 because of their
joint obligation. C is only necessary insofar as M’s share is concern.
But M is indispensable party insofar as his share is concern.
Q: But if D wants to collect the entire P100,000, what should she
do?
A: She should file a case against both M and C.
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PROBLEM: M and C are SOLIDARY debtors of P100,000 (50-50
sharing). D is the creditor. Both did not pay D.
Q: If D files a case against M only, can the case proceed without C?
A: YES and M is required to pay D the whole amount of the debt
because of solidary obligation. Then M can proceed against C for
reimbursement. Be is merely necessary party.
Sec. 9. Non-joinder of necessary parties to be
pleaded. Whenever in any pleading in which a
claim is asserted a necessary party is not
joined, the pleader shall set forth his name, if
known, and shall state why he is omitted.
Should the court find the reason for the
omission unmeritorious, it may order the
inclusion of the omitted necessary party if
jurisdiction over his person may be obtained.
The failure to comply with the order for his
inclusion, without justifiable cause, shall be
deemed a waiver of the claim against such
party.
The non-inclusion of a necessary party does
not prevent the court from proceeding in the
action, and the judgment rendered therein
shall be without prejudice to the rights of
such necessary party. (8a, 9a)
Duty of Pleader When a Necessary Party is not joined
While a necessary party is not indispensable to the final
determination of the action, said party ought to be joined
whenever possible. If a pleader has no intent to implead a
necessary party, the pleader is under obligation to: (a) set forth the
name of said necessary party, if known, and (b) state the reason
why the necessary party is omitted. A reason justifying the non-
joinder of a necessary party is when said party is outside the
jurisdiction of the court.
Effect of justified failure to implead a necessary party
Assuming that a necessary party cannot be impleaded, his
non-inclusion does not prevent the court from proceeding with the
action. The judgment rendered shall be without prejudice to the
rights of such necessary party.
When court may order joinder of a necessary party and effect of
failure to comply
However, if the court finds no valid reason for not impleading a
party, the court may order the inclusion of the necessary party
under Section 9. And take note that under the new rules, the
failure to comply with the order of inclusion without justifiable
cause shall be deemed a waiver of the claim against such
(necessary) party.
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Sec. 10. Unwilling co-plaintiff. If the consent
of any party who should be joined as plaintiff
cannot be obtained, he may be made a
defendant and the reason therefor shall be
stated in the complaint. (10)
This is particularly true with INDISPENSABLE parties because the
case cannot proceed without him/her.
EXAMPLE: There are 4 brothers and 1 sister. They have to file a
case against somebody to recover property which they believe was
owned by their parents. Then, brother 4 say to sister 1, “Let us file
a case.” But sabi ni sister 1, “Pilitin mo muna ako.” Then she says,
“Ayoko nga, hindi mo ako pinilit eh!” Meaning, all of them will
suffer because ayaw ni sister 1 mag-file ng kaso.
Q: Now, what is the remedy of the 4 brothers?
A: Under Section 10, include the one who refused as one of the
defendants. If there is unwilling plaintiff, name him as defendant
whether he likes it or not.
MISJOINDER AND NON-JOINDER OF PARTIES
Sec. 11. Misjoinder and non-joinder of parties.
Neither misjoinder nor non-joinder of parties
is ground for dismissal of an action. Parties
may be dropped or added by order of the
court on motion of any party or on its own
initiative at any stage of the action and on
such terms as are just. Any claim against a
misjoined party may be severed and
proceeded with separately. (11a)
This is similar to Section 6 of Rule 2 – misjoinder of causes of action
is not a ground for dismissal of an action. Misjoinder or non-joinder
at parties is not a ground for a motion to dismiss because at any
stage of the case, the court can order a misjoined party to be
removed or a party not joined to be included.
Q: Do you know what ‘MISJOINDER of parties’ mean?
A: It means that two or more parties should not be joined but they
are improperly joined. A good example is, if there is no common
question of fact or law. Meaning, you do not have any business to
be here but you are joined or misjoined. That is what we call
misjoinder of parties. It is also known as “spurious class suit.”
Well, ‘NON-JOINDER’ is different. A party who should be joined
was not joined such as a necessary party.
Q: What happens if a party is misjoined or if there is a non-joinder,
should the case be dismissed?
A: No, that is not a ground for dismissal.
Q: So what is the remedy then?
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A: The remedy is to order the removal of the party who is
misjoined, or to order the inclusion of the party who should be
joined. And that is not a defect which should cause the dismissal of
the case because the court can always issue an order ordering the
removal of a misjoined party or the inclusion of joinder of a party
who should be included.
Effect of failure to obey order of the court to add or drop a party
Even if neither misjoinder nor non-joinder is a ground of dismissal
of the action, the failure to obey the order of the court to drop or
add a party is a ground for the dismissal of the complaint under
Sec. 3, R 17.
Q: Does it mean to say therefore, that the plaintiff has the license
to include anybody in an action? Like for example, I have a case
against somebody in the class, the trouble is in the meantime, I
cannot identify who among you who did the wrong to me. So I will
file a case against all of you. Anyway later on, I can dump you.
Now, is this allowed?
A: NO. That is not a license. What the law contemplates, according
to the SC, the party was joined in good faith believing that he was a
defendant but actually it turned out to be wrong. So, you have no
right to sue anybody just like that. That is not an excuse for suing
any party left and right. In the case of
REPUBLIC vs. SANDIGANBAYAN – 173 SCRA 72 [1989]
HELD: Section 11 of Rule 3 “does not comprehend whimsical
and irrational dropping or adding of parties in a complaint.
What it really contemplates is erroneous or mistaken non-
joinder and misjoinder of parties. No one is free to join
anybody in a complaint in court only to drop him
unceremoniously later at the pleasure of the plaintiff. The rule
presupposes that the original inclusion had been made in the
honest conviction that it was proper and the subsequent
dropping is requested because it turned out that such
inclusion was a mistake. And this is the reason why the rule
ordains that the dropping is ‘on such terms as are just’” (also
Lim Tan Hu vs. Ramolete 66 SCRA 425).
Note: that objections to defects in parties should be made at the
earliest opportunity, i.e. the moment such defet becomes
apparent, by a Motion to Strike the Names of the Parties
impleaded. Objections to misjoinder cannot be raised for the first
time on appeal.
CLASS SUIT
SEC. 12. Class suit. When the subject matter
of the controversy is one of common or
general interest to many persons so
numerous that it is impracticable to join all as
parties, a number of them which the court
finds to be sufficiently numerous and
representative as to fully protect the
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interests of all concerned may sue or defend
for the benefit of all. Any party in interest
shall have the right to intervene to protect
his individual interest. (12a)
GENERAL RULE: if there are several real parties in interest, they
shall be included in the case whether indispensable or necessary.
Example: There are 30 of us. The general rule is that all parties in
interest, indispensable or necessary shall be included because
under Sec. 2 “every action must be prosecuted or defended in the
name of the real party-in-interest.”
EXCEPTION: to the General Rule: Class Suit.
A class suit is an action where one or more may sue for the benefit
of all implying that the parties are so numerous and it is
impracticble to bring them all to court.
The requisites for said class action must also be complied with.
Meaning, some of you will sue to represent the rest. That is also
known as the “doctrine of virtual representation.” The concept of
a class suit was first enunciated in the old case of
BORLAZA vs. POLISTICO – 47 Phil. 345
FACTS: This case has something to do with raffle. A group of
people decided to form an association which they called
“Turnuhang Polistico.” You become a member of this
association by contributing a certain sum of money. And then
every Sunday after mass, half of the collection will go to the
treasurer of the association. The other half will be raffled off.
This has been going on for months and years. The time came
when the funds of the association became very big. Some of
the members, in behalf of all the members, decided to file a
case against the officers to render an accounting of all the
amounts. The real parties in interest would be the members.
ISSUE: Is the suit filed by some members in behalf of some
members proper?
HELD: YES, because if We will require all the members to
appear, it will be quite impossible. Therefore, some members
must be made to sue but only in behalf of all the members
who are not around and it is impracticable to bring them all to
the court. A number of them may sue for the benefit of all.
An action does not become a class suit merely because it is
designated as such in the pleadings. Whether the suit is or is
not a class suit depends upon the attendant facts. (Mathay v.
Consolidatred Bank & Trust Company, 58 SCRA 559; Borlasa v.
Polistico 47 Phil. 345)
Q: What are the CONDITIONS FOR A VALID CLASS SUIT?
A: Under Section 12, the following are the conditions of a valid
class suit:
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1) The subject matter of the controversy is one of
common or general interest to many persons (such
as the funds of the association in the case of
POLISTICO); and
2) The parties are so numerous that it is impracticable
to bring them all before the court;
3) The parties actually before the court are sufficiently
numerous and representatives as to fully protect
the interests of all concerned; and
4) The representatives sue or defend for the benefit of
all. Berses v. Villanueva 25 Phil. 473; Sulo ng Bayan,
Inc. v. Araneta 72 SCRA 347)
A class suit does not require a commonality of interest in the
questions involved in the suit. What is required by the Rules is a
common or general interest in the subject matter of the litigation.
The ‘subject matter’ of the action is meant the physical, the things
real or personal, the money, lands, chattels, and the like, in
relation to the suit which is prosecuted and not the delict or
wrong committed by the defendant. It is not also a common
question of law that sustains a class suit but a common interest in
the subject matter of the controversy. (Mathay v. Consolidated &
Trust Bank 58 SCRA 559)
There is no class suit in an action filed by 400 residents initiated
through a former mayor, to recover damages sustained due to their
exposure to toxic wastes and fumes emitted by the cooking gas
plant of a corporation located in the town. Each of the plaintiffs has
a separate and distinct injury not shared by other members of the
class. Each supposed plaintiff has to prove his own injury. There is
no common or general interest in the injuries allegedly suffered by
the members of the class.
There is no class suit in an action for damages filed by the relatives
of the fatalities in a plane crash. There is no common or general
interest in the injuries or death of all passengers in the plane. Each
has a distinct and separate interest which must be proven
individually.
Example is a taxpayer’s suit – filed in behalf of all the taxpayers in
the Philippines. And there is no specific number of persons that is
provided by law.
Another example is a stckholder's derivative suit, though both are
subject to the other requisites of the corresponding governing law
especially on the issue of locus standi. (Regalado, p. 97)
Now, we will go to some interesting cases on class suit decided by
the Supreme Court:
SULO NG BAYAN vs. ARANETA, INC – 72 SCRA 347 [1976]
FACTS: This concerns the big property of the Araneta’s in
Quezon City. It has been the subject matter of litigation for
the past years – 3 or 4 decades. It is a big track of land in
Quezon City occupied by so many people who want to acquire
it. They are questioning the title of the Araneta’s
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So, Sulo (torch) ng Bayan is the association of squatters. Since
the properties of the Araneta is very big, they subdivided it.
Then a case was filed by Sulo ng Bayan Association against
Araneta to annul the title of the latter.
ISSUE #1: Whether or not the action was filed in the name of
the real in interest.
HELD: Sulo ng Bayan is not the real party in interest. It
violates Section 2 – “the action must be prosecuted and
defended in the name of the real parties in interest.” The
members occupying the land are the plaintiffs. The
association is not the one occupying the lot. So, the first
question is, who should be the plaintiff? It should be the
members.
ISSUE #2: Whether or not the action was properly pleaded as
a class suit
HELD: NO. This is the more important reason why they cannot
qualify as a class suit: In a class suit, the subject matter is of
common interest to all.
To illustrate:
You are Occupant No. 1, and occupies a particular lot over
which he/she has interest in but he/she does not have
interest over the other lots which he/she does not occupy. If
that is so, then the subject matter is not of common interest.
The interest of one occupant is only on the lot he occupies.
What should be done is for all of them to sue together to cover the
entire property, for each one has a lot. So, in that case, Section 6
should be applied – permissive joinder of parties because there is a
common question of fact. This is more of permissive joinder of
Parties rather than a class suit. That’s why you can confuse Section
6 with Section 12. But the permissive joinder of parties requires
that all should be impleaded. Unlike in a class suit, the subject
matter is of interest to everybody and we cannot all be joined
because we are so numerous.
BULIG-BULIG KITA KAMAGANAK ASSOCIATION, ET AL vs.
SULPICIO LINES – May 19, 1989
RE: Doña Paz Tragedy
FACTS: There we so many relatives who filed a case against
Sulpicio Lines and there was an attempt to file a class suit in
behalf of everyone who were drowned including those who
were not identified.
HELD: That cannot be. The survivors have no interest in the
death of other passengers. The interest in this case is
individual. What would have been proper is permissive joinder
of parties because of common question of tact or law, but not
class suit.
OPOSA vs. FACTORAN – 224 SCRA 12 [1993]
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FACTS: Oposa et al were all minors. Some were small boys
duly represented by their parents. They filed a case against
then DENR Secretary Factoran. The prayer in the case is to
order the DENR to cancel all existing Timber License
Agreements (TLA’s), to cease and desist from proceeding,
accepting, processing, renewing all accruing new TLA’s. So, in
effect, it prays for a total log ban in the country to preserve
the remaining forest all over the Philippines.
These young boys sue with their parents. They are suing in
their behalf, in behalf of the other citizens who are of their
age because they stand to suffer if the environment will be
deteriorated. They say that they are entitled to the full
benefit, use and enjoyment of the natural resources of our
country’s rich tropical rainforests. They say, the case was filed
for themselves and others for the preservation of our rainfor-
est and we are so numerous that it is impracticable to bring all
plaintiffs to court. They say that they represent their
generations and generations yet unborn.
HELD: The civil case is indeed a class suit. The case however
has a special and novel element. The personality of the minors
to sue for the succeeding generations is based on the concept
of inter-generational responsibility insofar as a balanced and
healthful ecology is concerned. Every generation has a
responsibility to preserve the ecology. The minors’ right to a
healthful environment constitute at the same time the
performance of the obligation to ensure the protection of the
rights or the generations to come.
Q: In case of doubt, should a class suit be allowed?
A: NO. When the issue is not so clear, a class suit should not be
allowed because class suit is an exception to the general rule that
all parties should be included.
CADALIN vs. POEA ADMINISTRATOR – 238 SCRA 721 [1995]
HELD: While it is true that class suit is allowed, it should be
allowed with caution because the fact that you represent
others is only a fiction of law. For all you know, those others
may not want to be represented. That is why the court is
extra- cautious in allowing class suits because they are the
exceptions to the condition sine qua non requiring joinder of
all indispensable parties.
In an improperly instituted class suit, there would be no
problem it the decision secured is favorable to the plaintiffs.
The problem arises where the decision is adverse to them. In
which case, the parties who are impleaded through their self-
appointed representatives would surely plead denial of due
process.
Q: Distinguish a representative suit from a class suit.
A: In the case of
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LIANA’S SUPERMARKET vs. NLRC – 257 SCRA 186 [May 31,
1996]
FACTS: A labor union filed a case against the employer in
behalf of hundreds of employees. Is this a representative suit
or a class suit?
HELD: “What makes the situation a proper case for a class
suit is the circumstance that there is only one right or cause
of action pertaining or belonging in common to many
persons, not separately or severally to distinct individuals.
The object of the suit is to obtain relief for or against
numerous persons as a group or as an integral entity, and not
as separate, distinct individuals whose rights or liabilities are
separate from and independent of those affecting the
others.”
In a representative suit, there are different causes of action
pertaining different persons.
“In the present case, there are multiple rights or causes of
action pertaining separately to several, distinct employees
who are members of respondent Union. Therefore, the
applicable rule is that provided in Rule 3 on Representative
Parties. Nonetheless, as provided for in the Labor Code, a
legitimate labor organization has the right to sue and be sued
in its registered name. This authorizes a union to file a
representative suit for the benefit of its members in the
interest of avoiding an otherwise cumbersome procedure of
joining all union members in the complaint, even if they
number by the hundreds.” For convenience, the Labor Code
allows a union to file a representative suit.
It is important to note the following:
1) CLASS SUIT
2) REPRESENTATIVE SUIT
3) DERIVATIVE SUIT – only peculiar to the corporation law
where the minority files a suit in behalf of the entire
corporation because an intra-corporate remedy is
useless or because of the failure of the board of
directors, deliberate or otherwise, to act in protection of
the corporation (Black’s 5th Ed. 399; Lim vs. Lim-Yu 352
SCRA 216).
In a derivative, suit, the cause of action belongs to the corporation
and not to the stockholder who initiates the suit. In a class suit, the
cause of action belongs to the members of the class.
Class suit and permissive joinder of parties
In a class suit there is one single cause of action pertaining to
numerous persons while in permissive joinder there are multiple
causes of action separately belonging to several persons.
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ALTERNATIVE DEFENDANTS
Sec. 13. Alternative defendants. Where the
plaintiff is uncertain against who of several
persons he is entitled to relief, he may join
any or all of them as defendants in the
alternative, although a right to relief against
one may be inconsistent with a right of relief
against the other. (13a)
Alternative defendants is also related to alternative causes of ac-
tion – even if your right against one is inconsistent with your right
to relief against the other party, you may file a suit against the
alternative defendant. (c.f. Rule 2, Section 5 – Joinder of Causes of
Action)
You filed a case against the operators of two vehicles. In effect,
your cause of action is either culpa aquiliana or culpa contractual.
Is that not inconsistent? The law says, “although a right to relief
against one may be inconsistent with a right against the other.” In
other words, even if the two causes of action are inconsistent with
each other, it is allowed.
As a matter of fact, this is the best policy because the plaintiff is a
sure winner. The only question is, who among the two will be held
liable.
Although the law is silent, if there is such a thing as “alternative
defendants,” there is no reason why the grounds for “alternative
plaintiffs” should not be allowed.
Q: May plaintiffs join in the alternative?
A: YES, plaintiffs may join in the alternative under the same
principle as alternative joinder of defendants. When several
persons are uncertain as to who among them is entitled to relief
from a certain defendant, they may join as plaintiffs in the
alternative. This is also sanctioned by the rule on permissive joinder
of parties (Pajota vs. Jante, L-6014, Feb. 8, 1955). Thus, the
principal and his agent may join as plaintiffs in the alternative
against a defendant. If the agency is proved, the relief is awarded
to the principal. If not, award is then made to the agent.
Just as the rule allows a suit against defendants in the alternative,
the rule also allows alternative causes of action and alternative
defenses (Sec. 2 Rule 8; Sec.5[b] Rule 6; Sec. 20, Rule 14)
Assume that X, a pedestrian, was injured in the collision of two
vehicles. He suffered injuries but does not know with certainty
which vehicle caused the mishap. What should X do if he wants to
sue?
He should sue the vehicle drivers/owners in the alternative.
P sent some goods to D pursuant to a contract. The goods were
delivered to E, the known agent of D. D did not pay P. D contends
that he has not received the goods. P claims otherwise and insists
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that D had received the goods. Should P sue D or should he sue E?
P should sue both but in the alternative.
Plaintiff may sue the shipping company and the arrastre operator
alternatively for the recovery of damages to goods shipped through
a maritime vessel (Rizal Surety & Insurance Company vs. Manila 70
SCRA 187).
Sec. 14. Unknown identity or name of
defendant. Whenever the identity or name of
a defendant is unknown, he may be sued as
the unknown owner, heir, devisee, or by such
other designation as the case may require;
when his identity or true name is discovered,
the pleading must be amended accordingly.
(14)
Requisites:
1) there is a defendant;
2) his/her identity is unknown;
3) fictitious name may be used because of ignorance of
defendant's true name and said ignorance is alleged in the
complaint;
4) identifying description may be used; sued as unknown
owner, heir, deviseee or other designation;
5) amendment to the pleading when true name is discovered;
and
6) defendant is the defendant being sued, not a mere
additional defendant.
Service of summons upon a defendant whose identity is unknown
may be made by publication in a newspaper of general circulation
in accordance with Sec. 14 of Rule 14.
Q: Can you sue somebody who is unknown?
A: YES, under Section 14.
BAR PROBLEM: While L was walking on the street. He was bumped
by a car, say a Toyota Altis, 2001 model, color blue. Now, so far, he
could not determine who is the owner. If you are the lawyer of L,
how would you sue the defendant?
A: Under Section, I will sue the owner of that car as an unknown
defendant. I can place in my complaint, “L’, plaintiff, vs. the
registered owner of Honda motor vehicle with plate number so and
so.” And later if you discover the true identity of the owner, we can
amend the complaint to place the name of the defendant.
Section 14 is similar with Rule 110 in Criminal Procedure – a case
