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RAMON CHING AND PO WING CORP VS 1.

Mercedes, being of low educational attainment, was


RODRIGUEZ sweet-talked by Ramon into surrendering to him a Global
Business Bank, Inc. (Global Bank) Certificate of Time
Facts: The private respondents filed a Complaint against
Deposit of P4,000,000.00 in the name of Antonio, and the
the Ramon Ching (Ramon), Po Wing Properties and
certificates of title covering two condominium units in
Stronghold Insurance Company, Global Business Bank,
Binondo which were purchased by Antonio using his own
Inc. (formerly PhilBank), Elena Tiu Del Pilar, Asia
money but which were registered in Ramon's name.
Atlantic Resources Ventures, Inc., Registers of Deeds of
Manila and Malabon, and all persons claiming rights or 2. Ramon also fraudulently misrepresented to Joseph,
titles from Ramon and his successors-in-interest. Jaime and Mercedes that they will promptly receive their
complete shares, exclusive of the stocks in Po Wing
In the Complaint, the respondents alleged the following
Properties, Inc. (Po Wing), from the estate of Antonio.
as causes of action:
Exerting undue influence, Ramon had convinced them to
First Cause of Action. execute an Agreement which was not complied with.

1. They are the heirs of Lim San, also known as Antonio 3. Further, Lucina was not informed of the execution of
Ching / Tiong Cheng / Ching Cheng Suy (Antonio). the said instruments and had not received any amount
from Ramon. Hence, the instruments are null and void.
2. Respondents Joseph Cheng (Joseph) and Jaime Cheng
(Jaime) are allegedly the children of Antonio with his Fourth Cause of Action.
common-law wife, respondent Mercedes Igne
1. Antonio's 40,000 shares in Po Wing, which constitute
(Mercedes).
60% of the latter's total capital stock, were illegally
3. Respondent Lucina Santos (Lucina) claimed that she transferred by Ramon to his own name through a forged
was also a common-law wife of Antonio. document of sale executed after Antonio died.

4. The respondents averred that Ramon misrepresented 2. Po Wing owns a ten-storey building in Binondo.
himself as Antonio's and Lucina's son when in truth and Ramon's claim that he bought the stocks from Antonio
in fact, he was adopted and his birth certificate was merely before the latter died is baseless. Further, Lucina's shares
simulated. in Po Wing had also banished into thin air through
Ramon's machinations.
5. Antonio died of a stab wound. Police investigators
identified Ramon as the prime suspect and he now stands Fifth Cause of Action.
as the lone accused in a criminal case for murder filed
1. Ramon executed an Affidavit of Extra-Judicial
against him. Warrants of arrest issued against him have
Settlement of Estate adjudicating solely to himself
remained unserved as he is at large.
Antonio's entire estate to the prejudice of the respondents.
6. From the foregoing circumstances and upon the By virtue of the said instrument, new TCTs covering eight
authority of Article 919of the New Civil Code (NCC), the real properties owned by Antonio were issued in Ramon's
respondents concluded that Ramon can be legally name.
disinherited, hence, prohibited from receiving any share
2. Relative to the Po Wing shares, the Register of Deeds
from the estate of Antonio.
of Manila had required Ramon to post a Surety Bond
Second Cause of Action. conditioned to answer for whatever claims which may
eventually surface in connection with the said stocks. Co-
1. Ramon misrepresented that there were only six real defendant Stronghold Insurance Company issued the
estate properties left by Antonio. bond in Ramon's behalf.
2. Ramon had illegally transferred to his name the titles to Sixth Cause of Action.
the said properties. Further, there are two other parcels of
land, cash and jewelries, plus properties in Hongkong, 1. Ramon sold Antonio's two parcels of land in Navotas
which were in Ramon's possession. to co-defendant Asia Atlantic Business Ventures, Inc.
Another parcel of land, which was part of Antonio's
Third Cause of Action.

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estate, was sold by Ramon to co-defendant Elena Tiu Del Ramon and the release in favor of the respondents of the
Pilar at an unreasonably low price. CPPA now under Metrobank's custody, remains to be an
ordinary civil action, and not a special proceeding
2. By reason of Ramon's lack of authority to dispose of
pertaining to a settlement court.
any part of Antonio's estate, the conveyances are null and
void ab initio. A special proceeding is a remedy by which a party seeks
to establish a status, a right, or a particular fact. It is
Since Ramon is at large, his wife, Belen Dy Tan Ching,
distinguished from an ordinary civil action where a party
now manages Antonio's estate. She has no intent to
sues another for the enforcement or protection of a right,
convey to the respondents their shares in the estate of
or the prevention or redress of a wrong. To initiate a
Antonio.The Amended Complaint, which impleaded
special proceeding, a petition and not a complaint should
Metrobank as successor-in-interest of Global, also added
be filed.An action for reconveyance and annulment of title
a seventh cause of action relative to the existence of a
with damages is a civil action, whereas matters relating to
Certificate of Premium Plus Acquisition (CPPA) in the
settlement of the estate of a deceased person such as
amount of P4,000,000.00 originally issued by PhilBank to
advancement of property made by the decedent, partake
Antonio. The respondents prayed that they be declared as
of the nature of a special proceeding, which
the rightful owners of the CPPA and that it be
concomitantly requires the application of specific rules as
immediately released to them. Alternatively, the
provided for in the Rules of Court.
respondents prayed for the issuance of a hold order
relative to the CPPA to preserve it during the pendency of Under Article 916 of the NCC, disinheritance can be
the case. effected only through a will wherein the legal cause
therefor shall be specified. While the respondents in their
Petitioners filed a Motion to Dismiss on the respondents'
Complaint and Amended Complaint sought the
Amended Complaint on the alleged ground of the RTC's
disinheritance of Ramon, no will or any instrument
lack of jurisdiction over the subject matter of the
supposedly effecting the disposition of Antonio's estate
Complaint. The petitioners argued that since the
was ever mentioned.
Amended Complaint sought the release of the CPPA to
the respondents, the latter's declaration as heirs of The petitioners argue that the prayers in the Amended
Antonio, and the propriety of Ramon's disinheritance, the Complaint, seeking the release in favor of the respondents
suit partakes of the nature of a special proceeding and not of the CPPA under Metrobank's custody and the
an ordinary action for declaration of nullity. Hence, nullification of the instruments subject of the complaint,
jurisdiction pertains to a probate or intestate court and not necessarily require the determination of the respondents'
to the RTC acting as an ordinary court. status as Antonio's heirs.It bears stressing that what the
respondents prayed for was that they be declared as the
RTC issued an Order denying the petitioners' Motion to
rightful owners of the CPPA which was in Mercedes'
Dismiss on the ground that the action delves mainly on
possession prior to the execution of the Agreement and
the question of ownership of the properties described in
Waiver. The respondents also prayed for the alternative
the complaint. Also, the issue of disinheritance can be
relief of securing the issuance by the RTC of a hold order
fully settled after a trial on the merits. And at this stage, it
relative to the CPPA to preserve Antonio's deposits with
has not been sufficiently established whether or not there
Metrobank during the pendency of the case. It can thus be
is a will. CA affirmed this decision.
said that the respondents' prayer relative to the CPPA was
Issue: Whether or not the RTC should have granted premised on Mercedes' prior possession of and their
Motion to Dismiss on the ground that the filiation with alleged collective ownership of the same, and not on the
Antonio of Ramon and the determination of the extent of declaration of their status as Antonio's heirs.
Antonio's estate can only be resolved in a special
Further, it also has to be emphasized that the respondents
proceeding.
were parties to the execution of an agreeement prayed to
Ruling: NO, RTC ACTED CORRECTLY BY be nullified. Hence, even without the necessity of being
DENYING MOTION TO DISMISS. declared as heirs of Antonio, the respondents have the
standing to seek for the nullification of the instruments in
Although the respondents' Complaint and Amended the light of their claims that there was no consideration
Complaint sought, among others, the disinheritance of

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for their execution, and that Ramon exercised undue However, under the two Real Estate Mortgages dated 11
influence and committed fraud against them. February 1994, the following version appears:
In the event that the RTC will find grounds to grant the Section 9. Venue. The venue of all suits and actions
reliefs prayed for by the respondents, the only arising out of or in connection with this Mortgage shall be
consequence will be the reversion of the properties in Cebu City Metro Manila or in the place where any of
subject of the dispute to the estate of Antonio. Civil Case the Mortgaged Properties is located, at the absolute option
No. 02-105251 was not instituted to conclusively resolve of the Mortgagee, the xxxxxxxxxxxxx any other venue.
the issues relating to the administration, liquidation and
Meanwhile, the same provision in the Real Estate
distribution of Antonio's estate, hence, not the proper
Mortgage dated 22 April 1998 contains the following:
subject of a special proceeding for the settlement of the
estate of a deceased person under Rules 73-91 of the Section 9. Venue. The venue of all suits and actions
Rules of Court.The respondents' resort to an ordinary civil arising out of or in connection with this Mortgage shall be
action before the RTC may not be strategically sound, in _________ or in the place where any of the Mortgaged
because a settlement proceeding should thereafter still Properties is located, at the absolute option of the
follow, if their intent is to recover from Ramon the Mortgagee, the parties hereto waiving any other venue
properties alleged to have been illegally transferred in his
name. Be that as it may, RTC cannot be restrained from HealthTech and Union Bank agreed to subsequent
taking cognizance of respondents' Complaint and renewals and increases in the credit line with the total
Amended Complaint as the issues raised and the prayers amount of debt reaching ₱36,500,000. Unfortunately,
indicated therein are matters which need not be threshed according to HealthTech, the 1997 Asian financial crisis
out in a special proceeding adversely affected its business and caused it difficulty in
meeting its obligations with Union Bank. Thus, both
parties entered into a Restructuring Agreement, which
states that any action or proceeding arising out of or in
PAGLAUM MGMT & DEVT CORP AND HEALTH
connection therewith shall be commenced in Makati City,
MARKETING TECH INC VS UNION BANK OF
with both parties waiving any other venue
THE PHILS
HealthTech defaulted on its payment, Union Bank extra-
FACTS
judicially foreclosed the mortgaged properties. The bank,
Petitioner Paglaum Management and Development as the sole bidder in the auction sale, was then issued a
Corporation (PAGLAUM) is the registered owner of Certificate of Sale
three parcels of land located in the Province of Cebu.
HealthTech filed a Complaint for Annulment of Sale and
These lots are co-owned by Benjamin B. Dy, the president
Titles with Damages and Application for Temporary
of petitioner (HealthTech), and his mother and siblings
Restraining Order and Writ of Injunction
Respondent Union Bank extended HealthTech a credit
The case raffled to the RTC Br. 134, which issued in favor
line in the amount of ₱10,000,000. To secure this
of PAGLAUM and HealthTech a Writ of Preliminary
obligation, PAGLAUM executed three Real Estate
Injunction restraining Union Bank from proceeding with
Mortgages on behalf of HealthTech and in favor of Union
the auction sale of the three mortgaged properties.
Bank. It must be noted that the Real Estate Mortgage, on
the provision regarding the venue of all suits and actions Union Bank filed a Motion to Dismiss on the following
arising out of or in connection grounds: (a) lack of jurisdiction over the issuance of the
therewith, originally stipulates: injunctive relief; (b) improper venue; and (c) lack of
authority of the person who signed the Complaint. RTC
Section 9. Venue. The venue of all suits and actions
Br. 134 granted this Motion
arising out of or in connection with this Mortgage shall be
in Makati, Metro Manila or in the place where any of the In the instant Petition, PAGLAUM and HealthTech argue
Mortgaged Properties is located, at the absolute option of that: (a) the Restructuring Agreement governs the choice
the Mortgagee, the parties hereto waiving any other of venue between the parties, and (b) the agreement on the
venue. choice of venue must be interpreted with the convenience

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of the parties in mind and the view that any obscurity the parties to implement a restrictive venue stipulation,
therein was caused by Union Bank.[29] which applies not only to the principal obligation, but also
to the mortgages. The phrase waiving any other
On the other hand, Union Bank contends that: (a) the
venue plainly shows that the choice of Makati City as the
Restructuring Agreement is applicable only to the
venue for actions arising out of or in connection with the
contract of loan, and not to the Real Estate Mortgage, and
Restructuring Agreement and the Collateral, with the Real
(b) the mortgage contracts explicitly state that the choice
Estate Mortgages being explicitly defined as such, is
of venue exclusively belongs to it
exclusive.
ISSUE Even if this Court were to consider the venue stipulations
Whether or not Makati City is the proper venue to assail under the Real Estate Mortgages, it must be underscored
the foreclosure of the subject real estate mortgage that those provisions did not contain words showing
exclusivity or restrictiveness. In fact, in the Real Estate
RULING Mortgages dated 11 February 1994, the phrase parties
Yes. Being an action for Annulment of Sale and Titles hereto waiving from the entire phrase the parties hereto
resulting from the extrajudicial foreclosure by Union waiving any other venue was stricken from the final
Bank of the mortgaged real properties, is classified as a executed contract. Following the ruling in Sps. Lantin as
real action. earlier quoted, in the absence of qualifying or restrictive
words, the venue stipulation should only be deemed as an
According to the Rules, real actions shall be commenced agreement on an additional forum, and not as a restriction
and tried in the court that has jurisdiction over the area on a specified place.
where the property is situated. In this case, all the
mortgaged properties are located in the Province of Cebu. Considering that Makati City was agreed upon by the
Thus, following the general rule, PAGLAUM and parties to be the venue for all actions arising out of or in
HealthTech should have filed their case in Cebu, and not connection with the loan obligation incurred by
in Makati. HealthTech, as well as the Real Estate Mortgages
executed by PAGLAUM, the CA committed reversible
However, the Rules provide an exception, in that real error in affirming the dismissal of Civil Case No. 01-1567
actions can be commenced and tried in a court other than by RTC Br. 134 on the ground of improper venue.
where the property is situated in instances where the
parties have previously and validly agreed in writing on
the exclusive venue thereof. In the case at bar, the parties BELEN VS CHAVEZ
claim that such an agreement exists. The only dispute is
whether the venue that should be followed is that FACTS: Spouses Pacleb (private respondents) filed an
contained in the Real Estate Mortgages, as contended by action for the enforcement of a foreign judgment against
Union Bank, or that in the Restructuring Agreement, as spouses Belen (petitioners). The complaint alleged that
posited by PAGLAUM and HealthTech. This Court rules the Pacleb secured a judgment by default rendered by
Judge John W. Green of the Superior Court of the State of
that the venue stipulation in the Restructuring Agreement
California, which ordered the spouses Belen to pay
should be controlling. $56,204.69 representing loan repayment and share in the
The Real Estate Mortgages were executed by PAGLAUM profits plus interest and costs of suit. The summons was
in favor of Union Bank to secure the credit line extended served on the Belen’s address in Laguna, as was alleged
in the complaint, and received by Marcelo M. Belen.
by the latter to HealthTech. All three mortgage contracts
1. Spouses Belen filed an answer alleging that they
contain a dragnet clause, which secures succeeding
were actually residents of California and that
obligations, including renewals, extensions, amendments their liability had already been extinguished via a
or novations thereof, incurred by HealthTech from Union release abstract judgment issued in the collection
Bank. On the other hand, the Restructuring Agreement case abroad.
was entered into by HealthTech and Union Bank to 2. For failure to attend the pre-trial conference, the
modify the entire loan obligation. RTC ordered the ex parte presentation of
evidence for Pacleb.
Provisions of the Real Estate Mortgages and the later 3. Belen subsequently filed a Motion to Dismiss
Restructuring Agreement clearly reveal the intention of citing the judgment of dismissal issued by the
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Superior Court of California; however the MTD of the following modes of service may be resorted to: (1)
was dismissed for failure to submit a copy of the substituted service set forth in Sec 8; (2) personal service
judgment of dismissal outside the country, with leave of court; (3) service by
4. Spouses Pacleb, for their part, filed for the publication, also with leave of court; or (4) any other
amendment of the complaint, stating that they manner the court may deem sufficient.
withdrew the complaint (in California) because of
the prohibitive cost of litigation. In an action in personam wherein the defendant is a
5. For failure of spouses Belen to appear in the non-resident who does not voluntarily submit himself
rescheduled pre-trial conference, RTC declared to the authority of the court, personal service of
Belen in default and allowed the presentation of summons within the state is essential to the acquisition
ex parte evidence. In the meantime, the counsel of jurisdiction over her person. This method of service
(Alcantara) of petitioners died without the RTC is possible if such defendant is physically present in
being informed of such fact. The RTC ruled the country. If he is not found therein, the court
against Belen and ordered them to pay Pacleb cannot acquire jurisdiction over his person and
6. A copy of the decision was sent to Atty. Alcantara therefore cannot validly try and decide the case
but was returned with the notation “addressee against him. An exception was laid down in Gemperle
deceased.” A copy of the same was then sent to v. Schenker wherein a non-resident was served with
the last known address of spouses Belen in summons through his wife, who was a resident of the
Laguna. Atty. Culvera, the new counsel of Philippines and who was his representative and
spouses Belen, filed a motion to quash the Writ attorney-in-fact in a prior civil case filed by him;
of Execution as well as a notice of appeal. The moreover, the second case was a mere offshoot of the
RTC denied the same. first case.
7. Petitioners filed a petition for review on certiorari
(Rule 65) alleging that CA committed grave CAB: the records of the case reveal that spouses Belen
abuse of discretion in denying petitioners’ motion were permanent residents of California. It has been
to quash the writ of execution and notice of consistently maintained that they were not physically
appeal despite sufficient legal bases in support resent in the Philippines. Therefore, the service of
thereof. summons in the petitioners’ address in Laguna was
defective and did not serve to vest in court jurisdiction
ISSUE: WON the RTC acquired jurisdiction over the over their person. Nevertheless, the CA correctly
persons of petitioners through either the proper service of concluded that the appearance of Atty. Alcantara and his
summons or the appearance of Atty. Alcantara on behalf filing of numerous pleadings were sufficient to vest such
of petitioners jurisdiction. By supplying the court with various
documents that could only have been supplied by spouses
HELD: Yes. Courts acquire jurisdiction over the Belen, implied authorization could be gleaned from such.
plaintiffs upon the filing of the complaint. On the other In sum, there was voluntary submission to the jurisdiction
hand, jurisdiction over the defendants in a civil case is of the RTC.
acquired either through the service of summons upon
them or through their voluntary appearance in court The running of the fifteen-day period for appeal did not
and their submission to its authority. As a rule, if commence upon the service of the RTC decision at the
defendants have not been summoned, the court acquires address on record of Atty. Alcantara or at the Laguna
no jurisdiction over their person, and a judgment rendered address. It is deemed served on petitioners only upon its
against them is null and void. To be bound by a decision, receipt by Atty. Culvera on 29 December 2003.
a party should first be subject to the court’s jurisdiction. Therefore, the filing of the Notice of Appeal on 06
January 2004 is within the reglementary period and
In an action in personam, jurisdiction over the person of should be given due course.
the defendant is necessary for the court to validly try and
decide the case. Jurisdiction over the person of a resident
defendant who does not voluntarily appear in court can be
acquired by personal service of summons as provided
under Sec 7, Rule 14 ROC. If he cannot be personally
served with summons within a reasonable time,
substituted service may be made in accordance with Sec
8 of said Rule. If he is temporarily out of the country, any

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PLANTERS DEVT BANK VS JULIE CHANDUMAL (2) The Court notes that aside from the allegation that she
did not receive any summons, Chandumal’s motion to set
Facts:
aside order of default and to admit attached answer failed
BF Homes and Julie Chandumal entered into a contract to to positively assert the trial court lack of jurisdiction. In
sell a parcel of land located in Las Pinas. Later, BF Homes fact, what was set forth therein was the substantial claim
sold to PDB all its rights over the contract. that PDB failed to comply with the requirements of R.A.
No. 6552 on payment of cash surrender value, which
Chandumal paid her monthly amortizations until she already delves into the merits of PDB’s cause of action.
defaulted in her payments. So, PDB sent a notice to In addition, Chandumal even appealed the RTC decision
Chandumal with a demand to vacate the land within to the CA, an act which demonstrates her recognition of
30days, otherwise all of her rights will be extinguished the trial court’s jurisdiction to render said judgment.
and the contract will be terminated and deemed rescinded.
In spite of the demand, Chandumal failed to settle her (3) R.A. No. 6552 recognizes the right of the seller to
account. cancel the contract but any such cancellation must be done
in conformity with the requirements therein prescribed. In
PDB filed an action for judicial confirmation of notarial addition to the notarial act of rescission, the seller is
rescission and delivery of possession but still Chandumal required to refund to the buyer the cash surrender value of
refused to do so. Summons were then issued and served the payments on the property. The actual cancellation of
by deputy sheriff Galing but its was unavailing as she was the contract can only be deemed to take place upon the
always out of her house on the dates the summons were expiry of a thirty (30)-day period following the receipt by
served. the buyer of the notice of cancellation or demand for
RTC then issued an order granting the motion of PDB. rescission by a notarial act and the full payment of the
Chandumal filed an urgent motion to set aside order of cash surrender value.
default and to admit attached answer. Chandumal said Petition is denied.
that she did not receive the summons and was not notified
of the same and her failure to file an answer within the
reglementary period was due to fraud. RTC denied
BIACO VS PHILIPPINE COUNTRYSIDE RURAL
Chandumal's motion to set aside the order of default.
BANK
Chandumal appealed to the CA. CA nullified the RTC's
515 SCRA 106 – Civil Procedure – In rem vs In personam
decision.
proceedings – Service of Summons – Resident Defendant
Issue: – Extrinsic Fraud

(1) Whether there was valid substituted service of Ernesto Biaco, husband of Teresa Biaco, acquired several
summons loans from Philippine Countryside Rural Bank (PCRB)
from 1996 to 1998. To secure the loans, he mortgaged
(2) Whether Chandumal voluntarily submitted to the certain property in favor of the bank. He was able to pay
jurisdiction of the RTC? loans from 1996 to 1997 but he defaulted in loans
(3) Whether there was proper rescission by notarial act of obtained in 1998 which amounted to more than a million
the contract to sell? pesos.
Eventually, PCRB filed a complaint for foreclosure
against the spouses Biaco. Summons were issued by the
Held: trial judge. The Sherriff served the summons to Ernesto at
the latter’s office. No summons was served to Teresa.
(1) Correctly ruled that the sheriff’s return failed to justify
a resort to substituted service of summons. According to Ernesto did not file a responsive pleading (so did Teresa
the CA, the Return of Summons does not specifically because she was not aware sans the summons being
show or indicate in detail the actual exertion of efforts or served her). The case was heard ex-parte and the spouses
any positive step taken by the officer or process server in were ordered to satisfy the debt and failure to do so will
attempting to serve the summons personally to the authorize the Sheriff to auction the mortgaged the
defendant. property.
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Eventually, the mortgaged property was auctioned for of the trial of the case, whereby the defeated party was
P150k which is not sufficient to cover the P1 M+ debt. prevented from presenting fully his side of the case by
Upon motion by PCRB, a notice of levy was issued fraud or deception practiced on him by the prevailing
against the personal properties of Teresa to satisfy the party. Extrinsic fraud is present where the unsuccessful
deficiency. party had been prevented from exhibiting fully his case,
by fraud or deception practiced on him by
It was only at this point that Teresa learned of the previous
his opponent, as by keeping him away from court, a false
ex parte proceedings. She then sought to have the
promise of a compromise; or where the defendant never
judgment annulled as she now claims that she was
had knowledge of the suit, being kept in ignorance by the
deprived of due process when she did not receive
acts of the plaintiff; or where an attorney fraudulently or
summons; that it was only her husband who received the
without authority assumes to represent a party and
summons; that there was extrinsic fraud because her
connives at his defeat; or where the attorney regularly
husband deliberately hid the fact of the foreclosure
employed corruptly sells out his client’s interest to the
proceeding.
other side. The above is not applicable in the case of
PRCB argued that the foreclosure proceeding is an action Teresa. It was not PCRB which made any fraud. It should
quasi in rem, hence Teresa’s participation is not required be noted that spouses Biaco were co-defendants in the
so long as the court acquires jurisdiction over the res case and shared the same interest.
which is what happened in the case at bar; that Teresa
cannot invoke extrinsic fraud because such situation
cannot occur in her case because she is a co-defendant of YU VS PACLEB
Ernesto.
NATURE OF THE CASE: This petition was filed to set
ISSUE: Whether or not the judgment of the trial court aside the decision made by the Court of Appeals in ruling
should be annulled. that the respondent has the better right over the subject
property and is the true owner thereof.
HELD: Yes. It is admitted that the proceeding is a quasi
in rem proceeding and that the presence of Teresa is not FACTS: Respondent Baltazar Pacleb and his late first
required because the trial court was able to acquire wife, Angelita Chan, are the owners of parcel of land in
jurisdiction over the res (mortgaged property). Langcaan, Dasmarinas, Cavite covered by a transfer
HOWEVER, her constitutional right to due process is certificate of title.
superior over the procedural matters mentioned. Her right
Sometime in September 1992, Ruperto Javier offered the
to due process was violated when she did not receive
said land to spouses Ernesto and Elsie Yu. Javier claimed
summons. Teresa, as a resident defendant, who does not
that he purchased the property from Rebecca Del Rosario
voluntary appear in court must be personally served with
who bought it from spouses Baltazar Pacleb and Angelita
summons as provided under Section 6, Rule 14 of the
Chan. Despite the alleged sales being unregistered, the
Rules of Court. Even if the action is quasi in
spouses Yu accepted the offer and made a down payment
rem, personal service of summons is essential in order to
and entered into an Agreement for the sale of the property.
afford her due process. The substituted service made by
After giving the amount, the spouses Yu discovered that
the sheriff at her husband’s office cannot be deemed
a portion of the property was tenanted by Ramon Pacleb,
proper service absent any explanation that efforts had
one of the respondent's sons. The petitioners then
been made to personally serve summons upon her but that
demanded the cancellation of their agreement and the
such efforts failed. Further, the order of the trial court
return of their initial payment.
compelling Teresa to pay off the debt using her personal
property is a judgment in personam which the court Javier then made arrangements with Ramon to vacate the
cannot do because it only acquired jurisdiction over the property and to pay Ramon for his disturbance
res and not over the person of Teresa. compensation. With that, Javier and the spouses YU
proceeded to enter into a Contract to Sell. But, Javier
On the issue of extrinsic fraud, the Court of Appeals,
failed to comply with his obligations. So, on April 23,
agreeing with PCRB, is correct that there is none in the
1993, the petitioners filed with the RTC a Complaint for
case at bar. Extrinsic fraud exists when there is a
specific performance and damages against Javier to
fraudulent act committed by the prevailing party outside

