RAMON CHING AND PO WING CORP VS
Mercedes, being of low educational attainment, was
RODRIGUEZ
Facts: The private respondents filed a Complaint against
the Ramon Ching (Ramon), Po Wing Properties and
Stronghold Insurance Company, Global Business Bank,
Inc. (formerly PhilBank), Elena Tiu Del Pilar, Asia
Atlantic Resources Ventures, Inc., Registers of Deeds of
Manila and Malabon, and all persons claiming rights or
titles from Ramon and his successors-in-interest.
In the Complaint, the respondents alleged the following
as causes of action:
First Cause of Action.
1. They are the heirs of Lim San, also known as Antonio
Ching / Tiong Cheng / Ching Cheng Suy (Antonio).
2. Respondents Joseph Cheng (Joseph) and Jaime Cheng
(Jaime) are allegedly the children of Antonio with his
common-law wife, respondent Mercedes Igne
(Mercedes).
3. Respondent Lucina Santos (Lucina) claimed that she
was also a common-law wife of Antonio.
4. The respondents averred that Ramon misrepresented
himself as Antonio's and Lucina's son when in truth and
in fact, he was adopted and his birth certificate was merely
simulated.
5. Antonio died of a stab wound. Police investigators
identified Ramon as the prime suspect and he now stands
as the lone accused in a criminal case for murder filed
against him. Warrants of arrest issued against him have
remained unserved as he is at large.
6. From the foregoing circumstances and upon the
authority of Article 919of the New Civil Code (NCC), the
respondents concluded that Ramon can be legally
disinherited, hence, prohibited from receiving any share
from the estate of Antonio.
Second Cause of Action.
1. Ramon misrepresented that there were only six real
estate properties left by Antonio.
2. Ramon had illegally transferred to his name the titles to
the said properties. Further, there are two other parcels of
land, cash and jewelries, plus properties in Hongkong,
which were in Ramon's possession.
Third Cause of Action.
1.
sweet-talked by Ramon into surrendering to him a Global
Business Bank, Inc. (Global Bank) Certificate of Time
Deposit of P4,000,000.00 in the name of Antonio, and the
certificates of title covering two condominium units in
Binondo which were purchased by Antonio using his own
money but which were registered in Ramon's name.
2. Ramon also fraudulently misrepresented to Joseph,
Jaime and Mercedes that they will promptly receive their
complete shares, exclusive of the stocks in Po Wing
Properties, Inc. (Po Wing), from the estate of Antonio.
Exerting undue influence, Ramon had convinced them to
execute an Agreement which was not complied with.
3. Further, Lucina was not informed of the execution of
the said instruments and had not received any amount
from Ramon. Hence, the instruments are null and void.
Fourth Cause of Action.
1. Antonio's 40,000 shares in Po Wing, which constitute
60% of the latter's total capital stock, were illegally
transferred by Ramon to his own name through a forged
document of sale executed after Antonio died.
2. Po Wing owns a ten-storey building in Binondo.
Ramon's claim that he bought the stocks from Antonio
before the latter died is baseless. Further, Lucina's shares
in Po Wing had also banished into thin air through
Ramon's machinations.
Fifth Cause of Action.
1. Ramon executed an Affidavit of Extra-Judicial
Settlement of Estate adjudicating solely to himself
Antonio's entire estate to the prejudice of the respondents.
By virtue of the said instrument, new TCTs covering eight
real properties owned by Antonio were issued in Ramon's
name.
2. Relative to the Po Wing shares, the Register of Deeds
of Manila had required Ramon to post a Surety Bond
conditioned to answer for whatever claims which may
eventually surface in connection with the said stocks. Co-
defendant Stronghold Insurance Company issued the
bond in Ramon's behalf.
Sixth Cause of Action.
1. Ramon sold Antonio's two parcels of land in Navotas
to co-defendant Asia Atlantic Business Ventures, Inc.
Another parcel of land, which was part of Antonio's
1
estate, was sold by Ramon to co-defendant Elena Tiu Del
Pilar at an unreasonably low price.
2. By reason of Ramon's lack of authority to dispose of
any part of Antonio's estate, the conveyances are null and
void ab initio.