may be filed against an unknown accused.
RULE 110, SEC. 7. Name of the accused. – The
complaint or information must state the
93
name and surname of the accused or any
appellation or nickname by which he has
been or is known. If his name cannot be
ascertained, he must be described under a
fictitious name with a statement that his true
name is unknown.
If the true name of the accused is thereafter
disclosed by him or appears in some other
manner to the court, such true name shall be
inserted in the complaint or information and
record. (7a)
ENTITY WITHOUT JURIDICAL PERSONALITY AS DEFENDANT
Sec. 15. Entity without juridical personality as
defendant. When two or more persons not
organized as an entity with juridical
personality enter into a transaction, they may
be sued under the name by which they are
generally or commonly known.
In the answer of such defendant, the names
and addresses of the persons composing said
entity must all be revealed.
Requisites:
1) there are two or more persons not organized as a
juridical entity;
2) they enter into a transaction;
3) a wrong or delict is committed against a third person in
the course of such transactions.
Rule 1, Section 1 provides that only natural of juridical persons may
be sued.
Entity without juridical personality as defendant. Under the old
law, this was known as suing two or more persons involved in a
business under a common name. When two or more persons
transact in a business under a common name, they may be sued
under their common name.
Q: Who are really the defendants here?
A: The persons involved.
Now, it is worded in this manner: “When two or more persons not
organized as an entity with juridical personality,” instead of a
‘common name.’ You cannot sue the entity because it has no
juridical personality. But you do not also know the members of that
entity, so the law allows you to file a case against the entity.
Under the second paragraph of Section 15, when the defendants
file an answer, they must file under their names as they are really
the real parties in interest. When the lawyer answers the
complaint, he is duty-bound to provide the names of all the
defendants.
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Q: How do you summon this kind of defendant?
A: Rule 14, Section 8:
RULE 14, Sec. 8. Service upon entity without
juridical personality. When persons associated
in an entity without juridical personality are
sued under the name by which they are
generally or commonly known, service may
be effected upon all the defendants by
serving upon any one of them, or upon the
person in charge of the office or place of
business maintained in such name. But such
service shall not bind individually any person
whose connection with the entity has, upon
due notice, been severed before the action
was brought. (9a)
Correlate this with Rule 36, Section 6:
Sec. 6. Judgment against entity without
juridical personality. When judgment is
rendered against two or more persons sued
as an entity without juridical personality, the
judgment shall set out their individual or
proper names, if known. (6a)
GENERAL RULE: actions must be filed against real parties in
interest.
EXCEPTIONS: (When may an action be filed without naming all the
parties in involved?)
1. Class suit (Section 12, Rule 3);
2. Entity without juridical personality (Section 15, Rule
3);
3. Any co--owner may bring an action for ejectment
(Article 487, New Civil Code)
Instances where substitution of parties is proper
EFFECT OF DEATH OF A PARTY
Sec. 16. Death of party; duty of counsel.
Whenever a party to a pending action dies,
and the claim is not thereby extinguished, it
shall be the duty of his counsel to inform the
court within thirty (30) days after such death
of the fact thereof, and to give the name and
address of his legal representative or
representatives. Failure of counsel to comply
with this duty shall be a ground for
disciplinary action.
The heirs of the deceased may be allowed to
be substituted for the deceased, without
requiring the appointment of an executor or
94
administrator and the court may appoint a
guardian ad litem for the minor heirs.
The court shall forthwith order said legal
representative or representatives to appear
and be substituted within a period of thirty
(30) days from notice.
If no legal representative is named by the
counsel for the deceased party, or if the one
so named shall fail to appear within the
specified period, the court may order the
opposing party, within a specified time, to
procure the appointment of an executor or
administrator for the estate of the deceased
and the latter shall immediately appear for
and on behalf of the deceased. The court
charges in procuring such appointment, if
defrayed by the opposing party, may be
recovered as costs. (16, 17a)
First of all, there are cases when a party to a pending action dies
and the claim is not thereby extinguished (this is what they called
an action which survives as we will explain later) and there are
certain actions where if a party dies, the claim is automatically
extinguished. Meaning, the death of a party causes death of the
action. But these are very few. In majority of cases when the party
dies, the case or the cause of action continues.
Examples of actions which survive the death of a party:
 Actions and obligations arising from delicts survive (Aguas
v. Llamas 5 SCRA 959)
 Actions based on the tortious conduct of the defendant
survive the death of the latter. (Melgar v. Benviaje 179
SCRA 196)
 Actions to recover real and personal property, actions to
enforce a lien thereon, and actions to recover damages for
an injury to person or property and suits based on the
alleged tortious acts of the defendant survive. (Board of
Liquidators v. Kalaw 20 SCRA 987). An action for quieting of
title with damages is an action involving real property. It
survives and the claim is not extinguished by the death of a
party. (Saligumba v. Calanog GRT+ 143365 Dec. 4, 2008)
 An action of ejectment survives the death of a party. It
continues until judgment because the issue concerning the
illegality of the defendant’s possession is still alive, and
upon its resolution depends the corollary issue of whether
and how much damages may be recovered. (Tanhueco v.
Aguilar 33 SCRA 236; Vda de Salazar v. CA; Florendo jr.
v.Coloma 129 SCERA 304)
 Actions for the recovery of money, arising from a contract
express or implied are not extinguished by the death of the
defendant. (Sec. 20 R 3)
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Duty of lawyer of the deceased
It is the duty of the lawyer of the deceased to inform the court
within 30 days after the death of the party thereof. He must
inform the court and give the name and address of his legal
representative/s (e.g. administrator or executor of the estate)
In legal ethics, the lawyer- client relationship is automatically
terminated by the death of the client because the lawyer-client
relationship is personal. Neither does he become the counsel of the
heirs of the deceased unless his services are engaged by said heirs
(Lawas vs. CA 146 SCRA 173). But procedurally, he must tell the
court and give the name of the legal representative. The latter may
re-hire the lawyer but under a new contract.
The purpose there is for substitution so that the legal
representative will be ordered substituted. And there is a new
provision under the new rules. That is, failure of the counsel to
comply with his duty shall be a ground for disciplinary action. That
is not found in the prior rule. So, the lawyer can be subjected to
disciplinary action.
Upon receipt of the notice of death, the court shall determine
whether or not the claim is extinguished by such death. If the
claim survives, the court shall order the legal representative or
representatives of the deceased to appear and be substituted for
the deceased within 30 days from notice (Sec. 16 Rule 3). The
substitution of the deceased would not be ordered by the court in
cases where the death of the party would extinguish the action
because substitution is proper only when the action survives
(Aguas vs. Llamas 5 SCRA 959)
So the provision continues, “the heirs of the deceased may be
allowed to be substituted for the deceased without requiring the
appointment of an executor or administrator. And the court may
appoint a guardian ad litem for the minor heirs.
So, other than the legal representative, which refers to the
executor or administrator, the alternative will be to substitute the
heirs, such as the surviving children, wife or spouse.
Although there was a case decided by the SC way back in 1986 in
the case of
LAWAS vs. CA – 146 SCRA 173
HELD: “The priority of substitution would be the executor or
administrator not the heirs. The heirs would only be allowed
to be substituted if there is:
1) An unreasonable delay in the appointment of
administrator or executor, or
2) when the heirs resort to extrajudicial partition
But outside of those two reason, the law always gives priority
to the administrator or executor.”
Under the rule, priority is given to the legal representative of
the deceased. That is, the executor or the administrator of his
95
estate. Many courts do not enforce it strictly. Normally, patay
na, “O! Ito ang heirs o!” “OK! Substitute!” Actually, that is
wrong based on LAWAS case. The priority is given to the
administrator or executor. It is only when there is
unreasonable delay in the appointment, or when the heirs
resort to extrajudicial partition because there is no more
administrator or executor in extrajudicial settlement.
Lawas ruling is no longer applicable
Under the second paragraph of Sec. 16 of Rule 3 states: “ … The
heirs of the deceased may be allowed to be substituted for the
deceased, without requiring the appointment of an executor or
administrator…”
The second paragraph of the rule is plain and explicit. The heirs
may be allowed to be substituted for the deceased without
requiring the appointment of an administrator or executor.
However, if within the specified period a legal representative fails
to appear, the court may order the opposing counsel, within a
specified period, to process the appointment of an administrator or
executor who shall immediately appear for the estate of the
deceased. The previous pronouncement of the Court in Lawas v. CA
xxxxx is no longer true. Thus, the heirs do not need to first secure
the appointment of an administrator of the estate of the deceased
because the very moment of death, they stepped into the shoes of
the deceased and acquired the rights as devisee/legatee. Said heirs
may designate one or some of them as their representative before
the trial court. (San Juan v. Cruz GR No. 167321, July 31, 2006)
Purpose and Importance of substitution of the deceased
The purpose behind the rule on substitution of parties is the
protection of the right of every party to due process. It is to
ensure that the deceased would continue to be properly
represented in the suit through the duly appointed legal
representative of the estate. (Torres v. CA 278 SCRA 793; Vda de
Salazar v. CA 250 SCRA 305)
Non-compliance with the rules on substitution of a deceased party
renders the proceedings of the trial court infirm because the court
acquired no jurisdiction over the person of the legal representative
of heirs of the deceased (Brioso v. Rili-Mariano 396 SCRA 549)
because no man should be affected by a proceeding to which he is
a stranger. A party to be affected by a personal judgment must
have a day in court and an opportunity to be heard. (Vda. De
Haberer v. CA 104 SCRA 534; Fereira v. Vda de Gonzales 104 Phil.
143; Torres v. CA 278 SCRA 793)
Note this portion in the case of:
VDA. DE SALAZAR vs. CA– 250 SCRA 303 [November 23, 1995]
FACTS: This is an ejectment case. The defendant died while
the case is going on. What is the procedure? There should be
substitution. But there was no substitution in the case for ten
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years, until it was decided. The court was not informed of the
death of the defendant. Until finally, there was a decision.
ISSUE: When there is failure to effectuate the substitution of
heirs before the rendition of judgment, is the judgment
jurisdictionally defective?
HELD: NO, “the judgment is valid where the heirs themselves
appeared before the trial court and participated in the
proceedings. Therein, they presented evidence in defense of
the deceased defendant. It is undeniably evident that the
heirs themselves sought their day in court and exercised their
right to due process.”
In other words, when there was a defect the heirs however cannot
use that because they themselves appeared and continued the
case. So, in effect, there was estoppel.
No requirement for service of summons
Service of summons is not required to effect a substitution.
Nothing in Sec. 16 of this Rule mandates service of summons.
Instead of service of summons the court shall, under the authority
of the same provision, order the legal representative of the
deceased to appear and be substituted for the said deceased
within 30 days from notice.
By virtue of the same rule, it is significant to know that it is not the
amendment of the pleading, but the order of substitution and its
service that effects the substitution of the deceased by his
representative or heir.
Note: If the action does not survive (like the purely personal actions
of support, annulment of marriage, and legal separation), the court
shall simply dismiss the case. It follows then that substitution will
not be required.
EFFECT OF DEATH OF A PARTY ON MONEY CLAIMS
Now, one of the radical changes again introduced by the new rules
is the effect of the death of the defendant in a money claim –
action to collect a sum of money.
Sec. 20. Action on contractual money claims.
When the action is for recovery of money
arising from contract, express or implied, and
the defendant dies before entry of final
judgment in the court in which the action was
pending at the time of such death, it shall not
be dismissed but shall instead be allowed to
continue until entry of final judgment. A
favorable judgment obtained by the plaintiff
therein shall be enforced in the manner
especially provided in these Rules for
prosecuting claims against the estate of a
deceased person. (21a)
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Requisites:
1) the action must primarily be for recovery of money,
debt, or interest therein;
2) the claim, subject of the action, arose from contract,
express of implied; and
3) defendant dies before the entry of final judgment of the
court in which the action was pending.
Under this section, the death of the defendant will not result in the
dismissal of the action. The deceased shall be substituted by his
legal representatives in the manner provided for in Sec. 16 of this
Rule 3 and the action continues until the entry of final judgment.
However, execution shall not issue in favor of the winning party.
The final judgment should be filed as a claim against the estate of
the decedent without need of proving the claim.
The best example here is an action to collect an unpaid loan. And
while the case is pending the defendant died. What will happen to
the case? The law says: If the defendant dies before the entry of
the final judgment in the court at the time of death, it shall not be
dismissed but it shall instead be allowed to continue until entry of
final judgment.
Under the OLD RULES, the case shall be dismissed. So, the civil case
is not suspended but it will be dismissed and the creditor can file a
case against the estate of the deceased under the Rules on Special
Proceedings. But definitely the civil case dies when the defendant
dies.
Now, under the NEW RULE, the case will not be dismissed but
rather, the case will now continue until entry of final judgment.
Meaning, until it becomes final and executory.
Q: But of course, if the judgment is favorable to you (the plaintiff),
can you move to execute? Can you move to execute the decision
against the property of the defendant?
A: NO, because the law provides, “xxx a favorable judgment
obtained by the plaintiff therein shall be enforced in the manner
specially provided in these Rules for prosecuting claims against the
estate of a deceased person.”
Q: And what is that procedure?
A: YOU FILE A CLAIM against the estate under Section 5, Rule 86 of
the Rules of Court, but there will be no execution.
[Note: SEE OUTLINE AT THE LAST PART OF THIS RULE.]
Q: We are talking of death of a party in a pending civil action. While
there is a case and a party dies, what will happen to the case?
A: I will distinguish Is that an ACTION WHICH DOES NOT SURVIVE
or an ACTION WHICH SURVIVES?
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ACTION WHICH DOES NOT SURVIVE
An action which does not survive is an action which is abated upon
the death of a party. The case cannot go on once a party dies. And
normally, that refers to actions which are purely personal in
character like an action for annulment of marriages, an action for
declaration of the nullity of marriage or, an action for legal
separation, or an action for support. These are the cases arising
from the Family Code.
Example: The husband files a case against the wife for annulment
of marriage or legal separation. One of them dies. When one of the
parties dies, the marriage is dissolved. There is nothing to annul
because the marriage is already dissolved. So, these are the actions
which are purely personal .
Q: So, what is the effect of the death of the party in actions which
does not survived?
A: The case is dismissed!
1) ACTIONS WHICH SURVIVE –
2a.) CONTRACTUAL MONEY CLAIMS:
2a1.) If it is the plaintiff who dies, the case will
continue. The heirs or legal representatives
will proceed. So, there is substitution.
2a2.) If it is the defendant who dies, the
question is when did he die? Before entry of
final judgment or after entry? This is where
Section 20 will come in.
2a2a.) If the defendant died before entry
of final judgment, you apply Section 20
of Rule 3. Meaning, the case shall not be
dismissed but shall be allowed to
continue until entry of final judgment.
And the favorable judgment obtained by
the plaintiff therein shall be enforced in
the manner especially provided in these
Rules for prosecuting claims against the
estate of a deceased person, and that is
Section 5 of Rule 86.
2a2b.) If the defendant died after the
entry of the final judgment but before
execution (after the judgment became
final but before there could be levy or
execution) you cannot move to execute.
Again, you apply Section 5 of Rule 86
which is the governing rule – you file
your judgment as a claim against the
estate of the deceased defendant.
[Section 5, Rule 86] The purpose there is,
so that the creditor will share with the
other creditors pro-rata in the
distribution of the estate.
97
2a2c) If the defendant died after levy or
execution but before the auction sale,
we will now apply Section 7[c] of Rule 39:
Rule 39, Sec. 7. Execution in case of
death of party. In case of the death of
party, execution may issue or be
enforced in the following manner:
xxxxxx
(c) In case of the death of the judgment
obligor, after execution is actually levied
upon any of his property, the same may
be sold for the satisfaction of the
judgment obligation, and the officer
making the sale shall account to the
corresponding executor or administrator
for any surplus in his hands. (7a)
Meaning, if death occurs after the levy, auction sale proceeds as
scheduled. And if there is an excess, the excess shall be delivered to
the administrator or executor.
2b.) NON-CONTRACTUAL MONEY CLAIMS:
EXAMPLE: an action for recovery of property, real or
personal like replevin, forcible entry, unlawful detainer,
action publiciana, action reinvidicatoria, or action for
damages, (damages that is not the same for transaction
of money because damages arising from culpa aquiliana
is one not arising from contract.)
If a party dies in an action which survives which is a non-
contractual money claim, obviously, there is substitution
of parties. So, what are these non-contractual money
claims which survive? These are those mentioned in
Section 7 of Rule 86 and Section 1 of Rule 87. That is in
the study of Special Proceedings on settlement of the
estate of a deceased person.
Note: What Section 20 says is that: before the case can be decided
and the defendant dies (in actions involving money claims) the case
shall not be dismissed but shall instead be allowed to continue until
entry of final judgment. BUT CONTINUE AGAINST WHOM? Against
the deceased? Now, to my mind, you correlate this with Section 16
--- there should still be substitution.
But assuming, there was no substitution and the heirs fought in the
case; there is waiver because the defect is procedural. Just like
what happened in the case of VDA. DE SALAZAR vs CA 250 SCRA
305). Actually, what Section 20 emphasized is that, the action shall
not be dismissed but shall continue – to emphasize that it is now
different compared with the prior RULE. But obviously, there will
always be a substitution
Sec. 17. Death or separation of a party who is
a public officer. When a public officer is a
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party in an action in his official capacity and
during its pendency dies, resigns, or
otherwise ceases to hold office, the action
may be continued and maintained by or
against his successor if, within thirty (30) days
after the successor takes office or such time
as may be granted by the court, it is
satisfactorily shown to the court by any party
that there is a substantial need for continuing
or maintaining it and that the successor
adopts or continues or threatens to adopt or
continue the action of his predecessor.
Before a substitution is made, the party or
officer to be affected, unless expressly
assenting thereto, shall be given reasonable
notice of the application therefor and
accorded an opportunity to be heard. (18a)
Requisites:
1) public officer is a party to an action in his official
capacity;
2) during the pendency of the action he either dies, resigns,
or other wise ceases to hold office;
3) it is satisfactorily shown to the court by any party, within
30 days after the successor takes office, that there is a
substantial need for continuing or maintaining the
action;
4) that the successor adopts or continues or threatens to
adopt or continue the action of his predecessor; and
5) the party or officer affected has been given reasonable
notice of the application therefor and accorded an
opportunity to be heard.
Q: What will happen to the case?
A: The following:
1) If the successor intends to continue with the policy.
EXAMPLE: Mayor Pascua threatened to demolish the
building of Mr. Nuere as a hazard. If Mayor Pascua dies,
Vice-Mayor Angeles becomes the mayor. If Vice-Mayor
Angeles who is now the mayor says that he will continue
with the demolition, he will be substituted and he is
given 30 days to comment.
by his legal guardian or guardian ad litem.
(19a)
EXAMPLE: F files a case against K. While the case is pending, K
becomes insane. The case will continue but K has to be assisted by
his guardian ad litem.
This is related to Rule 3, Section 3 on representative party but in
Section 3, K should be already insane before the case is filed.
Sec. 19. Transfer of interest. In case of any
transfer of interest, the action may be
continued by or against the original party,
unless the court upon motion directs the
person to whom the interest is transferred to
be substituted in the action or joined with
the original party. (20)
General Rule: The rule does not consider the transferee an
indispensable party. Hence, the action may proceed without the
need to imp lead him.
Exception: When the substitution by or joinder of the transferee is
ordered by the court.
A transferee pendent lite:
1) stands in exactly the same position as its predecessor-in-
interest, th original defendant; and
2) bound by the proceedings had in the case before the
property was transferred to it, even if not formally
included as defendant. (Herrera, vol. 1 p. 405)
The case will be dismissed if the interest of plaintiff is transferred
to defendant unless there are several plaintiffs, in which case, the
remaining plaintiffs can proceed with their own cause of action.
EXAMPLE: R files a case against L to recover a piece of land. While
the case is pending, L sold the land to E. E now assumes the risk
and takes the property subject to the outcome of the case.
Q: Can the case continue against L?
A: YES.
1) If L loses and cannot pay, E is subsidiarily liable;
2) L can be removed and E will be substituted; or
3) L can stay and E will be added.
In all 3 cases, E will be bound by the judgment.