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compel Javier to deliver to them ownership and the possession of the property to the petitioners. Upon
possession, and the title to the property. appeal by the respondent, the CA reversed the trial court's
decision. Hence, this petition.
However, Javier did not appear in the proceedings
and was declared in default, so, the trial court rendered a ISSUE: WON the action for specific performance filed
decision in favor of the petitioners. The decision and its by the petitioners against Javier is not merely an action in
Certificate of Finality were annotated in the title of the personam, but an action in rem, and is thus, conclusive
property. and binding upon respondent even if he was not a party
thereto since it involves a question of possession and
On March 10, 1995, the petitioners and Ramon
ownership of real property.
and his wife entered into an agreement that the spouses
will pay Ramon P500,000 in exchange for the waiver of HELD: The action for specific performance and damages
his tenancy rights over the land. filed by petitioners against Javier to compel him to
perform his obligations under their Contract to Sell is an
On October 12, 1995, the respondent filed a
action in personam.
Complaint for annulment of deed of sale and other
documents arising from it claiming that the deed of sale The purpose of the action is to compel Javier to accept the
supposedly executed between him and his late first wife full payment of the purchase price, and to execute a deed
and Del Rosario was spurious and the signatures were of absolute sale over the property in favor of the
forged. He also moved for the summons to be served upon petitioners. The obligations of Javier mentioned attach to
Del Rosario via publication since her address cannot be Javier alone and do not burden the property. Thus, the
found, but was denied. So, respondent moved to dismiss complaint filed by the petitioners is an action in personam
the case which was granted by the trial court. and is binding only upon the parties properly impleaded
therein and duly heard or given an opportunity to be
On November 23, 1995, the petitioners filed an
heard. So, the action cannot bind the respondent since he
action for forcible entry against the respondent with the
was not a party therein and considering the fact that his
MTC. They contend that they had prior physical
signature and that of his late first wife were forged in the
possession over the property through their trustee Ramon
deed of sale. Hence, the petition is denied and the Court
Pacleb, until the respondent ousted them in September
affirms the ruling of the CA finding the respondent having
1995. The MTC and the RTC ruled in favor of the
a better right over the property as the true owner thereof.
petitioners, but the Court of Appeals set aside the
decisions of the lower courts. The CA decided that it was
the respondent who had prior physical possession of the
property which was shown by his payment of real estate MANCHESTER DEVT VS CA
taxes thereon. 149 SCRA 562 – Remedial Law – Civil Procedure –
Payment of Docket Fees – Claimed Damages must be
On May 29, 1996, respondent filed an instant case
Stated in the BODY and PRAYER of pleadings
for removal of cloud from title with damages alleging that
the deed of sale between him and his late first wife could FACTS: A complaint for specific performance was filed
not have been executed on the date appearing thereon. He by Manchester Development Corporation against City
claimed that he was residing in the US at that time and Land Development Corporation to compel the latter to
that his late first wife died 20 years ago. execute a deed of sale in favor Manchester. Manchester
also alleged that City Land forfeited the former’s tender
On May 28, 1997, while the case was still
of payment for a certain transaction thereby causing
pending, the respondent died, hence, he was substituted
damages to Manchester amounting to P78,750,000.00.
by his surviving spouse and some of his children.
This amount was alleged in the BODY of their Complaint
On December 27, 2002, the respondent's case was but it was not reiterated in the PRAYER of same
dismissed and the petitioners were held to be purchasers complaint. Manchester paid a docket fee of P410.00 only.
in good faith. The trial court also held that the petitioners'
Said docket fee is premised on the allegation of
action for specific performance against Javier was already
Manchester that their action is primarily for specific
final, and the trial court also ordered the respondents' heirs
performance hence it is incapable of pecuniary
and all other persons claiming under them to surrender
estimation. The court ruled that there is an under
8
assessment of docket fees hence it ordered Manchester to SUN INSURANCE OFFICE LTD VS ASUNCION
amend its complaint. Manchester complied but what it did
Facts: Petitioner Sun Insurance (or SIOL) files a
was to lower the amount of claim for damages to P10M.
complaint for the annulment of a decision on the
Said amount was however again not stated in the
consignation of fire insurance policy. Subsequently, the
PRAYER.
Private Respondent (PR) files a complaint for the refund
ISSUE: Whether or not the amended complaint should be of premiums and the issuance of a writ of preliminary
admitted. attachment in a civil case against SIOL. In addition, PR
also claims for damages, attorney’s fees, litigation costs,
HELD: No. The docket fee, its computation, should be
etc., however, the prayer did not state the amount of
based on the original complaint. A case is deemed filed
damages sought although from the body of the complaint
only upon payment of the appropriate docket fee
it can be inferred to be in amount of P 50 million. Hence,
regardless of the actual date of filing in court. Here, since
PR originally paid only PhP 210.00 in docket fees.The
the proper docket fee was not paid for the original
complaint underwent a number of amendments to make
complaint, it’s as if there is no complaint to speak of. As
way for subsequent re-assessments of the amount of
a consequence, there is no original complaint duly filed
damages sought as well as the corresponding docket fees.
which can be amended. So, any subsequent proceeding
The respondent demonstrated his willingness to abide by
taken in consideration of the amended complaint is void.
the rules by paying the additional docket fees as required.
Manchester’s defense that this case is primarily an action
Issue: Did the Court acquire jurisdiction over the case
for specific performance is not merited. The Supreme
even if private respondent did not pay the correct or
Court ruled that based on the allegations and the prayer of
sufficient docket fees?
the complaint, this case is an action for damages and for
specific performance. Hence, it is capable of pecuniary RULING YES.
estimation.
It was held that it is not simply the filing of the complaint
Further, the amount for damages in the original complaint or appropriate initiatory pleading, but the payment of the
was already provided in the body of the complaint. Its prescribed docket fee, that vests a trial court with
omission in the PRAYER clearly constitutes an attempt to jurisdiction over the subject matter or nature of the action.
evade the payment of the proper filing fees. To stop the Where the filing of the initiatory pleading is not
happenstance of similar irregularities in the future, the accompanied by payment of the docket fee, the court may
Supreme Court ruled that from this case on, all allow payment of the fee within a reasonable time but in
complaints, petitions, answers and other similar pleadings no case beyond the applicable prescriptive or
should specify the amount of damages being prayed for reglamentary period. Same rule goes for permissive
not only in the body of the pleading but also in the prayer, counterclaims, third party claims and similar pleadings.
and said damages shall be considered in the assessment of
In herein case, obviously, there was the intent on the part
the filing fees in any case.
of PR to defraud the government of the docket fee due not
Any pleading that fails to comply with this requirement only in the filing of the original complaint but also in the
shall not bib accepted nor admitted, or shall otherwise be filing of the second amended complaint. However, a more
expunged from the record. liberal interpretation of the rules is called for considering
that, unlike in Manchester, the private respondent
demonstrated his willingness to abide by the rules by
paying the additional docket fees as required.
Where a trial court acquires jurisdiction in like manner,
but subsequently, the judgment awards a claim not
specified in the pleading, or if specified the same has been
left for determination by the court, the additional filing fee
shall constitute a lien on the judgment. It shall be the
responsibility of the Clerk of Court or his duly authorized
deputy to enforce said lien and assess and collect the
additional fee
9
BALLATAN VS CA amount for that portion of the lot which they encroached
– the value to be fixed at the time of taking.
Facts:
Issues:
In 1985, Eden Ballatan constructed her house on
Lot No. 24 in Araneta University Village, Malabon. 1) Is the award of damages proper, despite Go’s
During the construction, she noticed that the concrete failure to specify the amount prayer for & failure
fence & side pathway of the adjoining house of Winston to pay the corresponding additional filing fees
Go encroached upon the entire length of the eastern side thereon?
of her property. Her building contractor informed her that
2) Given the fact of encroachment on Ballatan’s
the area of her lot was actually less than that described in
property, what are her rights?
the title.
Ruling:
Ballatan informed Go about the discrepancy and
encroachment, but Go claimed that his house (including 1. YES, the award of damages is proper.
its fence and pathway) were built within the parameters of
his father’s lot. The third-party complaint in the instant case arose from
the complaint of accion publiciana of Ballatan against Go,
The owner-developer of the subdivision, Araneta which is a real action. In real actions, the docket & filing
Insitute of Agriculture (AIA) authorized a survey of the fees are based on the value of property & the amount of
land by Engr. Jose N. Quedding. Quedding found that the damages claimed.
lot area of Ballatan was less by a few meters & that of Li
Ching Yao (3 lots away), increased by 2 meters. He Where the fees prescribed for the real action have
declared that he made a verification survey of the lots been paid, but the fees of certain related damages are not,
belonging to Go in 1983, and found the boundaries to be the court, although having jurisdiction over the real
in order. However he could not explain the reduction in action, may not have acquired jurisdiction over the
Ballatan’s area. accompanying claim for damages. Accordingly, the court
may expunge those claims for damages, or allow (on
Engr. Quedding made another relocation survey motion) a reasonable time for amendment of the
upon request of the parties. He found that Lot 24 lost complaint so as to allege the precise amount of damages
approx.. 25sqm. on its eastern boundary; that Lot 25 did & accept payment of the requisite legal fees.
not lose nor gain any area; that Lot 26 lost around 3 sqm
which were however gained by Lot 27. In the instant case, the third-party complaint
sought the same remedy as the principal complaint, but
On the basis of this survey, Ballatan made a added a prayer for attorney’s fees & costs without
written demand on Go to remove & dismantle their specifying their amounts. The additional filing fee on this
improvements on Lot No. 24. Go refused, thus Ballatan claim is deemed to constitute a lien on the judgment
brought the issue before the barangay. Go did not appear. award.
Ballatan filed a case for recovery of possession 2. The erroneous survey by Engr. Quedding triggered the
before the RTC of Malabon. The Go’s filed an answer discrepancies. It was upon said erroneous survey that Go
with third-party complaint, impleading Li Ching Yao, relied upon in constructing his house on his father’s land.
AIA & Engr. Quedding. Otherwise stated, Go had no knowledge that they
encroached on Ballatan’s lot. They are deemed builders
The RTC decided in favor of Ballatan, ordering Go to
in good faith.
vacate Lot No. 24 and demolish their improvements and
to pay Ballatan actual damages. It also dismissed the Li Ching Yao built his house on his lot before any
third-party complaint against AIA, Quedding & Li Ching of the other parties did. There is no evidence, much less,
Yao. any allegation that Li Ching Yao was aware that when he
built his house he knew that a portion thereof encroached
On appeal, the CA modified the decision of the
on Go’s adjoining land. Good faith is always presumed,
RTC. It ordered Li Ching Yao & Engr. Quedding to pay
& upon him who alleges bad faith on the part of a
Ballatan; and Li Ching Yao to pay Go, a reasonable
possessor rests the burden of proof.

10
Thus, Ballatan as owner of Lot No. 24, may CA.[4] In addition, the CA ruled that since prescription had
choose to purchase the improvement made by Go on their set in, petitioners could no longer pay the required docket
land, or sell to Go the subject portion. fees.[5]
If buying the improvement is impractical as it Petitioners filed a motion for reconsideration of the CA
may render Go’s house useless, then Ballatan may sell to decision but it was denied
Go that portion of Lot No. 24 on which their improvement
stands. If the Go’s are unwilling or unable to buy the lot, ISSUE
then they must vacate the land and, until they vacate, they Whether or not The Court of Appeals
must pay rent to Ballatan. MISAPPLIED THE RULING of the Supreme Court in
the case of Manchester Corporation vs. Court of
In the event that Ballatan elects to sell to Go the
Appeals to this case
subject portion of their lot, the price must be fixed at the
prevailaing market value at the time of payment. The time RULING
of taking is determinative of just compensation in
expropriation proceedings; clearly the instant case is not The petitioners argue that the ruling in Manchester should
one for expropriation. not have been applied retroactively in this case, since it
was filed prior to the promulgation of
Ballatan was ordered to decide within 30 days the Manchesterdecision in 1987. They plead that though
whether to buy the portion of Go’s improvement on Lot this Court stated that failure to state the correct amount of
24, or to sell to Go the portion of their land on which the damages would lead to the dismissal of the complaint,
improvement stands. Engr. Quedding was ordered to pay said doctrine should be applied prospectively.
attorney’s fees of P5,000 to Go.
Moreover, the petitioners assert that at the time of the
filing of the complaint in 1979, they were not certain of
the amount of damages they were entitled to, because the
HEIRS OF REINOSO, SR VS CA
amount of the lost income would still be finally
FACTS determined in the course of the trial of the case. They
claim that the jurisdiction of the trial court remains even
The complaint for damages arose from the collision of a
if there was failure to pay the correct filing fee as long as
passenger jeepney and a truck at around 7:00 oclock in
the correct amount would be paid subsequently.
the evening of June 14, 1979 along E. Rodriguez
Avenue, Quezon City. As a result, a passenger of Finally, the petitioners stress that the alleged defect was
the jeepney, Ruben Reinoso, Sr. (Reinoso), was killed. never put in issue either in the RTC or in the CA.
The passenger jeepney was owned by Ponciano
Tapales (Tapales) and driven by Alejandro The Court finds merit in the petition.
Santos (Santos), while the truck was owned by Jose The rule is that payment in full of the docket fees within
Guballa (Guballa) and driven by Mariano the prescribed period is mandatory.[8] In Manchester v.
Geronimo (Geronimo). Court of Appeals,[9] it was held that a court acquires
jurisdiction over any case only upon the payment of the
On November 7, 1979, the heirs of
prescribed docket fee. The strict application of this rule
Reinoso (petitioners) filed a complaint for damages
was, however, relaxed two (2) years after in the case
against Tapales and Guballa. In turn, Guballa filed a third
of Sun Insurance Office, Ltd. v. Asuncion,[10] wherein the
party complaint against Filwriters Guaranty Assurance
Court decreed that where the initiatory pleading is not
Corporation (FGAC) under Policy Number OV-09527.
accompanied by the payment of the docket fee, the court
On March 22, 1988, the RTC rendered a decision in favor may allow payment of the fee within a reasonable period
of the petitioners and against Guballa. of time, but in no case beyond the applicable prescriptive
or reglementary period. This ruling was made on the
On appeal, the CA, in its Decision dated May 20, 1994,
premise that the plaintiff had demonstrated his
set aside and reversed the RTC decision and dismissed the
willingness to abide by the rules by paying the additional
complaint on the ground of non-payment of docket fees
docket fees required.[11] Thus, in the more recent case
pursuant to the doctrine laid down in Manchester v.
of United Overseas Bank v. Ros,[12] the Court explained
11
that where the party does not deliberately intend to was applied to the cases of Far Eastern Shipping
defraud the court in payment of docket fees, and manifests Company v. Court of Appeals[17] and Spouses Jimmy and
its willingness to abide by the rules by paying additional Patri Chan v. RTC of Zamboanga.[18] In the case
docket fees when required by the court, the liberal of Mactan Cebu International Airport Authority v.
doctrine enunciated in Sun Insurance Office, Ltd., and not Mangubat (Mactan),[19] it was stated that the intent of the
the strict regulations set in Manchester, will apply. It has Court is clear to afford litigants full opportunity to comply
been on record that the Court, in several instances, with the new rules and to temper enforcement of sanctions
allowed the relaxation of the rule on non-payment of in view of the recency of the changes introduced by the
docket fees in order to afford the parties the opportunity new rules. In Mactan, the Office of the Solicitor
to fully ventilate their cases on the merits. In the case General (OSG) also failed to pay the correct docket fees
of La Salette College v. Pilotin,[13] the Court stated: on time.
Notwithstanding the mandatory nature of the requirement The petitioners, however, are liable for the difference
of payment of appellate docket fees, we also recognize between the actual fees paid and the correct payable
that its strict application is qualified by the docket fees to be assessed by the clerk of court which shall
following: first, failure to pay those fees within the constitute a lien on the judgment pursuant to Section 2 of
reglementary period allows only discretionary, not Rule 141 which provides:
automatic, dismissal; second, such power should be used
SEC. 2. Fees in lien. Where the court in its final judgment
by the court in conjunction with its exercise of sound
awards a claim not alleged, or a relief different from, or
discretion in accordance with the tenets of justice and fair
more than that claimed in the pleading, the party
play, as well as with a great deal of circumspection in
concerned shall pay the additional fees which shall
consideration of all attendant circumstances.[14]
constitute a lien on the judgment in satisfaction of said
While there is a crying need to unclog court dockets on lien. The clerk of court shall assess and collect the
the one hand, there is, on the other, a greater demand for corresponding fees.
resolving genuine disputes fairly and equitably,[15] for it is
As the Court has taken the position that it would be
far better to dispose of a case on the merit which is a
grossly unjust if petitioners claim would be dismissed on
primordial end, rather than on a technicality that may
a strict application of the Manchester doctrine, the
result in injustice.
appropriate action, under ordinary circumstances, would
In this case, it cannot be denied that the case was litigated be for the Court to remand the case to the CA.
before the RTC and said trial court had already rendered Considering, however, that the case at bench has been
a decision. While it was at that level, the matter of non- pending for more than 30 years and the records thereof are
payment of docket fees was never an issue. It was only already before this Court, a remand of the case to the CA
the CA which motu propio dismissed the case for said would only unnecessarily prolong its resolution. In the
reason. higher interest of substantial justice and to spare the
parties from further delay, the Court will resolve the case
Considering the foregoing, there is a need to suspend the
on the merits.
strict application of the rules so that the petitioners would
be able to fully and finally prosecute their claim on the
merits at the appellate level rather than fail to secure
RE: IN THE MATTER OF EXEMPTION FROM
justice on a technicality, for, indeed, the general objective
of procedure is to facilitate the application of justice to the PAYMENT OF ALL COURT AND SHERIFF’S
rival claims of contending parties, bearing always in mind FEES OF COOPERATIVES DULY REGISTERED
that procedure is not to hinder but to promote the IN ACCORDANCE WITH RA NO 9520
administration of justice.[16] FACTS
The Court also takes into account the fact that the case In a Petition, Perpetual Help Community Cooperative
was filed before the Manchester ruling came out. Even if (PHCCI), through counsel, requests for the issuance of a
said ruling could be applied retroactively, liberality court order to clarify and implement the exemption of
should be accorded to the petitioners in view of the cooperatives from the payment of court and sheriffs fees
recency then of the ruling. Leniency because of recency pursuant to Republic Act No. 6938, as amended by

12
Republic Act No. 9520, otherwise known as ISSUE
the Philippine Cooperative Act of 2008.
Whether or not cooperatives are exempt from the payment
PHCCI contends that as a cooperative it enjoys the of court and sheriffs fees. The fees referred to are those
exemption provided for under Section 6, Article 61 of provided for under Rule 141 (Legal Fees) of the Rules of
Republic Act No. 9520, which states: Court.
(6) Cooperatives shall be exempt from the payment of all RULING
court and sheriffs fees payable to the Philippine
The term all court fees under Section 6, Article 61 of
Government for and in connection with all actions
Republic Act No. 9520 refers to the totality of legal fees
brought under this Code, or where such actions is brought
imposed under Rule 141 of the Rules of Court as an
by the Authority before the court, to enforce the payment
incident of instituting an action in court.[4] These fees
of obligations contracted in favor of the cooperative.
include filing or docket fees, appeal fees, fees for issuance
It claims that this was a reiteration of Section 62, of provisional remedies, mediation fees, sheriffs fees,
paragraph 6 of Republic Act No. 6938, An Act to Ordain stenographers fees and commissioners fees.[5]
a Cooperative Code of the Philippines,[2] and was made
With regard to the term sheriffs fees, this Court, in an
basis for the Courts Resolution in A.M. No. 03-4-01-0, as
extended minute Resolution dated 1 September 2009,
well as of Office of the Court Administrator (OCA)
held that the exemptions granted to cooperatives under
Circular No. 44-2007.[3]
Section 2, paragraph 6 of Republic Act No. 6938; Section
It avers that despite the exemptions granted by the 6, Article 61 of Republic Act No. 9520; and OCA Circular
aforesaid laws and issuances, PHCCI had been No. 44-2007 clearly do not cover the amount required to
continuously assessed and required to pay legal and other defray the actual travel expenses of the sheriff, process
fees whenever it files cases in court. server or other court-authorized person in the service of
summons, subpoena and other court processes issued
PHCCI reports that it filed with the Office of the
relative to the trial of the case,[6] which are neither
Executive Judge of the Municipal Trial Court in Cities
considered as court and sheriffs fees nor are amounts
(MTCC), Dumaguete City, Negros Oriental, a Motion to
payable to the Philippine Government.[7]
implement the exemption of cooperatives from the
payment of court and sheriffs fees in cases filed before the In fine, the 1 September 2009 Resolution exempted the
courts in his jurisdiction, but the Executive Judge ruled cooperatives from court fees but not from sheriffs
that the matter is of national concern and should be fees/expenses.
brought to the attention of the Supreme Court for it to
On 11 February 2010, however, the Supreme Court En
come up with a straight policy and uniform system of
Banc issued a Resolution in A.M. No. 08-2-01-0,[8] which
collection. In the meantime, the MTCC has continued the
denied the petition of the Government Service Insurance
assessment of filing fees against cooperatives.
System (GSIS) for recognition of its exemption from
Records reveal that on 21 September 2011, Executive payment of legal fees imposed under Section 22 of Rule
Judge Antonio Estoconing (Executive Judge Estoconing), 141 of the Rules of Court. In the GSIS case, the Court
MTCC, Dumaguete City, Negros Oriental, issued an citing Echegaray v. Secretary of Justice,[9] stressed that
Order treating the motion filed by PHCCI as a the 1987 Constitution molded an even stronger and more
mere consulta considering that no main action was filed independent judiciary; took away the power of Congress
in his court. Executive Judge Estoconing submits that he to repeal, alter, or supplement rules concerning pleading,
had second thoughts in considering the exemption in view practice and procedure; and held that the power to
of the guidelines laid down in the Rules. He reported that promulgate these Rules is no longer shared by the Court
many cases filed by PHCCI are small claims cases and with Congress, more so, with the Executive,[10] thus:
under Section 8 of the Rule on Small Claims, the plaintiff
Since the payment of legal fees is a vital component of the
is required to pay docket fees and other related costs
rules promulgated by this Court concerning pleading,
unless he is allowed to litigate the case as an indigent.
practice and procedure, it cannot be validly annulled,
changed or modified by Congress. As one of the
safeguards of this Courts institutional independence, the