Since Ramon is at large, his wife, Belen Dy Tan Ching,
now manages Antonio's estate. She has no intent to
convey to the respondents their shares in the estate of
Antonio.The Amended Complaint, which impleaded
Metrobank as successor-in-interest of Global, also added
a seventh cause of action relative to the existence of a
Certificate of Premium Plus Acquisition (CPPA) in the
amount of P4,000,000.00 originally issued by PhilBank to
Antonio. The respondents prayed that they be declared as
the rightful owners of the CPPA and that it be
immediately released to them. Alternatively, the
respondents prayed for the issuance of a hold order
relative to the CPPA to preserve it during the pendency of
the case.
Petitioners filed a Motion to Dismiss on the respondents'
Amended Complaint on the alleged ground of the RTC's
lack of jurisdiction over the subject matter of the
Complaint. The petitioners argued that since the
Amended Complaint sought the release of the CPPA to
the respondents, the latter's declaration as heirs of
Antonio, and the propriety of Ramon's disinheritance, the
suit partakes of the nature of a special proceeding and not
an ordinary action for declaration of nullity. Hence,
jurisdiction pertains to a probate or intestate court and not
to the RTC acting as an ordinary court.
RTC issued an Order denying the petitioners' Motion to
Dismiss on the ground that the action delves mainly on
the question of ownership of the properties described in
the complaint. Also, the issue of disinheritance can be
fully settled after a trial on the merits. And at this stage, it
has not been sufficiently established whether or not there
is a will. CA affirmed this decision.
Issue: Whether or not the RTC should have granted
Motion to Dismiss on the ground that the filiation with
Antonio of Ramon and the determination of the extent of
Antonio's estate can only be resolved in a special
proceeding.
Ruling: NO, RTC ACTED CORRECTLY BY
DENYING MOTION TO DISMISS.
Although the respondents' Complaint and Amended
Complaint sought, among others, the disinheritance of
Ramon and the release in favor of the respondents of the
CPPA now under Metrobank's custody, remains to be an
ordinary civil action, and not a special proceeding
pertaining to a settlement court.
A special proceeding is a remedy by which a party seeks
to establish a status, a right, or a particular fact. It is
distinguished from an ordinary civil action where a party
sues another for the enforcement or protection of a right,
or the prevention or redress of a wrong. To initiate a
special proceeding, a petition and not a complaint should
be filed.An action for reconveyance and annulment of title
with damages is a civil action, whereas matters relating to
settlement of the estate of a deceased person such as
advancement of property made by the decedent, partake
of the nature of a special proceeding, which
concomitantly requires the application of specific rules as
provided for in the Rules of Court.
Under Article 916 of the NCC, disinheritance can be
effected only through a will wherein the legal cause
therefor shall be specified. While the respondents in their
Complaint and Amended Complaint sought the
disinheritance of Ramon, no will or any instrument
supposedly effecting the disposition of Antonio's estate
was ever mentioned.
The petitioners argue that the prayers in the Amended
Complaint, seeking the release in favor of the respondents
of the CPPA under Metrobank's custody and the
nullification of the instruments subject of the complaint,
necessarily require the determination of the respondents'
status as Antonio's heirs.It bears stressing that what the
respondents prayed for was that they be declared as the
rightful owners of the CPPA which was in Mercedes'
possession prior to the execution of the Agreement and
Waiver. The respondents also prayed for the alternative
relief of securing the issuance by the RTC of a hold order
relative to the CPPA to preserve Antonio's deposits with
Metrobank during the pendency of the case. It can thus be
said that the respondents' prayer relative to the CPPA was
premised on Mercedes' prior possession of and their
alleged collective ownership of the same, and not on the
declaration of their status as Antonio's heirs.
Further, it also has to be emphasized that the respondents
were parties to the execution of an agreeement prayed to
be nullified. Hence, even without the necessity of being
declared as heirs of Antonio, the respondents have the
standing to seek for the nullification of the instruments in
the light of their claims that there was no consideration
2
for their execution, and that Ramon exercised undue
influence and committed fraud against them.