2) If the successor does not adopt the policy, the case will Sec. 21. Indigent party. A party may be
be dismissed. authorized to litigate his action, claim or
defense as an indigent if the court, upon an
Sec. 18. Incompetency or incapacity. If a party
ex parte application and hearing, is satisfied
becomes incompetent or incapacitated, the
that the party is one who has no money or
court, upon motion with notice, may allow
property sufficient and available for food,
the action to be continued by or against the
incompetent or incapacitated person assisted

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shelter and basic necessities for himself and vs. Dolefil Agrarian Reform Beneficiaries Cooperative 382 SCRA
his family. 552).

Such authority shall include an exemption
from payment of docket and other lawful
fees, and of transcripts of stenographic notes
which the court may order to be furnished
him. The amount of the docket and other
lawful fees which the indigent was exempted
from paying shall be a lien on any judgment
rendered in the case favorable to the
indigent, unless the court otherwise provides.
EXAMPLE: M files a case against K for declaration of nullity on the
ground of psychological incapacity. K alleges that Article 38 of the
Family Code is unconstitutional. So the court will rule on the
validity of the law in which case, the Solicitor General has to be
involved in the case to defend the validity of the law.
REASON: The Solicitor General is the legal counsel of the Republic
of the Philippines whose duty is to defend all the official acts of the
Government.

Any adverse party may contest the grant of

such authority at any time before judgment is
rendered by the trial court. If the court
should determine after hearing that the party
declared as an indigent is in fact a person
with sufficient income or property, the
proper docket and other lawful fees shall be
assessed and collected by the clerk of court.
If payment is not made within the time fixed
by the court, execution shall issue for the
payment thereof, without prejudice to such
other sanctions as the court may impose.
(22a)

In criminal cases, the court assigns a counsel de officio. Under the

Constitution on Bill of Rights, no person shall be denied access to
courts by reason of poverty.

In civil cases, a plaintiff need not pay docket fee if he is an indigent

if he files an application (ex-parte application) to allow him to
litigate as an indigent litigant. But if the indigent wins, he has to pay
the fees – file now, pay later) – the amount shall be a lien on any
favorable judgment.

The third paragraph is new. The other party may contest the claim
of the indigent if he is really an indigent or not.

Sec. 22. Notice to the Solicitor General. In any

action involving the validity of any treaty,
law, ordinance, executive order, presidential
decree, rules or regulations, the court, in its
discretion, may require the appearance of the
Solicitor General who may be heard in person
or through a representative duly designated
by him. (23a)

The rule is that only the Solicitor General can bring and defend
actions on behalf of the Republic of the Philippines and that actions
filed in the name of the Republic of the Philippines or its agencies
and instrumentalities, if not initiated by the Solicitor General will
be summarily dismissed. The authority of the Solicitor General is
embodied in Sec. 35(1) Chapter 12, Title III and Book IV of the
Administrative Code of 1987 (Cooperative Development Authority

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Rule 4
VENUE OF ACTIONS
Q: Define venue.
A: VENUE is the place, or the geographical area where an action is
to be filed and tried. In civil cases, it relates only to the place of the
suit and not to the jurisdiction of the court. (Manila Railroad
Company vs. Attoryney General, 20 Phil. 523)
Venue not a matter of substantive law
Venue is procedural and not substantive. In civil cases, venue is not
a matter of jurisdiction. (Heirs of Pedro Lopez vs. de Castro, 324
SCRA 591 [2000]). Venue becomes jurisdictional only in a criminal
case. In the latter case, where the information is filed in a place
where the offense was not committed, the information may be
quashed for lack of jurisdiction over the offense charged. (Sec. 3, R
117) This is not so in a civil case where improper venue is not
equivalent to lack of jurisdiction. Because it is merely procedural,
the parties can waive the venue of a case.
the court may do so without need of waiting for the filing of a
motion to dismiss. (Sec. 4, Rules on Summary Procedure)
How venue is determined
As said before, in order to know the venue of a particular action,
the initial step is to determine if the action is personal or real. If it is
personal, the venue is transitory hence, the venue is the residence
of the plaintiff or the defendant at the option of the plaintiff. If the
defendant is a non-resident, the venue is the residence of the
plaintiff or where the non-resident defendant may be found, at the
election of the plaintiff.(Sec. 3)
If the action is real, the venue is local hence, the venue is the place
where the real property involved, or any portion thereof, is
situated. (Sec. 1). However, when the defendant is a non-resident
and is not found in the Philippines, and the action affects the
personal status of the plaintiff, or any property of the defendant
located in the Philippines, the venue is the residence of the plaintiff
or where the property or any portion thereof is situated. (Sec. 3)
VENUE OF REAL ACTIONS

Means of waiving venue: Section 1. Venue of real actions. Actions

affecting title to or possession of real
1. failure to object via motion to dismiss;
property, or interest therein, shall be
2. affirmative relief sought in the court where the case is
filed even if venue is improper; commenced and tried in the proper court
3. affirmative defense in an answer; which has jurisdiction over the area wherein
4. voluntary submission to the court where the case is filed; the real property involved, or a portion
5. laches thereof, is situated.

Dismissal based on improper venue Forcible entry and detainer actions shall be
commenced and tried in the municipal trial
1) The trial court cannot motu proprio dismiss a case on the court of the municipality or city wherein the
ground of improper venue. The court may motu proprio
real property involved, or a portion thereof,
dismiss an action in case of lack of jurisdiction over the
subject matter, litis pendencia, res judicata and is situated. (1[a], 2[a]a)
prescription, but not for improper venue. (Rudolf Lietz
Holdings, Inc. v. Register of Deeds of Paranaque City, 344 Q: Why does the law say “tried in the proper court?”
SCRA 68; Universal Robina Corp. v. Lim GR 154338, Oct.
5, 2007) A: It is because proper court will now be the MTC or the RTC,
depending on the assessed value of the property.
2) Unless and until the defendant objects to the venue in a
motion to dismiss, the venue cannot be truly said to be The venue is the placed where the real property or any portion
improperly laid, because the venue although technically thereof is located.
wrong may be acceptable to the parties for whose
convenience the rules on venue have been devised. The
If a property is located at the boundaries of two places: file the
trial court cannot preempt the defendant’s prerogative
to object to the improper laying of the venue by motu case in either place at the option of the plaintiff.
proprio dismissing the case. (Dacuycoy v. IAC 195 SCRA
641) When the case involves two properties located in two different
places:
When court may motu proprio dismiss based on improper venue
1) if the properties are the object of the same transaction,
The court may dismiss on improper venue, at its instance, in an file it in any of the two places; and
action covered by the rules on summary procedure. Under these 2) if they are the subjects of two distinct transactions,
separate actions whould be filed in each place unless
rules, the court may motu proprio dismiss a case from an
properly joined.
examination of the allegations of the complaint and such evidence
as may be attached thereto on any of the grounds apparent
therefrom. The dismissal may be made outright, which means that