13
power to promulgate rules of pleading, practice and National Power Corporation is not exempt from the
procedure is now the Courts exclusive domain. That payment of legal fees.[19]
power is no longer shared by this Court with Congress,
With the foregoing categorical pronouncements of the
much less with the Executive.[11]
Supreme Court, it is evident that the exemption of
xxxx cooperatives from payment of court and sheriffs fees no
longer stands.Cooperatives can no longer invoke
The separation of powers among the three co-equal
Republic Act No. 6938, as amended by Republic Act No.
branches of our government has erected an impregnable
9520, as basis for exemption from the payment of legal
wall that keeps the power to promulgate rules of pleading,
fees.
practice and procedure within the sole province of this
Court. The other branches trespass upon this prerogative WHEREFORE, in the light of the foregoing premises,
if they enact laws or issue orders that effectively repeal, the petition of PHCCI requesting for this Court to issue an
alter or modify any of the procedural rules promulgated order clarifying and implementing the exemption of
by this Court. Viewed from this perspective, the claim of cooperatives from the payment of court and sheriffs fees
a legislative grant of exemption from the payment of legal is hereby DENIED.
fees under Section 39 of R.A. 8291 necessarily fails.
The Office of the Court Administrator is DIRECTED to
Congress could not have carved out an exemption for the issue a circular clarifying that cooperatives are not exempt
GSIS from the payment of legal fees without from the payment of the legal fees provided for under
transgressing another equally important institutional Rule 141 of the Rules of Court.
safeguard of the Courts independence - fiscal
autonomy.[12] Fiscal autonomy recognizes the power and
authority of the Court to levy, assess and collect RICARDO RIZAL VS LEONCIA NAREDO
fees,[13] including legal fees. Moreover, legal fees under
Rule 141 have two basic components, the Judiciary (see full)
Development Fund (JDF) and the Special Allowance for
the Judiciary Fund (SAJF).[14] The laws which established
the JDF and SAJF[15]expressly declare the identical GOODLAND COMPANY INC VS ASIA UNITED
purpose of these funds to guarantee the independence of BANK
the Judiciary as mandated by the Constitution and public
Facts: Sometime in July 1999, petitioner Goodland
policy.[16] Legal fees therefore do not only constitute a
Company, Inc. (petitioner) mortgaged its two parcels of
vital source of the Courts financial resources but also
land situated in Sta. Rosa, Laguna.
comprise an essential element of the Courts fiscal
independence. Any exemption from the payment of legal The Third Party Real Estate Mortgage (REM) secured
fees granted by Congress to government-owned or the loans extended by respondent Asia United Bank
controlled corporations and local government units will (“AUB”) to Radio Marine Network (Smartnet), Inc.
necessarily reduce the JDF and the SAJF. Undoubtedly, (RMNSI), doing business as Smartnet Philippines, under
such situation is constitutionally infirm for it impairs the the latter’s P250,000,000.00 Omnibus Credit Line with
Courts guaranteed fiscal autonomy and erodes its AUB. In addition to the aforesaid collaterals, petitioner
independence.[17] executed a Third Party REM over its 5,801-square meter
property located at Pasong Tamo St., Makati City.
In a decision dated 26 February 2010 in Baguio Market
Vendors Multi-Purpose Cooperative (BAMARVEMPCO) The REMs, both signed by Gilbert G. Guy, President of
v. Cabato-Cortes,[18] this Court reiterated its ruling in Goodland Company, Inc., were duly registered by AUB
the GSIScase when it denied the petition of the with the Registry of Deeds for Calamba, Laguna and
cooperative to be exempted from the payment of legal Registry of Deeds for Makati City, and annotated on the
fees under Section 7(c) of Rule 141 of the Rules of Court said titles. Subsequently, however, petitioner repudiated
relative to fees in petitions for extra-judicial foreclosure. the REMs by claiming that AUB and its officers
unlawfully filled up the blank mortgage forms and
On 10 March 2010, relying again on the GSIS ruling, the
falsified the entries therein.
Court En Banc issued a resolution clarifying that the

14
The Laguna properties were the subject of two suits filed Ruling: Yes. For forum shopping can be said to exist, the
by petitioner to forestall their imminent foreclosure, and following must concur: (1) identity of parties, or at least
similar actions were likewise instituted by petitioner such parties as represent the same interests in both
involving the Makati property which is the subject of the actions, (2) identity of rights asserted and relief prayed
present case. However, the only subject of the present for, the relief being founded on the same facts, and (3) the
petition is the Makati Property. The Laguna Properties identity of the two preceding particulars is such that any
were the subject of separate petitions. judgment rendered in the other action will, regardless of
which party is successful, amount to res judicata in the
Petitioner instituted two suits involving the Makati
action under consideration.
Property. The first suit filed by petitioner was an action
for an annulment of the REM covering the Makati The Court ruled that these elements are present in the
Property on the ground of its fraudulent and irregular instant case. There is identity of parties in the instant case
execution and registration filed before the Regional Trial notwithstanding that in the first case (Civil Case No. 03-
Court (RTC), Branch 56 of Makati City. On the other 045), only one bank officer (Co), the notary public
hand, the second suit filed by petitioner prayed for (Pelicano) and the Register of Deeds were impleaded
injunctive relief and/or nullification of the extrajudicial along with AUB as defendants, whereas in the second
foreclosure sale which petitioner alleged to be case (Civil Case No. 06-1032), AUB and its two officers
procedurally and legally defective filed before the RTC, (Chan and Del Mundo), along with the RTC Clerk of
Branch 145 of Makati City. Court (Escasinas, Jr.), Sheriff (Magsajo) and the Register
of Deeds of Makati City (Ortile) were the named
The RTC (Branch 145) issued an Order denying
defendants.
petitioner’s application for the issuance of a writ of
preliminary injunction, as well as respondents’ motion to The parties in both cases are substantially the same as they
dismiss based on forum shopping, non-payment of correct represent the same interests and offices/positions, and
docket fees and failure to state a cause of action. who were impleaded in their respective capacities with
However, the court reserved the issuance of the corresponding liabilities/duties under the claims asserted.
corresponding order requiring petitioner to pay the
The prayer for relief in the two cases was based on the
appropriate docket fees after respondents shall have
same attendant facts in the execution of REMs over
submitted what they believed should have been the
petitioner’s properties in favor of AUB. While the
correct computation thereof.
extrajudicial foreclosure of mortgage, consolidation of
On motion of respondents, Civil Case No. 06-1032 was ownership in AUB and issuance of title in the latter’s
consolidated with Civil Case No. 03-045. Prior to the name were set forth only in the second case (Civil Case
consolidation, respondents moved to dismiss with No. 06-1032), these were simply the expected
prejudice the two cases on the grounds of forum shopping, consequences of the REM transaction in the first case
and that no jurisdiction was acquired by the RTC in Civil (Civil Case No. 03-045). These eventualities are precisely
Case No. 03-045 for failure to pay the proper docket and what petitioner sought to avert when it filed the first case.
other legal fees. Undeniably then, the injunctive relief sought against the
extrajudicial foreclosure, as well as the cancellation of the
In a Joint Order, the RTC (Branch 56) dismissed with
new title in the name of the creditor-mortgagee AUB,
prejudice the complaints in both cases. Petitioner filed
were all premised on the alleged nullity of the REM due
two separate motions for reconsideration, which the RTC
to its allegedly fraudulent and irregular execution and
likewise denied. Petitioner again filed separate appeals
registration—the same facts set forth in the first case. In
before the Court of Appeals (CA), which were docketed
both cases, petitioner asserted its right as owner of the
under only one case (CA-G.R. CV No. 90418).
property subject of the REM, while AUB invoked the
The appellate court sustained the dismissal made by trial rights of a foreclosing creditor-mortgagee.
court on the ground of forum shopping, but not on the
With respect to identity of cause of action, a cause of
ground of improper docket and other legal fees.
action is defined in Section 2, Rule 2 of the Rules of Court
Issue: Whether or not petitioner violated the rule against as the act or omission by which a party violates the right
forum shopping. of another. The Court made reference to the test in
determining whether or not the causes of action in the first
15
and second cases are identical, to wit: would the same No. 03-045 and Civil Case No. 06-1032 are therefore
evidence support and establish both the present and correctly dismissed with prejudice.
former cause of action? If so, the former recovery is a bar;
if otherwise, it does not stand in the way of the former
action. RELUCIO VS LOPEZ
In the first case, petitioner alleged the fraudulent and Facts: Private respondent Angelina Mejia Lopez filed a
irregular execution and registration of the REM which petition for APPOINTMENT AS SOLE
violated its right as owner who did not consent thereto, ADMINISTRATRIX OF CONJUGAL PARTNERSHIP
while in the second case petitioner cited further violation OF PROPERTIES, FORFEITURE, ETC., against
of its right as owner when AUB foreclosed the property, defendant Alberto Lopez and petitioner Imelda Relucioin
consolidated its ownership and obtained a new TCT in its a special proceeding. In the petition, privaterespondent
name. Considering that the aforesaid violations of alleged that sometime in 1968, defendant Lopez, who is
petitioner’s right as owner in the two cases both hinge on legally married to the private respondent, abandoned the
the binding effect of the REM, i.e., both cases will rise or latter and their four legitimate children; that he arrogated
fall on the issue of the validity of the REM, it follows that unto himself full and exclusive control and administration
the same evidence will support and establish the first and of the conjugal properties, spending and using the same
second causes of action. The procedural infirmities or for his sole gain and benefit to the total exclusion of the
non-compliance with legal requirements for extrajudicial private respondent and their four children; that defendant
foreclosure raised in the second case were but additional Lopez, after abandoning his family, maintained an illicit
grounds in support of the injunctive relief sought against relationship and cohabited with herein petitioner since
the foreclosure which was, in the first place, illegal on 1976.
account of the mortgage contract’s nullity. Evidently,
petitioner never relied solely on the alleged procedural It was further alleged that defendant Lopez and petitioner
irregularities in the extrajudicial foreclosure when it Relucio, during their period of cohabitation since 1976,
sought the reliefs in the second case. have amassed a fortune consisting mainly of
stockholdings in Lopez-owned or controlled corporations,
Lastly, Under Sec. 7, Rule 5 of the Rules of Court: The residential, agricultural, commercial lots, houses,
plaintiff is required under oath to certify, among others, apartments and buildings, cars and other motor vehicles,
his undertaking to report to the court the fact of filing of bank accounts and jewelry. In order to avoid defendant
a similar case, failing which shall be cause for the Lopez obligations as a father and husband, he excluded
dismissal of the case, to wit: “(c) if he should thereafter the private respondent and their four children from
learn that the same or similar action or claim has been sharing or benefiting from the conjugal properties and the
filed or is pending, he shall report that fact within five (5) income or fruits therefrom. He placed substantial portions
days therefrom to the court wherein his aforesaid of these conjugal properties in the name of petitioner
complaint or initiatory pleading has been filed. …non- Relucio.
compliance with any of the undertakings therein shall
constitute indirect contempt of court, without prejudice to On December 8, 1993, a Motion to Dismiss the Petition
the corresponding administrative and criminal actions. If was filed by herein petitioner on the ground that private
the acts of the party or his counsel clearly constitute respondent has no cause of action against her.
willful and deliberate forum shopping, the same shall be An Order dated February 10, 1994 was issued by the
ground for summary dismissal with prejudice and shall judge denying petitioner Relucio’s Motion to Dismiss on
constitute direct contempt, as well as a cause for the ground that she is impleaded as a necessary or
administrative sanctions.” indispensable party because some of the subject
The Court ruled that petitioner’s act of forum shopping properties are registered in her name and defendant
was deliberate and malicious considering that it Lopez, or solely in her name.
knowingly filed Civil Case No. 06-1032 despite the Issues:
pendency of Civil Case No. 03-045. This being the case,
the act of petitioner is punishable by and results in the (1) Whether respondents petition for appointment as sole
summary dismissal of the actions filed. Both Civil Case administratrix of the conjugal property, accounting, etc.

16
against her husband Alberto J. Lopez established a cause If petitioner is not a real party in interest, she cannot be an
of action against petitioner. indispensable party. An indispensable party is one
without whom there can be no final determination of an
(2) Whether petitioner’s inclusion as party defendant is
action. Petitioner’s participation in Special Proceeding is
essential in the proceedings for a complete adjudication
not indispensable.The trial court can issue a judgment
of the controversy
ordering Alberto J. Lopez to make an accounting of his
Ruling: conjugal partnership with respondent, and give support to
respondent and their children, and dissolve Alberto J.
(1) No, the complaint is by an aggrieved wife against her Lopez conjugal partnership with respondent, and forfeit
husband.Nowhere in the allegations does it appear that Alberto J. Lopez share in property co-owned by him and
relief is sought against petitioner. Respondent’s causes of petitioner. Such judgment would be perfectly valid and
action were all against her husband. enforceable only against Alberto J. Lopez.
The first cause of action is for judicial appointment of In the context of her petition in the lower court,
respondent as administratrix of the conjugal partnership respondent would be accorded complete relief if Alberto
or absolute community property arising from her J. Lopez were ordered to account for his alleged conjugal
marriage to Alberto J. Lopez. Petitioner is a complete partnership property with respondent, give support to
stranger to this cause of action. respondent and her children, turn over his share in the co-
Article 128 of the Family Code refers only to spouses. Art ownership with petitioner and dissolve his conjugal
128: “If a spouse without just cause abandons the other or partnership or absolute community property with
fails to comply with his or her obligations to the family, respondent. Petitioner is not a necessary party because her
the aggrieved spouse may petition the court for cause of action is against her husband, not the petitioner.
receivership, for judicial separation of property, or for
authority to be the sole administrator of the conjugal
partnership property xxx” JUANA COMPLEX I HOMEOWNERS ASSOC INC
VS FIL-ESTATE LAND INC
Respondent alleges that Alberto J. Lopez is her husband.
Therefore, her first cause of action is against Alberto J. Facts: Juana Complex I together with its individual
Lopez. There is no right-duty relation between petitioner residents and other neighboring subdivisions instituted a
and respondent that can possibly support a cause of complaint for damages as a class suit representing the
action. regular commuters and motorists of Juana Complex I
(Juana) and neighboring subdivisions who were deprived
The second cause of action is for an accounting by of the use of La Paz Road (Road) , against Fil-Estate (Fil-
respondent husband. The accounting of conjugal Estate). The complaint alleged that Juana et.al. were
partnership arises from or is an incident of marriage. regular commuters and motorists who constantly travelled
Petitioner has nothing to do with the marriage between Road for more than ten years until Fil-Estate excavated
respondent Alberto J. Lopez. Hence, no cause of action and permanently closed the Road.
can exist against petitioner on this ground.
Juana prayed for the immediate issuance of a Temporary
The third cause of action is essentially for forfeiture of Restraining Order (TRO) or a writ of preliminary
Alberto J. Lopez share in property co-owned by him and injunction (WPI) to enjoin Fil-Estate from stopping and
petitioner. It does not involve the issue of validity of the intimidating them in their use of the Roas. A TRO was
co-ownership between Alberto J. Lopez and petitioner. issued ordering Fil-Estate for 20 days to stop preventing
The issue is whether there is basis in law to forfeit Alberto or harassing Juana from using the Road. The Regional
J. Lopez share.Respondents asserted right to forfeit Trial Court (RTC) conducted several hearings to
extends to Alberto J. Lopez share alone, such cause of determine the propriety of the issuance of WPI. Fil-Estate
action, however, pertains to Alberto J. Lopez, not filed a Motion to Dismiss arguing that complaint failed to
petitioner.The respondent also sought support. Support state a cause of action and that it was improperly files as
cannot be compelled from a stranger. a class suit. RTC granted WPI thus Fil-Estate filed a
(2) No, petitioner would not be affected by any judgment Motion for Reconsideration. RTC then issued Omnibus
in Special Proceeding. Order denying both Motion to Dismiss and Motion for

17
Reconsideration file by Fil-Estate. Not satisfied, Fil- MISAMIS OCCIDENTAL II COOPERATIVE INC
Estate filed a petition foe certiorari and prohibit before the VS DAVID
Court of Appeals (CA) to annul the Order and Omnibus
Facts: Private respondent Virgilio S. David, a supplier of
Order issued by RTC contending that Juana failed to state
electrical hardware, filed a case for specific performance
a cause of action, improperly filed class suit and failed to
and damages against MOELCI II, a rural electric
show that Juana had a clear and unmistakable right to the
cooperative in Misamis Occidental. The case was
use of the Road since Road was a Torrens registered
essentially a collection suit, predicated on a document
private road and there was neither a voluntary nor legal
attached as Annex A to the Amended Complaint that
easement constituted over it. CA partially granted petition
according to David is the contract pursuant to which he
on the merit of the last contention. Hence, this petition for
sold to MOELCI II one unit of 10 MVA Transformer.
review
MOELCI II filed its Answer to Amended Complaint,
Issues:
affirmative defenses which constitutes grounds for
(1) Whether or not the complaint states a cause of action; dismissal. These grounds were lack of cause of action,
there being allegedly no enforceable contract between the
(2) Whether the complaint has been properly filed as a
parties under the Statute of Frauds and improper venue.
class suit;
MOELCI II in essence argued that the document attached
(3) Whether or not a WPI is warranted. as Annex A was only a quotation letter and not a contract
as alleged by David. Thus, it contends that David`s
Ruling: Amended Complaint is dismissible for failure to state a
(1) Yes, the complaint states a cause of action. Whether cause of action.
the complaint states a cause of action is determined by its David contended in the main that because a motion to
averments regarding the acts committed by the defendant. dismiss on the ground of failure to state a cause of action
Thus, contains a concise statement of the ultimate or is required to be based only on the allegations of the
essential facts constituting plaintiff’s cause of action. complaint, the “quotation letter”, being merely an
First, Juana’s averments show a demandable right over attachment to the complaint and not part of its allegations,
Road. Second, there is an alleged violation of such right cannot be inquired into.
by Fil-Estate when they excavated and prevented Juana
from using it. Third, Juana consequently suffered injury. MOELCI II filed a rejoinder to the opposition in which it
asserted that a complaint cannot be separated from its
(2) Yes, the complaint has been properly filed as a class annexes; hence the trial court in resolving a motion to
suit. The necessary elements of a class suit are present in dismiss on the ground of failure to state a cause of action
this case namely: common interest, numerous parties must consider the complaint`s annexes.
affected and sufficient number of parties bringing the
class suit. The suit is clearly one that benefits all The RTC, issued an order denying MOELCI II`s motion
commuters and motorists who use the Road. for preliminary hearing of affirmative defenses. The
Court of Appeals dismissed MOELCI II`s petition
(3) No, the WPI is not warranted. A WPI under Sec. 3, holding that the allegations in David`s complaint
Rule 58 is available to prevent a threatened or continuous constitutes a cause of action.
irremediable injury to parties before their claims can be
thoroughly studied and adjudicated. The requisites for its Petitioner is now before the Supreme Court seeking a
issuance are (1) existence of clear and unmistakable right review of the appelate court`s pronouncements, MOELCI
that must be protected and (2) an urgent and paramount II asserts that the Court of Appeals committed serious
necessity for the writ to prevent serious damage. Juana error in: 1) ruling that the resolution of its motion to
failed to establish a prima facie proof of violation of their dismiss on the ground for lack of cause of action
right to justify issuance of WPI. Their right to use the necessitated hearing by the trial court with the end in view
Road is disputable since Juana has no clear legal right of determining whether or not the document attached as
therein. Juana merely anchor their purported right over the Annex A to the Amended Complaint is a contract as
Road on the bare allegation that they use the Road for alleged in the body of the pleading; and 2) not ordering
more than ten yeas. A mere allegation does not meet the the trial court to dismiss the amended complaint on the
standard of proof that would warrant issuance of WPI. lack of cause of action.
18
Issue: Whether the Court of Appeals erred in dismissing embodied therein. Thus, the appendage of Annex A does
the petition for certiorari and in holding that the trial court not entirely serve to snuff out David`s claim.
did not commit grave abuse of discretion in denying
Finally, we do not agree with MOELCI II`s contention
petitioner`s Motion.
that the Court of Appeals sanctioned the trial court`s
Ruling: There is no error in the ruling of the Court of deferment of the resolution of MOELCI II`s Motion. The
Appeals. trial court squarely denied the Motion and not merely
deferred its resolution. Thus, there is no deferment to
Under the old Rules of Court a preliminary hearing
speak of that should be enjoined.
permitted under Section 5, Rule 16, is not a mandatory
even when the same is prayed for. It rests largely on the
sound dicretion of the court. Such interpretation is now
specifically expressed in the 1997 Rules of Civil JUANA COMPLEX I HOMEOWNERS ASSOC INC
Procedure. Section 6, Rule 16 provides that a grant of VS FIL-ESTATE LAND INC (see before Misamis)
preliminary hearing rests on the sound discretion of the
court.
BSP VS LEGASPI
Moreover, as MOELCI II`s Motion is anchored on the
ground that the Complaint allegedly stated no cause of Doctrines:
action, a preliminary hearing thereon is more than CIVIL PROCEDURE (Jurisdiction) –
unnecessary as it constitutes an erroneous and
improvident move. No error therefore could be ascribed Annexes to a complaint are deemed part of, and should
to the trial court in the denial of such Motion. be considered together with the complaint.