In the event that the RTC will find grounds to grant the
reliefs prayed for by the respondents, the only
consequence will be the reversion of the properties
subject of the dispute to the estate of Antonio. Civil Case
No. 02-105251 was not instituted to conclusively resolve
the issues relating to the administration, liquidation and
distribution of Antonio's estate, hence, not the proper
subject of a special proceeding for the settlement of the
estate of a deceased person under Rules 73-91 of the
Rules of Court.The respondents' resort to an ordinary civil
action before the RTC may not be strategically sound,
because a settlement proceeding should thereafter still
follow, if their intent is to recover from Ramon the
properties alleged to have been illegally transferred in his
name. Be that as it may, RTC cannot be restrained from
taking cognizance of respondents' Complaint and
Amended Complaint as the issues raised and the prayers
indicated therein are matters which need not be threshed
out in a special proceeding
PAGLAUM MGMT & DEVT CORP AND HEALTH
MARKETING TECH INC VS UNION BANK OF
THE PHILS
FACTS
Petitioner Paglaum Management and Development
Corporation (PAGLAUM) is the registered owner of
three parcels of land located in the Province of Cebu.
These lots are co-owned by Benjamin B. Dy, the president
of petitioner (HealthTech), and his mother and siblings
Respondent Union Bank extended HealthTech a credit
line in the amount of ₱10,000,000. To secure this
obligation, PAGLAUM executed three Real Estate
Mortgages on behalf of HealthTech and in favor of Union
Bank. It must be noted that the Real Estate Mortgage, on
the provision regarding the venue of all suits and actions
arising out of or in connection
therewith, originally stipulates:
Section 9. Venue. The venue of all suits and actions
arising out of or in connection with this Mortgage shall be
in Makati, Metro Manila or in the place where any of the
Mortgaged Properties is located, at the absolute option of
the Mortgagee, the parties hereto waiving any other
venue.
However, under the two Real Estate Mortgages dated 11
February 1994, the following version appears:
Section 9. Venue. The venue of all suits and actions
arising out of or in connection with this Mortgage shall be
in Cebu City Metro Manila or in the place where any of
the Mortgaged Properties is located, at the absolute option
of the Mortgagee, the xxxxxxxxxxxxx any other venue.
Meanwhile, the same provision in the Real Estate
Mortgage dated 22 April 1998 contains the following:
Section 9. Venue. The venue of all suits and actions
arising out of or in connection with this Mortgage shall be
in _________ or in the place where any of the Mortgaged
Properties is located, at the absolute option of the
Mortgagee, the parties hereto waiving any other venue
HealthTech and Union Bank agreed to subsequent
renewals and increases in the credit line with the total
amount of debt reaching ₱36,500,000. Unfortunately,
according to HealthTech, the 1997 Asian financial crisis
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
connection therewith shall be commenced in Makati City,
with both parties waiving any other venue
HealthTech defaulted on its payment, Union Bank extra-
judicially foreclosed the mortgaged properties. The bank,
as the sole bidder in the auction sale, was then issued a
Certificate of Sale
HealthTech filed a Complaint for Annulment of Sale and
Titles with Damages and Application for Temporary
Restraining Order and Writ of Injunction
The case raffled to the RTC Br. 134, which issued in favor
of PAGLAUM and HealthTech a Writ of Preliminary
Injunction restraining Union Bank from proceeding with
the auction sale of the three mortgaged properties.
Union Bank filed a Motion to Dismiss on the following
grounds: (a) lack of jurisdiction over the issuance of the
injunctive relief; (b) improper venue; and (c) lack of
authority of the person who signed the Complaint. RTC
Br. 134 granted this Motion
In the instant Petition, PAGLAUM and HealthTech argue
that: (a) the Restructuring Agreement governs the choice
of venue between the parties, and (b) the agreement on the
choice of venue must be interpreted with the convenience
3
of the parties in mind and the view that any obscurity
therein was caused by Union Bank.[29]
On the other hand, Union Bank contends that: (a) the
Restructuring Agreement is applicable only to the
contract of loan, and not to the Real Estate Mortgage, and
(b) the mortgage contracts explicitly state that the choice
of venue exclusively belongs to it
ISSUE
Whether or not Makati City is the proper venue to assail
the foreclosure of the subject real estate mortgage
RULING
Yes. Being an action for Annulment of Sale and Titles
resulting from the extrajudicial foreclosure by Union
Bank of the mortgaged real properties, is classified as a
real action.
According to the Rules, real actions shall be commenced
and tried in the court that has jurisdiction over the area
where the property is situated. In this case, all the
mortgaged properties are located in the Province of Cebu.