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VENUE OF PERSONAL ACTIONS
Sec. 2. Venue of personal actions. All other
actions may be commenced and tried where
the plaintiff or any of the principal plaintiffs
resides, or where the defendant or any of the
principal defendants resides, or in the case of
a non-resident defendant where he may be
found, at the election of the plaintiff. (2[b]a)
Venue of personal actions:
1) Where the plaintiff or any of the principa plaintiffs
resides;
2) where the defendant or any of the principal defendants
resides; or
3) in case of a non-resident defendant but found in the
Philippines, in the place where he may be found.
Note: All at the election of the plaintiff.
Situation: suppose, there are four (4) plaintiffs and 4 defendants
and the 4 plaintiffs reside in 4 different cities or municipalities. So
there are 8 choices for venue because the law says, “where the
plaintiff or any of the principal plaintiffs or where the defendant or
any of the principal defendants reside…”
NOTE: PRINCIPAL PLAINTIFF, PRINCIPAL DEFENDANT. Because
there is such a thing as nominal defendant and nominal plaintiff..
EXAMPLE of a nominal party: When a party wants to file a case to
annul an execution sale or to annul a levy, normally it impleads the
sheriff as party. But the sheriff is not the principal party but is only
a NOMINAL PARTY. So, the residence of the sheriff is not
considered the sheriff being a nominal party only.
This is the original concept of forum shopping which is legitimate
but had later been abused. That is why there is a SC case where
Justice Panganiban cited the history of forum shopping entitled
FIRST PHILIPPINE INTERNATIONAL BANK vs. CA (252 SCRA 259),
January 24, 1996)
How to distinguish real from personal action
There are instances when it is easy to distinguish whether the
action is real or personal and there are also instances when it is
difficult.
EXAMPLE: An action for annulment of a contract of sale or
rescission of contract of sale of real property. Generally, an action
for annulment or rescission is a personal action. But suppose, I will
file a complaint to annul or rescind a contract or a deed of sale over
a parcel of land which we made one year ago which land is situated
in Mandaue City and the purpose of my action is to recover the
ownership of that land is this a real or personal action?
It is a real action because the primary object of the suit is to
recover the ownership of real property. It seems to be personal but
in reality it is a real action. So the venue is governed by Section 2.
101
But there are also actions which appear to be real but in reality, are
personal actions. Like what happened in the case of
LA TONDEÑA DISTILLERS INC vs. PONFERRADA - 264 SCRA 540
[1996]
FACTS: A entered into a contract where she committed
herself to sell her land to B. A even placed a lis pendens on
the property but later she backed out. So B will file a case
against A for specific performance to compel her to sign the
deed of sale.
ISSUE: Is this real or personal action?
HELD: It is a PERSONAL ACTION because you are not
questioning my ownership. Here, the plaintiff recognizes that
the defendant is still the owner, which is the reason why he is
still filing the case to compel him to sell.
Thus, it should be filed at the residence of the parties. “The
complaint is one for specific performance with damages.
Private respondents do not claim ownership of the lot but in
fact recognized title of defendants by annotating a notice of
lis pendens. In one case, a similar complaint for specific
performance with damages involving real property, was held
to be a personal action, which may be filed in the proper court
where the party resides. Not being an action involving title to
or ownership of real property, venue, in this case, was not
improperly laid before the RTC of Bacolod City.” (Adamos vs.
Tuazon 25 SCRA 30 [1968])
Q: Where several or alternative reliefs are sought in an action, and
the reliefs prayed for are real and personal, how is venue
determined?
A: Where several or alternative reliefs are prayed for in the
complaint, the nature of the action as real or personal is
determined by the primary object of the suit or by the nature of
the principal claim. Thus, where the purpose is to nullify the title to
real property, the venue of the action is in the province where the
property lies, notwithstanding the alternative relief sought,
recovery of damages, which is predicated upon a declaration of
nullity of the title. (Navarro vs. Lucero, 100 Phil. 146)
Where a lessee seeks to establish his right to the hacienda, which
was subsequently sold, for the purpose of gathering the crops
thereon, it is unnecessary to decide whether the crops are real or
personal property, because the principal claim is recovery of
possession of land so that he may gather the fruits thereof. (LTC vs.
Macadaeg, 57 O.G. 3317)
Now, going back to Section 2.
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RESIDENCE OF THE PARTIES
Where is the residence of the parties? Because residence in law
could mean DOMICILE OR LEGAL RESIDENCE, it could be ACTUAL
OR PHYSICAL RESIDENCE.
With the exception of only one case, the word ‘residence’ and
‘venue’ has been uniformly interpreted by the SC to mean ACTUAL
or PHYSICAL RESIDENCE not legal domicile. Alright, there are so
many casesalready: CO vs. CA (70 SCRA 296); FULE vs. CA (14 SCRA
189); HERNANDEZ vs. RURAL BANK OF THE PHIL (81 SCRA 75);
RAYMOND vs. CA (166 SCRA 50); ESCUERTE vs. CA (193 3CRA 54).
EXCEPT for one case decided way back in 1956 – the case of
CORRE vs. CORRE – 100 Phil 221
FACTS: An American who resides in San Francisco who came
to the Philippines rented an apartment in Manila to sue his
wife who is a Filipina. The wife is from Mindanao. And then
the American husband filed the case in Manila because he
rented an apartment in Manila.
HELD: You are not a resident of Manila. Your residence is in
San Francisco – that is your domicile. So that is to compel the
American to file the case in the residence of the wife rather
than the wife going to Manila.
So the case of CORRE is the only exception where the SC said,
“residence means domicile.” All the rest, physical! In the case of
CORRE, maybe the SC there was just trying to help the Filipina. If
we will interpret the rule on venue as physical, it is the Filipina who
will be inconvenienced.
RESIDENCE OF A CORPORATION
Under Rule 1, a corporation can sue and be sued. But what is the
residence of a corporation? Under the corporation law, the
residence of a corporation is the place where its head or main
office is situated.
CLAVECILLA RADIO SYSTEM vs. ANTILLON – 19 SCRA 39 [1967]
FACTS: Clavecilla was sued in Cagayan de Oro City. Clavecilla
questioned the venue because its head office is in Manila. The
plaintiff argued that it can be sued because it has a branch in
Cagayan.
ISSUE: Is a corporation resident of any city or province
wherein it has an office or branch?
HELD: NO. Any person, whether natural or juridical, can only
have one residence. Therefore, a corporation cannot be
allowed to file personal actions in a place other than its
principal place of business unless such a place is also the
residence of a co-plaintiff or defendant.
102
The ruling in the case of ANTILLON was reiterated in the 1993 case
of YOUNG AUTO SUPPLY CO. vs. COURT OF APPEALS (223 SCRA
670)
Because the law said “where the plaintiff or any of the principal
plaintiffs..” So if the corporation is suing with someone from Cebu
City, even if its head office is in Manila, the corporation can file in
Cebu City because of the residence of my co-plaintiff or the
residence of the defendant. But outside of that, a corporation
cannot sue outside of its head office because its residence is there.
That is the case of YOUNG AUTO SUPPLY.
“OR IN THE CASE OF A NON-RESIDENT DEFENDANT WHERE HE
MAY BE FOUND”
Suppose the defendnt is not residing here in the Philippines but is
just on vacation and you want to sue him. What is now the point of
reference?
Did you notice the phrase “or in the case of a non-resident
defendants where he may be found.” Now what does that mean? It
means to say that the defendant is not actually residing in the
Philippines but he is temporarily around because he is found in the
Philippines. Example is a balikbayan who is still on vacation.
PROBLEM: Suppose a Filipino who is already residing abroad
decided to come back this Christmas for a vacation. When he
landed at the Manila Domestic Airport, you met him as your friend
and the first thing he requested you is if he could borrow some
pesos because his money is in dollars. He borrowed from you
P15,000.00 promising to pay in a week’s time.. One week later, still
he has not paid you and obviously it seems he will not pay you. So
you decided to sue him while he is around to collect, where is the
venue of the action?
A: The law says, generally where the plaintiff resides or where the
defendant resides. The trouble is, the defendant has no residence
here because he is already residing abroad. But he is temporarily
here in the Philippines.
You can sue him where he may be found. If he decides to stay in
Cebu, that is where the proper venue rather his permanent
residence. So where he may be found is the alternative venue. The
phrase “where he may be found” means where he may be found
here in the Philippines for a non-resident defendant but
temporarily staying in the Philippines.
Q: Suppose a defendant is a non-resident and he is not even here.
Like for example, your neighbor borrowed money from you and the
nest thing you heard is that he left the country. He has already
migrated to the states. Of course you know his address there. Can
you sue him in the Philippine court, a defendant who is no longer
residing here and is not found in the Philippines?
A: NO, you cannot. Charge it to experience.
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Q: Why can you not sue a person not residing here in the
Philippines and is not found here in the first place?
A: There is no way for Philippine courts to acquire jurisdiction over
his person. Otherwise, he will not be bound by the decision.
But in our discussion on the element of jurisdiction: subject matter,
person, res and issues, I told you that the res or the thing in dispute
is important because sometimes it takes the place of jurisdiction
over the person of the defendant. So even if the Philippine court
cannot acquire jurisdiction over the person of the defendant but
the subject of the controversy (res) is in the Philippines, then the
non-resident defendant can also be sued in the Philippines. The
court can now acquire jurisdiction over the res, subject and since
the res is here, the judgment can be enforced. It is not a useless
judgement anymore.
EXAMPLE: He is there but he is the owner of a piece of land here. I
want to file a case to recover ownership over the land here in the
Philippines.
Q: Can I sue the non-resident defendant?
A: YES under Section 3. Even if the person is abroad, the res of the
property in dispute is here and if he loses the case the judgment
can be enforced – transfer the property to you. So it is not a useless
judgment. That is what Section 3 is all about.
Sec. 3. Venue of actions against nonresidents.
- If any of the defendants does not reside and
is not found in the Philippines, and the action
affects the personal status of the plaintiff, or
any property of said defendant located in the
Philippines, the action may be commenced
and tried in the court of the place where the
plaintiff resides, or where the property or any
portion thereof is situated or found, (2[c]a)
Q: What is the difference between the non-resident defendant in
Section 2 and the non-resident defendant in Section 3?
A: In Section 2, the non-resident defendant may be found in the
Philippines. But in Section 3, he does not reside and is not found in
the Philippines. So, physically, he is not around.
Venue of ordinary civil actions against non-residents:
1) Non-resident but found in the Philippines;
a) for personal actions, where the plaintiff resides or
where he may be found at the election of the
plaintiff;
b) for real actions, where the property is located.
2) Non-resident not found in the Philippines
103
An action may be filed only when:
1.) The action affects the personal status of the plaintiff
and venue is the place where the plaiantiff resides; or
2.) The action affects the property or any portion thereof of
said defendants is located here in the Philippines, and
venue is the place where the property or any portion
thereof is located.
ACTION THAT AFFECTS THE PERSONAL STATUS OF THE PLAINTIFF
EXAMPLE: A young child was abandoned by his illegitimate father.
The illegitimate father left the Philippines for good. The son wants
to file a case against the father for compulsory recognition, at least
to improve his status.
Q: Can the child file a case for compulsory acknowledgment here in
the Philippines against the father for compulsory acknowledgment?
A: YES because the action involves the person status of the
plaintiff. The res is the status of the plaintiff who happens to be in
the Philippines.
THE ACTION AFFECTS THE PROPERTY OR ANY PORTION THEREOF
OF SAID DEFENDANTS LOCATED HERE IN THE PHILIPPINES
Example: The defendant who is already abroad owns a piece of
land located here in the Philippines and I want to recover the
ownership of the piece of land.
Q: What is the res?
A: The res is the land which is situated here in the Philippines.
Therefore I can sue that defendant even if he is there because the
court can acquire jurisdiction over the res.
In order to validly sue in the Philippine court, a defendant who is no
longer residing here and is no longer found here, the action must
be:
1) action in rem; or
2) at least quasi-in rem.
In the examples given, if the action is for compulsory recognition,
that is actually an action in rem. In the suit which involves a
property here in the Philippines, at least that is an action quasi-in
rem.
But if the action is purely in personam, then there is no way by
which you can sue him. Example is an action to collect an unpaid
loan.
Q: Where is now the proper venue of the action against the non-
residents?
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A: The law says where the plaintiff resides – action which affects
the personal status of defendants, where the property of the
defendant located here in the Philippines
Sec. 4. When rule not applicable. - This rule shall not apply -
a)In those cases where a specific rule or law
provides otherwise; or
b)Where the parties have validly agreed in writing
before the filing of the action on the exclusive
venue thereof. (3a, 5a)
A.) IN THOSE CASES WHERE A SPECIFIC RULE OR LAW PROVIDES
OTHERWISE;
Q: What cases provide for venue of the action which may be
different from what Rule 4 says?
A: The following:
1.) A civil action arising from LIBEL under Article 360 of the
Revised Penal Code.
Libel could give rise to a civil action for
damages. It is considered under the RPC as
one of the independent civil actions. The
criminal action for libel shall be filed
simultaneously or separately in the RTC of the:
a.) province or city where the libelous article is
printed and first published; or
b.) where any of the offended parties actually
resides at the time of the commission of the
offense.
If one of the offended party is a public officer, whose
office is in the City of Manila at the time of the
commission of the offense, the action shall be filed (a) in
the RTC of Manila, or (b) in the RTC of the province
where he held office at the time of the commission of
the offense.
2.) Section 5 (4), Article VIII, 1987 Constitution – The SC may
order a change of venue or place of trial to avoid a
miscarriage of justice as what happened in the case of
Mayor Sanchez.
B.) WHERE THE PARTIES HAVE VALIDLY AGREED IN WRITING
BEFORE THE FILING OF THE ACTION ON THE EXCLUSIVE VENUE
THEREOF.
The parties may agree on a specific venue which could be in a place
where neither of them resides. Take note that the stipulation must
be:
1) in writing;
2) made before the filing of the action and
3) exclusive as to the venue.
104
While the first two rarely pose a problem, the third has been a
source of controversy in the past.
A stipulation that “any suit arising from this contract shall be filed
only in Quezon City” is exclusive in character and is clear enough to
preclude the filing of the case in any other place. In this case, the
residences of the parties are not to be considered in determining
the venue of the action.
How about a stipulation that the “parties agree to sue and be sued
in the courts of Manila?”
POLYTRADE CORP. vs. BLANCO – 30 SCRA 187
FACTS: C and J are both residing here in Cebu City. J borrowed
money from C, and executed a promissory note in favor of the
latter which says, “I promise to pay C the sum of P200,000
one year from today. In case of a suit arising from this
promissory note, the parties agree to sue and be sued in the
City of Manila.”
When the note matured, J did not pay so C filed a case to
collect the unpaid loan here in Cebu City but J challenged the
venue on ground that the venue is agreed upon which is
Manila. According to C, the venue is correct because both of
us are residing here in Cebu City and under Rule 4, the venue
is where I reside or you reside, at my option.
ISSUE: Who is correct in this case?
HELD: Plaintiff is correct notwithstanding the stipulation.
Why? When. the parties stipulated on the venue of the civil
action, other than those found in the Rule of Court, the
stipulated venue is considered merely as an ADDITION to
where the parties reside. Unless the stipulation contains
RESTRICTIVE words which shows the intention of the parties
to limit the place stipulated as the exclusive venue.
So in the second exception where there is an agreement in writing
on the exclusive venue, the word exclusive is very important as
taken in the ruling in POLYTRADE vs. BLANCO. So if the venue is not
exclusive, Rule 4 still applies and the stipulated venue is just an
additional one.
Of course, there are stipulations where you can see clearly the
intention of the parties to limit the venue. But sometimes, there
are stipulations in which it is difficult to decipher the real intention
of the parties whether exclusive or not. Examples of clear
stipulations which calls for the application of the POLYTRADE
ruling: in the City of Manila only or the suit shall be filed in the City
of Manila and in no other place.
The Polytrade doctrine was further applied in the case of
Unimasters Conglomeration Inc. v. CA 267 SCRA 759. In this case, it
was ruled that a stipulation stating that “all suits arising out of this
Agreement shall be filed with/in the proper courts of Quezon City,”
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is only permissive and does not limit the venue to the Quezon City
courts. As explained the said case:
“In other words, unless the parties made very clear, by employing
categorical and suitably limiting language, that they wish the venue
of the actions between them to be laid only and exclusively at a
definite place, and to disregard the prescriptions of Rule 4,
agreements on venue are not to be regarded as mandatory or
restrictive, but merely permissive, or complementary of said
rule.xxxThere must be, to repeat, accompanying language clearly
and categorically expressing their purpose and design that actions
between them be litigated only at the place named by them,
regardless of the general precepts of Rule 4; and any doubt or
uncertainty as to the parties’ intentions must be resolved against
giving their agreement a restrictive or mandatory aspect. Any other
rule would permit of individual, subjective judicial interpretations
without stable standards, which could well result in precedents in
hopeless inconsistency.”
However, there are cases in which you cannot find the word
exclusive or the word only, and yet the SC said it seems the
intention of the parties to limit the venue as exclusive as what
happened in the 1994 case of
GESMUNDO vs. JRB REALTY CORP – 234 SCRA 153
FACTS: This involves a lease contract which contain a
stipulation on venue. Here is the language of the lease
contract: “venue for all suits, whether for breach hereof or
damages or any cause between the LESSOR and the LESSEE,
and persons claiming under each, being the courts of
appropriate jurisdiction in Pasay City…”
In other words, if there is a case, they agreed to file it in the
court of Pasay City.
ISSUE: Is this intention of the parties to make Pasay City an
exclusive venue?
HELD: Pasay City is the exclusive venue. “It is true that in
Polytrade Corporation v. Blanco, a stipulation that ‘The
parties agree to sue and be sued in the City of Manila’ was
held to merely provide an additional forum in the absence of
any qualifying or restrictive words. But here, by laying in Pasay
City the venue for all suits, the parties made it plain that in no
other place may they bring suit against each other for breach
contract or damages or any other cause between them and
persons claiming under each of them.” In other words, the
intention of the parties is to make Pasay City the exclusive
venue.
The following stipulations were likewise treated as merely
permissive and did not limit the venue:
a. xxxThe agreed venue for such action is Makati, Metro
Manila, Philippines (Mangila v. CA 435 Phil. 870).
105
b. “In case of litigation hereunder, venue shall be in the City
Court or Court of First Instance of Manila as the case
may be for determination of any and all questions arising
thereunder.” (Phil. Bank of Communications v. Trazo, GR
165500, Sug. 30, 2006)
c. “It is hereby agreed that in case of foreclosure of this
mortgage under ACT 3135, as amended, and Presidential
Decree No. 385, the auction sale shall be held at the
capital of the province, if the property is within the
territorial jurisdiction of the province concerned, or shall
be held in the city, if the property is within the territorial
jurisdiction of the city concerned”(Langkaan Realty
Development, Inc. v. UCPB GR 139427, Dec. 8, 2000)
d. “All court litigation procedures shall be conducted in the
appropriate courts of Valenzuela City, Metro Manila”
(Auction in Malinta, inc. v. Luyaben GR 173979, Feb. 12,
2007)
Examples of words with restrictive meanings are: xxx “only”,
“solely”, “exclusively in this court”, “in no other court save –“,
“particularly”, “nowhere else but/except --, or words of equal
import xxx” (Pacific Consultants International Asia, Inc. v.
Schonfeld, GR 166920 Feb. 19, 2007)
Cases like Hoechst, Inc. v. Torres, 83 SCRA 297 and Bautista v. de
Borja 18 SCRA 474 and other rulings contrary to the Polytrade
doctrine are deemed superseded by current decisions on venue.
In Supena v. de la Rosa 334 Phil. 671, it was ruled that Hoechst had
been rendered obsolete by recent jurisprudence applying the
doctrine enunciated in Polytrade (Auction in Malinta Inc. v.
Luyaben)
This conflict was resolved in the case of PHIL. BANKING vs.
TENSUAN (228 SCRA 385) where the SC ruled that the ruling in
BAUTISTA vs. DE BORJA and HOECHST PHILS. vs. TORRES has been
rendered obsolete by the POLYTRADE ruling and subsequent cases
reiterated it. So the ruling in POLYTRADE is the correct ruling.
Forget what the SC said in the abovementioned two cases.
When stipulation would be contrary to public policy of making
courts accessible to all who may have need of their service
SWEET LINES vs. TEVES – 83 SCRA 361
FACTS: This is a Cagayan de Oro case which involves Sweet
Lines, a shipping company with the head office in Cebu. The
respondent Teves is the former City Fiscal of Davao City,
former Mayor and became judge of CFI of Cagayan de Oro
City.
There was a group of passenger who rode on the Sweet Lines
bound for Cebu City. During the trip, they were given a crude
treatment by the officers of the vessel. When they came back
in Cagayan de Oro City, they filed a suit for damages against
Sweet Lines. They file the case in the former CFI, now RTC, of
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Cagayan de Oro City because the plaintiffs are residents of
Cagayan de Oro City.
Sweet Lines filed a motion to dismiss questioning the venue of
the action because in the ticket issued by Sweet Lines, it is
stipulated that “…in case of a civil action arising from the
contract of carriage, the venue of the action shall be the City
of Cebu ONLY and in no other place.” So there is a restrictive
word. Obviously the lawyers of Sweet Lines knew about
Polytrade because they moved to dismiss the case citing this
case.
Judge Teves denied the motion to dismiss the case despite the
stipulation. According to him, it is unfair. If I will dismiss the
case based on this stipulation, the aggrieved parties will be
discouraged in going to Cebu. It is very expensive and they will
be inconvenienced. But, if the case will go on in Cagayan de
Oro, it will not inconvenienced Sweet Lines because they have
their branch office, their manager and their own lawyer.
ISSUE: Whether or not Cagayan de Oro is the proper venue.
HELD: YES. Judge Teves was correct in not dismissing the case.
First of all, the stipulation is placed in the ticket. These people
never even bothered to read this. Nakalagay na iyan diyan eh.
So either you take it or you leave it. Therefore, the passengers
did not have a hand in preparing that stipulation. So the
contract is a contract of adhesion.
Second, again for the sake of equity, to be fair that these poor
people will be compelled to go to Cebu to file a case there.
They will be discouraged. It is very expensive to go back and
forth to Cebu. Whereas, Sweet Lines has the resources, the
means, the lawyers here in Cagayan to litigate. Therefore, it
would be inequitable to compel them or to apply the
stipulation there.
The ruling in SWEET LINES is an exception to POLYTRADE despite
the exclusive stipulation. The SC said that the refusal of the court to
apply it is correct. There is no grave abuse of discretion on the part
of Judge Teves.
ARQUERO vs. FLOJO – 168 SCRA 54
FACTS: Arquero here is lawyer and the municipal mayor of the
municipality of Sta. Teresita, Cagayan Valley. He sent a
telegram through the RCPI branch in Cagayan addressed to a
Congressman in stating: I will go there to Manila, I will see
you in your office on this particular date.
When he went to the office of the congressman after a few
days, who was mad at him telling him “So you are here to ask
for a favor for your own but your telegram was charged
collect! Arquero was stunned and embarrassed because he
paid for the telegram.
106
Upon his return to Cagayan, he filed an action for damages
against RCPI. But in the RCPI telegraph form, there is a
stipulation that “venue of any action shall be the court of
Quezon City alone and in no other courts.” So the venue is
restrictive and RCPI filed a motion to dismiss citing as ground
improper venue.
The trial court granted the motion. Arquero went to the SC
citing the case of SWEET LINES where despite the fact of a
restrictive stipulation, SC refused to apply the POLYTRADE
ruling.
HELD: The ruling in Sweet Lines vs. Teves does not apply. You
are bound by the stipulation. Why? You are a lawyer so you
klnow the implication of the stipulation signed.
Q: Distinguish JURISDICTION from VENUE.
A: The following are the distinctions:
1) JURISDICTION refers to the authority of the court to
hear the case, whereas
VENUE refers only to the place where the action is
to be heard or tried;
2) JURISDICTION over the subject matter cannot he
waived; whereas
VENUE is waivable and can be subject of agreement;
3) JURISDICTION is governed by substantive law –
Judiciary Law, BP 129; whereas
VENUE is governed by procedural law – Rule 4 of the
Rules of Court;
4) JURISDICTION establishes a relation between the
court and the subject matter; whereas
VENUE creates a relation between the plaintiff and
defendant, or petitioner and respondent; and
5) JURISDICTION or lack of it over the subject matter
is a ground for a motu proprio dismissal; whereas
VENUE is not except in cases subject to summary
procedure.
BAR QUESTION: State in what instance the jurisdiction and venue
coincide.
A: In CRIMINAL CASES because in criminal cases, venue is territorial
jurisdiction. But in civil cases, jurisdiction and venue are two
different things. They do not coincide.
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Rule 5

UNIFORM PROCEDURE IN TRIAL COURTS

SECTION 1. Uniform Procedure – The

procedure in Municipal Trial Courts shall be
the same as in the Regional Trial Courts,
except (a) where a particular provision
expressly or impliedly applies only to either
of said courts, or (b) in civil cases governed by
the Rule on Summary Procedure. (n)

The Rules on Procedure starting with Rule 6, the title of the subject
matter is procedure in Regional Trial Courts. However, by express
provisions in Section 1, the procedure in the Regional Trial Court
and the procedure in the Municipal Trial Court is the same.