To determine the existence of a cause of action, ony the The Honorable Supreme Court has ruled that: “The non-
statements in the complaint may be properly considered. inclusion on the face of the complaint of the amount of
It is error for the court to take cognizance of external facts the property, however, is not fatal because attached in the
of hold preliminary hearing to determine their existence. complaint is a tax declaration of the property in question.”
If the allegations in a complaint furnish sufficient basis by
Facts:
which the complaint can be maintained, the same should
not be dismissed regardless of the defenses that may be BSP filed a Complaint for annulment of title, revocation
averred by the defendants. of certificate and damages (with application for TRO /
writ of preliminary injunction) against respondent. The
The test of sufficiency of facts alleged in the complaint as
RTC issued the preliminary injunction against
constituting a cause of action is whether or not admitting
respondent. In one of his defenses, Legaspi alleged that
the facts alleged, the court could render a valid verdict in
RTC failed to acquire jurisdiction over the action because
accordance with the prayer of said complaint.
the complaint, a real action, failed to allege the assessed
It has been hypothetically admitted that the parties had value of the subject property. BSP countered that a tax
entered into a contract sale, David bound himself to declaration showing the assessed value and latest zonal
supply petitioner 1 unit of MVA Power transformer plus value was annexed to the complaint.
69 KV Line Accessories; that despite written and verbal
Issues:
demands, petitioner has failed to pay the price thereof.
 Whether or not failure to allege the amount in the
Contrary to MOELCI II`s assertion, Annex A is not an
face of the complaint would tantamount to a lack
“undisguied quotation letter”. While Annex A is
of a cause of action;
captioned as such, the presence of the signatures of both
the General Manager and the Chairman of the Committee Held:
of Management immediately below the word
“CONFORME” appearing on the document`s last page  It depends. The Honorable Supreme Court stated
lends credulity to David`s contention that there was, or that:
might have been, a meeting of minds on the terms “The non-inclusion on the face of the complaint of the
amount of the property, however, is not fatal because
19
attached in the complaint is a tax declaration (Annex “N” parcels of land.GEC filed a complaint for specific
in the complaint) of the property in question showing that performance against LBP due to the latter’s refusal to
it has an assessed value of P215,320.00. It must be share the mortgaged properties with the consortium of
emphasized that annexes to a complaint are deemed part creditor banks.
of, and should be considered together with the
PNB demanded payment from GEC and when the latter
complaint (emphasis mine). In Fluor Daniel, Inc. –
discovered the former’s intent to foreclose the REM, it
Philippines vs. E.B. Villarosa and Partners Co.,
prayed that a (TRO) be issued to enjoin PNB from
Ltd., this Court ruled that in determining the sufficiency
foreclosing on the properties of GPHI and judgment be
of a cause of action, the courts should also consider the
issued declaring that the real estate mortgage involving
attachments to the complaint, thus:
the properties of GPHI and executed in favor of PNB is
We have ruled that a complaint should not be dismissed null and void. GPHI contended that the understanding
for insufficiency of cause of action if it appears clearly between GEC and PNB is that the GPHI properties would
from the complaint and its attachmentsthat the plaintiff stand merely as a temporary security pending the outcome
is entitled to relief. The converse is also true. The of case filed by GEC against LBP.
complaint may be dismissed for lack of cause of action
Since no TRO was issued by the Court, PNB was able to
if it is obvious from the complaint and its annexes that
foreclosed the mortgaged properties.
the plaintiff is not entitled to any relief” (emphasis
mine). Thereafter, GPHI filed a Petition for Annulment of
Foreclosure of Mortgage. GPHI argued that, in
conducting the foreclosure proceedings, the sheriff failed
GOODLAND COMPANY INC VS ASIA UNITED to observe the requirement of Section 4 of Act No. 3135
BANK (see before Relucio) that the sale shall be made at public auction.
RTC dismissed the case and ruled that both the civil cases
involved the same parties, substantially identical causes
PNB VS GATEWAY PROPERTY HOLDINGS INC of action and reliefs prayed for, the reliefs being founded
Facts: Respondent GPHI was a subsidiary company of on the same facts. Where a single cause of action has been
Gateway Electronics Company (GEC). GEC obtained split and pursuant to Rule 16, Section 1(e) of the 1997
long term loans from the Land Bank of the Philippines Rules on Civil Procedure, the Motion to Dismiss filed by
(LBP) in the amount of P600 million and the loans were PNB, on the ground that there is another action pending
secured by mortgages executed by GEC over its between the same parties for the same cause, or litis
properties.LBP invited other banks to lend money to pendentia is proper.
GEC. It is alleged that LBP agreed to submit the
On appeal, the CA set aside the decision of the RTC and
mortgaged properties to it by GEC as part of the latters
ruled that the third requisite of litis pendentia (the identity
assets that will be covered by a Mortgage Trust Indenture
in the two cases should be such that the judgment that may
(MTI), ensuring that all participating banks in the loan
be rendered in one would, regardless of which party is
syndicate will have equal security position. LBP and a
successful, amount to res adjudicata to the other) is not
consortium of banks entered into a Memorandum of
present
Understanding (MOU), whereby LBP agreed to release
the mortgaged properties to the consortium of banks on Issue: Whether or not the requisites of litis pendentia exist
the basis of an MTI. The participating banks released to warrant the dismissal of Civil Case for Annulment of
funds in favor of GEC. Petitioner PNB became part of this the Foreclosure Sale.
consortium of creditor banks.
Ruling: Yes. All the requisites of litis pendentia exist.
GEC then requested PNB to convert its long-term loans
There is litis pendentia if the following requisites are
into a Convertible Omnibus Credit Line due to its
present: (a) identity of parties, or at least such parties as
difficulty in paying its obligation. PNB approved such a
represent the same interests in both actions; (b) identity of
conversion subject to certain conditions- GPHI was made
rights asserted and relief prayed for, the relief being
a co-borrower in the agreement and was obligated to
founded on the same facts; and (c) the identity of the two
execute in favor of PNB a real estate mortgage over two
preceding particulars is such that any judgment rendered
20
in the other action, will, regardless of which party is Plaintiff filed a claim for damages in the amount of
successful, amount to res judicata in the action under P1,723.12 against the American President Lines, agents
consideration. of the ship, demanding settlement, and when no action
was taken on this claim, plaintiff demanded payment
As to the first requisite, GPHI is the plaintiff in both civil
thereof from Warner, Barnes and Co., Ltd., as agent of the
cases while PNB is the party against whom GPHI is
insurance company in the Philippines, and this agent
asserting a claim.
having refused to pay the claim, plaintiff instituted the
As to the second requisite, allegations in Civil for present action.
Annulment of the Real Estate Mortgage and Annulment
After trial, at which both parties presented their respective
of the Foreclosure Sale reveal that the said cases invoke
evidence, the court rendered judgment against Jovito
the same fundamental issue which is the temporary nature
Salonga. The motion for reconsideration filed by the
of the security that was to be provided by the mortgaged
defendant having been denied, the case was appealed to
properties of GPHI.
this court.
As to the third requisite, While the appeal of the dismissal
Issue: Whether or not the trial court erred in holding that
of Annulment of the Foreclosure Sale was still pending
defendant, as agent of Westchester Fire Insurance
with the Court of Appeals, GPHI filed on a Motion for
Company of New York, United States of America, is
Leave to Amend Complaint to Conform to the Evidence
responsible upon the insurance claim subject to the suit.
in Civil Case Annulment of the Real Estate Mortgage.
GPHI stated therein that after the parties presented their Ruling: Yes.
evidence, the fact of foreclosure and the acquisition of the
1. Defendant has no contractual relation with either
mortgaged properties by PNB were duly established. In
plaintiff or his consignor
the accompanying Amended Complaint in Annulment of
the Real Estate Mortgage, GPHI prayed, for the It is a well known rule that a contractual obligation or
declaration of the nullity of the foreclosure and auction liability, or an action ex-contractu, must be founded upon
sale of the mortgaged properties. As a consequence of a contract, oral or written, either express or implied. This
such an action, the two cases that GPHI filed before the is axiomatic. If there is no contract, there is no
court a quo henceforth contained an identity of rights corresponding liability, and no cause of action may arise
asserted and reliefs prayed for, the relief being founded therefrom. This is what is provided for in article 1257 of
on the same factual allegations. the Civil Code. This article provides that contracts are
binding upon the parties who make them and their heirs,
excepting, with respect to the latter, where the rights and
SALONGA VS WARNER BARNES & CO obligations are not transmissible, and when the contract
contains a stipulation in favor of a third person, he may
Facts: Westchester Fire Insurance Company of New
demand its fulfillment if he gives notice of his acceptance
York entered into a contract with Tina J. Gamboa
before it is revoked.
whereby said company insured one case of rayon yardage
which said Tina J. Gamboa shipped from San Francisco, Warner, Barnes and Co., as principal or agent, did not
California to Manila, Philippines and consigned to Jovito make any contract, either oral or written, with the
Salonga, plaintiff herein. According to the contract of plaintiff. The contracts were made between the respective
insurance, the insurance company undertook to pay to the insurance companies and the insured, and were made by
sender or her consignee the damages that may be caused the insurance companies, through Warner, Barnes and
to the goods shipped subject to the condition that the Co., as their agent.
liability of the company will be limited to the actual loss
The defendant has not taken part, directly or indirectly, in
which the insured may suffer not to the exceed the sum of
the contract in question. The evidence shows that the
P2,000. The ship arrived in Manila, and the shipment was
defendant did not enter into any contract either with the
later on examined by C. B. Nelson and Co., marine
plaintiff or his consignor — Tina J. Gamboa
surveyors, at the request of the plaintiff, and in their
examination the surveyors found a shortage in the The contract of marine insurance was made and executed
shipment in the amount of P1,723,12. only by and between the Westchester Fire Insurance
Company of New York and Tina J. Gamboa. The contract
21
was entered in New York. There is nothing therein which instant case, the agent does not assume any personal
may affect, in favor or adversely, the defendant, the liability. The recourse of the insured is to press his claim
fulfillment of which may be demanded by or against it. against the principal.
That contract is purely bilateral, binding only upon
An insurance adjuster is ordinarily a special agent for the
Gamboa and the insurance company. When the lower
person or company for whom he acts, and his authority is
court, therefore, imposed upon the defendant an
prima facie coextensive with the business intrusted to
obligation which it has never assumed, either expressly or
him. . .
impliedly, or when it extended to the defendant the effects
of a contract which was entered into exclusively by and An adjuster does not discharge functions of a quasi-
between the Westchester Fire Insurance Company of New judicial nature, but represents his employer, to whom he
York and Tina J. Gamboa, the error it has committed is owes faithful service, and for his acts, in the employer's
evident. This is contrary to law. interest, the employer is responsible so long as the acts are
done while the agent is acting within the scope of his
employment.
2. Defendant is not a real party in interest in this case
4. A judgment for or against an agent in no way binds the
NO. Section 2, Rule 3 of the Rules of Court requires that real party in interest.
"every action must be prosecuted in the name of the real
If the party sued upon is not the proper party, any decision
party in interest." In the case at bar, the defendant issued
that may be rendered against him would be futile, for it
upon in its capacity as agent of Westchester Fire
cannot be enforced or executed. The effort that may be
Insurance Company of New York in spite of the fact that
employed will be wasted. Such would be the result of this
the insurance contract has not been signed by it. As
case if it will be allowed to proceed against the defendant,
aforementioned, the defendant did not assume any
for even if a favorable judgment is obtained against it, it
obligation thereunder either as agent or as a principal. It
cannot be enforced because the real party is not involved.
cannot, therefore, be made liable under said contract, and
The defendant cannot be made to pay for something it is
hence it can be said that this case was filed against one
not responsible.
who is not the real party in interest.
The court stated that the correct remedy would be for the
The court further held that the action should have been
Plaintiff to bring the principal into this case or make it
filed against its principal, the Westchester Fire Insurance
come under the courts in this jurisdiction in accordance
Company of New York.
with the procedure indicated in section 14, Rule 7, of the
3. Defendant is a settlement and adjustment agent of the Rules of Court concerning litigations involving foreign
foreign insurance company (agency). corporations. This rule says that if the defendant is a
foreign corporation and it has not designated an agent in
As such agent it has the authority to settle all the losses
the Philippines on whom service may be made in case of
and claims that may arise under the policies that may be
litigation, such service may be made on any agent it may
issued by or in behalf of said company in accordance with
have in the Philippines.
the instructions it may receive from time to time from its
principal. The Westchester Fire Insurance Company of new York
comes within the import of this rule for even if it has not
An adjustment and settlement agent is no different from
designated an agent as required by law, it has however a
any other agent from the point of view of his
settling agent who may serve the purpose. In other words,
responsibility, for he also acts in a representative capacity.
an action may be brought against said insurance company
Whenever he adjusts or settles a claim, he does it in behalf
in the Philippines and the process may be served on the
of his principal, and his action is binding not upon himself
defendant to give our courts the necessary jurisdiction.
but upon his principal, and the scope and extent of the
functions of an adjustment and settlement agent do not
include personal liability. His functions are merely to
settle and adjust claims in behalf of his principal if those
claims are proven and undisputed, and if the claim is
disputed or is disapproved by the principal, like in the

22
FORTICH VS CORONA reconsideration for having been filed beyond the
reglementary period of fifteen (15) days. The said order
This case involves a land located at San Vicente, Sumilao,
further declared that the March 29, 1996 OP decision had
Bukidnon, owned by the Norberto Quisumbing, Sr.
already become final and executory.
Management and Development Corporation
(NQSRMDC), one of the petitioners. The property is
On December 12, 1997, a Motion For Leave To
covered by a Transfer Certificate of Title No. 14371 of
Intervene was filed by alleged farmer-beneficiaries,
the Registry of Deeds of the Province of Bukidnon.
through counsel, claiming that they are real parties in
interest as they were previously identified by respondent
In 1984, the land was leased as a pineapple plantation to
DAR as agrarian reform beneficiaries on the 144-hectare
the Philippine Packing Corporation, now Del Monte
property subject of this case. The motion was vehemently
Philippines, Inc. (DMPI), a multinational corporation, for
opposed by the petitioners.
a period of ten (10) years under the Crop Producer and
Growers Agreement duly annotated in the certificate of
In seeking the nullification of the Win-Win Resolution,
title. The lease expired in April, 1994.
the petitioners claim that the Office of the President was
prompted to issue the said resolution after a very well-
In October, 1991, during the existence of the lease, the
managed hunger strike led by fake farmer-beneficiary
Department of Agrarian Reform (DAR) placed the entire
Linda Ligmon succeeded in pressuring and/or politically
144-hectare property under compulsory acquisition and
blackmailing the Office of the President to come up with
assessed the land value at P2.38 million.
this purely political decision to appease the farmers, by
reviving and modifying the Decision of 29 March
When NQSRMDC was about to transfer the title over the
1996 which has been declared final and executory in
4-hectare donated to DECS, it discovered that the title
an Order of 23 June 1997. Thus, petitioners further
over the subject property was no longer in its name. It
allege, respondent then Deputy Executive Secretary
soon found out that during the pendency of both the
Renato C. Corona committed grave abuse of discretion
Petition for Certiorari, Prohibition, with Preliminary
and acted beyond his jurisdiction when he issued the
Injunction it filed against DAR in the Court of Appeals
questioned Resolution of 7 November 1997. They availed
and the appeal to the President filed by Governor Carlos
of this extraordinary writ of certiorari because there is no
O. Fortich, the DAR, without giving just compensation,
other plain, speedy and adequate remedy in the ordinary
caused the cancellation of NQSRMDCs title on August
course of law. They never filed a motion for
11, 1995 and had it transferred in the name of the
reconsideration of the subject Resolution because (it) is
Republic of the Philippines under TCT No. T-50264 of
patently illegal or contrary to law and it would be a futile
the Registry of Deeds of Bukidnon. Thereafter, on
exercise to seek reconsideration.
September 25, 1995, DAR caused the issuance of
Certificates of Land Ownership Award (CLOA) No.
Issue:
00240227 and had it registered in the name of 137 farmer-
beneficiaries under TCT No. AT-3536 of the Registry of
1) Whether or not the proper remedy of petitioners should
Deeds of Bukidnon.
have been to file a petition for review directly with the
Court of Appeals in accordance with Rule 43 of the
NQSRMDC filed a complaint with the Regional Trial
Revised Rules of Court;
Court (RTC) of Malaybalay, Bukidnon docketed as Civil
Case No. 2687-97, for annulment and cancellation of title,
(2) Whether or not the petitioners failed to file a motion
damages and injunction against DAR and 141 others. The
for reconsideration of the assailed Win-Win Resolution
RTC then issued a Temporary Restraining Order and a
before filing the present petition; and
Writ of Preliminary Injunction on May 19,
1997, restraining the DAR and 141 others from entering,
(3) Whether or not Petitioner NQSRMDC is guilty of
occupying and/or wresting from NQSRMDC the
forum-shopping.
possession of the subject land.

Meanwhile, an Order was issued by then Executive


Secretary Ruben D. Torres denying DARs motion for
23
Held: certainty and praying that judgment be rendered annulling
or modifying the proceedings of such tribunal, board or
1. In order to determine whether the recourse of officer, and granting such incidental reliefs as law and
petitioners is proper or not, it is necessary to draw a line justice may require.
between an error of judgment and an error of jurisdiction.
The office of a writ of certiorari is restricted to truly
An error of judgment is one which the court may extraordinary cases in which the act of the lower court or
commit in the exercise of its jurisdiction, and which error quasi-judicial body is wholly void.
is reviewable only by an appeal. On the other hand,
an error of jurisdiction is one where the act complained The aforequoted Section 1 of Rule 65 mandates that the
of was issued by the court, officer or a quasi-judicial person aggrieved by the assailed illegal act may file a
body without or in excess of jurisdiction, or with grave verified petition (for certiorari) in the proper court. The
abuse of discretion which is tantamount to lack or in proper court where the petition must be filed is stated in
excess of jurisdiction. This error is correctable only by the Section 4 of the same Rule 65 which reads:
extraordinary writ of certiorari.
SEC. 4. Where petition filed.- The petition may be filed
It is true that under Rule 43, appeals from awards, not later than sixty (60) days from notice of the judgment,
judgments, final orders or resolutions of any quasi- order or resolution sought to be assailed in the Supreme
judicial agency exercising quasi-judicial Court or, if it relates to the acts or omissions of a lower
functions, including the Office of the President, may be court or of a corporation, board, officer or person, in the
taken to the Court of Appeals by filing a verified petition Regional Trial Court exercising jurisdiction over the
for review within fifteen (15) days from notice of the said territorial area as defined by the Supreme Court. It may
judgment, final order or resolution, whether the appeal also be filed in the Court of Appeals whether or not the
involves questions of fact, of law, or mixed questions of same is in aid of its appellate jurisdiction, or in the
fact and law. Sandiganbayan if it is in aid of its jurisdiction. If it
involves the acts or omissions of a quasi-judicial agency,
However, in this particular case, the remedy prescribed in and unless otherwise provided by law or these Rules, the
Rule 43 is inapplicable considering that the present petition shall be filed in and cognizable only by the Court
petition contains an allegation that the challenged of Appeals.
resolution is patently illegal and was issued with grave
abuse of discretion and beyond his (respondent Secretary Under the above-quoted Section 4, the Supreme Court,
Renato C. Coronas) jurisdiction when said resolution Court of Appeals and Regional Trial Court have original
substantially modified the earlier OP Decision of March concurrent jurisdiction to issue a writ of
29, 1996 which had long become final and executory. In certiorari, prohibition and mandamus. But the
other words, the crucial issue raised here involves an error jurisdiction of these three (3) courts are also delineated in
of jurisdiction, not an error of judgment which is that, if the challenged act relates to acts or omissions of a
reviewable by an appeal under Rule 43. Thus, the lower court or of a corporation, board, officer or person,
appropriate remedy to annul and set aside the assailed the petition must be filed with the Regional Trial Court
resolution is an original special civil action for certiorari which exercises jurisdiction over the territorial area as
under Rule 65, as what the petitioners have correctly defined by the Supreme Court. And if it involves the act
done. The pertinent portion of Section 1 thereof provides: or omission of a quasi-judicial agency, the petition shall
be filed only with the Court of Appeals, unless otherwise
SECTION 1. Petition for certiorari. When any tribunal, provided by law or the Rules of Court. We have clearly
board or officer exercising judicial or quasi-judicial discussed this matter of concurrence of jurisdiction
functions has acted without or in excess of its or his in People vs. Cuaresma, et. al., through now Chief
jurisdiction, or with grave abuse of discretion amounting Justice Andres R. Narvasa, thus:
to lack or excess of jurisdiction, and there is no appeal, or
any plain, speedy, and adequate remedy in the ordinary This Courts original jurisdiction to issue writs
course of law, a person aggrieved thereby may file a of certiorari (as well as prohibition, mandamus, quo
verified petition in the proper court, alleging the facts with warranto, habeas corpus and injunction) is not

24
exclusive. It is shared by this Court with Regional Trial When the Office of the President issued the Order dated
Courts , which may issue the writ, enforceable in any part June 23,1997 declaring the Decision of March 29, 1996
of their respective regions. It is also shared by this Court, final and executory, as no one has seasonably filed a
and by the Regional Trial Court, with the Court of motion for reconsideration thereto, the said Office had
Appeals, although prior to the effectivity of Batas lost its jurisdiction to re-open the case, more so modify its
Pambansa Bilang 129, the latters competence to issue the Decision. Having lost its jurisdiction, the Office of the
extraordinary writs was restricted to those in aid of its President has no more authority to entertain
appellate jurisdiction. This concurrence of jurisdiction is the second motion for reconsideration filed by
not, however, to be taken as according to parties seeking respondent DAR Secretary, which second motion became
any of the writs an absolute, unrestrained freedom of the basis of the assailed Win-Win Resolution. Section 7
choice of the court to which application therefor will be of Administrative Order No. 18 and Section 4, Rule 43 of
directed. the Revised Rules of Court mandate that only one (1)
motion for reconsideration is allowed to be taken from the
But the Supreme Court has the full discretionary power to Decision of March 29, 1996. And even if a second motion
take cognizance of the petition filed directly to it if for reconsideration was permitted to be filed in
compelling reasons, or the nature and importance of the exceptionally meritorious cases, as provided in the second
issues rose, warrant. This has been the judicial policy to paragraph of Section 7 of AO 18, still the said motion
be observed. should not have been entertained considering that the first
motion for reconsideration was not seasonably filed,
Pursuant to said judicial policy, we resolve to take thereby allowing the Decision of March 29, 1996 to lapse
primary jurisdiction over the present petition in the into finality. Thus, the act of the Office of the President in
interest of speedy justice and to avoid future litigations so re-opening the case and substantially modifying its March
as to promptly put an end to the present controversy 29,1996 Decision which had already become final and
which, as correctly observed by petitioners, has sparked executory, was in gross disregard of the rules and basic
national interest because of the magnitude of the problem legal precept that accord finality to administrative
created by the issuance of the assailed determinations.
resolution. Moreover, as will be discussed later, we find
the assailed resolution wholly void and requiring the In San Luis, et al. vs. Court of Appeals, et al. we held:
petitioners to file their petition first with the Court of
Appeals would only result in a waste of time and money. Since the decisions of both the Civil Service Commission
and the Office of the President had long become final and
2. The rules and regulations governing appeals to the executory, the same can no longer be reviewed by the
Office of the President of the Philippines are embodied in courts. It is well-established in our jurisprudence that the
Administrative Order No. 18. Section 7 thereof provides: decisions and orders of administrative agencies, rendered
pursuant to their quasi-judicial authority, have upon their
SEC. 7. Decisions/resolutions/orders of the Office of the finality, the force and binding effect of a final judgment
President shall, except as otherwise provided for by within the purview of the doctrine of res judicata The rule
special laws, become final after the lapse of fifteen (15) of res judicata which forbids the reopening of a matter
days from receipt of a copy thereof by the once judicially determined by competent authority applies
parties, unless a motion for reconsideration thereof is as well to the judicial and quasi-judicial acts of public,
filed within such period. executive or administrative officers and boards acting
within their jurisdiction as to the judgments of courts
Only one motion for reconsideration by any one party having general judicial powers.
shall be allowed and entertained, save in exceptionally
meritorious cases. The orderly administration of justice requires that the
judgments/resolutions of a court or quasi-judicial body
It is further provided for in Section 9 that The Rules of must reach a point of finality set by the law, rules and
Court shall apply in a suppletory character whenever regulations. The noble purpose is to write finis to disputes
practicable. once and for all. This is a fundamental principle in our
justice system, without which there would be no end to

25
litigations. Utmost respect and adherence to this principle damages, was based on the following grounds: (1) the
must always be maintained by those who wield the power DAR, in applying for cancellation of petitioner
of adjudication. Any act which violates such principle NQSRMDCs title, used documents which were earlier
must immediately be struck down. declared null and void by the DARAB; (2) the
cancellation of NQSRMDCs title was made without
3. There is forum-shopping whenever, as a result of an payment of just compensation; and (3) without notice to
adverse opinion in one forum, a party seeks a favorable NQSRMDC for the surrender of its title. The present
opinion (other than by appeal or certiorari) in petition is entirely different from the said two cases as it
another. The principle applies not only with respect to seeks the nullification of the assailed Win-Win
suits filed in the courts but also in connection with Resolution of the Office of the President dated November
litigation commenced in the courts while an 7, 1997, which resolution was issued long after the
administrative proceeding is pending, as in this case, in previous two cases were instituted.
order to defeat administrative processes and in
anticipation of an unfavorable administrative ruling and a
favorable court ruling. This specially so, as in this case, SAMANIEGO VS AGUILA
where the court in which the second suit was brought, has
no jurisdiction. Facts: Petitioners are tenants in a landholding owned by
respondents’ mother with an aggregate area of 10.4496
The test for determining whether a party violated the rule hectares in Patul, Santiago, Isabela.The subject land was
against forum shopping has been laid down in the 1986 identified by the DAR-Region 2 as covered by the
case of Buan vs. Lopez and that is, forum shopping Operation Land Transfer Program of the government.
exists where the elements of litis pendentia are present After sometime, respondent’s mother on their behalf filed
or where a final judgment in one case will amount a petition for exemption from the coverage of PD 27
to res judicata in the other, as follows: (Land Reform Program). Thus, petitioners opposed the
application for respondents’ mother transferred the title of
There thus exists between the action before this Court and the lands to respondents in violation of the rules and
RTC Case No. 86-36563 identity of parties, or at least regulations of the DAR.
such parties as represent the same interests in both The Regional Director granted the application for
actions, as well as identity of rights asserted and relief exemption. The decision was affirmed on appeal to the
prayed for, the relief being founded on the same facts, DAR, which was reversed by the same on motion of the
and the identity on the two preceding particulars is such petitioners. Thus, DAR denied the application for
that any judgment rendered in the other action, will, exemption and declared petitioners as rightful farmer-
regardless of which party is successful, amount to res beneficiaries of the land.Respondents appealed to the
adjudicata in the action under consideration: all the Office of the President which set aside the decision of the
requisites, in fine, of auter action pendant. DAR and reinstated DAR’s prior decision.

It is clear from the above-quoted rule that the petitioners On appeal in the CA, the petition was dismissed for failure
are not guilty of forum shopping. The test for determining to implead the Office of the President (OP) as an
whether a party has violated the rule against forum indispensable party (as the one whose decision and
shopping is where a final judgment in one case will resolution is being questioned). Joinder of indispensable
amount to res adjudicata in the action under parties is mandatory. Failure to implead the OP was fatal
consideration. A cursory examination of the cases filed by and the petition must be dismissed.
the petitioners does not show that the said cases are
Issue: Whether or not the OP was an indispensable party
similar with each other. The petition for certiorari in the
and had to be impleaded.
Court of Appeals sought the nullification of the DAR
Secretarys order to proceed with the compulsory Ruling: No. At the time the petitioners brought the case
acquisition and distribution of the subject property. On to the CA, the rule on appeals to the said court from quasi-
the other hand, the civil case in RTC of Malaybalay, judicial agencies was that, “petition for review shall (a)
Bukidnon for the annulment and cancellation of title state the full names of the parties, without impleading the
issued in the name of the Republic of the Philippines, with court or agencies either as petitioners or respondents.”