Thus, following the general rule, PAGLAUM and
HealthTech should have filed their case in Cebu, and not
in Makati.
However, the Rules provide an exception, in that real
actions can be commenced and tried in a court other than
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
claim that such an agreement exists. The only dispute is
whether the venue that should be followed is that
contained in the Real Estate Mortgages, as contended by
Union Bank, or that in the Restructuring Agreement, as
posited by PAGLAUM and HealthTech. This Court rules
that the venue stipulation in the Restructuring Agreement
should be controlling.
The Real Estate Mortgages were executed by PAGLAUM
in favor of Union Bank to secure the credit line extended
by the latter to HealthTech. All three mortgage contracts
contain a dragnet clause, which secures succeeding
obligations, including renewals, extensions, amendments
or novations thereof, incurred by HealthTech from Union
Bank. On the other hand, the Restructuring Agreement
was entered into by HealthTech and Union Bank to
modify the entire loan obligation.
Provisions of the Real Estate Mortgages and the later
Restructuring Agreement clearly reveal the intention of
the parties to implement a restrictive venue stipulation,
which applies not only to the principal obligation, but also
to the mortgages. The phrase waiving any other
venue plainly shows that the choice of Makati City as the
venue for actions arising out of or in connection with the
Restructuring Agreement and the Collateral, with the Real
Estate Mortgages being explicitly defined as such, is
exclusive.
Even if this Court were to consider the venue stipulations
under the Real Estate Mortgages, it must be underscored
that those provisions did not contain words showing
exclusivity or restrictiveness. In fact, in the Real Estate
Mortgages dated 11 February 1994, the phrase parties
hereto waiving from the entire phrase the parties hereto
waiving any other venue was stricken from the final
executed contract. Following the ruling in Sps. Lantin as
earlier quoted, in the absence of qualifying or restrictive
words, the venue stipulation should only be deemed as an
agreement on an additional forum, and not as a restriction
on a specified place.
Considering that Makati City was agreed upon by the
parties to be the venue for all actions arising out of or in
connection with the loan obligation incurred by
HealthTech, as well as the Real Estate Mortgages
executed by PAGLAUM, the CA committed reversible
error in affirming the dismissal of Civil Case No. 01-1567
by RTC Br. 134 on the ground of improper venue.
BELEN VS CHAVEZ
FACTS: Spouses Pacleb (private respondents) filed an
action for the enforcement of a foreign judgment against
spouses Belen (petitioners). The complaint alleged that
the Pacleb secured a judgment by default rendered by
Judge John W. Green of the Superior Court of the State of
California, which ordered the spouses Belen to pay
$56,204.69 representing loan repayment and share in the
profits plus interest and costs of suit. The summons was
served on the Belen’s address in Laguna, as was alleged
in the complaint, and received by Marcelo M. Belen.
1. Spouses Belen filed an answer alleging that they
were actually residents of California and that
their liability had already been extinguished via a
release abstract judgment issued in the collection
case abroad.
2. For failure to attend the pre-trial conference, the
RTC ordered the ex parte presentation of
evidence for Pacleb.
3. Belen subsequently filed a Motion to Dismiss
citing the judgment of dismissal issued by the
4
 Superior Court of California; however the MTD
was dismissed for failure to submit a copy of the
judgment of dismissal
4. Spouses Pacleb, for their part, filed for the
amendment of the complaint, stating that they
withdrew the complaint (in California) because of
the prohibitive cost of litigation.
5. For failure of spouses Belen to appear in the
rescheduled pre-trial conference, RTC declared
Belen in default and allowed the presentation of
ex parte evidence. In the meantime, the counsel
(Alcantara) of petitioners died without the RTC
being informed of such fact. The RTC ruled
against Belen and ordered them to pay Pacleb
6. A copy of the decision was sent to Atty. Alcantara
but was returned with the notation “addressee
deceased.” A copy of the same was then sent to
the last known address of spouses Belen in
Laguna. Atty. Culvera, the new counsel of
spouses Belen, filed a motion to quash the Writ
of Execution as well as a notice of appeal. The
RTC denied the same.