The Rules on Civil Procedure which applies to RTC are also

applicable to the MTC except when a particular provision expressly
applies only to either of said courts.

There are provisions where it is very clear and intended only to

apply to RTC or MTC. A good example of this is paragraph (a) is Rule
40 which governs appeals from MTC to RTC. It is only applicable to
MTC. It does not apply to appeals from RTC to Court of Appeals.

The second example would be in civil cases governed by Rules on

Summary Procedure. That would be the last law that we will take
up. Rules on Summary Procedure applied only to MTC. They do not
apply to RTC.

Sec. 2 Meaning of Terms. – The term

“Municipal Trial Courts” as used in these
Rules shall include Metropolitan Trial Courts,
Municipal Trial Courts in Cities, Municipal
Trial Court, and Municipal Circuit Trial Courts.
(1a)

In our structure, we already illustrated the hierarchy of courts.

Metropolitan Trial Courts are only in Manila. Municipal Trial Courts
are in cities and municipalities. When the Rule says ‘Municipal Trial
Court’, it already includes Metropolitan Trial Courts, MTCC, MCTC.
So that we will not be repetitious.

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PROCEDURE IN THE REGIONAL TRIAL COURTS
Rule 6
KINDS OF PLEADINGS
SECTION 1. Pleadings Defined. Pleadings are
the written statements of the respective
claims and defenses of the parties submitted
to the court for appropriate judgment. (1a)
Q: Define pleadings
A: PLEADINGS are the written statements of the respective claims
and defenses of the parties submitted to the court for appropriate
judgment. (Section 1) Under the Rules, “pleadings” cannot be oral
because they are clearly described as “written” statements.
This is the document where a party will state his claim against the
defendant; or where the defendant will state also his defense.
Pleadings merely tell a story. You tell your story there, the other
party will tell his story.
Necessity and purpose of pleadings
1) Pleadings are necessary to invoke the jurisdiction of the
court (71 C.J.S. Pleadings). It is necessary, in order to
confer jurisdiction on a court, that the subject matter be
presented for its consideration in a mode sanctioned by
law and this is done by the filing of the complaint or
other pleading. Unless a complaint or other pleading is
filed, the judgment of a court of record is void and
subject to collateral attack even though it may be a court
which has jurisdiction over the subject matter referred
to in the judgment.
2) Pleadings are intended to secure a method by which the
issues may be properly laid before the court. (Santiago v.
de los Santos 61 SCRA 146).
3) Pleadings are designed to present, define and narrow
the issues, to limit the proof to be submitted in the trial,
to advise the court and the adverse party of the issues
and what are relied upon as the causes of action or
defense. (71 CJS)
The counterpart of pleadings in criminal procedure is information,
or the criminal complaint where a prosecutor will tell what crime
you are being accused – what you did, time, the victim, etc.
Construction of pleadings
In this jurisdiction, all pleadings shall be liberally construed so as to
do substantial justice (Concrete Aggregate Corp. v. CA 266 SCRA
88). Pleadings should receive a fair and reasonable construction in
accordance with the natural intendment of the words and language
used and the subject matter involved. The intendment of the
pleader is the controlling factor in construing a pleading and should
be read in accordance with its substance, not its form.
While it is the rule that pleadings should be liberally construed, it
has also been ruled that a party is strictly bound by the allegations,
108
statements or admissions made in his pleading and cannot be
permitted to take a contradictory position. (Santiago v. de los
Santos 61 SCRA 146)
Construction of ambiguous allegations in pleadings
In case there are ambiguities in the pleadings, the same must be
construed most strongly against the pleader and that no
presumptions in his favor are to be indulged in. This rule proceeds
from the theory that it is the pleader who selects the language
used and if his pleading is open to different constructions, such
ambiguities must be at the pleader’s peril. (61 Am Jur, Pleading)
System of pleading in the Philippines
The system is the Code Pleading following the system observed in
some states of the US like California and New York. This system is
based on codified rules or written set of procedure as distinguished
from common laws procedure. (Marquez and Gutierrez Lora v.
Varela, 92 Phil. 373)
Sec. 2 – Pleadings allowed – The claims of a
party are asserted in a complaint,
counterclaim, cross-claim, third (fourth, etc.)
– party complaint, or complaint-in-
intervention.
The defenses of a party are alleged in the
answer to the pleading asserting a claim
against him.
An answer may be responded to by a reply.
(n)
Section 2 tells us what pleadings are allowed by the Rules of Court.
In a civil case, there are actually two (2) contending parties:
1) the person suing or filing a claim; and
2) the person being sued or defending.
Q: If you are the claimant or the plaintiff, in what pleading do you
assert your claim?
A: Complaint, counterclaim, cross-claim, third-party complaint or
fourth-party complaint, etc.
On the other hand, if you are the party sued, you also have to file
your pleading or your defense. It is known as the ANSWER. The
defenses of a party are alleged in the answer to the pleading
asserting a claim against him. If I file a complaint against you, in
response, you will file an answer.
In the last paragraph, an answer may be responded by a REPLY. I
file a complaint. You file an answer invoking your defenses. If I
want to respond to your defenses, I will file a REPLY.
COMPLAINT ANSWER REPLY
That is the pattern.
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Q: Summarizing all of them, what are the known pleadings Q: Define complaint
recognized by the law on Civil Procedure?
A: COMPLAINT is the pleading where the plaintiff will allege his
A: There are seven (7) types of pleadings: cause or causes of action. A complaint is also called the INITIATORY
PLEADING because it is actually the first pleading filed in court. It is
1) Complaint; the pleading that initiates the civil action.
2) Answer;
3) Counterclaim; Rule 8 requires that it should contain a concise statement of the
4) Cross-claim;
ultimate facts constituting the plaintiff's cause of action not
5) Reply
6) Third (Fourth, Fifth, etc.) – Party Complaint; evidentiary facts or legal conclusions.
7) Complaint-in-Intervention.
Ultimate facts refer to the essential facts constituting the plaintiff's
Pleadings allowed under the Rules on Summary Procedure cause of action.

Note however, that when a case falls under the Rules on Summary The fact is essential if it cannot be stricken out without leaving the
Procedure, the only pleadings allowed to be filed are: statement of the cause of action insufficient.

1) Complaint; Test of sufficiency of the facts alleged in the complaint:

2) Compulsory Counterclaim;
3) Cross-claim pleaded in the Answer; and Determine whether upon the averment of facts, a valid judgment
4) Answers thereto (Sec. 3 [A]II, Rules on Summary may be properly rendered.
Procedure)
What are not ultimate facts:
Permissive Counterclaims, third-party complaints, reply and
pleadings-in-intervention are prohibited. (Sec. 9, IV) 1) evidentiary or immaterial facts;
2) legal conclusions, conclusions or inferences of facts from
Pleading and motion facts not stated, or incorrect inferences or conclusions
from facts stated;
1.) the purpose of a pleading is to submit a claim or defense 3) the details of probative matter or particulars of
for appropriate judgment while the purpose of a motion evidence, statements of law, inferences and arguments;
is to apply for an order not included in the judgment; 4) an allegation that a contract is valid or void is a mere
conclusion of law.
2.) a pleading may be initiatory like a complaint while a
motion can never be such as it is filed in a case that is For EXAMPLE: Mr. P wants to sue Mr. R to collect an unpaid loan.
already pending in court; Mr. R borrowed money from Mr. P and refused to pay. Normally, it
starts with an introduction: “Plaintiff, through counsel, respectfully
3.) A pleading is always filed before judgment while a
alleges that…” Then it is followed by paragraphs which are
motion may be filed after judgment;
numbered. For instance:
4.) There are only 9 kinds of pleadings while any application
for a relief other a judgment can be made in a motion' Illustration:
however, there are only three motions which actually
seek judgment namely: 1) Plaintiff Mr. P, of legal age, is a resident of 79 P. del
Rosario St., Cebu City; whereas defendant Mr. R
a) a motion for judgment on the pleadings (R 34); also of legal age, is a resident of 29 Pelaez St. Cebu
b) a motion for summary judgment (R 35); City where summons and other processes of this
c) Demurrer to Evidence court may be served;

5.) a pleading must be written while a motion may be oral 2) On Nov. 7, 2008, defendant secured a loan from
when made in open court or in the course of a hearing or plaintiff in the sum of P30,000.00 payable within
trial. one (1) year form said date with legal interest;

A.) COMPLAINT 3) The account is already due and despite repeated

demands, defendant failed and refused to pay;
Sec. 3. Complaint – The complaint is the
PRAYER
pleading alleging the plaintiff’s cause or
WHEREFORE, it is respectfully prayed that judgment be
causes of action. The names and residences
rendered against the defendant ordering him to pay the loan
of the plaintiff and defendant must be stated
of P30,000.00 and interest in favor of the plaintiff.
in the complaint.
Plaintiff further prays for such other reliefs as may be just and
equitable under the premises.