26
Also, the CA was not an indispensable party or a party in CA held that the complaint should have been filed in
interest without whom no final determination can be had Bacolod City instead. Petitioners moved to reconsider but
of an action without being impleaded. Indispensable were denied by the CA
parties are those with such an interest in the matter that a
Issue: Did the CA commit an error of law when it ruled
final decree would necessarily affect their rights and the
that the complaint must be dismissed on the ground of
court cannot proceed without their presence.
improper venue?
The word “interest” in this rule should be material,
Ruling: No, the CA did not commit an error of law.
directly in issue and to be affected by the decree, as
distinguished from a mere incidental interest in the While the fixing of the venue in personal actions may be
question involved, as opposed to a nominal or pro forma done for the convenience of the plaintiffs and their
party who is joined as a plaintiff or defendant, not because witnesses, the choice is not left to the caprice of the
such party has any real interest in the subject matter or plaintiff. The Rules of court still regulate the fixing of the
because any relief is demanded, but merely because the venue for filing a personal action.
technical rules of pleadings require the presence of such
party on the record. Thus, the OP not having any interest The collection of a sum of money is a personal action in
in the case except to entertain appeals from the DAR, is order to enforce a contract. The Rules of Court give the
not an indispensable party.CA was ordered to decide on plaintiff the choice where to file the action; whether in the
the matter place where the plaintiff resides or in the place where the
defendant resides. However, the plaintiffs in this case do
not reside in the Philippines. Philippine Courts do not
have jurisdiction over persons residing abroad. Hence, the
THEODORE AND NANCY ANG VS SPS ALAN
only choice left for venue was the residence of the
AND EM ANG
defendant.
Facts: Spouses Alan and Em Ang, the respondents,
Atty. Aceron, the attorney-in-fact of the petitioners is not
obtained a loan worth $300,000 from Theodore and
a real party in interest for the court to consider his
Nancy Ang, the petitioners. When the loan became
residence as a basis for setting the venue. He is only a
demandable, respondent spouses executed a Promissory
representative of the petitioners, and under Rule 3, sec. 3
Note promising to pay the loan and 10% annual interest
of the Rules of Court “the beneficiary shall be included in
on demand. Petitioners made several demands but
the title of the case and shall be deemed to be the real party
respondents failed to pay, their obligation amounting to
in interest”. Atty. Aceron did not subrogate petitioners as
$719, 627.21 inclusive of the 10% interest. Theodore and
real parties in interest, he merely represents them. The real
Nancy Ang, the petitioners, were residing in Los Angeles,
party in interest still remains Theodore Ang and Nancy
California. They executed a Special Power of Attorney in
Ang; Atty. Aceron cannot replace their residence with that
favor of one Atty. Eldrige Marvin Aceron in order for him
of his own for purposes of setting the venue. The rules of
to file an action against the respondent spouses. Atty.
venue are designed to facilitate the just and orderly
Aceron filed a complaint for the collection of a sum of
administration of justice. This objective will be frustrated
money with the RTC of Quezon City, his residence. The
if the plaintiffs are given unbridled freedom to choose the
respondent spouses moved to dismiss, on the ground of
venue, as they may have ulterior motives for filing the
improper venue. They contend that the complaint against
complaint in a specific court of their choosing.
them may be filed in the where either the petitioners or
respondents reside. Respondent spouses reside in Bacolod
City. The RTC denied the motion to dismiss, ruling that
Atty. Aceron as the attorneyin-fact may use his residence MOST REVEREND PEDRO ARIGO VS SWIFT
as basis for the venue of the action. Respondents filed a FACTS:
petition for certiorari with the CA based on their earlier
ground and on the ground that Atty. Aceron, a mere The USS Guardian is an Avenger-class mine
attorney-in-fact, is not the real party in interest; that his countermeasures ship of the US Navy. In December 2012,
residence should not be considered in determining the the US Embassy in the Philippines requested diplomatic
proper venue for the complaint. The CA reversed the RTC clearance for the said vessel “to enter and exit the
and dismissed the complaint filed by the petitioners. The territorial waters of the Philippines and to arrive at the
27
port of Subic Bay for the purpose of routine ship In the landmark case of Oposa v. Factoran, Jr.,
replenishment, maintenance, and crew liberty.” On we recognized the “public right” of citizens to “a balanced
January 6, 2013, the ship left Sasebo, Japan for Subic Bay, and healthful ecology which, for the first time in our
arriving on January 13, 2013 after a brief stop for fuel in constitutional history, is solemnly incorporated in the
Okinawa, Japan. fundamental law.” We declared that the right to a
balanced and healthful ecology need not be written in the
On January 15, 2013, the USS Guardian
Constitution for it is assumed, like other civil and polittcal
departed Subic Bay for its next port of call in Makassar,
rights guaranteed in the Bill of Rights, to exist from the
Indonesia. On January 17, 2013 at 2:20 a.m. while
inception of mankind and it is an issue of transcendental
transiting the Sulu Sea, the ship ran aground on the
importance with intergenerational implications. Such
northwest side of South Shoal of the Tubbataha Reefs,
right carries with it the correlative duty to refrain from
about 80 miles east-southeast of Palawan. No one was
impairing the environment.
injured in the incident, and there have been no reports of
leaking fuel or oil. On the novel element in the class suit filed by
the petitioners minors in Oposa, this Court ruled that not
Petitioners claim that the grounding, salvaging
only do ordinary citizens have legal standing to sue for
and post-salvaging operations of the USS Guardian cause
the enforcement of environmental rights, they can do so
and continue to cause environmental damage of such
in representation of their own and future generations.
magnitude as to affect the provinces of Palawan, Antique,
Aklan, Guimaras, Iloilo, Negros Occidental, Negros Second issue: YES.
Oriental, Zamboanga del Norte, Basilan, Sulu, and Tawi-
The US respondents were sued in their official
Tawi, which events violate their constitutional rights to a
capacity as commanding officers of the US Navy who had
balanced and healthful ecology.
control and supervision over the USS Guardian and its
ISSUES: crew. The alleged act or omission resulting in the
unfortunate grounding of the USS Guardian on the TRNP
1. Whether or not petitioners have legal standing.
was committed while they were performing official
2. Whether or not US respondents may be held military duties. Considering that the satisfaction of a
liable for damages caused by USS Guardian. judgment against said officials will require remedial
actions and appropriation of funds by the US government,
3. Whether or not the waiver of immunity from suit the suit is deemed to be one against the US itself. The
under VFA applies in this case. principle of State immunity therefore bars the exercise of
jurisdiction by this Court over the persons of respondents
Swift, Rice and Robling.
HELD:
During the deliberations, Senior Associate
First issue: YES. Justice Antonio T. Carpio took the position that the
conduct of the US in this case, when its warship entered a
Petitioners have legal standing
restricted area in violation of R.A. No. 10067 and caused
Locus standi is “a right of appearance in a court damage to the TRNP reef system, brings the matter within
of justice on a given question.” Specifically, it is “a the ambit of Article 31 of the United Nations Convention
party’s personal and substantial interest in a case where on the Law of the Sea (UNCLOS). He explained that
he has sustained or will sustain direct injury as a result” while historically, warships enjoy sovereign immunity
of the act being challenged, and “calls for more than just from suit as extensions of their flag State, Art. 31 of
a generalized grievance.” However, the rule on standing the UNCLOS creates an exception to this rule in cases
is a procedural matter which this Court has relaxed for where they fail to comply with the rules and
non-traditional plaintiffs like ordinary citizens, taxpayers regulations of the coastal State regarding passage
and legislators when the public interest so requires, such through the latter’s internal waters and the territorial
as when the subject matter of the controversy is of sea.
transcendental importance, of overreaching significance
to society, or of paramount public interest.

28
In the case of warships, as pointed out by The Court also fully concurred with Justice Carpio’s view
Justice Carpio, they continue to enjoy sovereign that non-membership in the UNCLOS does not mean that
immunity subject to the following exceptions: the US will disregard the rights of the Philippines as a
Coastal State over its internal waters and territorial sea.
Article 30: Non-compliance by warships with the laws
We thus expect the US to bear “international
and regulations of the coastal State
responsibility” under Art. 31 in connection with the USS
If any warship does not comply with the laws and Guardian grounding which adversely affected the
regulations of the coastal State concerning passage Tubbataha reefs. Indeed, it is difficult to imagine that our
through the territorial sea and disregards any request for long-time ally and trading partner, which has been
compliance therewith which is made to it, the coastal actively supporting the country’s efforts to preserve our
State may require it to leave the territorial sea vital marine resources, would shirk from its obligation to
immediately. compensate the damage caused by its warship while
transiting our internal waters. Much less can we
Article 31: Responsibility of the flag State for damage comprehend a Government exercising leadership in
caused by a warship or other government ship operated international affairs, unwilling to comply with the
for non-commercial purposes UNCLOS directive for all nations to cooperate in the
The flag State shall bear international responsibility for global task to protect and preserve the marine
any loss or damage to the coastal State resulting from the environment as provided in Article 197 of UNCLOS
non-compliance by a warship or other government ship Article 197: Cooperation on a global or regional basis
operated for non-commercial purposes with the laws and
regulations of the coastal State concerning passage States shall cooperate on a global basis and, as
through the territorial sea or with the provisions of this appropriate, on a regional basis, directly or through
Convention or other rules of international law. competent international organizations, in formulating and
elaborating international rules, standards and
Article 32: Immunities of warships and other government recommended practices and procedures consistent with
ships operated for non-commercial purposes this Convention, for the protection and preservation of the
With such exceptions as are contained in marine environment, taking into account characteristic
subsection A and in articles 30 and 31, nothing in this regional features.
Convention affects the immunities of warships and other In fine, the relevance of UNCLOS provisions to the
government ships operated for non-commercial present controversy is beyond dispute. Although the
purposes. A foreign warship’s unauthorized entry into said treaty upholds the immunity of warships from the
our internal waters with resulting damage to marine jurisdiction of Coastal States while navigating the
resources is one situation in which the above latter’s territorial sea, the flag States shall be required
provisions may apply. to leave the territorial sea immediately if they flout the
But what if the offending warship is a non-party to the laws and regulations of the Coastal State, and they will
UNCLOS, as in this case, the US? be liable for damages caused by their warships or any
other government vessel operated for non-commercial
According to Justice Carpio, although the US to date has purposes under Article 31.
not ratified the UNCLOS, as a matter of long-standing
policy the US considers itself bound by customary Third issue: NO.
international rules on the “traditional uses of the oceans” The waiver of State immunity under the VF A
as codified in UNCLOS. pertains only to criminal jurisdiction and not to special
Moreover, Justice Carpio emphasizes that “the US refusal civil actions such as the present petition for issuance of a
to join the UNCLOS was centered on its disagreement writ of Kalikasan. In fact, it can be inferred from Section
with UNCLOS” regime of deep seabed mining (Part XI) 17, Rule 7 of the Rules that a criminal case against a
which considers the oceans and deep seabed commonly person charged with a violation of an environmental law
owned by mankind,” pointing out that such “has nothing is to be filed separately.
to do with its the US’ acceptance of customary The Court considered a view that a ruling on the
international rules on navigation.” application or non-application of criminal jurisdiction
29
provisions of the VFA to US personnel who may be found Issues:
responsible for the grounding of the USS Guardian,
1) whether marine mammals, through their stewards, have
would be premature and beyond the province of a petition
legal standing to pursue the case;
for a writ of Kalikasan.
2) whether the service contract violated the Philippine
The Court also found unnecessary at this point
Constitution or other domestic laws. Id., p. 11.
to determine whether such waiver of State immunity is
indeed absolute. In the same vein, we cannot grant RULING:
damages which have resulted from the violation of
environmental laws. The Rules allows the recovery of As to standing, the Court declined to extend the principle
damages, including the collection of administrative fines of standing beyond natural and juridical persons, even
under R.A. No. 10067, in a separate civil suit or that though it recognized that the current trend in Philippine
deemed instituted with the criminal action charging the jurisprudence “moves towards simplification of
same violation of an environmental law. procedures and facilitating court access in environmental
cases.” Id., p. 15. Instead, the Court explained, “the need
to give the Resident Marine Mammals legal standing has
been eliminated by our Rules, which allow any Filipino
RESIDENT MARINE MAMMALS VS SEC REYES
citizen, as a steward of nature, to bring a suit to enforce
Facts: Two sets of petitioners filed separate cases our environmental laws.” Id., p. 16-17.
challenging the legality of Service Contract No. 46 (SC-
The Court then held that while SC-46 was authorized
46) awarded to Japan Petroleum Exploration Co.
Presidential Decree No. 87 on oil extraction, the contract
(JAPEX). The service contract allowed JAPEX to
did not fulfill two additional constitutional
conduct oil exploration in the Tañon Strait during which
requirements. Section 2 Article XII of the 1987
it performed seismic surveys and drilled one exploration
Constitution requires a service contract for oil exploration
well. The first petition was brought on behalf of resident
and extraction to be signed by the president and reported
marine mammals in the Tañon Strait by two individuals
to congress. Because the JAPEX contract was executed
acting as legal guardians and stewards of the marine
solely by the Energy Secretary, and not reported to the
mammals. The second petition was filed by a non-
Philippine congress, the Court held that it was
governmental organization representing the interests of
unconstitutional. Id., pp. 24-25.
fisherfolk, along with individual representatives from
fishing communities impacted by the oil exploration In addition, the Court also ruled that the contract violated
activities. The petitioners filed their cases in 2007, shortly the National Integrated Protected Areas System Act of
after JAPEX began drilling in the strait. In 2008, JAPEX 1992 (NIPAS Act), which generally prohibits exploitation
and the government of the Philippines mutually of natural resources in protected areas. In order to explore
terminated the service contract and oil exploration for resources in a protected area, the exploration must be
activities ceased. The Supreme Court consolidated the performed in accordance with an environmental impact
cases for the purpose of review. assessment (EIA). The Court noted that JAPEX started
the seismic surveys before any EIA was performed;
In its decision, the Supreme Court first addressed the
therefore its activity was unlawful. Id., pp. 33-
important procedural point of whether the case was moot
34. Furthermore, the Tanon Strait is a NIPAS area, and
because the service contract had been terminated. The
exploration and utilization of energy resources can only
Court declared that mootness is “not a magical formula
be authorized through a law passed by the Philippine
that can automatically dissuade the courts in resolving a
Congress. Because Congress had not specifically
case.” Id., p. 12. Due to the alleged grave constitutional
authorized the activity in Tañon Strait, the Court declared
violations and paramount public interest in the case, not
that no energy exploration should be permitted in that
to mention the fact that the actions complained of could
area. Id., p. 34.
be repeated, the Court found it necessary to reach the
merits of the case even though the particular service
contract had been terminated. Id.

30
SIMNY GUY VS GILBERT GUY Minutes of Meeting, and for Damages with Application
for a Preliminary Injunctive Relief," against petitioners,
Facts: With 519,997 shares of stock as reflected in Stock
alleging, among others, that no stock certificate ever
Certificate Nos. 004-014, herein respondent Gilbert G.
existed;that his signature at the back of the spurious Stock
Guy (Gilbert) practically owned almost 80 percent of the
Certificate Nos. 004-014 which purportedly endorsed the
650,000 subscribed capital stock of GoodGold Realty &
same and that of the corporate secretary, Emmanuel
Development Corporation (GoodGold).
Paras, at the obverse side of the certificates were forged,
GoodGold’s remaining shares were divided among and, hence, should be nullified.
Francisco Guy (Francisco) with 130,000 shares, Simny
Gilbert, however, withdrew the complaint, after the
Guy (Simny), Benjamin Lim and Paulino Delfin Pe, with
National Bureau of Investigation (NBI) submitted a report
one share each, respectively.Gilbert is the son of spouses
to the RTC of Manila authenticating Gilbert’s signature in
Francisco and Simny.Simny, one of the petitioners,
the endorsed certificates.
however, alleged that it was she and her husband who
established GoodGold, putting the bulk of its shares under The present controversy arose, when in 2008, three years
Gilbert’s name. after the complaint with the RTC of Manila was
withdrawn, Gilbert again filed a complaint, this time, with
Simny claimed that with their eldest son, Gaspar G. Guy
the RTC of Mandaluyong, captioned as "IntraCorporate
(Gaspar), having entered the Focolare Missionary in
Controversy: For the Declaration of Nullity of Fraudulent
1970s, renouncing worldly possessions,2 she and
Transfers of Shares of Stock Certificates, Fabricated
Francisco put the future of the Guy group of companies in
Stock Certificates, Falsified General Information Sheets,
Gilbert’s hands.Simny further claimed that upon the
Minutes of Meetings, and Damages with Application for
advice of their lawyers, upon the incorporation of
the Issuance of a Writ of Preliminary and Mandatory
GoodGold, they issued stock certificates reflecting the
Injunction," against petitioners.Gilbert alleged that he
shares held by each stockholder duly signed by Francisco
never signed any document which would justify and
as President and Atty. Emmanuel Paras as Corporate
support the transfer of his shares to his siblings.
Secretary, with corresponding blank endorsements at the
back of each certificate – including Stock Certificate Nos. He also denied the existence of the certificates of stocks.
004-014 under Gilbert’s name. According to him, "there were no certificates of stocks
under his name for the shares of stock subscribed by him
These certificates were all with Gilbert’s irrevocable
were never issued nor delivered to him from the time of
endorsement and power of attorney to have these stocks
the inception of the corporation.
transferred in the books of corporation.All of these
certificates were always in the undisturbed possession of Gilbert added that the Amended General Information
the spouses Francisco and Simny, including Stock Sheets (GIS) of GoodGold for the years 2000 to 2004
Certificate Nos. 004-014. which his siblings submitted to the Securities and
Exchange Commission (SEC) were spurious as these did
In 1999, Francisco instructed Benjamin Lim, to
not reflect his true shares in the corporation which
collaborate with Atty. Emmanuel Paras, to redistribute
supposedly totaled to 595,000 shares;16 that no valid
GoodGold’s shareholdings evenly among his children,
stockholders’ annual meeting for the year 2004 was held,
while maintaining a proportionate share for himself and
hence proceedings taken thereon, including the election
his wife, Simny.Accordingly, some of GoodGold’s
of corporate officers were null and void;17 and, that his
certificates were cancelled and new ones were issued to
siblings are foreign citizens, thus, cannot own more than
represent the redistribution of GoodGold’s shares of
forty percent of the authorized capital stock of the
stock. The new certificates of stock were signed by
corporation.
Francisco and Atty. Emmanuel Paras, as President and
Corporate Secretary, respectively. Gilbert also asked in his complaint for the issuance of a
Writ of Preliminary and Mandatory Injunction to protect
In September 2004, or five years after the redistribution
his rights.In an Order dated 30 June 2008,20 the RTC
of GoodGold’s shares of stock, Gilbert filed with the
denied Gilbert’s Motion for Injunctive Relief21 which
Regional Trial Court (RTC) of Manila, a Complaint for
constrained him to file a motion for reconsideration, and,
the "Declaration of Nullity of Transfers of Shares in
thereafter, a Motion for Inhibition against Judge Edwin
GoodGold and of General Information Sheets and
31
Sorongon, praying that the latter recuse himself from Gilbert’s complaint essentially prayed for the return of
further taking part in the case.Gilbert’s siblings filed a his original 519,997 shares in GoodGold, by praying that
manifestation claiming that the complaint is a nuisance the court declare that "there were no valid transfers of the
and harassment suit. contested shares to defendants and Francisco.”
In an Order dated 6 November 2008,22 the RTC denied The transfer of the shares cannot be, as Gilbert wanted,
the motion for inhibition, as well as dismissed the case, declared entirely fraudulent without including those of
declaring it a nuisance and harassment suit.This Francisco who owns almost a third of the total number.
constrained Gilbert to assail the above Order before the
Francisco, in both the 2004 and 2008 complaints, is an
Court of Appeals (CA).
indispensable party without whom no final determination
In a Decision dated 27 May 2009, the CA upheld Judge can be had for the following reasons: (a) the complaint
Sorongon’s refusal to inhibit.The CA, in the same prays that the shares now under the name of the
decision, also denied Gilbert’s Petition for the Issuance of defendants and Francisco be declared fraudulent; (b)
Writ of Preliminary Injunction for failure to establish a Francisco owns 195,000 shares some of which, Gilbert
clear and unmistakable right that was violated as required prays be returned to him; (c) Francisco signed the
under Section 3, rule 58 of the 1997 Rules of Civil certificates of stocks evidencing the alleged fraudulent
Procedure. shares previously in the name of Gilbert.
The CA, however, found merit on Gilbert’s contention The inclusion of the shares of Francisco in the complaint
that the complaint should be heard on the merits. Hence, makes Francisco an indispensable party. Moreover, the
these consolidated petitions. pronouncement about the shares of Francisco would
impact on the hereditary rights of the contesting parties or
G.R. No. 189486 is a Petition for Review under Rule 45
on the conjugal properties of the spouses to the effect that
of the Rules of Court filed by petitioners which prays that
Francisco, being husband of Simny and father of the other
this Court declare Civil Case No. SEC-MC08-112, a
contesting parties, must be included for, otherwise, in his
harassment or nuisance suit.
absence, there cannot be a determination between the
Meanwhile, during the pendency of G.R. No. 189486, the parties already before the court which is effective,
trial court set the pre-trial conference on the case subject complete, or equitable.
of this controversy, constraining the petitioners to file a
It bears emphasis that Gilbert, while suing as a
Motion to defer the pre-trial, which was, however, denied
stockholder against his co-stockholders, should have also
by the court a quo.
impleaded GoodGold as defendant. His complaint also
The denial of the petitioners’ motion to defer pre-trial, prayed for the annulment of the 2004 stockholders’
compelled them to file with this Court a Petition for annual meeting, the annulment of the 2004 election of the
Certiorari with Urgent Application for the Issuance of board of directors and of its officers, the annulment of
TRO and/or A Writ of Preliminary Injunction, docketed 2004 GIS submitted to the SEC, issuance of an order for
as G.R. No. 189699. the accounting of all monies and rentals of GoodGold, and
the issuance of a writ of preliminary and mandatory
Because of the pendency of the G.R. No. 189486 before injunction. We have made clear that GoodGold is a
us, the petitioners deemed proper to question the said separate juridical entity distinct from its stockholders and
denial before us as an incident arising from the main from its directors and officers. The trial court, acting as a
controversy special commercial court, cannot settle the issues with
RULING: The absence of an indispensable party in a finality without impleading GoodGold as defendant. Like
case renders all subsequent actions of the court null and Francisco, and for the same reasons, GoodGold is an
void for want of authority to act, not only as to the absent indispensable party which Gilbert should have impleaded
parties but even as to those present. as defendant in his complaint.

It bears emphasis that this controversy started with Allegations of deceit, machination, false pretenses,
Gilbert’s complaint filed with the RTC of Mandaluyong misrepresentation, and threats are largely conclusions of
City in his capacity as stockholder, director and Vice- law that, without supporting statements of the facts to
President of GoodGold
32
which the allegations of fraud refer, do not sufficiently particularity as is desirable is not fatal if the general
state an effective cause of action. purport of the claim or defense is clear, since all pleadings
should be so construed as to do substantial justice. Doubt
"In all averments of fraud or mistake, the circumstances
as to the meaning of the pleading may be resolved by
constituting fraud or mistake must be stated with
seeking a bill of particulars.
particularity" to "appraise the other party of what he is to
be called on to answer, and so that it may be determined A bill of particulars may be ordered as to a defense of
whether the facts and circumstances alleged amount to fraud or mistake if the circumstances constituting fraud or
fraud." These particulars would necessarily include the mistake are not stated with the particularity required by
time, place and specific acts of fraud committed. "The the rule.
reason for this rule is that an allegation of fraud concerns
The above-stated rule, however, does not apply to intra-
the morality of the defendant’s conduct and he is entitled
corporate controversies. It did not escape us that Gilbert,
to know fully the ground on which the allegations are
instead of particularly describing the fraudulent acts that
made, so he may have every opportunity to prepare his
he complained of, just made a sweeping denial of the
case to clear himself at the trial."
existence of stock certificates by claiming that such were
Tested against established standards, we find that the not necessary, GoodGold being a mere family
charges of fraud which Gilbert accuses his siblings are not corporation.As sweeping and bereft of particulars is his
supported by the required factual allegations. In Reyes v. claim that he "is unaware of any document signed by him
RTC of Makati, which we now reiterate, mutatis that would justify and support the transfer of his shares to
mutandis, while the complaint contained allegations of herein petitioners." Even more telling is the contradiction
fraud purportedly committed by his siblings, these between the denial of the existence of stock certificates
allegations are not particular enough to bring the and the denial of the transfer of his shares of stocks "under
controversy within the special commercial court’s his name under the books of the corporations."
jurisdiction; they are not statements of ultimate facts, but
Even beyond the vacant pleadings, its nature as nuisance
are mere conclusions of law: how and why the alleged
is palpable. To recapitulate, it was only after five years
transfer of shares can be characterized as "fraudulent"
following the redistribution of GoodGold’s shares of
were not explained and elaborated on. As emphasized in
stock, that Gilbert filed with the RTC of Manila a
Reyes:
complaint. Gilbert withdrew this complaint after the NBI
Not every allegation of fraud done in a corporate setting submitted a report to the RTC of Manila authenticating
or perpetrated by corporate officers will bring the case Gilbert’s signature in the endorsed certificates
within the special commercial court’s jurisdiction. To fall
And, it was only after three years from the withdrawal of
within this jurisdiction, there must be sufficient nexus
the Manila complaint, that Gilbert again filed in 2008 a
showing that the corporation’s nature, structure, or
complaint also for declaration of nullity of the transfer of
powers were used to facilitate the fraudulent device or
the shares of stock, this time with the RTC of
scheme.
Mandaluyong
Significantly, no corporate power or office was alleged to
When a stock certificate is endorsed in blank by the owner
have facilitated the transfer of Gilbert’s shares. How the
thereof, it constitutes what is termed as "street certificate,"
petitioners perpetrated the fraud, if ever they did, is an
so that upon its face, the holder is entitled to demand its
indispensable allegation which Gilbert must have had
transfer his name from the issuing corporation.
alleged with particularity in his complaint, but which he
failed to. With Gilbert’s failure to allege specific acts of fraud in his
complaint and his failure to rebut the NBI report, this
Failure to specifically allege the fraudulent acts in intra-
Court pronounces, as a consequence thereof, that the
corporate controversies is indicative of a harassment or
signatures appearing on the stock certificates, including
nuisance suit and may be dismissed motu proprio.
his blank endorsement thereon were authentic. With the
In ordinary cases, the failure to specifically allege the stock certificates having been endorsed in blank by
fraudulent acts does not constitute a ground for dismissal Gilbert, which he himself delivered to his parents, the
since such a defect can be cured by a bill of particulars. same can be cancelled and transferred in the names of
Thus: Failure to allege fraud or mistake with as much herein petitioners.
33
In Santamaria v. Hongkong and Shanghai Banking corrective measures, prompting petitioner to terminate the
Corp.,61 this Court held that when a stock certificate is Agreement and seek indemnification from respondent in
endorsed in blank by the owner thereof, it constitutes what the total amount of P 1,040,895.34.
is termed as "street certificate," so that upon its face, the
However, respondent effectively denied petitioner’s
holder is entitled to demand its transfer into his name from
claim on the ground that the liability of its principal, DMI,
the issuing corporation. Such certificate is deemed quasi-
should first be ascertained before its own liability as a
negotiable, and as such the transferee thereof is justified
surety attaches. Hence, the instant complaint, premised on
in believing that it belongs to the holder and transferor.
respondent’s liability under the surety and performance
While there is a contrary ruling, as an exception to the bonds secured by DMI.
general rule enunciated above, what the Court held in
Respondent claimed that DMI is an indispensable party
Neugene Marketing Inc., et al., v CA,62 where stock
that should be impleaded and whose liability should first
certificates endorsed in blank were stolen from the
be determined before respondent can be held liable. On
possession of the beneficial owners thereof constraining
the other hand, petitioner asserted that respondent is a
this Court to declare the transfer void for lack of delivery
surety who is directly and primarily liable to indemnify
and want of value, the same cannot apply to Gilbert
petitioner, and that the bond is "callable on demand" in
because the stock certificates which Gilbert endorsed in
the event DMI fails to perform its obligations under the
blank were in the undisturbed possession of his parents
Agreement.
who were the beneficial owners thereof and who
themselves as such owners caused the transfer in their Issue: Whether or not DMI is an indispensable party in
names. Indeed, even if Gilbert’s parents were not the this case.
beneficial owners, an endorsement in blank of the stock
certificates coupled with its delivery, entitles the holder Ruling: No. DMI is not an indispensable party because
thereof to demand the transfer of said stock certificates in petitioner can claim indemnity directly from respondent,
his name from the issuing corporation having made itself jointly and severally liable with DMI
for the obligation under the bonds. Therefore, the failure
to implead DMI is not a ground to dismiss the case, even
if the same was without prejudice. The term "jointly and
LIVING SENSE INC VS MALAYAN INSURANCE
severally" expresses a solidary obligation granting
COMPANY
petitioner, as creditor, the right to proceed against its
Facts: Petitioner was the main contractor of the FOC debtors. The nature of the solidary obligation under the
Network Project of Globe Telecom in Mindanao. surety does not make one an indispensable party.An
Petitioner entered into a Sub-Contract Agreement indispensable party is a party-in-interest without whom
(Agreement) with Dou Mac, Inc. (DMI), under which the no final determination can be had of an action, and who
latter was tasked to undertake an underground open- shall be joined mandatorily either as plaintiffs or
trench work. Petitioner required DMI to give a bond, in defendants. The presence of indispensable parties is
the event that DMI fails to perform its obligations under necessary to vest the court with jurisdiction, thus, without
the Agreement. their presence to a suit or proceeding, the judgment of a
court cannot attain real finality. The absence of an
Thus, DMI secured surety and performance bonds, both
indispensable party renders all subsequent actions of the
in the amount of P 5,171,488.00, from respondent
court null and void for want of authority to act, not only
Malayan Insurance Company, Inc. (respondent) to
as to the absent parties but even as to those present.When
answer: (1) for the unliquidated portion of the
DMI secured the surety and performance bonds from
downpayment, and (2) for the loss and damage that
respondent in compliance with petitioner’s requirement,
petitioner may suffer, respectively, should DMI fail to
respondent bound itself "jointly and severally" with DMI
perform its obligations under the Agreement. Under the
for the damages and actual loss that petitioner may suffer
bonds, respondent bound itself jointly and severally liable
should DMI fail to perform its obligations.
with DMI.
The Department of Public Works and Highways (DPWH)
issued a work-stoppage order against DMI after finding
the latter’s work unsatisfactory. DMI failed to adopt
34
PHILIP GO VS DISTINCTION PROPERTIES jurisdiction of the HLURB to hear and decide cases is
DEVT AND CONSTRUCTION INC determined by the nature of the cause of action, the
subject matter or property involved and the parties.
FACTS Philip L. Go, Pacifico Q. Lim and Andrew Q.
Lim (petitioners) are registered individual owners of In this case, the complaint filed by petitioners alleged
condominium units in Phoenix Heights Condominium causes of action that apparently are not cognizable by the
developed by the HLURB considering the nature of the action and the
respondent. reliefs sought.
In August 2008, petitioners, as condominium unit- 2. An indispensable party is defined as one who has such
owners, filed a complaint before the HLURB against an interest in the controversy or subject matter that a final
DPDCI for unsound business practices and violation of adjudication cannot be made, in his absence, without
the MDDR, alleging that DPDCI committed injuring or affecting that interest. It is "precisely ‘when
misrepresentation in their circulated flyers and brochures an indispensable party is not before the court (that) an
as to the facilities or amenities that would be available in action should be dismissed.’ The absence of an
the condominium and failed to perform its obligation to indispensable party renders all subsequent actions of
comply with the MDDR. the court null and void for want of authority to act, not
only as to the absent parties but even to those present.
In defense, DPDCI alleged that the brochure attached to
The purpose of the rules on joinder of indispensable
the complaint was “a mere preparatory draft”. HLURB
parties is a complete determination of all issues not only
rendered its decision in favor of petitioners. DPDCI filed
between the parties themselves, but also as regards other
with the CA its Petition for Certiorari and Prohibition on
persons who may be affected by the judgment.
the ground that HLURB acted without or beyond its
jurisdiction. PHCC is an indispensable party and should have been
impleaded, as it would be directly and adversely affected
The CA ruled that the HLURB had no jurisdiction over
by any determination therein. Evidently, the cause of
the complaint filed by petitioners as the controversy did
action rightfully pertains to PHCC.
not fall within the scope of the administrative agency’s
authority.
ISSUES: SEPULVEDA VS PELAEZ
1. Whether the HLURB has jurisdiction over the SUMMARY: Atty. Pelaez filed a complaint against his
complaint filed by the petitioners granduncle Pedro Sepulveda, Sr. for the recovery of
possession and ownership of his undivided share of
2. Whether PHCC is an indispensable party
several parcels of land. RTC and CA decided in favor of
HELD: Pelaez, but the SC ordered the case dismissed for the
failure of Pelaez to implead the ff. indispensable parties
1. Jurisdiction over the subject matter of a case is in his complaint: his father, Rodolfo Pelaez; the heirs of
conferred by law and determined by the allegations in the Santiago Sepulveda, namely, Paz Sepulveda and their
complaint which comprise a concise statement of the children; and the City of Danao.
ultimate facts constituting the plaintiff's cause of action.
The nature of an action, as well as which court or body DOCTRINE: The presence of all indispensable parties is
has jurisdiction over it, is determined based on the a condition sine qua non for the exercise of judicial power.
allegations contained in the complaint of the plaintiff, It is precisely when an indispensable party is not before
irrespective of whether or not the plaintiff is entitled to the court that the action should be dismissed. Thus, the
recover upon all or some of the claims asserted therein. plaintiff is mandated to implead all the indispensable
The averments in the complaint and the character of parties, considering that the absence of one such party
the relief sought are the ones to be consulted. Once renders all subsequent actions of the court null and void
vested by the allegations in the complaint, jurisdiction for want of authority to act, not only as to the absent
also remains vested irrespective of whether or not the parties but even as to those present.
plaintiff is entitled to recover upon all or some of the
FACTS: On December 6, 1972, private respondent Atty.
claims asserted therein. Thus, it was ruled that the
Pacifico Pelaez filed a complaint against his granduncle,
35
Pedro Sepulveda, Sr., for the recovery of possession and According to the petitioner, Dulce and Pedro Sepulveda,
ownership of his 1/2 undivided share of several parcels of Sr. had a verbal agreement wherein the eleven parcels of
land; his undivided 1/3 share in several other lots; and for land covered by the complaint would serve as the latter’s
the partition thereof among the co-owners. compensation for his services as administrator of
Dionisia’s estate. Thus, upon the termination of Special
The 11 lots were among the 25 parcels of land, which
Proceeding No. 778-0, and subsequent to the distribution
Dulce (private respondent's mother) and her uncles Pedro
of the shares of Dionisia’s heirs, Pedro Sepulveda, Sr.
and Santiago co-owned, each with an undivided 1/3 share
then became the sole owner of Dulce’s shares.
thereof.
The petitioner likewise adduced evidence that Santiago
In his complaint, the private respondent claims that his
Sepulveda died intestate and was survived by his wife,
grandmother Carlota repeatedly demanded the delivery of
Paz Velez Sepulveda and their then minor children. It was
her mother’s share in the 11 parcels of land, but Pedro
pointed out that the private respondent failed to implead
Sepulveda, Sr. who by then was the Municipal Mayor of
Paz Sepulveda and her minor children as parties-
Tudela, refused to do so. Dulce, likewise, later demanded
defendants in the complaint
the delivery of her share in the eleven parcels of land, but
Pedro still refused. The private respondent alleged that he It was further claimed that Pedro Sepulveda, Sr. declared
himself demanded the delivery of his mother’s share in the property covered by T.D. No. 18199 under his name
the subject properties on so many occasions, the last of for taxation purposes since the beginning of 1948. It was
which was in 1972, to no avail. likewise alleged that the 11 parcels of land deeded to
Dulce under the Project of Partition had been declared for
The private respondent further narrated that his
taxation purposes under the name of Pedro Sepulveda
granduncle executed an affidavit stating that he was the
since 1974, and that he and his heirs paid the realty taxes
sole heir of Dionisia when she died intestate in 1921,
thereon.
when, in fact, the latter was survived by her three sons,
Santiago, Pedro and Vicente. Pedro also executed a Deed TC in favor of the private respondent: The private
of Absolute Sale over the property covered by T.D. No. respondent’s action for reconveyance based on
19804 in favor of the City of Danao, and received P7,492 constructive trust had not yet prescribed when the
without his (private respondent’s) knowledge. complaint was filed; that he was entitled to a share in the
proceeds of the sale of the property to Danao City; and
The private respondent prayed that he be declared the
that the partition of the subject property among the
absolute owner of his portions of the parcels of land, that
adjudicatees thereof was in order. Petitioner appealed the
said parcels of land be partitioned and segregated, and that
decision to the CA. CA affirmed the appealed decision
he be given his share of P7,492 representing the purchase
with modification. The petitioner now comes to the Court
price of the parcel of land sold to the City of Danao.
via a petition for review on certiorari.
In his answer to the complaint, Pedro Sepulveda, Sr.
ISSUE: WON private respondent's action will prosper,
admitted having executed a deed of sale over the parcel of
despite having failed to implead all the indispensable
land covered by T.D. No. 19804 in favor of Danao City,
parties in his complaint – NO
but averred that the latter failed to pay the purchase price
thereof; besides, the private respondent had no right to RATIO: It appears that when the private respondent filed
share in the proceeds of the said sale. He likewise denied the complaint, his father, Rodolfo Pelaez, was still alive.
having received any demand for the delivery of Dulce’s Thus, when his mother Dulce Pelaez died intestate on
share of the subject properties from the latter’s mother March 2, 1944, she was survived by her husband Rodolfo
Carlota, or from the private respondent. and their son, the private respondent.
During the trial, Pedro Sepulveda, Sr. died intestate. A Section 1, Rule 69 of the Rules of Court provides that in
petition for the settlement of his estate was filed with the an action for partition, all persons interested in the
RTC of Cebu. His daughter, petitioner Socorro Sepulveda property shall be joined as defendants. Section 1.
Lawas, was appointed administratrix of his estate and Complaint in action for partition of real estate.- A person
substituted the deceased in this case. having the right to compel the partition of real estate may
do so as in this rule prescribed, setting forth in his
complaint the nature and extent of his title and an
36
adequate description of the real estate of which partition GRANTED. RTC and CA decisions are set aside. RTC is
is demanded and joining as defendants all the other ordered to dismiss the complaint without prejudice.
persons interested in the property.
Thus, all the co-heirs and persons having an interest in the
property are indispensable parties; as such, an action for SOCORRO LIMOS VS SPS ODIONES
partition will not lie without the joinder of the said parties. Non-joinder of indispensable parties is not a ground for
dismissal of an action. The remedy is to implead the non-
In the present action, the private respondent failed to
party claimed to be indispensable. Parties may be added
implead the following indispensable parties: his father,
by order of the court on motion of the party or on its own
Rodolfo Pelaez; the heirs of Santiago Sepulveda, namely,
initiative at any stage of the action and/or such times as
Paz Sepulveda and their children; and the City of Danao
are just. It is only when the plaintiff refuses to implead an
which purchased the property from Pedro Sepulveda, Sr.
indispensable party despite the order of the court, that the
and maintained that it had failed to pay for the purchase
latter may dismiss the complaint. In this case, no such
price of the property.
order was issued.
Rodolfo Pelaez is an indispensable party he being entitled
Facts:
to a share in usufruct, equal to the share of the respondent
in the subject properties. There is no showing that Private respondents Sps Odones filed a complaint for
Rodolfo Pelaez had waived his right to usufruct. Annulment of Deed, Title and Damages against
petitioners Limos, Rosa delos Reyes and Sps Delos Reyes
Section 7, Rule 3 of the Rules of Court reads: SEC. 7.
before Tarlac RTC.
Compulsory joinder of indispensable parties. – Parties in
interest without whom no final determination can be had The complaint alleged that they are the owners of a 940
of an action shall be joined either as plaintiffs or sq m land by virtue of an Extrajudicial Succession of
defendants. Estate and Sale dated Jan 29, 2004, executed by the
surviving heirs of Donata Lardizabal, in whom the
Indeed, the presence of all indispensable parties is a
original title was vested.
condition sine qua non for the exercise of judicial power.
It is precisely when an indispensable party is not before After registering the document of conveyance, they found
the court that the action should be dismissed. Thus, the out that the OCT was cancelled and replaced by a TCT in
plaintiff is mandated to implead all the indispensable the petitioners’ name.
parties, considering that the absence of one such party
renders all subsequent actions of the court null and void Petitioners were able to secure TCT by virtue of a Deed
for want of authority to act, not only as to the absent of Sale allegedly executed by Donata and husband on
parties but even as to those present. One who is a party to April 18, 1972. Respondents sought the cancellation of
a case is not bound by any decision of the court, said TCTs on the ground that the Sps Lardizabal’s
otherwise, he will be deprived of his right to due process. signatures were forgeries.
Without the presence of all the other heirs as plaintiffs, In response, petitioners filed a Motion for Bill of
the trial court could not validly render judgment and grant Particulars, which was denied, and in their answer
relief in favor of the private respondent. The failure of the pleaded affirmative defenses: (a) failure to state a cause
private respondent to implead the other heirs as parties- of action inasmuch as the respondents’ alleged title is void
plaintiffs constituted a legal obstacle to the trial court and & are not real parties-in-interest (b) non-joinder of the
the appellate court’s exercise of judicial power over the other heirs of Donata as indispensable parties (c)
said case, and rendered any orders or judgments rendered respondents’ claim is barred by laches. In reply,
therein a nullity. respondents maintained their standing and appended a
To reiterate, the absence of an indispensable party renders sworn statement of heir Amadeo Razalan. *
all subsequent actions of the court null and void for want Petitioners also served upon respondents a Request for
of authority to act, not only as to the absent parties but Admission, which respondents failed to respond to,
even as to those present. Hence, the trial court should have prompting petitioners to file a Motion to Set for
ordered the dismissal of the complaint. Petition is Preliminary Hearing on the Special and Affirmative

37
Defenses. RTC & CA denied said motion because SIX HUNDRED THIRTY TWO (1,632) SQUARE
respondents had already replied*, hence this petition for METERS.
certiorari.
Parcel 2 – A parcel of land, Cadastral Lot No. 6737-Rem,
Issue: Albuera, Leyte; Containing an area of THREE
THOUSAND SEVEN HUNDRED THIRTY (3,730).
W/N respondents’ failure to respond to the Request for
Admission amounted to an implied admission & a Upon the death of the spouses Fian, their heirs––whose
preliminary hearing should therefore be conducted names do not appear on the records, claiming ownership
of the parcels of land and taking possession of them––
W/N the affirmative defense of non-joinder of
refused to acknowledge the payments for the lots and
indispensable parties is a ground for dismissal of action
denied that their late parents sold the property to the
Held: spouses Mesina.