109
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Your allegations must contain the four (4) elements of a Cause of
Action – the Right, the Obligation, the Delict or Wrong or Violation
of Your Right, and the Damage.
B.) ANSWER
Sec. 4 – Answer – An answer is a pleading in
which a defending party sets forth his
defenses. (4a)
Q: What is the pleading where you respond?
A: It is called the ANSWER. That is where you will state your
defenses. That is why an ANSWER is called a Responsive Pleading.
Q: Why is it called “Responsive Pleading”?
A: Because it is the pleading which is filed in response to the
complaint or a pleading containing a claim. It is where you respond
to the cause of action. That is where you state your defenses.
So you can file an answer to the complaint; answer to the
counterclaim, answer to the cross-claim, etc.
It is something which is not found in Criminal Procedure.
Q: If you are charged with a crime, how do you answer?
A: By pleading guilty or not guilty. That is the answer. When you
plead guilty, and the offense is not punishable by reclusion
perpetua to death it is the end.
There is no writing of defenses, no written answer in criminal
cases. It (pleadings) only applies to civil cases where you allege
your defenses.
Q: What are the defenses under the Rules?
A: That is Section 5.
Sec. 5 – Defenses – Defenses may either be
negative or affirmative.
A NEGATIVE DEFENSE – is the specific denial
of the material fact or facts alleged in the
pleading of the claimant essential to his
cause or causes of action.
An AFFIRMATIVE DEFENSE – is an allegation
of a new matter which, while hypothetically
admitting the material allegations in the
pleading of the claimant, would nevertheless
prevent or bar recovery by him.
Defenses may either be negative or affirmative.
b.) Answer; NEGATIVE DEFENSES;
Q: Define a NEGATIVE defense.
110
A: Paragraph [a]: Briefly, it is a defense of specific denial where you
deny the statement in the complaint and you state the facts and
the reason/s on which your denial is based. In a negative defense,
the defendant specifically denies a material fact or facts alleged in
the pleading of the claimant essential to his cause of action.
EXAMPLE: The complaint says in paragraph 2, “On November 6,
2008, defendant secured a loan from plaintiff in the amount of
P30,000.00 payable one (1) year from November 6,2008.
The defendant will say in his answer:
“Defendant specifically denies the allegation in
Paragraph 2 of the complaint. The truth of the
matter being that he never secured any loan from
plaintiff because he does not even know the
plaintiff and he did not see his face before.”
That is a negative defense. You said I borrowed money from you.
“No, I don’t even know you. I have not seen you before.” He
denies the existence of the loan. That is known as the negative
defense. It is a denial of a material fact which constitutes the
plaintiff’s cause of action. That’s why it is briefly called a “Defense
of Specific Denial”.
Insufficient denial or denial amounting to admissions:
1. General denial; and
2. denial in the form of negative pregnant
Negative pregnant is a denial in such form as to imply or express
an admission of the substantial fact which apparently is
controverted. It is form of denial which really admits the important
facts contained in the allegations to which it relates.
While it is a denial in form, its substance actually has the effect of
an admission because of a too literal denial of the allegations
sought to be denied. This arises when the pleader merely repeats
the allegations in a negative form.
In the example above, when the answer states:
"The defendant did not secure a loan from the plaintiff on Nov. 6,
2008 in the amount of P30,000.00 payable within one year."
b.) Answer; AFFIRMATIVE DEFENSES
Q: Define an AFFIRMATIVE defense.
A: In paragraph (b), it is briefly called a defense of confession and
avoidance because, while the defendant may admit the material
allegation in the complaint, however, he will plead a new matter
which will prevent a recovery by the plaintiff. I admit what you are
saying in the complaint but still you are not entitled to recover
from me.
EXAMPLE: Defendant may say: Defendant admits the allegation in
par. 2 of the Complaint, but alleges that the action has prescribed.
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He confesses to having borrowed money but avoids liability by
asserting prescription.
Examples of affirmative defenses are: fraud, statute of limitations,
release, payment, illegality, statute of frauds, estoppel, former
recovery, discharge in bankruptcy, and any other matter by way of
confession and avoidance.
Suppose, you sue me for damages arising from breach
of contract. I admit I entered into a contract but I have
no obligation to comply because the contract is null and
void. Or, the contract is illegal. Or, the stipulation is
contrary to public policy, therefore, I am not bound. I
admit what you say but I am not liable because of the
illegality of the subject matter of the contract.
Or, you sue me because according to you, I entered into a contract
and I refused to comply. So, you file a case against me for specific
performance or for damages. Then I say: “It’s true that I entered
into a contract with you. It’s true I did not comply. But there is
nothing you can do because the contract is oral and the contract is
covered by the statute of frauds. In order to be enforceable, we
should have reduced it into writing. Since we never reduced it into
writing, I am not bound to comply.”
c.) COUNTERCLAIMS
Sec. 6. Counterclaim. - A counterclaim is any
claim which a defending party may have
against an opposing party. (6a)
EXAMPLE: You file a case against me for damage to your car.
According to you in your complaint, while you were driving your car
along the highway carefully, I came along driving recklessly and
bumped your car causing damages amounting to P50,000.00 for
repair. Your allegation is based on negligence on my part.
My answer is denial: “That is not true! I deny that! I was the one
driving carefully and you were driving carelessly and negligently.
Therefore, if you are the proximate cause of the accident, I’m not
liable for the damage of your car.” That’s my answer – I’m not
liable because you are negligent. Because you were the one
negligent, my car was also damaged. I am not liable for the damage
on your car. As a matter of fact, you are the one that should be
held liable to pay for the damage of my car. I am now claiming for
the damage of P50,000.00. That is called COUNTERCLAIM.
Nature of a counterclaim
A counterclaim is in the nature of a cross-complaint. Although it
may be alleged in the answer, it is not part of the answer. Upon its
filing, the same proceedings are had as in the original complaint.
For this this reason it is to be answered within ten (10) days from
service.
According to a lawyer who is fluent in Cebuano, he called it balos.
He was explaining to his client that they have counterclaim.
111
Therefore, there is one civil case but there are two (2) causes
involved – the main cause of action in the complaint and that in the
counterclaim. There are two (2) issues to be resolved by the court.
Q: If your complaint against me is to recover a sum of money,
should my counterclaim also involve recovery of sum of money?
A: NO. There is no such rule that these two (2) cases should be
similar in nature. (De Borja vs. De Borja, 101 Phil. 911) It is possible
for you to file case for recovery of a piece of land and my
counterclaim is recovery of damages arising from a vehicular
accident.
Q: Suppose your claim against me is One (1) Million, is it possible
that my counterclaim against you is Two (2) Million?
A: YES. There is no rule which limits my counterclaim to the same
amount you are claiming. A counterclaim need not diminish or
defeat the recovery sought by the opposing party, but may claim
relief exceeding in amount or different in kind from that sought by
the opposing party. (De Borja vs. De Borja, 101 Phil. 911)
Q: You file a case against me for recovery of unpaid loan. My
counterclaim is, rescission of partnership contract. Is the
counterclaim proper?
A: Yes although there is no connection between what you are
asking and what my answer is. But what is important is that we are
the same parties. If you will not allow me to file my counterclaim
against you, that will be another case in the future. So to avoid
multiplying suits, clogging the dockets of the court and making the
proceedings more expensive, violating the purpose of the rules, the
parties are allowed to include all their claims against each other in
one case.
Same capacity rule
DE BORJA vs. DE BORJA - 101 Phil 911
FACTS: A died, of course, what survives after that is the
estate. X was appointed as administrator or legal
representative. W owes a sum of money to the estate of A
and X filed a case against W to collect the unpaid loan. X is
called the REPRESENTATIVE PARTY under Rule 3, Section 3. W
filed an answer and stated that W has a claim against X. W
filed a counterclaim against X in the case.
HELD: The counterclaim is improper. When X sued W, X is not
suing in his own personal capacity. He is acting as
administrator of the estate of A. The real plaintiff is the estate
of A. X is just the legal representative. Therefore, you cannot
file a counterclaim against X in the latter’s personal capacity
when X is suing W in a representative capacity.
The SC said that the plaintiff should be sued in a counterclaim in
the SAME CAPACITY that he is suing the defendant. That’s a
principle to remember.
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PERMISSIVE & COMPULSORY
COUNTERCLAIMS
Sec. 7 – Compulsory counterclaim – 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. Such a
counterclaim must be within the jurisdiction
of the court both as to the amount and the
nature thereof, except that in the original
action before the Regional Trial Court, the
counterclaim may be considered compulsory.
Under the Rules, there are two types of counterclaim:
1) COMPULSORY COUNTERCLAIM and,
2) PERMISSIVE COUNTERCLAIM.
Q: How do you distinguish one from the other? When is a
counterclaim compulsory and when is it permissive?
A: The ELEMENTS of a COMPULSORY COUNTERCLAIM are found in
Section 7. If we will outline Section 7, we will see that a
counterclaim is compulsory if the following requisites are present:
1) It is cognizable by the regular courts of justice;
2) It arises out of or it is connected with a transaction or
occurrence constituting a subject matter of the opposing
party’s claim;
3) It does not require for its adjudication the presence of
third parties of whom the court cannot acquire
jurisdiction;
4) It must be within the jurisdiction of the court, both as to
the amount and the nature thereof, except that in an
original action before the RTC, the counterclaim may be
considered compulsory regardless of the amount; and
5) The defending party has a counterclaim at the time he
files his answer.
The fifth requisite is not found in Section 7 but in Rule 11, Section
8:
Rule 11, Sec. 8. Existing counterclaim or cross-
claim. - A compulsory counterclaim or a cross-
claim that a defending party has at the time
he files his answer shall be contained therein.
(8a, R6)
Another way of saying it is, the counterclaim has already matured
at the time he files his answer. That is the fifth requisite.
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Q: What happens if one of these requisites is missing?
A: If one of the five requisites is missing, the counterclaim is
permissive in nature.
Discussion of the elements
First Element: A COUNTERCLAIM TO BE COMPULSORY MUST
BE COGNIZABLE BY THE REGULAR COURTS.
In other words, if you file a complaint against me and I have a
counterclaim against you in the Labor Code, then it cannot be
classified as a compulsory claim because how can I invoke against
you a claim which is cognizable by the NLRC before the RTC?
Second Element: IT ARISES OUT OF OR IT IS CONNECTED WITH A
TRANSACTION OR OCCURRENCE CONSTITUTING A SUBJECT
MATTER OF THE OPPOSING PARTY’S CLAIM
The second requisite is the most important. A counterclaim, to be
compulsory, must arise out of or connected with the transaction or
occurrence constituting a subject matter of the opposing party
concerned. It must arise out of or is connected with a transaction
or occurrence constituting a subject matter of the opposing party’s
claim. It must be logically related to the subject matter of the main
action.
So the rule is, if the counterclaim did not arise out of or is not
connected with the transaction or occurrence constituting the
subject matter of the opposing party’s concern, the counterclaim
must be permissive in nature.
PROBLEM: Emily filed a case against Regina for damages arising
from a vehicle collision. According to Emily, the case of the accident
is the negligence of the defendant in driving her car. Her car
bumped the car of Emily and was damaged. So, Emily is holding
Regina liable for the damage on her car. Regina denied that she
was negligent. According to Regina, “No, I am not negligent. As a
matter of fact, you (Emily) were the one negligent, and because of
that negligence, my car was also damaged. So you should be the
one to pay damages.”
Q: Is the counterclaim of Regina arising out of or is connected with
the transaction or occurrence constituting the subject matter of
the opposing party?
A: YES because we are talking of the same bumping. You bumped
my car, you say I bumped your car. So we are talking of the same
event or transaction.
PROBLEM: T files a case against me for recovery of a piece of land.
According to her, she is the owner of the land which I’m occupying.
Now, I file my answer, and then I said, “T, I spent a lot of money for
necessary expenses to preserve the land. You are also liable to
reimburse me for the expenses for the necessary improvements I
introduced on the land.” Under the law on Property, a defendant
or possessor is entitled to reimbursement for necessary
improvements and expenses. So she is trying to recover the piece
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of land, I am now asking her to reimburse me for all necessary
expenses that I spent on the land.
Q: Is my counterclaim arising out of or connected with the subject
matter of your claim or not?
A: YES. We are talking of the same subject matter. Thus, the
counterclaim is compulsory.
PROBLEM: T files a case against me for recovery of a piece of land.
My counterclaim against her is damages arising from a vehicular
collision.
Q: Is my counterclaim arising out of a subject matter of your
action?
A: NO. It is completely different. Thus, that is a permissive
counterclaim.
MELITON vs. CA – 216 SCRA 485
HELD: “It has been postulated that while a number of criteria
have been advanced for the determination of whether the
counterclaim is compulsory or permissive, the one compelling
test of compulsoriness is the logical relationship between the
claim alleged in the complaint and that in the counterclaim,
that is, where conducting separate trials of the respective
claims of the parties would entail a substantial duplication of
effort and time, as where they involve many of the same
factual and/or legal issues.”
Logical Relationship Test
The logical relationship test between the claim and the
counterclaim has been called: The one compelling test of
“compulsoriness.” Under this test, any claim a party has against an
opposing party that is logically related to the claim being asserted
by the opposing party, and that it is not within the exception to the
rule is a compulsory counterclaim. Its outstanding quality is
flexibility. (Tan v. Kaakbay Finance Corporation 404 SCRA 518)
Q: What is the importance of determining whether the claim is
compulsory or permissive?
A: A compulsory counterclaim must be invoked in the same action.
It cannot be the subject matter of a separate action. Unlike in
permissive counterclaim where you have the choice of invoking it
in the same case, or in a separate action, compulsory counterclaim
must be invoked in the same action otherwise it will be barred.
That is found in Rule 9, Section 2:
Rule 9, Sec. 2. Compulsory counterclaim, or
cross-claim, not set up barred. - A compulsory
counter-claim or a cross-claim, not set up
shall be barred. (4a)
Let us try to apply that principle to the case cited.
113
PROBLEM: V files a case against me for damages arising from
vehicular collision. Her car is damaged, my car is damaged. In my
answer, I denied negligence but I did not claim from her the
damage to my vehicle. After the trial, court found the plaintiff at
fault. So, the complaint of V. This time I will file a case against her
to recover damages for the damage to my car since I was able to
prove that she was negligent and not me.
Q: What will happen to my case now?
A: My case will be dismissed because I did not raise that cause of
action as a counterclaim as it is compulsory.
PROBLEM: A files a case against me for recovery of a piece of land.
After trial, the decision is against me. The court said that I should
return the land to her. I will file a case against her. She moved to
dismiss – barred, because I should have raised that as a
counterclaim. I cannot file another case involving that cause of
action. That is the effect of failure to raise the compulsory
counterclaim in the case filed against you.
PROBLEM: Now, suppose the counterclaim is PERMISSIVE. My
cause of action against her is damages arising against a vehicular
collision.
Q: Is the counterclaim allowed?
A: Yes, allowed.
Q: My decision is not to file a counterclaim but to file another case
against her. Is that allowed?
A: Yes, that is allowed. Meaning, I may or may not raise it as a
counterclaim because it is permissive. I am permitted to raise it as
a counterclaim but I am not obliged. I may decide to file another
action against you. That is the importance between a compulsory
counterclaim and a permissive counterclaim.
Third Requisite: IT DOES NOT REQUIRE FOR ITS
ADJUDICATION PRESENCE OF THIRD PARTIES OF WHOM THE
COURT CANNOT ACQUIRE JURISDICTION.
Meaning, if my counterclaim against you will involve the presence
of an indispensable party who is, let’s say, abroad, and therefore,
the court cannot acquire jurisdiction over him, if I don’t allege it as
counterclaim in my answer, I will not be barred from filing a
separate action.
Fourth Element: THAT THE COUNTERCLAIM MUST BE WITHIN THE
JURISDICTION OF THE COURT BOTH AS TO THE AMOUNT AND
NATURE THEREOF
Rules:
1) A counterclaim before the MTC must be within the
jurisdiction of the said court, both as to the amount and
nature thereof.
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2) In an original action before the RTC, the counterclaim
may be considered compulsory regardless of the
amount.
3) However, the nature of the action is always material
such that unlawful detainer cannot be set up in the RTC.
4) If a counterclaim is filed in the MTC in excess of its
jurisdictional amount, the excess is considered waived
(Agustin v. Bacalan GR No. 46000, March 18, 1985)
In Calo v. Ajax In'tl GR No. 22485, March 16, 1968, the remedy
where a counterclaim is beyond the jurisdiction of the MTC is to set
off the claims and file a separate action to collect the balance.
Q: I will file a case against you for forcible entry. I want to recover a
piece of land. Where is the jurisdiction of that case?
A: MTC.
Review: In the Law on Property, even if you are a possessor in bad
faith, you are entitled to reimbursement for necessary expenses.
The theory there is, even if he is a possessor in bad faith, the
expenses redounded to the benefit of the land owner. Anyway, you
will spend them just the same as the land owner will have to spend
for them. So it will not be fair if he is not reimbursed. That’s our
premise.
PROBLEM: Now, the defendant would like to claim for
reimbursement for the necessary expenses that he spent in my lot.
The case I filed against you is forcible entry in the MTC. Your
necessary expenses amount to P350,000.
Q: Should you raise it as a compulsory counterclaim in the forcible
entry case?
A: NO.
Q: Does it arise out of or connected with the transaction which is
the subject matter of the main action? Why not compulsory?
A: Because the MTC has no jurisdiction over the P350,000 amount
for the necessary expenses. This time, that is the missing element.
Q: How will the defendant claim reimbursement?
A: He has to file with the RTC a case for reimbursement. He cannot
use that as a counterclaim for the forcible entry case because the
MTC has no jurisdiction on a counterclaim where the amount is
over P300,000.00.
I will reverse the problem:
PROBLEM: The plaintiff filed against the defendant an action for
accion publiciana – recovery for a piece of land where the value of
the property is P1 million. So the case should be filed in the RTC.
Now, the defendant is claiming for the reimbursement of the
improvements thereon (necessary expenses) amounting to
P50,000.
114
Q: Should the defendant raise that as a counterclaim in the accion
publiciana case?
A: YES.
In the first example, the counterclaim is above the jurisdiction of
the MTC. This time, the amount for the counterclaim is below the
jurisdiction of the RTC. So the RTC can claim jurisdiction.
Q: How can the RTC try a counterclaim when the claim is only
P50,000?
A: It is in accordance with the exception under Section 7: “except
that in an original action before the RTC, the counterclaim may be
considered compulsory regardless of the amount.” This means that
the main action is accion publiciana—RTC. The counterclaim is
reimbursement for necessary expenses with arose out of the same
land. Normally, the RTC cannot try that but the answer to this
question is YES.
The RTC can award a claim for damages even though the claim is
below its jurisdiction. The principle is: Since the counterclaim is
compulsory, jurisdiction over the main action automatically carries
with it jurisdiction over the compulsory counterclaim. The
compulsory counterclaim is merely incidental to the main action.
Jurisdiction of the RTC over the main action necessarily carries with
it jurisdiction over the compulsory counterclaim which is merely
ancillary.
If the main action is with the MTC, it cannot try the counterclaim
with the RTC. It is beyond its jurisdiction. It is not covered by the
exception. But if it is the main action which is within the jurisdiction
of the RTC, it can try a counterclaim which is below its jurisdiction
provided it arose out or is connected with the transaction.
That exception is not written in the prior rules but it is a recognized
exception laid down by the SC which is now written down in the
law. In the case of
MACEDA vs. CA – 176 SCRA 440
HELD: “The jurisdiction of the MTC in a civil action for sum of
money is limited to a demand that does not exceed P100,000
(now P300,000) exclusive of interest and costs. A
counterclaim beyond its jurisdiction and limit may be pleaded
only by way of defense to weaken the plaintiff’s claim, but not
to obtain affirmative relief.”
Fifth Requisite: THE DEFENDING PARTY HAS A COUNTERCLAIM AT
THE TIME HE FILES HIS ANSWER
How can I make a claim against you which is not yet existing? Even
if all the other requisites are present, the counterclaim would still
not be compulsory because how can one invoke something now
which he can acquire in the future?
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So, those are the five essential elements. You remove one, the
counterclaim becomes permissive.
Q: Again. What is the importance of distinguishing whether the
counterclaim is compulsory or permissive?
A: If the counterclaim is compulsory, the defendant is obliged
under the law to raise it as a counterclaim in the action where he is
being sued. If he fails to invoke it, it is barred forever (Rule 9
Section 2).
If the counterclaim is permissive, the defendant has a choice of
raising it as a counterclaim in the case filed against him or he may
decide to file another action against the plaintiff, raising it as his
cause of action. It is permitted but not obliged.
Compulsory and Permissive Counterclaim compared:
1) A compulsory counterclaim arises out of or is necessarily
connected with the transaction or occurrence that is the
subject matter of the other party's claim, while a
permissive counterclaim is not;
2) A compulsory counterclaim does not require for its
adjudication the presence of third parties of whom the
court cannot acquire jurisdiction while a permissive
counterclaim may require such;
3) A compulsory counterclaim is barred it not set up in the
action, while a permissive counterclaim is not;
4) A compulsory counterclaim need not be answered, no
default, while a permissive counterclaim must be
answered otherwise the defendant can be declared in
default.
A plaintiff who fails or chooses not to answer a compulsory
counterclaim may not be declared in default, principally because
the issues raised in the counterclaim are deemed automatically
joined by the allegations of the complaint (Gojo v. Goyala, GR No.
26768, Oct. 30, 1970)
General Rule: A compulsory counterclaim not set up in the answer
is deemed barred.
Exceptions:
1. if it is a counterclaim which either matured or was
acquired by a party after serving his answer. In this case
it may be pleaded by filing a supplemental answer or
pleading before judgment (Sec. 9 R 11);
2. When a pleader fails to set-up a counterclaim through
oversight, inadvertence, excusable negligence, or when
justice requires, he may, by leave of court, set up the
counterclaim by amendment of the pleading before
judgment (Sec. 10, R 11).
The filing of a motion to dismiss and the setting up of a compulsory
counterclaim are incompatible remedies. In the event that a
defending party has a ground for dismissal and a compulsory
115
counterclaim, he must choose only one remedy. If he decides to file
a motion to dismiss, he cannot set up his counterclaim. But if he
opts to set up his counterclaim, he may still plead his ground for
dismissal as an affirmative defense in his answer.
COUNTERCLAIMS IN CRIMINAL CASES
JAVIER vs. IAC – 171 SCRA 605
FACTS: The Javier spouses filed a criminal case against Leon
Gutierrez Jr, under BP 22 or the Bouncing Check Law, for
issuing a bad check. The criminal case was filed before the RTC
of Makati. The complainants did not reserve the civil action.
The implication is that the claim for civil liability is deemed
instituted with the criminal case.
Gutierrez in turn filed a civil action for damages against the
Javier spouses in the RTC of Catarman, Northern Samar,
where he accused the spouses of having tricked him into
signing the check.
What happened now is that he was being criminally sued in
Makati but defending himself in Catarman, Northern Samar.
He is explaining in the Samar court what he should be doing in
the Makati court.
HELD: The civil case in Samar should be dismissed. It must be
in the Makati court that Gutierrez, as accused in the criminal
charge of violation of BP 22, should explain why he issued the
bouncing check. He should explain that story in Makati and
not in Samar.
This should have been done in the form of a counterclaim for
damages for the alleged deception by the Javier spouses. In
fact, the counterclaim was compulsory and should have been
filed by Gutierrez upon the implied institution of the civil
action for damages in the criminal case.
What the SC is saying is, since the civil action for damages is
impliedly instituted in the criminal case, and he wants to hold you
liable for filing this case, he should file a counterclaim against you
in the criminal case. What is unique was that for the first time in
the Philippine Procedural Law, SC laid down the rule that there is
such thing as a counterclaim in a criminal case, because, normally,
counterclaims are only recognized in civil cases. But since the civil
action is deemed instituted in the criminal case, the accused can
file a counterclaim against the offended party in the criminal
action.
The trouble in this ruling is that, it has been subjected to a lot of
criticisms by academicians – professors of Remedial Law, authors –
they criticized the ruling. It provokes more problems than answers.
A justice of the SC remarked, “I think we made a mistake (privately
ba) in the Javier ruling. Kaya it was never repeated.
The SC, in 1997, had another chance to comment on Javier in the
case of—
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CABAERO vs. CANTOS - 271 SCRA 392
NOTE: Here, the Javier ruling was set aside.
HELD: “The logic and cogency of Javier notwithstanding, some
reservations and concerns were voiced out by members of the
Court during the deliberations on the present case. These
were engendered by the obvious lacuna in the Rules of Court,
which contains no express provision for the adjudication of a
counterclaim in a civil action impliedly instituted in a criminal
case.”
“By the foregoing discussion, we do not imply any fault in
Javier. The real problem lies in the absence of clear-cut rules
governing the prosecution of impliedly instituted civil actions
and the necessary consequences and implications thereof. For
this reason, the counter-claim of the accused cannot be tried
together with the criminal case because, as already discussed,
it will unnecessarily complicate and confuse the criminal
proceedings. Thus, the trial court should confine itself to the
criminal aspect and the possible civil liability of the accused
arising out of the crime. The counter-claim (and cross-claim or
third party complaint, if any) should be set aside or refused
cognizance without prejudice to their filing in separate
proceedings at the proper time.”
“At balance, until there are definitive rules of procedure to
govern the institution, prosecution and resolution of the civil
aspect and the consequences and implications thereof
impliedly instituted in a criminal case, trial courts should
limit their jurisdiction to the civil liability of the accused
arising from the criminal case.”
This means SC admitted that the Javier doctrine put more problems
and confusions in the absence of specific rules. The counterclaim
should not be tried together in a criminal case. The trial court
should confine itself in the criminal action and that the
counterclaim should be set aside without prejudice to its right in
setting up actions in the civil action.
NOTE: The ruling in the case of CABAERO is now incorporated in
the last paragraph of Section 1, paragraph [a], Rule 111 of the 2000
Revised Criminal Procedure:
“No counterclaim, cross-claim or third-party
complaint may be filed by the accused in the
criminal case, but any cause of action which
could have been the subject thereof may be
litigated in a separate civil action.”
D.) CROSS-CLAIMS
Sec. 8. Cross-claim. A cross-claim is any claim
by one party against a co-party arising out of
the transaction or occurrence that is the
subject matter either of the original action or
116
of a counterclaim therein. Such cross-claim
may include a claim that the party against
whom it is asserted is or may be liable to the
cross-claimant for all or part of a claim
asserted in the action against the cross-
claimant.(7)
A cross claim is a claim by one party against a co-party. It may be a
claim by defendant against his co-defendant arising out of the
subject matter of the main action.
Examples:
 In an action for damages against the judgment creditor
and the Sheriff for having sold real property of the
plaintiff, the Sheriff may file a cross-claim against the
judgment creditor for whatever amount he may be
adjudged to pay the plaintiff.
 In an action against a co-signer of a promissory note one
of whom is merely an accommodation party, the latter
may file a cross-claim against the party accommodated
for whatever amount he may be adjudged to pay the
plaintiff.
 J and P are solidary debtors for the sum of P100,000.00
because they signed a promissory note in favor of D to
collect the sum of P100,000.00. However, although J
signed the promissory note, he did not get a single
centavo. Everything went to P. Both of them are now
sued. According to J, “Actually there is a possibility that I
will pay the P100,000 to Dean when actually I did not
even get a single centavo out of it. Everything went to
P!” Therefore, J will now file a case against P where he
will allege that if J will be held liable to D, P will
reimburse him (J). So, J will also file a claim in the same
action against P.
Now, the claim filed by J against his co-defendant P is
called a CROSS-CLAIM where J is called defendant in the
case filed by D and a cross-claimant against P. P is also
the defendant in the case filed by D and a cross-
defendant with respect to the cross-claim filed by J. So
that is another case which a defendant is filing against
another defendant.
Limitations on Cross-Claim
1. Must arise out of the subject matter of the complaint or
counterclaim;
2. Can be filed only against a co-party; and
3. Is proper only when the cross claimant stands to be
prejudiced by the filing of the action against him.
Purpose: To settle in a single proceeding all the claims of the
different parties in the case against each other in order to avoid
multiplicity of suits (Republic vs. Paredes, GR No. L-12548, May 20,
1960).
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Take note that the cross-claim of J against P is merely an off-shoot
of the case filed by D against J and P. Meaning, it arises out of the
same transaction or occurrence that is the subject matter of the
case filed by D against them.
PROBLEM: Suppose D files a case against J and P to collect a
promissory note signed by J and P and J alleges in his cross claim,
“Well, since we are already here, I also have a claim against P for
damages arising from a vehicular collision.”
Q: Is the cross-claim allowed in the problem?
A: NO. The cross-claim is improper. It has no connection with the
complaint of D against J and P. A counter-claim must always arise
out of a transaction or occurrence that is the subject matter of the
main action.
BAR QUESTION: Distinguish a COUNTERCLAIM from a CROSS-
CLAIM.
A: The following are the distinctions:
1) A COUNTERCLAIM is a complaint by the defendant
against the plaintiff, whereas,
A CROSS-CLAIM is a claim by a defendant against a
co-defendant;
2) The life of the CROSS-CLAIM depends on the life of
the main action. A cross-claim is merely a
consequence of the case filed by the plaintiff
against the defendants. No main action, no cross-
claim (RUIZ, JR. vs. CA, infra). Whereas,
In a COUNTERCLAIM, you can kill the main action,
still the counterclaim survives.
3) A COUNTERCLAIM may be asserted whether or not
it arises out of the same transaction or occurrence
that is the subject matter of the action, whereas,
A CROSS-CLAIM must always arise out of the same
transaction or occurrence that is the subject matter
of the action.
Example: P case filed against J to collect a loan. J
files a COUNTERCLAIM against P to recover a piece
of land. That is allowed and that is a permissive
counterclaim. But suppose D files a case to collect a
loan against J and P. J files a CROSS-CLAIM against P
to recover a piece of land.
Q: Will it be allowed?
A: Not allowed! It has no connection with the
subject matter of the main action.
Take note that a cross-claim is any claim by one party against a co-
party arising out of the transaction of occurrence that is the subject
matter of the original action or of a counterclaim therein. So, a
117
cross-claim may arise either out of the original action or counter-
claim therein.
EXAMPLE: J and P file a case against D. D files his answer with a
counterclaim against the plaintiffs J and P. So J and P will now
become defendants with respect to the counterclaim filed by D. So
J now can file a cross-claim against P arising out of the
counterclaim.
HYPOTHETICAL EXAMPLE:
1.) Mortz and Charles, plaintiffs, filed a case against Jet and
Pao, defendants. There are two plaintiffs suing two
different defendants on a promissory note. Both Jet and
Pao signed the promissory note in favor of Mortz and
Charles:
COMPLAINT (Collection case – Main Action)
MORTZ and CHARLES, plaintiffs
-versus-
JET and PAO, defendants
2.) Now, according to Jet, every centavo of the loan went to
Pao. So Jet files a cross-claim against Pao:
CROSS-CLAIM ON THE MAIN ACTION
Defendant JET, now cross-claimant
-versus-
Defendant PAO, now cross-defendant
3.) Jet also says, “Actually I have a case against Mortz and
Charles because they entered my land and gathered
some of its product”. So, he filed a counterclaim against
both Mortz and Charles. In the counter-claim of Jet, the
defendants are Mortz and Charles for the accounting of
the improvements on the land:
COUNTERCLAIM OF JET
Defendant JET, now plaintiff
-versus-
Plaintiffs MORTZ and CHARLES, now co-defendants
4.) Mortz now will answer the counterclaim of Jet, “Actually,
the damages on land was not caused by me but Charles.
So Mortz files a cross-claim against co-plaintiff Charles
arising out to the counterclaim of Jet:
CROSS-CLAIM ARISING FROM THE COUNTERCLAIM OF JET
Plaintiff MORTZ, now cross-claimant
-versus-
Plaintiff CHARLES, now cross-defendant
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5.) Now, according to Pao, “Actually last month, a car
owned by both of you (Mortz and Charles) bumped my
car and that my car was damaged.” So, P filed a
counterclaim against Mortz and Charles for the damage
of the car.
COUNTERCLAIM OF PAO
Defendant PAO, now plaintiff
-versus-
Plaintiffs MORTZ and CHARLES, now defendants
6.) But Charles says, “I’m not the owner of the car but
Mortz. So he files a cross-claim against Mortz:
CROSS-CLAIM ARISING FROM THE COUNTERCLAIM OF PAO
Plaintiff CHARLES, now cross-claimant
-versus-
Plaintiff MORTZ, now cross-defendant
There are six (6) cases which are to be decided in the same action.
This rarely happens, but it is possible under the rules. The obvious
PURPOSE of these is to avoid multiplicity of suits and toward these
ends. According to the SC, the rules allow in a certain case and
even compel a petitioner to combine in one litigation these
conflicting claims most particularly when they arise out of the same
transaction. The rule does not only allow a permissive counterclaim
but the parties are even compelled to raise them in a compulsory
counter-claim.
RUIZ, JR. vs. CA – 212 SCRA 660
FACTS: Dean files a case against Jet and Pao. Jet files a cross-
claim against Pao. After a while, the case against Jet and Pao
was dismissed.
ISSUE: What happens to the cross-claim of Jet against Pao?
HELD: When the main action was dismissed, the cross-action
must also be dismissed. The life of a cross-claim depends on
the life of the main action. If the main action is dismissed, the
cross-claim will have to be automatically dismissed.
“A cross-claim could not be the subject of independent
adjudication once it lost the nexus upon which its life
depended. The cross-claimants cannot claim more rights than
the plaintiffs themselves, on whose cause of action the cross-
claim depended. The dismissal of the complaint divested the
cross-claimants of whatever appealable interest they might
have had before and also made the cross-claim itself no
longer viable”
Whereas, the counterclaim can exist alone without the complaint.
EXAMPLE: Pao filed a case against Jet for the recovery of a piece of
land. Jet’s counterclaim is damages arising from a vehicular
accident. If the complaint is dismissed the counterclaim of Jet can
still remain alive even if the main action is dead.
118
But in a cross-claim, once the main action is dead, the cross-claim is
also automatically dead too. What is there to reimburse when the
complaint has been dismissed?
There is an opinion to the effect that the dismissal of the complaint
carries with it the dismissal of a cross-claim which is purely
defensive but not a cross claim seeking an affirmative relief.
If a cross-claim is not set up, it is barred: except
1) when it is outside the jurisdiction of the court;
2) if the court cannot acquire jurisdiction over third parties
whose presence is necessary for the adjudication of said
cross-claim. In which case, the cross-claim is considered
permissive;
3) cross-claim that may mature or may be acquired after
service of the answer (Riano 2007, p. 285)
COUNTER COUNTERCLAIM and COUNTER CROSS-CLAIM
Sec. 9. Counter-counterclaims and counter-
cross-claims. A counterclaim may be asserted
against an original counter-claimant.
A cross-claim may also be filed against an
original cross-claimant.(n)
Section 9 is a new provision. There is such a thing as counter-
counterclaim and counter-cross-claim. The concept of counter-
counter-claim is not new. As a matter of fact, that was asked in the
bar years ago.
EXAMPLE: C filed against you an action to collect a loan. You filed a
counterclaim against her to recover a piece of land. Of course, she
has to answer your counterclaim. But she will say, “Actually you
have been molesting me with your claim when actually you have
no right over my land.” So, she files an injunction to stop you from
molesting her. In other words, based on your counter-claim against
her to recover my land, she will file a counterclaim to stop you
from molesting her. In effect, there is counterclaim to a
counterclaim.
COUNTER-CROSS-CLAIM
E.) REPLY
Sec. 10. Reply. A reply is a pleading, the office
or function of which is to deny, or allege facts
in denial or avoidance of new matters alleged
by way of defense in the answer and thereby
join or make issue as to such new matters. If
a party does not file such reply, all the new
matters alleged in the answer are deemed
controverted.
If the plaintiff wishes to interpose any claims
arising out of the new matters so alleged,
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such claims shall be set forth in an amended
or supplemental complaint.(11)
ILLUSTRATION: Plaintiff files a complaint against a defendant to
collect an unpaid loan. D files his answer and raises a new matter,
affirmative defense. According to the defendant, the obligation is
already paid. Plaintiff said that you have paid the other loan. In
other words, the plaintiff would like to deny or dispute the
defendant’s affirmative defense of payment.
Q: Can I file a pleading to dispute your defense?
A: Yes, that pleading is called a REPLY.
Q: How do you classify a reply?
A: It is a responsive pleading because it is the response of the
plaintiff to the affirmative defense raised in the defendant’s
answer.
An answer is a response to the complaint and the reply is a
response to the answer.
Q: Assuming that you would like to answer my reply, what
pleading would you file?
A: None. That is the last pleading. So, reply is considered as the
last pleading.
Effect of failure to file a reply
Q: Suppose I filed a complaint, you filed an answer invoking
payment. I failed to reply. What is the effect if the plaintiff fails to
reply? Is he admitting the correctness of the defense?
A: No. As a general rule, the failure to file a reply has no effect.
Section 10 says that if a party does not file such reply, all the new
matters alleged in the answer are deemed controverted. Meaning,
all the affirmative defenses raised in the answers are automatically
denied.
So, whether you file a reply or not, the defenses are deemed
automatically disputed. The filing of a reply is OPTIONAL.
Exceptions:
1) Where the answer is based on an actionable document
(Sec. 8 R 8); and
2) To set up affirmative defenses in the counterclaim
((Rosario vs. Martinez, GR No. L-4473, Sept. 30, 1952)
Note: Only allegations of usury in a Complaint to recover usurious
interest are deemed admitted if not denied under oath. Hence, if
the allegation of usury is contained in an answer it is not necessary
for the plaintiff to file a reply thereto in order to deny that
allegation under oath. (Regalado, p. 146)
A reply should not be confused with the answer to a counterclaim
which is also filed by the plaintiff.
Q: Give the distinctions between ANSWER TO COUNTER-CLAIM and
REPLY.
A: The following:
1) A REPLY is a response to the defenses interposed by
the defendant in his answer, whereas
An ANSWER TO A COUNTERCLAIM is a response to a
cause of action by the defendant against the plaintiff;
2) The filing of a REPLY is generally optional, whereas
The filing of an ANSWER TO A COUNTERCLAIM is
generally mandatory under Rule 11 because if the
plaintiff fails to file an answer to the counterclaim, he
will be declared in default on the counterclaim.
OUTLINE OF FLOW OF PLEADINGS
PLAINTIFF DEFENDANT
1. Complaint
2. a.) Answer
b.) Counterclaim
3. a.) Reply to answer
b.) Answer to counterclaim
4. Reply to answer to counterclaim
F. THIRD (FOURTH, ETC.) – PARTY COMPLAINT
Sec. 11. Third, (fourth, etc.) - party complaint.
A third (fourth, etc.) party complaint is a
claim that a defending party may, with leave
of court, file against a person not a party to
the action, called the third (fourth, etc.) party
defendant, for contribution, indemnity,
subrogation or any other relief, in respect of
his opponent's claim. (12a)
THIRD PARTY COMPLAINT is the procedure for bringing into a case
a third person who is not a party to the case.
It is 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. Were it not for this provision of the Rules,
it would have to be filed independently and separately from the
original complaint by the defendant against the third party.
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The purpose of a third-party complaint is to enable a defending
party to obtain contribution, indemnity, subrogation or other relief
from a person not a party to the action.
EXAMPLE: A plaintiff files a case against a defendant to collect a
loan when there are two solidary debtors and one of them is
compelled to pay everything so that defendant will drag into the
picture the co-debtor for contribution or indemnity. If the two of
them were sued as defendants, all one has to do is to file a cross-
claim against his co-defendant. BUT since only one is sued, the
remedy is to avail of Section 11.
Take note that filing a third-party complaint is not a matter of right.
THERE MUST BE LEAVE OF COURT, unlike counterclaim or
cross-claim, where you do not need any motion or leave of court.
There is a close relationship between a cross-claim and a third-
party complaint because a cross-claim must arise out of the subject
matter of the main action. A third-party complaint must be also
related to the main action. It cannot be a cause of action which has
no relation to the main action.
EXAMPLE: The plaintiff files a case against the surety and the
principal debtor, so both of them are defendants, and the surety
seeks reimbursement for whatever amount he may be compelled
to pay the plaintiff. What kind of pleading would he file against his
co-defendant (the principal debtor)? CROSS-CLAIM.
BUT if the plaintiff files a case ONLY against the surety, because
anyway the principal debtor is not an indispensable party and the
surety would like to seek reimbursement from the person who
benefited from the loan, he cannot file a cross-claim against
anybody because he is the lone defendant. It is possible for him to
just file an answer. If he loses and pays the plaintiff, then he will file
another case against the principal debtor for reimbursement.
But if he wants everything to be resolved in the same case, what
kind of pleading will he file? He must resort a THIRD-PARTY
COMPLAINT and implead the principal debtor.
The PURPOSE of a third-party complaint is for the third party
plaintiff to ask the third party defendant for:
1.) Contribution;
2.) Indemnity;
3.) Subrogation; or
4.) any other relief in respect to the opponent’s claim.
CONTRIBUTION
Example #1: Two debtors borrowed P100,000 from Janis (creditor)
and they shared the money 50-50. When the debt fell due, the
creditor filed a case against one of them. So, one of them is being
made to pay the P100,000. Not only his share but also his co-
solidary debtor. So if I am the one liable when actually my real
liability is only 50,000. What will I do? I will file a third party
complaint against my co-debtor for contribution.
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Example #2: If Andrew and Carlo are guilty of a quasi-delict and the
injured party files an action for damages against Andrew only,
Andrew may file a third-party complaint against Carlo for
contribution, their liability being solidary (Article 2194, New Civil
Code)
INDEMNIFICATION
Example #1: Two people signed a promissory note in favor of the
creditor. But actually the entire amount went to you and none for
me. When the note fell due, I was the one sued. So I will file a
third-party complaint against you for indemnity. You have to
return to me every centavo that I will pay the creditor.
Example #2: A surety sued for recovery of debt by the creditor may
file a third-party complaint against the principal debtor for
indemnity. (Article 2047, New Civil Code)
SUBROGATION
Subrogation - You step into the shoes of someone else. Your
obligation is transferred to me.
EXAMPLE: Where a house is leased by a lessee and he subleased
the property to a third person who is now occupying the property.
In effect, the sub-lessee stepped into the shoes of the original
lessee. If the property is damaged and the lessor sues the lessee for
damages to his leased property, the lessee or sub-lessor can file a
third-party complaint and have the sub-lessee for subrogation
because actually, you stepped into the shoes when you occupied
the leased property. (Articles 1651 and 1654, New Civil Code)
For ANY OTHER RELIEF IN RESPECT TO THE OPPONENTS
CLAIM
EXAMPLE: When I buy the property of Mr. Cruz and after a while,
here comes Mr. Dee filing a case against me to claim ownership of
the land. But I bought it from Mr. Cruz who warranted that he is
the real owner. So I will now file third-party complaint against Mr.
Cruz to enforce his warranty – warranty against eviction. (Article
1548, New Civil Code)
Take note that there is always a connection between the main
complaint and the third-party complaint because the condition is
“contribution, indemnification, subrogation and any other relief in
respect to your opponents claim.” There is always a relation
between the third party-complaint and the main complaint against
you. Here is a bar question...
BAR QUESTION: Janis files a case against Nudj to recover an unpaid
loan. Now the reason is that Carlo also owes Nudj. Nudj says, “I
cannot pay you because there is a person who has also utang to
me. What I will pay you depends on his payment to me.” File agad
si Nudj ng third-party complaint against Carlo. Is the third-party
complaint proper?
A: NO. There is no connection between the main action and the
3rd-party complaint – the loan of Nudj to Janis and the loan of
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Andrew to Nudj. Walang connection. Anong pakialam ni Janis sa
utang ni Andrew kay Nudj? Not in respect to his opponent’s claim.
BAR QUESTION: How do you determine whether a 3rd-party
complaint is proper or improper? What are the tests to determine
its propriety?
A: Case of
CAPAYAS vs. CFI – 77 PHIL. 181
HELD: There are four (4) possible tests to determine the
propriety of a third-party complaint. In order for it to be
allowed, it must pass one of them. That is the reason when
you file it, you need the permission of the court to determine
whether it is proper or not and the original plaintiff may
object to the propriety of the third-party complaint.
There are the FOUR TESTS (any one will do):
1. A third-party complaint is proper if it arises out of
the same transaction on which plaintiff is based, or
although arising out of another or different
transaction, is connected with the plaintiff's claim.
EXAMPLE: A creditor sued only one solidary
debtor. So you can file a third-party complaint
for contribution. Anyway, there is only one
loan and our liability arises out of the same
promissory note.
(A third-party complaint is proper if the third-
party’s complaint, although arising out of
another transaction, is connected with the
plaintiff’s claim.)
EXAMPLE: The car owner is sued for culpa
aquiliana for damages arising from vehicular
collision and he files a third-party complaint
against the insurance company for indemnity
based on the contract of insurance. So it is
connected with plaintiff’s claim, and that is
precisely the purpose of my insurance
coverage.
2. Whether the third party defendant would be liable
to the original plaintiff or to the defendant for all
or part of the plaintiff's claim against the original
defendant. Although the third party defendant's
liability arises out of another transaction.
EXAMPLE: Sublease. Roy leased his property
to Eric. Eric subleased it to Rudolph. If Roy’s
property is damaged, Roy will sue Eric. But Eric
will also sue Rudolph. The sub-lessor has the
right to file a third-party complaint against the
sub-lessee for the damaged leased property
which is now occupied by the sub-lessee. The
third-party defendant Rudolph would be liable
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to plaintiff’s (Roy’s) claim. Rudolph will be
liable to Roy for Roy’s claim against Eric
although the liability of Rudolph arises out of
another transaction (Sub-lease contract)
3. Whether the third party defendant may assert any
defense which the third party plaintiff has or may
have against plaintiff’s claim.
EXAMPLE: Tato is a registered owner of a car
and then sold it to Philip. Philip is the actual
owner. However, Philip did not register the
sale to the LTO. The registered owner is si
Tato lang gihapon although he is no longer the
real owner. While Philip was driving that car it
bumped the car of Lewee Tanduay. Lewee
researched the owner of the car at LTO and
ang lumabas ay si Tato. So ang ginawa ni
Lewee, ang kinasuhan nya ay si Tato na walang
malay...under the law, the registered owner is
liable. Of course, when Tato got the
complaint, “Wala akong alam sa sinasabi nyo,
that car is no longer mine. I sold that two
years ago, I have no idea what happened.”
So obviously, Tato arrived at the conclusion
that si Philip and nakabangga. Tato filed a
third-party complaint against Philip because
he is the real owner. When Philip got the
third-party complaint, and because he knows
the story, in fact he was the one driving, ang
ginawa niya, nilabanan niya ng diretso si
Lewee. Meaning, instead of Tato fighting
Lewee, Philip fought Lewee directly. Frontal
na ba. Sabi ni Philip, “I was not at fault, you
(Lewee) are at fault.” So here is a situation
where Lewee sues Tato, Tato sues Philip but
Philip fights Lewee, as if he is the real
defendant, then the third party complaint
must be proper. It must be related.
Take note that there is a close similarity between a third-party
complaint and a cross-claim because as we have learned, a cross-
claim must also be related to the same action.
SAMALA vs. VICTOR – 170 SCRA 453
FACTS: This case involves a vehicular accident. Philip, while
riding on a passenger jeep owned by Tato, the jeep was
bumped by the truck of Lewee, injuring Philip. Philip filed a
case for damages arising from breach of contract against Tato.
Tato filed a third-party complaint against Lewee. After trial,
the court found that Tato has not at fault. The fault is entirely
against Lewee . So the action against Tato was dismissed, but
the court held that Lewee be directly liable to Philip.
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It was questioned by Lewee. Lewee claims that is should be
Tato who is liable to Philip because Philip did not sue me
(Lewee), “Bakit ako ang ma-liable hindi naman ako ang
dinemanda ni Philip? So procedurally, I am liable to Tato, Tato
is liable to Philip.”
ISSUE #1: Can Lewee, a third-party defendant, be held liable
directly to Philip, the original plaintiff?
HELD: YES, that is possible. In a third-party complaint,
normally Lewee is liable to Tato. But Lewee can be made
liable to Philip, or Lewee can be made liable to both Philip and
Tato because that is covered by the phrase “OR ANY OTHER
RELIEF” – so broad that it cover a direct liability of a third
party defendant to the original plaintiff.
ISSUE #2: How can the court award damages to Philip based
on the theory of culpa aquiliana when his complaint is based
on culpa contractual? Can Lewee be held liable for culpa-
contractual?
HELD: YES. That is also possible because “the primary purpose
of this rule is to avoid circuitry of action and to dispose of in
one litigation, the entire subject matter arising from a
particular set of fact it is immaterial that the third-party
plaintiff asserts a cause of action against the third party
defendant on a theory different from that asserted by the
plaintiff against the defendant. It has likewise been held that
a defendant in a contract action may join as third-party
defendants those liable to him in tort for the plaintiff’s claim
against him or directly to the plaintiff.”
Another interesting case which is to be compared with the
abovementioned case is the 1989 case of
SHEAFER vs. JUDGE OF RTC OF OLONGAPO – 167 SCRA 386
NOTE: This case although it refers to third-party complaint is
related to criminal procedure. This is similar to the case of
JAVIER where the issue is, is there such a thing as a
counterclaim in a criminal case where the offended party did
not make a reservation. In SHAFER, is there such a thing as a
third-party complaint in a criminal case?
FACTS: Shafer while driving his car covered by TPL, bumped
another car driven by T. T filed a criminal case against S for
physical injuries arising from reckless imprudence. T did not
make any reservation to file a separate civil action. So
obviously, the claim for civil liability is deemed instituted.
Shafer was covered by the insurance, so he filed a third-party
complaint against the insurance company insofar as the civil
liability is concerned. The insurance company questioned the
propriety of d third-party complaint in a criminal case,
because according to the insurance company, the third-party
complaint is entirely different from the criminal liability.
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ISSUE: Whether or not the filing of a third-party complaint in a
criminal case is procedurally correct.
HELD: Yes, it is proper. There could be a third party complaint
in a criminal case because an offense causes two classes of
injuries – the SOCIAL and the PERSONAL injury. In this case,
the civil aspect of the criminal case is deemed impliedly
instituted in the criminal case. Shafer may raise all defenses
available to him in so far as the criminal and civil aspects are
concerned. Shafer’s claim of indemnity against the insurance
company are also the claim by the victim in the criminal claim.
Therefore Shafer’s claim against the insurance company is
related to the criminal case. So similar to Javier that an
accused may also file a compulsory counterclaim in a criminal
case when there is no reservation.
BUT in the light of the ruling in the case of
CABAERO vs. CANTOS, supra
The SHAFER ruling has to be set aside for the meantime
because there is no such thing as third-party complaint in
criminal cases now. In other words, forget it in the meantime.
Also, forget counterclaims in criminal cases even if they arose
out of the main action.
This case refers to JAVIER on whether or not there is such a
thing as a compulsory counterclaim in criminal cases. SC said,
“Huwag muna samok!” If we will allow it in criminal cases it
will only complicate and confuse the case. The attention
might be divested to counterclaims or cross-claims or third-
party complaints, etc.
HELD: “The trial court should confine itself to the criminal
aspect and the possible civil liability of the accused arising out
of the crime. The counter-claim (and cross-claim or third party
complaint, if any) should be set aside or refused cognizance
without prejudice to their filing in separate proceedings at the
proper time.”
We will go to the old case of
REPUBLIC vs. CENTRAL SURETY CO – 25 SCRA 641 [1968]
FACTS: Hannah filed a case against Rina for a liability
amounting to P350,000. So it was filed in RTC. Rina filed a
third-party complaint against ConCon Insurance Company for
indemnity insurance but the maximum insurance is only
P50,000. The insurance company moved to dismiss on the
ground that the court has no jurisdiction because third-party
complaint is only for P50,000 which is supposed to be within
the competence of the MTC.
ISSUE: Is the insurance company correct?
HELD: NO. The insurance company is wrong. The third-party
complaint is only incidental. The third-party complaint need
not be within the jurisdiction of the RTC where the principal
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action is pending because the third-party complaint is really a
continuation and an ancillary to the principal action. If the
court acquires jurisdiction over the main action,
automatically, it acquires jurisdiction over the third-party
complain which is mainly a continuation of the principal
action.
Now, the same situation happened in another case. The case of
EASTERN ASSURANCE vs. CUI – 105 SCRA 642
FACTS: Carol is a resident of Davao City. Cathy is a resident of
Cebu City. Carol filed a case before the RTC of Davao City
against Cathy. Cathy files a third-party complaint against Joy,
a resident of Manila. Is the venue proper?
HELD: The venue is proper because the venue of the main
action is proper. So automatically third-party complaint is also
proper. The third-party has to yield to the jurisdiction and
venue of the main action.
Now of course, if there’s such a thing as 3rd party complaint, there
is also a 4th, 5th, 6th or 7th complaint. That is possible but
everything is with respect to his opponent’s claim.
EXAMPLE:
A B C D
A files a B files a 3rd C files a 4th D files a 5th
complaint party party party
against B complaint complaint complaint
against C against D against E
A’s car was bumped by B. But B contented that the reason that he
bumped A’s car was because he was bumped by C and the same
goes to C, D, E. B then files a 3rd party complaint against C. C files a
4th party complaint against D. D files a 5th party complaint against
E. Meaning, pasahan, ba. They will throw the liability to the one
who did it. That is a good hypothetical example of how a fourth,
fifth, sixth party complaint can come into play.
Rule on Venue and Jurisdiction Inapplicable
Jurisdiction over the third-party complaint is but a continuation of
the main action and is a procedural device to avoid multiplicity of
suits. Because of its nature, the proscription on jurisdiction and
venue applicable to ordinary suits may not apply. (Eastern
Assurance vs. Cui, 105 SCRA 622 [1981])
Grounds for Denial of Third-Party Complaint
a. When allowance would delay resolution of the original
case or when the third-party defendant could not be
located; and
b. When extraneous matters to issue of possession would
unnecessarily clutter a case of forcible entry.(del Rosario
v. Jimenez 8 SCRA 549)
Summons on third, fourth, etc. party defendant must be served for
the court to acquire jurisdiction over his person, since he is not an
original party.
A third-party complaint is not proper in an ction for declaratory
relief (Comm. of Customs vs. Cloribel, GR No. L - 21036, June 30,
1977)
Where the trial court has jurisdiction over the main case, it also has
jurisdiction over the third-party complaint, regardless of the
amount involved as a third-party complaint is merely auxiliary to an
is a continuation of the main action (Rep. vs. Central Surety and
Insurance Co. GR No. L 27802, Oct. 26, 1968)
Sec. 12. Bringing new parties. - 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.
Distinguished from a Third-Party Complaint
A third party complaint is proper when not one of the third-party
defendants therein is a party to the main action. If one or more of
E the defendants in a counterclaim or cross-claim is already a party
to the action, then the other necessary parties may be brought in
under this section.
The best example of Section 12 is the case of:
SAPUGAY vs. CA – 183 SCRA 464
FACTS: Mobil Philippines filed a case against Sapugay, its
gasoline dealer. Sapugay filed an answer and interposed a
counterclaim for damages against Mobil and included
Cardenas (the manager of Mobil) who is not a plaintiff.
ISSUE: Whether or not the inclusion of Cardenas in the
counterclaim is proper where he is not a plaintiff in the Mobil
case.
HELD: The inclusion of Cardenas is proper. The general rule
that the defendant cannot by a counterclaim bring into the
action any claim against persons other than the plaintiff,
admits of an exception under this provision (Section 12) –
meaning, if it is necessary to include a 3rd person in a
counterclaim or cross-claim, the court can order him to be
brought in as defendants. In effect, the bringing of Cardenas
in the case is sanctioned by the Rules.
The case of SAPUGAY should not be confused with the case of:
CHAVEZ vs. SANDIGANBAYAN – 198 SCRA 282
FACTS: Petitioner Francisco Chavez (former solicitor general)
represented the government for PCGG. The case arose out of
PCGG cases wherein Enrile was sued for accumulation of his
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ill-gotten wealth. Enrile filed an answer to the complaint.
Enrile contends that the case is harassment suit whose
mastermind was the Solicitor General himself. Enrile files a
counterclaim against Chavez. (Enrile’s lawyer maybe well
aware of the Sapugay case the one sued is the lawyer.)
Chavez questioned such counterclaim contending that he was
not a plaintiff. Sandiganbayan denied such contention.
HELD: The inclusion of plaintiff’s lawyer is improper.
“To allow a counterclaim against a lawyer who files a
complaint for his clients, who is merely their representative in
court and not a plaintiff or complainant in the case would lead
to mischievous consequences. A lawyer owes his client entire
devotion to his genuine interest, warm zeal in the
maintenance and defense of his rights and the exertion of his
utmost learning and ability. A lawyer cannot properly attend
to his duties towards his client if, in the same case, he is kept
busy defending himself.”
If C has the right to frontally meet the action filed by A – meaning,
C will fight A directly – if C has the right to assert any defense which
B has against A and even for C to litigate against A, then it must be
a proper third party complaint. That has happened several times.
EXAMPLE: B owns a car which was already sold to C. The trouble is
that B never registered the transaction. On the record, B is still the
registered owner. Then C, while driving the car, meets an accident
and injures A. When A looked at the record, the owner is B. So A
files a case against B. So B will file a third party complaint against
the real owner (C). Now, C can frontally meet the complaint filed by
A. That is the best example where you have the right against the
original plaintiff or even assert a counterclaim against him. As a
matter of fact, that last test is now incorporated as a new provision
(Section 13).
In the case of:
SINGAPORE AIRLINES vs. CA – 243 SCRA 143 [1995]