No. The application of the rules and determination of Notwithstanding repeated demands, the Heirs of Fian
sanction to be imposed upon failure to comply with modes refused to vacate the lots and to turn possession over to
of discovery rests on sound judicial discretion. Matters set the heirs of the spouses Mesina, namely: Norman, Victor,
forth in the petitioners’ Request for Admission were the Maria and Lorna. Thus, on August 8, 2005, Norman, as
same affirmative defenses in their answer which attorney-in-fact of his siblings, filed an action for quieting
respondents already traversed in their Reply. of title and damages before the Regional Trial Court
(RTC), Branch 14 in Baybay, Leyte against the Heirs of
No. Non-joinder of indispensable parties is not a ground Fian, naming only Theresa Fian Yray (Theresa) as the
for dismissal of an action. The remedy is to implead the representative of the Heirs of Fian. The case, was
non-party claimed to be indispensable. Parties may be docketed as Civil Case No. B-05-08-20.
added by order of the court on motion of the party or on
its own initiative at any stage of the action and/or such On September 5, 2005, respondent Theresa filed a Motion
times as are just. It is only when the plaintiff refuses to to Dismiss the complaint, arguing that the complaint
implead an indispensable party despite the order of the states no cause of action and that the case should be
court, that the latter may dismiss the complaint. In this dismissed for gross violation of Sections 1 and 2, Rule 3
case, no such order was issued. of the Rules of Court, which state in part:
“Section 1. Who may be parties; plaintiff and defendant.
– Only natural or juridical persons, or entities authorized
HEIRS OF AUSTINO MESINA VS HEIRS OF FIAN by law may be parties in a civil action.”
Definition of Terms: She claims that the "Heirs of Mesina" could not be
Non-joinder - failure to bring a person who is a necessary considered as a juridical person or entity authorized by
party or in this case an indispensable party into a lawsuit. law to file a civil action. Neither could the "Heirs of Fian"
be made as defendant, not being a juridical person as well.
Indispensable party - is a party-in-interest without whom She added that since the names of all the heirs of the late
no final determination can be had of the action, and who spouses Mesina and spouses Fian were not individually
shall be joined either as plaintiff or defendant. named, the complaint is infirmed, warranting its
dismissal.
Parties in interest. – A real party in interest is the party
who stands to be benefited or injured by the judgment in On November 24, 2005, petitioners filed their Opposition
the suit, or the party entitled to the avails of the suit. to the Motion to Dismiss.
Facts of the Case: RTC Ruling:
The late spouses Mesina, during their lifetime, bought The Rules of Court is explicit that only natural or juridical
from the spouses Fian two parcels of land on installment. persons or entities authorized by law may be parties in a
The properties described: civil action (Section 1, Rule 3, Revised Rules of Court).
Certainly, the Heirs of Faurstino s. Mesina and Genoveva
Parcel 1 – A parcel of land, Cadastral Lot No. 6791-Rem.
S. Mesina, represented by Norman Mesina as plaintiffs as
Albuera, Leyte; Containing an area of ONE THOUSAND
38
well as Heirs of Domingo Fian, Sr. represented by the complaint being the other heirs of Fian, and not a
Theresa Fian Yray as defendants, do not fall within the failure of the complaint to state a cause of action.
category as natural or juridical persons as contemplated
Thus, the dismissal of the case for failure to state a cause
by law to institute or defend civil actions. Said heirs not
of action is improper. What the trial court should have
having been individually named could not be the real
done is to direct petitioner Norman Mesina to implead all
parties in interest. Hence, the complaint states no cause of
the heirs of Domingo Fian, Sr. as defendants within a
action.
reasonable time from notice with a warning that his failure
Accordingly, the case is hereby dismissed. to do so shall mean dismissal of the complaint.
Ruling of the CA 2. Verification, like in most cases required by the
rules of procedure, is a formal requirement, not
In affirming the RTC, the CA, on April 29, 2011, rendered
jurisdictional. It is mainly intended to secure an
its Decision, ruling that all the heirs of the spouses Fian
assurance that matters which are alleged are done
are indispensable parties and should have been impleaded
in good faith or are true and correct and not of
in the complaint. The appellate court explained that this
mere speculation. Thus, when circumstances so
failure to implead the other heirs of the late spouses Fian
warrant, as in the case at hand, "the court may
is a legal obstacle to the trial court’s exercise of judicial
simply order the correction of unverified
power over the case and any order or judgment that would
pleadings or act on it and waive strict compliance
be rendered is a nullity in view of the absence of
with the rules in order that the ends of justice may
indispensable parties. The CA further held that the RTC
thereby be served.
correctly dismissed the complaint for being improperly
verified. WHEREFORE, the petition is GRANTED. The assailed
April 29, 2011 Decision and April 12, 2012 Resolution of
Issue:
the CA in CA-G.R. CV No. 01366, and the November 22,
1. W/N the court correctly dismissed the complaint 2005 Order and February 29,2006 Resolution of the RTC,
for lack of cause of action. Branch 14 in Baybay, Leyte, dismissing the complaint in
Civil Case No. 8-05-08-20, are hereby REVERSED and
2. W/N the court correctly dismissed the complaint SET ASIDE. Petitioner Norman Mesina is ORDERED to
for being improperly verified. implead all the Heirs of Domingo Fian, Sr. as defendants
Ruling of the SC in said civil case within thirty (30) days from notice of
finality of this Decision. Failure on the part of petitioner
1. Failure to state a cause of action refers to the Mesina to comply with this directive shall result in the
insufficiency of the pleading. A complaint states dismissal of Civil Case No. B-05-08-20. Upon
a cause of action if it avers the existence of the compliance by petitioner Mesina with this directive, the
three essential elements of a cause of action, RTC, Branch 14 in Baybay, Leyte is ORDERED to
namely: undertake appropriate steps and proceedings to expedite
adjudication of the case.
(a) The legal right of the plaintiff;
(b) The correlative obligation of the defendant; and
THEODORE AND NANCY AND VS SPS ALAN
(c) The act or omission of the defendant in violation of
AND EM ANG (see previous case)
said right.9
By a simple reading of the elements of a failure to state a
cause of action, it can be readily seen that the inclusion of SENO VS MANGUBAT
Theresa’s co-heirs does not fall under any of the above
elements. The infirmity is, in fact, not a failure to state a Facts: Plaintiff Crisanta Seno agreed to mortgage a
cause of action but a non-joinder of an indispensable parcel of land to Marcos Mangubat for a sum of P15,000
party. with interest of 2% a month and that the property will not
be foreclosed as long as the interest is paid monthly.
As such, this is properly a non-joinder of indispensable
party, the indispensable parties who were not included in
39
On July 17, 1961, plaintiff agreed to the execution of a interest are so far separable that a final decree can be made
deed of absolute sale over the subject property for a in their absence without affecting them.
consideration of P5,000 in favor of Mangubat and certain
In the present case, there are no rights of defendants
Andres Evangelista and Bienvenido Mangubat on the
Andres and Bienvenido to be safeguarded if the sale
condition that Marcos Mangubat who is a lawyer will
should be held to be in fact an absolute sale nor it the sale
respect the true agreement which is the mortgage. On
is held to be equitable mortgage as they sold their shares
january8, 1962, Andres and Bienvenido executed a deed
in the property. However, being parties to the instrument
of absolute sale in favor of Marcos Mangubat who was
being reformed, their presence is necessary.
able to obtain a title on the property under his name.
In January 1969, plaintiff learned that Marcos Mangubat
sold the subject property in favor of spouses Francisco IN THE MATTER OF HEIRSHIP OF
and Vergita Luzame for a sum of P10,000. On August 29, HERMOGENES RODRIGUEZ VS JAIME ROBLES
1969, plaintiff file a complaint seeking the reformation of (see full)
a deed of sale executed in favor of Mangubat and
annulment of subsequent sale of Mangubat to spouse
Luzame. On motion of spouse Luzame, the trial court BORLOSA VS POLISTICO
ordered on October 20, 1971 the inclusion of defendants
of Andres and Bienvenido on the ground that they are FACTS: The plaintiffs and defendants, together with
indispensable parties. several hundred other persons, formed an association
under the name of Turuhan Polistico & Co. Polistico, the
On December 29, 1971, plaintiff filed amended complaint principal defendant herein, was elected president and
in compliance with the court's order impleading Andres treasurer of the association, and his house in Lilio,
and Bienvenido. The newly impleaded defendants moved Laguna, was made its principal place of business. Under
for the dismissal of the complaint on groundof the by-laws, each member obligated himself to pay to
prescription while defendants spouses Luzame and Polistico, before 3 o'clock in the afternoon of every
Mangubat asked the court to dismiss against all the Sunday the sum of 50 centavos, except that on every fifth
defendants. Sunday the amount was P1, if the president elected to call
The trial court granted the motions and dismissed the this amount, as he always did. It is alleged that from April,
case. A motion for reconsideration by plaintiff was denied 1911, until April, 1917, the sums of money mentioned
and an appeal was filed with Court of Appeals which above were paid weekly by all of the members of the
subsequently certified the case to the SC on purely legal society with few irregularities. The inducement to these
question. weekly contributions was found in provisions of the by-
laws to the effect that a lottery should be conducted
ISSUE: weekly among the members and that the successful
member should be paid the amount collected each week,
whether or not defendants Andres and Bienvenido are
from which, however, the president-treasurer of the
indispensable parties in the case without whom no action
society was to receive the sum of P200, to be held by him
can be properly taken thereon.
as funds of the society, to which, Polistico allegedly
RULING: received P74,000.
No. Under Sec. 7 Rule 3, indispensable patries must Borlasa and others filed an action against Vicente
always be joined either as plaintiff or defendants for the Polistico and others, chiefly for the purpose of securing
court cannot proceed without them. Necessary parties the dissolution of Turuhan Polistico & Co., and to compel
must be joined, under Sec. 8, in order to adjudicate the the defendants to account for and surrender the money and
whole controversy and avoid multiplicity of suits. property of the association in order that its affairs may be
Indispensable parties are those with such interest in the liquidated and its assets applied according to law. The
controversy that a final decree would necessarily affect defendants in the complaint are the members of the board
their rights, so that the courts cannot proceed without their of directors of the association.
presence. Necessary parties are those whose presence is
In an amended answer the defendants raised the question
necessary to adjudicate the whole controversy but whose
of lack of parties and set out a list of some hundreds of
40
persons whom they alleged should be brought in as parties The addition of some hundreds of persons to the number
defendant on the ground, among others, that they were in of the plaintiffs, was unnecessary, and as the presence of
default in the payment of their dues to the association. so many parties is bound to prove embarrassing to the
litigation from death or removal. Upon the return of this
The court made an order requiring the plaintiffs to amend
record to the lower court for further proceedings, the
their complaint within a stated period so as to include all
plaintiff shall again amend their complaint by dismissing
of the members of theTurnuhan Polistico & Co. either as
as to unnecessary parties plaintiffs, but retaining a
plaintiffs or defendants. The plaintiffs excepted to this
sufficient number of responsible persons to secure
order, but acquiesced to the extent of amending their
liability for costs and fairly to present all the members of
complaint by adding as additional parties plaintiff some
the association.
hundreds of persons. The defendants demurred to the
amended complaint on the ground that it showed on its The order appealed from is reversed, the demurrer of the
face a lack of necessary parties. The trial judge having defendants based upon supposed lack of parties is
sustained a demurrer for defect of parties and the plaintiffs overruled, and the defendants are required to answer to
electing not to amend, the cause was dismissed, and from the amended complaint within the time allowed by law
this order an appeal was taken by the plaintiffs to Supreme and the rules of the court.
Court.
ISSUE: Whether or not all the members of the association
must be pleaded either as plaintiffs or defendants. NEWSWEEK INC VS IAC
Facts:
HELD: NO. The situation involved is precisely the one
contemplated in section 118 of the Code of Civil · "An Island of Fear" was published
Procedure, where one or more may sue for the benefit of by Newsweek in its Feb 23, 1981. It allegedly portrayed
all. It is evident from the showing made in the complaint, the island province of Negros Occidental as a place
and from the proceedings in the court below, that it would dominated by big landowners or sugarcane
be impossible to make all of the persons in interest parties planters who not only exploited the impoverished
to the cases and to require all of the members of the workers, but also brutalized and killed them with
association to be joined as parties would be tantamount to impunity.
a denial of justice.
· Newsweek filed a motion to dismiss on the
The general rule with reference to the making of parties grounds that
in a civil action requires, of course, the joinder of all
necessary parties wherever possible, and the joinder of all o the printed article sued upon is not actionable in fact
indispensable parties under any and all conditions, the and in law;
presence of those latter being a sine qua non of the o the complaint is bereft of allegations that state, much
exercise of judicial power. The class suit contemplates an less support a cause of action.
exceptional situation where there are numerous persons
all in the same plight and all together constituting a · Trial court denied the motion to
constituency whose presence in the litigation is absolutely dismiss. Complaint on its face states a valid cause of
indispensable to the administration of justice. Here the action; and the question as to whether the printed article
strict application of the rule as to indispensable parties sued upon its actionable or not is a matter of evidence.
would require that each and every individual in the class
· Petitioner: Complaint failed to state a cause of
should be present. But at this point the practice is so far
action because:
relaxed as to permit the suit to proceed, when the class is
sufficient represented to enable the court to deal properly o Complaint made no allegation the article referred
and justly with that interest and with all other interest specifically to any one of the private respondents;
involved in the suit. In the class suit, then, representation
of a class interest which will be affected by the judgment o Libel can be committed only against individual
is indispensable; but it is not indispensable to make each reputation;
member of the class an actual party o in cases where libel is claimed to have been directed
at a group, there is actionable defamation only if the libel
41
can be said to reach beyond the mere collectivity to do of the natural resources property he holds in trust for the
damage to a specific, individual group member's benefit of the plaintiff minors and succeeding generations.
reputation.
The defendant filed a motion to dismiss the complaint on
Issue: WON the complaint must be dismissed? the following grounds:
RULING: YES. 1. Plaintiffs have no cause of action against him;
· Corpus vs. Cuaderno, Sr.: 2. The issues raised by the plaintiffs is a political question
which properly pertains to the legislative or executive
o "in order to maintain a libel suit, it is essential that the
branches of the government.
victim be identifiable, although it is not necessary that he
be named (19 A.L.R. 116)." ISSUE: Whether or not the petitioner-minors have a
cause of action in filing a class suit to prevent the
· Uy Tioco vs. Yang Shu Wen:
misappropriation or impairment of Philippine rainforests.
o Defamatory remarks directed at a class or group of
HELD: Yes. Petitioner-minors assert that they represent
persons in general language only, are not actionable by
their generation as well as generations to come. The
individuals composing the class or group unless the
Supreme Court ruled that they can, for themselves, for
statements are sweeping.
others of their generation, and for the succeeding
· The case at bar is not a class suit. It is not a case generation, file a class suit. Their personality to sue in
where one or more may sue for the benefit of all behalf of succeeding generations is based on the concept
of intergenerational responsibility insofar as the right to a
· We have here a case where each of the plaintiffs balanced and healthful ecology is concerned. Such a right
has a separate and distinct reputation in the community. considers the “rhythm and harmony of nature” which
They do not have a common or general interest in the indispensably include, inter alia, the judicious disposition,
subject matter of the controversy. utilization, management, renewal and conservation of the
country’s forest, mineral, land, waters, fisheries, wildlife,
offshore areas and other natural resources to the end that
OPOSA VS FACTORAN their exploration, development, and utilization be
equitably accessible to the present as well as the future
FACTS: A taxpayer’s class suit was filed by minors Juan
generations. Needless to say, every generation has a
Antonio Oposa, et al., representing their generation and
responsibility to the next to preserve that rhythm and
generations yet unborn, and represented by their parents
harmony for the full enjoyment of a balanced and
against Fulgencio Factoran Jr., Secretary of DENR. They
healthful ecology. Put a little differently, the minor’s
prayed that judgment be rendered ordering the defendant,
assertion of their right to a sound environment constitutes
his agents, representatives and other persons acting in his
at the same time, the performance of their obligation to
behalf to:
ensure the protection of that right for the generations to
1. Cancel all existing Timber Licensing Agreements come
(TLA) in the country;
2. Cease and desist from receiving, accepting, processing,
ORTIGAS & CO LIMITED PARTNERSHIP VS
renewing, or appraising new TLAs: and granting the
RUIZ
plaintiffs “such other reliefs just and equitable under the
premises.” FACTS: The case involves a large tract of land located in
the boundaries of Pasig, Rizal and Ortigas wherein the
They alleged that they have a clear and constitutional right
said petitioners thru their predecessors-in-interest
to a balanced and healthful ecology and are entitled to
"Provincial del Santisima Nombre de Jesus de Agustinos
protection by the State in its capacity as parens patriae.
Calzados," has been in continuous possession since 1862
Furthermore, they claim that the act of the defendant in
or 125 years ago, as confirmed by the Court in Compana
allowing TLA holders to cut and deforest the remaining
Agricola de Ultramar v. Marcos Domingo, et al., 6 Phil.
forests constitutes a misappropriation and/or impairment
246 (1906), when it affirmed the decision of the Court of
Land Registration declaring the Compana Agricola de
42
Ultramar, also one of petitioner's predecessors-in-interest, The NPO was formed on July 25, 1987, during the term
owner of the lands in question to the exclusion of the of former President Corazon C. Aquino (President
claims of contestants or any persons holding under them. Aquino), by virtue of Executive Order No. 285which
Said titles are in the Registry of Deeds of Rizal. provided, among others, the creation of the NPO from the
merger of the Government Printing Office and the
Pedro del Rosario and three others in behalf of 104 others,
relevant printing units of the Philippine Information
as a class suit, filed a civil case against the petitioner
Agency (PIA). Section 6 of Executive Order No. 285
alleging that said title of the petitioner should be declared
reads:
as null and void for lack of publication in the land registry
proceedings and declaring that they are the lawful owners
SECTION 6. Creation of the National Printing Office.
of the said land.
There is hereby created a National Printing Office out of
Another civil case was instituted by Inocencio Bernardo the merger of the Government Printing Office and the
and five others in behalf of 37 others, as a class suit, relevant printing units of the Philippine Information
concerning another portion of the said land. Said case was Agency. The Office shall have exclusive printing
identical to the case file by Pedro del Rosario and jurisdiction over the following:
others.An urgent ex-parte motion of private respondents,
opposing among others, petitioner's construction of a. Printing, binding and distribution of all standard and
fences and high walls, roads, streets and canals on the land accountable forms of national, provincial, city and
in dispute.In the resolution of the Supreme Court directed municipal governments, including government
the issuance of a writ of preliminary injunction upon corporations;
petitioner's filing of a bond in the sum of ten thousand
pesos (P10,000.00), enjoining respondent Court from b. Printing of officials ballots;
enforcing the restraining order.
c. Printing of public documents such as the Official
ISSUE: Whether or not there is a valid class suit. Gazette, General Appropriations Act, Philippine Reports,
HELD: No. The Supreme Court cited the case of (Borlaza and development information materials of the Philippine
v. Polistico, 47 Phil. 348; Newsweek, Inc. v. The Information Agency.
Intermediate Appellate Court, et al., G.R. No. 63559,
promulgated May 30, 1986) where in it stated that, “It is The Office may also accept other government printing
not a case where one or more may sue for the benefit of jobs, including government publications, aside from those
all or where the representation of class interest affected by enumerated above, but not in an exclusive basis.
the judgment or decree is indispensable to make each
member of the class an actual party.”Furthermore, class The details of the organization, powers, functions,
suit will not lie because each defendant has an interest authorities, and related management aspects of the Office
only in the particular portion of the said land that each of shall be provided in the implementing details which shall
them occupies. They do not have any common interest in be prepared and promulgated in accordance with Section
the subject matter in controversy II of this Executive Order.

The Office shall be attached to the Philippine Information


Agency.
BANDA VS ERMITA
FACTS: The present controversy arose from a Petition On October 25, 2004, President Arroyo issued the herein
forCertiorari and prohibition challenging the assailed Executive Order No. 378, amending Section 6 of
constitutionality of Executive Order No. 378 dated Executive Order No. 285 by, inter alia, removing the
October 25, 2004, issued by President Gloria Macapagal exclusive jurisdiction of the NPO over the printing
Arroyo (President Arroyo). Petitioners characterize their services requirements of government agencies and
action as a class suit filed on their own behalf and on instrumentalities.
behalf of all their co-employees at the National Printing
Office (NPO). Pursuant to Executive Order No. 378, government
agencies and instrumentalities are allowed to source their

43
printing services from the private sector through Section 17, Article VII of the 1987 Constitution, clearly
competitive bidding, subject to the condition that the states: "[T]he president shall have control of all executive
services offered by the private supplier be of superior departments, bureaus and offices." Section 31, Book III,
quality and lower in cost compared to what was offered Chapter 10 of Executive Order No. 292, also known as
by the NPO. Executive Order No. 378 also limited NPOs the Administrative Code of 1987 reads:
appropriation in the General Appropriations Act to its
income. SEC. 31. Continuing Authority of the President to
Reorganize his Office - The President, subject to the
Perceiving Executive Order No. 378 as a threat to their policy in the Executive Office and in order to achieve
security of tenure as employees of the NPO, petitioners simplicity, economy and efficiency, shall have continuing
now challenge its constitutionality, contending that: (1) it authority to reorganize the administrative structure of the
is beyond the executive powers of President Arroyo to Office of the President.:
amend or repeal Executive Order No. 285 issued by
former President Aquino when the latter still exercised The Administrative Code provides that the Office of the
legislative powers; and (2) Executive Order No. 378 President consists of the Office of the President Proper
violates petitioners security of tenure, because it paves the and the agencies under it. The agencies under the Office
way for the gradual abolition of the NPO. of the President are identified in Section 23, Chapter 8,
Title II of the Administrative Code:
ISSUE: Whether the E.O no. 378 is Constitutional.
Sec. 23. The Agencies under the Office of the
HELD: Yes. It is constitutional President.The agencies under the Office of the President
refer to those offices placed under the chairmanship of the
POLITICAL LAW: reorganization President, those under the supervision and control of the
President, those under the administrative supervision of
In the present case, involving neither an abolition nor the Office of the President, those attached to it for policy
transfer of offices,the assailed action is a mere and program coordination, and those that are not placed
reorganization under the general provisions of the law by law or order creating them under any specific
consisting mainly of streamlining the NTA in the interest department.
of simplicity, economy and efficiency. It is an act well
within the authority of the President motivated and carried The power of the President to reorganize the executive
out, according to the findings of the appellate court, in department is likewise recognized in general
good faith, a factual assessment that this Court could only appropriations laws.
but accept.
Clearly, Executive Order No. 102 is well within the
In the more recent case of Tondo Medical Center constitutional power of the President to issue. The
Employees Association v. Court of Appeals 527 SCRA President did not usurp any legislative prerogative in
746which involved a structural and functional issuing Executive Order No. 102. It is an exercise of the
reorganization of the Department of Health under an Presidents constitutional power of control over the
executive order, we reiterated the principle that the power executive department, supported by the provisions of the
of the President to reorganize agencies under the Administrative Code, recognized by other statutes, and
executive department by executive or administrative consistently affirmed by this Court.
order is constitutionally and statutorily recognized. We
held in that case: In establishing an executive department, bureau or office,
the legislature necessarily ordains an executive agencys
This Court has already ruled in a number of cases that the position in the scheme of administrative structure. Such
President may, by executive or administrative order, determination is primary, but subject to the Presidents
direct the reorganization of government entities under the continuing authority to reorganize the administrative
Executive Department. This is also sanctioned under the structure. As far as bureaus, agencies or offices in the
Constitution, as well as other statutes. executive department are concerned, the power of control
may justify the President to deactivate the functions of a

44
particular office. Or a law may expressly grant the offered to buy the property at 4,000/sqm. Reyes did not
President the broad authority to carry out reorganization accept the offer as he wanted to sell it at 6,000/sqm. At
measures. The Administrative Code of 1987 is one such this point, no agreement was still arrived. On Nov. 2,
law. 1988,Reyes, through its counsel, sent a letter informing
Riviera that Reyes was selling the property at 6,000/sqm
The issuance of Executive Order No. 378 by President and that Riviera is given 10 days to purchase the property.
Arroyo is an exercise of a delegated legislative power As reply, Riviera sent a letter making an offer at
granted by the aforementioned Section 31, Chapter 10, 5,000/sqm. However, still no agreement was made
Title III, Book III of the Administrative Code of 1987, between the parties.
which provides for the continuing authority of the
Meanwhile, on December 4, 1988, Reyes confided to
President to reorganize the Office of the President, "in
Rolando P. Traballo, a close family friend and President
order to achieve simplicity, economy and efficiency."
of Cypress, his predicament about the nearing expiry date
This is a matter already well-entrenched in jurisprudence.
of the redemption period of the foreclosed mortgaged
The reorganization of such an office through executive or
property with Prudential Bank, the money for which he
administrative order is also recognized in the
could not raise on time thereby offering the subject
Administrative Code of 1987.
property to him for Six Thousand Pesos (P6,000.00) per
square meter. Traballo expressed interest in buying the
The Petition is denied.
said property, told Reyes that he will study the matter and
suggested for them to meet the next day.
JUANA COMPLEX I HOMEOWNERS ASSOC INC They met the next day, December 5, 1988, at which time
VS FIL-ESTATE LAND INC (SEE PREVIOUS Traballo bargained for Five Thousand Three Hundred
CASE) Pesos (P5,300.00) per square meter. After considering the
reasons cited by Traballo for his quoted price, Reyes
accepted the same. However, since Traballo did not have
PHIL CHARTER INSURANCE VS EXPLORER the amount with which to pay Reyes, he told the latter that
MARITIME (see full) he will look for a partner for that purpose. Reyes told
Traballo that he had already afforded Riviera its right of
first refusal but they cannot agree because Riviera’s final
RIVIERA FILIPINA VS CA offer was for Five Thousand Pesos (P5,000.00) per square
meter.
FACTS: Respondent Juan L. Reyes (Reyes) executed a
Contract of Lease with Riviera. The ten-year (10) Sometime in January 1989, apprehensive of the
renewable lease of Riviera, which started on August 1, impending expiration in March 1989 of the redemption
1982, involved a 1,018 square meter parcel of land located period of the foreclosed mortgaged property with
along EDSA, Quezon City, covered and described in Prudential Bank and the deal between Reyes and Traballo
Transfer Certificate of Title No. 186326 of the Registry was not yet formally concluded, Reyes decided to
of Deeds of Quezon City in the name of Juan L. Reyes. approach anew Riviera. For this purpose, he requested his
The subject land is mortgaged in favor of Prudential nephew, Atty. Estanislao Alinea, to approach Angeles and
Bank. Since Reyes’ loan remained unpaid, the bank find out if the latter was still interested in buying the
extrajudicially foreclosed the property. At the auction subject property and ask him to raise his offer for the
sale, the bank was declared as the highest bidder. The purchase of the said property a little higher. As instructed,
redemption period was set to expire on March 7, 1989. Atty. Alinea met with Angeles and asked the latter to
Realizing that he could not possibly raise in time the increase his offer of Five Thousand Pesos (P5,000.00) per
money needed to redeem the subject property, Reyes square meter but Angeles said that his offer is Five
decided to sell the same. Recognizing Riviera’s right of Thousand Pesos (P5,000.00) per square meter.
first refusal, the subject land was first offered to Riviera, Following the meeting, Angeles sent a letter dated
through its President Vicente C. Angeles. The first offer February 4, 1989 to Reyes, through Atty. Alinea, that his
made by Reyes was at 5,000/sqm. However, Angeles offer is Five Thousand Pesos (P5,000.00) per square
bargained at 3,500/sqm. After seven months, Angeles meter payment of which would be fifty percent (50%)
45
down within thirty (30) days upon submission of certain assigned this error, it later filed on October 27, 1994 a
documents in three (3) days, the balance payable in five Manifestation with the Court of Appeals stating that it has
(5) years in equal monthly installments at twelve percent discovered that Reyes is already dead, in view of which
(12%) interest in diminishing balance.With the terms of the appellate court issued a Resolution dated December
this second offer, Angeles admittedly downgraded the 16, 1994 which noted the manifestation of Riviera and
previous offer of Riviera on December 2, 1988. directed the counsel of Reyes to submit a copy of the
latter’s death certificate and to file the proper motion for
Atty. Alinea conveyed to Reyes Riviera’s offer of Five
substitution of party.Complying therewith, the necessary
Thousand Pesos (P5,000.00) per square meter but Reyes
motion for substitution of deceased Reyes, who died on
did not agree. Consequently, Atty. Alinea contacted again
January 7, 1994, was filed by the heirs, namely, Estefania
Angeles and asked him if he can increase his price.
B. Reyes, Juanita R. de la Rosa, Juan B. Reyes, Jr. and
Angeles, however, said he cannot add anymore. Reyes did
Fidel B. Reyes. Acting on the motion for substitution, the
not expressly offer his subject property to Riviera at the
Court of Appeals granted the same.
price of Five Thousand Three Hundred Pesos (P5,300.00)
per square meter. Notwithstanding the foregoing, Section 16 and 17 of
Rule 3 of the Revised Rules of Court, upon which Riviera
Sometime in February 1989, Cypress and its partner in the
anchors its argument, has already been amended by the
venture, Cornhill Trading Corporation, were able to come
1997 Rules of Civil Procedure. Even applying the old
up with the amount sufficient to cover the redemption
Rules, the failure of a counsel to comply with his duty
money, with which Reyes paid to the Prudential Bank to
under Section 16 of Rule 3 of the Revised Rules of Court,
redeem the subject property. On May 1, 1989, a Deed of
to inform the court of the death of his client and no
Absolute Sale covering the subject property was executed
substitution of such is effected, will not invalidate the
by Reyes in favor of Cypress and Cornhill for the
proceedings and the judgment thereon if the action
consideration of Five Million Three Hundred Ninety Five
survives the death of such party, as this case does, since
Thousand Four Hundred Pesos (P5,395,400.00). On the
the death of Reyes did not extinguish his civil personality.
same date, Cypress and Cornhill mortgaged the subject
The appellate court was well within its jurisdiction to
property to Urban Development Bank for Three Million
proceed as it did with the case since the death of a party
Pesos (P3,000,000.00).
is not subject to its judicial notice. Needless to stress, the
Thereafter, Riviera sought from Reyes, Cypress and purpose behind the rule on substitution of parties is the
Cornhill a resale of the subject property to it claiming that protection of the right of every party to due process
its right of first refusal under the lease contract was
violated. After several unsuccessful attempts, Riviera
filed the suit to compel Reyes, Cypress, Cornhill and LAWAS VS CA
Urban Development Bank to transfer the disputed title to
FACTS: This is an appeal by certiorari under Rule 45 of
the land in favor of Riviera upon its payment of the price
the Revised Rules of Court from the decision of the Court
paid by Cypress and Cornhill.Both the trial court and the
of Appeals which dismissed the petition for certiorari
appellate court rendered judgment in favor of Reyes.
under, Rule 65 of said Rules against respondent Judge
ISSUE: Whether or not the CA committee a grave abuse Bernardo L. Salas of the Court of First Instance (CFI) of
of discretion tantamount to lack or excess of its Cebu. The antecedent facts are briefly as follows:
jurisdiction in deciding petitioner’s appeal at a time when
Private respondent Pacifico Pelaez filed a Complaint on
the principal appellee is allegedly dead and no proper
December 6, 1972 against petitioner's father, Pedro
substitution of the alleged deceased party has been made;
Sepulveda, for ownership and partition of certain parcels
Hence, the decision of the CA and its resolution denying
of land. Defendant Pedro Sepulveda filed his Answer
reconsideration, is null and void.
dated December 31, 1972 resisting the claim and raising
HELD: No. On the last error attributed to the Court of the special defenses of laches, prescription and failure to
Appeals which is the effect on the jurisdiction of the ventilate in a previous special proceeding. During the
appellate court of the non-substitution of Reyes, who died presentation of evidence for the plaintiff, the defendant
during the pendency of the appeal, the Court notes that died on March 25, 1975. On May 21, 1975, counsels for
when Riviera filed its petition with this Court and the deceased defendant filed a notice of death wherein

46
were enumerated the thirteen children and surviving postponement of the hearing made by one of the three
spouse of the deceased. heirs on the ground of the absence of their counsel.
On May 5, 1975, petitioner filed a petition for letters of On July 9, 1976, petitioner, who had been appointed
administration and she was appointed judicial judicial administratrix of the estate of the deceased
administratrix of the estate of her late father in July, 1976. defendant and who was one of the heirs who had filed an
At the hearing of the case on November 27, 1975, Attys. Answer on February 19, 1976, filed a motion to intervene
Domingo Antigua and Serafin Branzuela, former and/or substitute the deceased defendant. On August 25,
counsels for the deceased defendant, manifested in open 1976, the respondent trial judge denied the motion for the
court that with the death of their client, their contract with reason that the decision had already become final.
him was also terminated and none of the thirteen children
Petitioner then filed a special civil action of certiorari with
nor the surviving spouse had renewed the contract, but
the Court of Appeals to annul the proceedings in the
instead they had engaged the services of other lawyers in
respondent trial court. However, the Court of Appeals
the intestate proceedings. Notwithstanding the
dismissed the petition for certiorari. Hence, the present
manifestation of the former counsels of the deceased
appeal.
defendant, the respondent trial judge set the case for
hearing on January 13, 1976 and sent the notice of hearing ISSUE: Whether or not the CFI and CA erred in its
to said counsels. decision for failure to comply with Sec. 16, Rule 3, Rules
of Court.
On January 13, 1976, the respondent trial judge issued
three orders. The first order substituted the heirs of the HELD: Yes. The appeal is meritorious. Section 16 of
deceased defendant, namely, his thirteen children and Rule 3 provides as follows:
surviving spouse, as defendants; the second order
authorized Atty. Teodoro Almase, counsel for the Duty of attorney upon death, incapacity, or incompetency
plaintiff, to present his evidence in the absence of Attys. of party. — Whenever a party to a pending case dies,
Antigua and Branzuela and the third order treated the case becomes incapacitated or incompetent, it shall be the duty
submitted for decision, after the plaintiff had presented of his attorney to inform the court promptly of such death,
his evidence and rested his case, and directed that said incapacity or incompetency, and to give the name and
counsels and the fourteen heirs of the deceased defendant residence of his executor, administrator, guardian or other
be furnished copies thereof. legal representative.

On January 28, 1976, the respondent trial judge rendered The former counsels for the deceased defendant, Pedro
a decision against the heirs of the deceased defendant. On Sepulveda, complied with this rule by filing a notice of
February 19, 1976, ten of the children of the deceased death on May 21, 1975. They also correctly manifested in
defendant, who apparently did not know that a decision open court at the hearing of the case on November 27,
had already been rendered, filed an Answer in- 1975, that with the death of their client their contract with
substitution of the deceased defendant through their him was also terminated and none of the heirs of the
counsel Atty. Jesus Yray. This was denied admission by deceased had renewed the contract, and the heirs had
the respondent trial judge for being already moot and instead engaged the services of other lawyers in the
academic because of the earlier decision. intestate proceedings.

On March 9, 1976, the widow and two other children of Both the respondent trial judge and the CA erred in
the deceased defendant, through their counsel Atty. considering the former counsels of the deceased
Delfin Quijano, filed a motion for substitution and for defendant as counsels for the heirs of the deceased. The
reconsideration of the decision dated January 28, 1976. statement in the decision of the CA that "the appearance
On April 7, 1976, the respondent trial judge issued an of the lawyers of their deceased father in court on January
order setting aside his decision and setting the case in the 13, 1976 carries the presumption that they were
calendar for cross-examination of the plaintiff, Pacifico authorized by the heirs of the deceased defendant" is
Pelaez, with a proviso that said order was applicable only erroneous. Moreover, such a presumption was not
to the three heirs who had filed the motion. On July 14, warranted in view of the manifestation of said lawyers in
1976, the respondent trial judge lifted the order setting open court on November 27, 1975 that they were not
aside his decision, despite the verbal petition for representing the heirs of the deceased defendant.

47
Consequently, when on the same date, November 27, representative shall immediately appear for and on behalf
1975, the respondent trial judge issued an order setting the of the interest of the deceased. The court charges involved
continuation of the trial of the case on January 13, 1976, in procuring such appointment, if defrayed by the
with notices sent to Atty. Almase for the plaintiff and opposing party, may be recovered as costs. The heirs of
Attys. Antigua and Branzuela for the deceased defendant, the de ceased may be allowed to be substituted for the
he acted with grave abuse of discretion amounting to deceased, without requiring the appointment of an
excess of jurisdiction. It was only at the hearing on executor or administrator and the court may appoint
January 13, 1976 that the respondent trial judge issued an guardian ad litem for the minor heirs.
order substituting the deceased defendant with his
As this Court has held:
fourteen heirs. This was followed with an order
authorizing counsel for the plaintiff to present his ... Under the Rule, it is the court that is called upon, after
evidence in the absence of Attys. Antigua and Branzuela, notice of a party's death and the claim is not thereby
and lastly, an order treating the case as submitted for extinguished, to order upon proper notice the legal
decision. representative of the deceased to appear within a period
of 30 days or such time as it may grant. Since no
In the order of the respondent trial judge dated November
administrator of the estate of the deceased appellant had
10, 1976, denying petitioner's motion for reconsideration
yet been appointed as the same was still pending
of the order denying her motion for intervention, mention
determination in the Court of First Instance of Quezon
was made of the delayed arrival of Attys. Antigua and
City, the motion of the deceased's counsel for the
Branzuela at the hearing on January 13, 1976 and of their
suspension of the running of the period within which to
being allowed to cross-examine the plaintiff himself.
file appellant's brief was well-taken. More, under the
The refusal of said former counsels of the deceased Rule, it should have set a period for the substitution of the
defendant to cross-examine the plaintiff was justified — deceased party with her legal representative or heirs,
failing which, the court is called upon to order the
... in view of the intervening event of appellant's death and
opposing party to procure the appointment of a legal
the interposition of the equally established principle that
representative of the deceased at the cost of the deceased's
the relationship of attorney and client is terminated by the
estate, and such representative shall then 'immediately
death of the client, as acknowledged by respondent court
appear for and on behalf of the interest of the deceased.
itself as well as respondents. In the absence of a retainer
from the heirs or authorized representatives of his Respondent court gravely erred in not following the Rule
deceased defendant the attorney would have no further and requiring the appearance of the legal representative of
power or authority to appear or take any further action in the deceased and instead dismissing the appeal of the
the case, save to inform the court of the client's death and deceased who yet had to be substituted in the pending
take the necessary steps to safeguard the decedent's rights appeal Thus, it has been held that when a party dies in an
in the case. (Vda. de Haberer vs. Court of Appeals, May action that survives, and no order is issued by the court
26, 1981, 104 SCRA 534, 540) for the appearance of the legal representative or of the
heirs of the deceased in substitution of the deceased, and
Moreover, as above stated, petitioner had as early as May
as a matter of fact no such substitution has ever been
5, 1975 filed a petition for letters of administration, and
effected, the trial held by the court without such legal
the same was granted in July, 1975. Section 17 of Rule 3
representatives or heirs and the judgment rendered after
provides as follows:
such trial are null and void because the court acquired no
Death of party. After a party dies and the claim is not jurisdiction over the persons of the legal representatives
thereby extinguished, the court shag order, upon proper or of the heirs upon whom the trial and the judgment
notice, the legal representative of the deceased to appear would be binding. (Ordoveza vs. Raymundo, 63 Phil 275
and to be substituted for the deceased, within a period of [1936]; Obut vs. Court of Appeals, et al., 70 SCRA 546)
thirty (30) days, or within such time as may be granted. If (Vda. de Haberer vs. Court of Appeals, supra, p. 541.
the legal representative fails to appear within said time,
Under the said Rule, priority is given to the legal
the court may order the opposing party to procure the
representative of the deceased, that is, the executor or
appointment of a legal representative of the deceased
administrator of his estate. It is only in cases of
within a time to be specified by the court, and the
unreasonable delay in the appointment of an executor or
48
administrator, or in cases where the heirs resort to an RTC Makati: Dismissed the complaint without prejudice
extrajudicial settlement of the estate, that the court may on the ground of improper venue.
adopt the alternative of allowing the heirs of the deceased
Tan filed an Omnibus Motion dated February 24, 1999,
to be substituted for the deceased.
seeking reconsideration of the dismissal and admission of
In the case at bar, in view of the pendency of Special the amended complaint. It included, inter alia, that: the
Proceeding No. 37-SF Intestate Estate of Pedro questioned article was printed and first published in the
Sepulveda, and the pending application of petitioner to be City of Makati and that the questioned caricature was
appointed judicial administratrix of the estate, the printed and first published in the City of Makati.
respondent trial judge should have awaited the
RTC Makati: admitted the amended complaint and
appointment of petitioner and granted her motion to
deemed set aside the previous order of dismissal, inter
substitute the deceased defendant. While the lower courts
alia, that: The mistake or deficiency in the original
correctly held that the death of Pedro Sepulveda did not
complaint appears now to have been cured in the
obliterate his verified Answer to the Complaint filed by
Amended Complaint which can still be properly admitted,
private respondent and that the Answer filed by the ten
pursuant to Rule 10 of the 1997 Rules of Civil Procedure,
heirs and the Answer filed by the Administratrix were
inasmuch as the Order of dismissal is not yet final.
both unnecessary, the said heirs or the administratrix
Besides, there is no substantial amendment in the
could, with leave of court, file an Amended Answer.
Amended Complaint which would affect the defendants’
In view of the foregoing, the Court rules that the defenses and their Answers. The Amendment is merely
proceedings conducted by the respondent trial judge after formal, contrary to the contention of the defendants that it
the death of the deceased defendant are null and void. is substantial.
CA: Two petitions for certiorari were filed, one filed by
petitioners and the other by defendants Umali and
NOCUM AND PHIL DAILY INQUIRER VS TAN
ALPAP. The two petitions were consolidated. In April
FACTS: On September 27, 1998, Lucio Tan filed a 2000, it ordered the dismissal of the petition and thereby
complaint against reporter Armand Nocum, Capt. affirming the RTC decision. Motions for reconsideration
Florendo Umali, ALPAP and Inquirer with the Regional was filed but was denied.
Trial Court of Makati seeking moral and exemplary
On 11 December 2000, the Court required respondent Tan
damages for the alleged malicious and defamatory
to comment on the petition filed by
imputations contained in a news article. INQUIRER and
petitioners.Respondent filed his comment on 22 January
NOCUM filed their joint answer, dated October 27, 1998,
2001[4] to which petitioners filed a reply on 26 April
wherein they alleged that: (1) the complaint failed to state
2001.In a Manifestation filed on 19 February 2001,
a cause of action; (2) the defamatory statements alleged
respondent stated that the petition[6] filed by defendants
in the complaint were general conclusions without factual
Umali and ALPAP has already been denied by the Court
premises; (3) the questioned news report constituted fair
in a resolution dated 17 January 2001.On 20 August 2003,
and true report on the matters of public interest
the Court resolved to give due course to the petition and
concerning a public figure and therefore, was privileged
required the parties to submit their respective memoranda
in nature; and (4) malice on their part was negated by the
within thirty (30) days from notice. Both petitioners and
publication in the same article of plaintiffs or PALs side
respondent complied.
of the dispute with the pilots union. ALPAP and UMALI
likewise filed their joint answer, dated October 31, 1998, ISSUE: Whether or not the RTC of Makati has
and alleged therein that: (1) the complaint stated no cause jurisdiction over the case upon the filing of the original
of action; (2) venue was improperly laid; and (3) plaintiff complaint for damages.
Lucio Tan was not a real party in interest. It appeared that
HELD: Yes. It is settled that jurisdiction is conferred by
the complaint failed to state the residence of the
law based on the facts alleged in the complaint since the
complainant at the time of the alleged commission of the
latter comprises a concise statement of the ultimate facts
offense and the place where the libelous article was
constituting the plaintiff's causes of action. In the case at
printed and first published.
bar, after examining the original complaint, we find that
the RTC acquired jurisdiction over the case when the case
49
was filed before it. From the allegations thereof, jurisdictional impediment. In fact, in civil cases, venue
respondent’s cause of action is for damages arising from may be waived. Consequently, by dismissing the case on
libel, the jurisdiction of which is vested with the RTC. the ground of improper venue, the lower court had
jurisdiction over the case. Apparently, the herein
Petitioners are confusing jurisdiction with venue. Hon.
petitioners recognized this jurisdiction by filing their
Florenz D. Regalado differentiated jurisdiction and venue
answers to the complaint, albeit, questioning the propriety
as follows: (a) Jurisdiction is the authority to hear and
of venue, instead of a motion to dismiss.
determine a case; venue is the place where the case is to
be heard or tried; (b) Jurisdiction is a matter of substantive The Court held that dismissal of the complaint by the
law; venue, of procedural law; (c) Jurisdiction establishes lower court was proper considering that the complaint,
a relation between the court and the subject matter; venue, indeed, on its face, failed to allege neither the residence
a relation between plaintiff and defendant, or petitioner of the complainant nor the place where the libelous article
and respondent; and, (d) Jurisdiction is fixed by law and was printed and first published. Nevertheless, before the
cannot be conferred by the parties; venue may be finality of the dismissal, the same may still be amended
conferred by the act or agreement of the parties. as in fact the amended complaint was admitted, in view
of the court a quos jurisdiction, of which it was never
In the case at bar, the additional allegations in the
divested. In so doing, the court acted properly and without
Amended Complaint that the article and the caricature
any grave abuse of discretion.
were printed and first published in the City of Makati
referred only to the question of venue and not jurisdiction. Petitioners argument that the lower court has no
These additional allegations would neither confer jurisdiction over the case because respondent failed to
jurisdiction on the RTC nor would respondents failure to allege the place where the libelous articles were printed
include the same in the original complaint divest the lower and first published would have been tenable if the case
court of its jurisdiction over the case. Respondents failure filed were a criminal case. The failure of the original
to allege these allegations gave the lower court the power, complaint to contain such information would be fatal
upon motion by a party, to dismiss the complaint on the because this fact involves the issue of venue which goes
ground that venue was not properly laid. into the territorial jurisdiction of the court. This is not to
be because the case before us is a civil action where venue
The rules on venue in Article 360 as follows:
is not jurisdictional.
1. Whether the offended party is a public official or a
private person, the criminal action may be filed in the
Court of First Instance of the province or city where the PAGLAUM MGMT AND DEVT COPR AND
libelous article is printed and first published. HEALTH MARKETING TECH INC VS UNION
BANK OF THE PHLS (SEE PREVIOUS CASE)
2. If the offended party is a private individual, the criminal
action may also be filed in the Court of First Instance of FACTS: Paglaum Management and Development
the province where he actually resided at the time of the Corporation is the registered owner of three parcels of
commission of the offense. land located in Cebu. Union Bank extended HealthTech a
credit line and to secure this obligation Paglaum exectuted
3. If the offended party is a public officer whose office is
three Real Estate Mortgages in favor of Union Bank. The
in Manila at the time of the commission of the offense,
parties entered into a Restructuring Agreement, which
the action may be filed in the Court of First Instance of
states that any action or proceeding arising out of the
Manila.
transaction shall be commenced in Makati City, with both
4. If the offended party is a public officer holding office parties waiving any other venue. The restructuring was
outside of Manila, the action may be filed in the Court of due to HealthTech’s failure to meet its obligations after
First Instance of the province or city where he held office the Asian financial crisis adversely affected its business.
at the time of the commission of the offense. Despite the restructuring, Heatltech still failed to pay its
obligation which prompted Union Bank to institute
It is a well-established rule that venue has nothing to do foreclosure proceedings. Union Bank extra-judicially
with jurisdiction, except in criminal actions. Assuming foreclosed the mortgaged properties. The bank filed a
that venue were properly laid in the court where the action
was instituted, that would be procedural, not a
50
Petition for Consolidation of Title after it won the auction According to Sec 3. Rule 4 of the Rules of Court: Sec. 3.
sale. When Rule not applicable. This Rule shall not apply
HealthTech later filed a Complaint for Annulment of Sale a) In those cases where a specific rule or law provides
and Titles with Damages and Application for Temporary otherwise; or b) Where the parties have validly agreed in
Restraining Order and Writ of Injunction, praying for: (a) writing before the filing of the action on the exclusive
the issuance of a temporary restraining order, and later a venue thereof
writ of preliminary injunction, directing Union Bank to
According to the Supreme Court in Sps. Lantin v.
refrain from exercising acts of ownership over the
Lantion, “the general rules on venue of actions shall not
foreclosed properties; (b) the annulment of the extra-
apply where the parties, before the filing of the action,
judicial foreclosure of real properties; (c) the cancellation
have validly agreed in writing on an exclusive venue. The
of the registration of the Certificates of Sale and the
mere stipulation on the venue of an action, however, is not
resulting titles issued; (d) the reinstatement of
enough to preclude parties from bringing a case in other
PAGLAUMs ownership over the subject properties; and
venues. The parties must be able to show that such
(e) the payment of damages. The complaint was filed in
stipulation is exclusive. In the absence of qualifying or
Makati City.
restrictive words, the stipulation should be deemed as
Union Bank filed a motion to dismiss of the grounds of, merely an agreement on an additional forum, not as
lack of jurisdiction over the issuance of the injunctive limiting venue to the specified place.”
relief, improper venue, and lack of authority if the person
Motion for Reconsideration April 17, 2013
who signed the Complaint. This motion was granted
resulting in the dismissal of the case. Paglaum and Union Bank for the first time, raised three new arguments.
HealhTech elevated the case to the CA but was denied. First that the restructuring agreement was null and void
Now, PAGLAUM and HealthTech argue that: (a) the because the condition precedent that the borrower should
Restructuring Agreement governs the choice of venue not be in default, was not complied with. Second even if
between the parties, and (b) the agreement on the choice the Restructuring Agreement is enforceable, it was only
of venue must be interpreted with the convenience of the between Health Tech and Union Bank. PAGLAUM was
parties in mind and the view that any obscurity therein a party only to the Real Estate Mortgages (which was
was caused by Union Bank entered into before the Restructuring Agreement) and not
to the Restructuring Agreement. Therefore, the venue
ISSUE: Whether or not Makati City is the proper venue
insofar as it is concerned is exclusively in Cebu City
to assail the foreclosure of the subject real estate
pursuant to the venue stipulation in the mortgage
mortgage.
contracts. Third, that the RTC’s assumption of
HELD: Yes, Makati City is the proper venue to assail the jurisdiction over the case was without basis because, the
foreclosure of the subject real estate mortgage. Complaint being an accion reinvindicatoria the assessed
value of the real property determines which court has
In the present case, although the action is a real action,
jurisdiction. It further argues that the complaint does not
where the properties are situated in Cebu, Paglaum and
show the assessed value of the parcels of land.
Union Bank have stipulated that the venue of any case
arising from their transaction would be in Makati City. The Supreme Court denied the Motion for
The phrase “ waive any other venue” shows that the Reconsideration because the issues were raised for the
choice of venue was only Makati City first time in a motion for reconsideration. All new issues
or defences were deemed waived because they should
According to Section 1of Rule 4 of the Rules of Court:
have been brought up in the first opportunity
Venue of real actions. Actions affecting title to or
possession of real property, or interest therein, shall be
commenced and tried in the proper court which has
jurisdiction over the area wherein the real property THEODORE AND NANCY AND VS SPS ALAN
involved, or a portion thereof, is situated. Forcible entry AND EM ANG (SEE PREVIOUS CASE)
and detainer actions shall be commenced and tried in the
municipal trial court of the municipality or city wherein
the real property involved, or a portion thereof, is situated
51
SPS TEODORO SARAZA VS WILLIAM ISSUE: Whether or not venue was properly laid in the
FRANCISCO (see full) province of Bulacan where defendant is a resident.
HELD: Yes, venue was proper. Section 2 (b), Rule 4 of
the Rules of Court on venue of personal actions triable by
THEODORE AND NANCY AND VS SPS ALAN courts of first instance — and this is one — provides that
AND EM ANG (SEE PREVIOUS CASE) such "actions may be commenced and tried where the
defendant or any of the defendants resides or may be
found, or where the plaintiff or any of the plaintiffs
PAGLAUM MGMT AND DEVT CORP AND resides, at the election of the plaintiff." Qualifying this
HEALTECH VS UNION BANK OF THE PHILS provision in Section 3 of the same Rule which states that
(SEE PREVIOUS CASE) venue may be stipulated by written agreement — "By
written agreement of the parties the venue of an action
may be changed or transferred from one province to
POLYTRADE CORP VS BLANCO another."
FACTS: Suit before the Court of First Instance of Defendant places his case upon Section 3 of Rule 4 just
Bulacan on four causes of action to recover the purchase quoted. According to defendant, plaintiff and defendant,
price of rawhide delivered by plaintiff to defendant. by written contracts covering the four causes of action,
Plaintiff corporation has its principal office and place of stipulated that: "The parties agree to sue and be sued in
business in Makati, Rizal. Defendant is a resident of the Courts of Manila." This agreement is valid. Defendant
Meycauayan, Bulacan. Defendant moved to dismiss upon says that because of such covenant he can only be sued in
the ground of improper venue. He claims that by contract the courts of Manila. We are thus called upon to shake
suit may only be lodged in the courts of Manila. The meaning from the terms of the agreement just quoted.
Bulacan court overruled him. He did not answer the
complaint. In consequence, a default judgment was No such stipulation appears in the contracts covering the
rendered against him on September 21, 1966, thus: first two causes of action. The general rule set forth in
Section 2 (b), Rule 4, governs, and as to said two causes
WHEREFORE, judgment is hereby rendered in favor of of action, venue was properly laid in Bulacan, the
plaintiff and against defendant ordering defendant to pay province of defendant's residence. The stipulation
plaintiff the following amounts: adverted to is only found in the agreements covering the
third and fourth causes of action. An accurate reading,
First Cause of Action — P60,845.67, with interest thereon
however, of the stipulation, "The parties agree to sue and
at 1% a month from May 9, 1965 until the full amount is
be sued in the Courts of Manila," does not preclude the
paid.
filing of suits in the residence of plaintiff or defendant.
Second Cause of Action — P51,952.55, with interest
The plain meaning is that the parties merely consented to
thereon at 1% a month from March 30, 1965 until the full
be sued in Manila. Qualifying or restrictive words which
amount is paid.
would indicate that Manila and Manila alone is the venue
Third Cause of Action — P53,973.07, with interest are totally absent therefrom. We cannot read into that
thereon at 1% a month from July 3, 1965 until the full clause that plaintiff and defendant bound themselves to
amount is paid. file suits with respect to the last two transactions in
question only or exclusively in Manila. It simply is
Fourth Cause of Action — P41,075.22, with interest permissive.
thereon at 1% a month until the full amount is paid.
The parties solely agreed to add the courts of Manila as
In addition, defendant shall pay plaintiff attorney's fees tribunals to which they may resort. They did not waive
amounting to 25% of the principal amount due in each their right to pursue remedy in the courts specifically
cause of action, and the costs of the suit. The amount of mentioned in Section 2(b) of Rule 4. Renuntiatio non
P400.00 shall be deducted from the total amount due praesumitur
plaintiff in accordance with this judgment.
Defendant appealed.
52
SWEET LINES VS TEVES refuse, leaving them no choice but to pay and avail the
said tickets out of necessity.
FACTS: Respondents Atty. Leovigildo Tandog and
Rogelio Tiro bought two tickets in the branch office of ISSUES: (1) Whether or not the condition printed at the
Sweet Lines at Cagayan de Oro City (CDO) for Voyage back of the ticket which limits the venue of actions arising
90 aswere scheduled to board in the petitioner’s vessel from the contract of carriage is valid and enforceable.
M/S Sweet Hope bound for Tagbilaran City via the port
(2) Whether or not the condition constitutes a valid waiver
of Cebu. However, upon knowing that the vessel will not
as to venue
anymore proceed to Bohol, Tandog and Tiro went again
to the branch office of Sweet Lines for proper relocation HELD: (1) No. The condition printed on the ticket is void
to M/S Sweet Town. And while on board on the said and unenforceable.
vessel, the two were forced to hide at the cargoes section
of the ship to avoid the inspection being conducted by the The one involved in the case is a contract of adhesion in
Philippine Coastguard since the vessel already reached its which the validity and/or enforceability will have to be
passenger capacity. During the trip, Tandog and Tiro determined by peculiar circumstances obtaining in each
alleged that they were exposed to the scorching heat of case and the nature of the conditions or terms sought to be
the sun and dust coming from the cargoes. They also enforced. Generally, contracts of adhesion are drafted and
claimed that the tickets they bought in CDO were prepared only by one party and is sought to be accepted
dishonored as they were constrained to pay for other or adhered by the other party who cannot change the same
tickets. The incident prompted Tandog and Tiro to sue and who are thus made to adhere thereto on the “take it”
Sweet Lines for damages and for breach of contract of or “leave it” basis. Because of such imbalance nature of
carriage before the CFI of Misamis Oriental. this kind of contract, jurisprudence formulated certain
guidelines in the determination of their validity and
Sweet Lines moved to dismiss the case on the ground of enforceability in order to establish justice and fair play by
improper venue basing the said dismissal on the condition placing the weaker party on equal footing with another
printed at the back of the tickets that where in any case, who solely prepared the same.
all actions arising out of the conditions and provisions of
the said tickets shall only be filed in the courts in the city In the case at bar, the Court ruled that such condition
of Cebu. imposed on the ticket by petitioner Sweet Lines is void
and unenforceable for it would be unfair, considering that
Thereafter, Respondent Judge Teves denied the motion to Sweet Lines is engaged in inter-land shipping
dismiss filed by Sweet Lines which thereafter filed a transportation business, to bind passengers to the terms of
motion for reconsideration from the order of denial but to conditions printed at the back of the tickets and prejudice
no avail. Thus, Sweet Lines filed an instant petition for their rights and interests to file suits against the petitioner
prohibition for preliminary injunction to the Supreme as it solely imposed that such actions should only be filed
Court praying that the respondent judge be restrained in the courts of Cebu city. And under these circumstances,
from proceeding further with the case filed by Tandog and it is hardly just and proper to expect the passengers to
Tiro for grave abuse of discretion amounting to lack of examine their tickets received from crowded/congested
jurisdiction. counters, more often than not during rush hours, for
conditions that may be printed much charge them with
Sweet Lines contends that the condition printed on the
having consented to the conditions, so printed, especially
tickets is valid and enforceable since Tandog and Tiro
if there are a number of such conditions in fine print, as in
acceded to it when they purchased the same in CDO and
this case.
took its vessel M/S Sweet Town as a relocation vessel.
They also argued that the condition is binding among the With regard to the rules on venue, the Court held that:
respondents since it is a valid waiver of venue. On the
other hand, respondents countered that the said condition “The condition cited above is subversive of public policy
is invalid considering that the same is not an essential on transfers of venue of actions. For, although venue may
element of the contract of carriage, being in itself a be changed or transferred from one province to another by
separate agreement which requires the mutual consent of agreement of the parties in writing in relation to Rule 4,
both parties. They also claimed that such condition is Section 3, of the Rules of Court, such agreement will not
prepared solely by Sweet Lines by which they could not be held valid where it practically negates the action of the

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claimants, such as the private respondents herein. The
philosophy underlying the provisions on transfer of venue
of actions is the convenience of the plaintiffs as well as
his witnesses and to promote the ends of justice.
Considering the expense and trouble a passenger residing
outside of Cebu City would incur to prosecute a claim in
the City of Cebu, he would most probably decide not to
file the action at all. The condition will thus defeat,
instead of enhance, the ends of justice. Upon the other
hand, petitioner has branches or offices in the respective
ports of call of its vessels and can afford to litigate in any
of these places. Hence, the filing of the suit in the CFI of
Misamis Oriental, as was done in the instant case, will not
cause inconvenience to, much less prejudice, petitioner”.

PHILIP GO VS DISTINCTION PROPERTIES


DEVT AND CONSTRUCTION INC (SEE
PREVIOUS CASE)

54