Q: Is the SC suggesting that a lawyer who sued in a harassment

case can get away with it? Does that mean to say that the lawyer is
immune from suit?
A: NO, the SC does not say a lawyer enjoys a special immunity from
damage suits. However, when he acts in the name of the client, he
should not be sued in a counterclaim in the very same case where
he has filed only as a counsel and not as party. Only claims for
alleged damages or other causes of action should be filed in a
separate case. Thus, if you feel that the lawyer is acting maliciously,
you file a complaint but in a separate case. That’s why the case of
Sapugay should not be confused with Chavez.
Sec. 13. Answer to third (fourth, etc.) party
complaint. - A third (fourth, etc.)-party
defendant may allege in his answer his
defenses, counterclaims or cross-claims,
including such defenses that the third (fourth,
etc.)-party plaintiff may have against the
original plaintiff in respect of the latter's
claim against the third-party plaintiff. (n)
FACTS: Aying filed a case against Bugoy. Bugoy filed a third
party complaint against and Cyle who wants to frontally meet
the main complaint filed by Aying
HELD: If that is your purpose, you have to file two (2) answers
– you file an answer to the third party complaint and you file a
second answer to the main complaint filed by Aying.
“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.”
Normally, Cyle answers the 3rd party complaint of Bugoy and does
not answer to the complaint of Aying. But according to SINGAPORE
case, if Cyle feels aggrieved by the allegations of Aying, he should
also answer the main complaint of Aying. Practically, he shall
answer the 3rd party complaint and the main complaint.

ILLUSTRATIONS: A files a case against B

B files a 3rd party complaint against C

A vs. B; B vs. C. Normally, B will defend himself against the

complaint of A and C will defend himself in the complaint of B. That
is supposed to be the pattern. Normally, C does not file a direct
claim against A. But the law allows C in defending himself, to
answer the claim of A. The law allows him to file a direct
counterclaim against A.

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