7. Petitioners filed a petition for review on certiorari
(Rule 65) alleging that CA committed grave
abuse of discretion in denying petitioners’ motion
to quash the writ of execution and notice of
appeal despite sufficient legal bases in support
thereof.
ISSUE: WON the RTC acquired jurisdiction over the
persons of petitioners through either the proper service of
summons or the appearance of Atty. Alcantara on behalf
of petitioners
HELD: Yes. Courts acquire jurisdiction over the
plaintiffs upon the filing of the complaint. On the other
hand, jurisdiction over the defendants in a civil case is
acquired either through the service of summons upon
them or through their voluntary appearance in court
and their submission to its authority. As a rule, if
defendants have not been summoned, the court acquires
no jurisdiction over their person, and a judgment rendered
against them is null and void. To be bound by a decision,
a party should first be subject to the court’s jurisdiction.
In an action in personam, jurisdiction over the person of
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
of the following modes of service may be resorted to: (1)
substituted service set forth in Sec 8; (2) personal service
outside the country, with leave of court; (3) service by
publication, also with leave of court; or (4) any other
manner the court may deem sufficient.
In an action in personam wherein the defendant is a
non-resident who does not voluntarily submit himself
to the authority of the court, personal service of
summons within the state is essential to the acquisition
of jurisdiction over her person. This method of service
is possible if such defendant is physically present in
the country. If he is not found therein, the court
cannot acquire jurisdiction over his person and
therefore cannot validly try and decide the case
against him. An exception was laid down in Gemperle
v. Schenker wherein a non-resident was served with
summons through his wife, who was a resident of the
Philippines and who was his representative and
attorney-in-fact in a prior civil case filed by him;
moreover, the second case was a mere offshoot of the
first case.
CAB: the records of the case reveal that spouses Belen
were permanent residents of California. It has been
consistently maintained that they were not physically
resent in the Philippines. Therefore, the service of
summons in the petitioners’ address in Laguna was
defective and did not serve to vest in court jurisdiction
over their person. Nevertheless, the CA correctly
concluded that the appearance of Atty. Alcantara and his
filing of numerous pleadings were sufficient to vest such
jurisdiction. By supplying the court with various
documents that could only have been supplied by spouses
Belen, implied authorization could be gleaned from such.
In sum, there was voluntary submission to the jurisdiction
of the RTC.
The running of the fifteen-day period for appeal did not
commence upon the service of the RTC decision at the
address on record of Atty. Alcantara or at the Laguna
address. It is deemed served on petitioners only upon its
receipt by Atty. Culvera on 29 December 2003.
Therefore, the filing of the Notice of Appeal on 06
January 2004 is within the reglementary period and
should be given due course.
5
PLANTERS DEVT BANK VS JULIE CHANDUMAL
Facts:
BF Homes and Julie Chandumal entered into a contract to
sell a parcel of land located in Las Pinas. Later, BF Homes
sold to PDB all its rights over the contract.
Chandumal paid her monthly amortizations until she
defaulted in her payments. So, PDB sent a notice to
Chandumal with a demand to vacate the land within
30days, otherwise all of her rights will be extinguished
and the contract will be terminated and deemed rescinded.
In spite of the demand, Chandumal failed to settle her
account.
PDB filed an action for judicial confirmation of notarial
rescission and delivery of possession but still Chandumal
refused to do so. Summons were then issued and served
by deputy sheriff Galing but its was unavailing as she was
always out of her house on the dates the summons were
served.
RTC then issued an order granting the motion of PDB.
Chandumal filed an urgent motion to set aside order of
default and to admit attached answer. Chandumal said
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
Chandumal's motion to set aside the order of default.
Chandumal appealed to the CA. CA nullified the RTC's
decision.
Issue:
(1) Whether there was valid substituted service of
summons
(2) Whether Chandumal voluntarily submitted to the
jurisdiction of the RTC?
(3) Whether there was proper rescission by notarial act of
the contract to sell?
Held:
(1) Correctly ruled that the sheriff’s return failed to justify
a resort to substituted service of summons. According to
the CA, the Return of Summons does not specifically
show or indicate in detail the actual exertion of efforts or
any positive step taken by the officer or process server in
attempting to serve the summons personally to the
defendant.
(2) The Court notes that aside from the allegation that she
did not receive any summons, Chandumal’s motion to set
aside order of default and to admit attached answer failed
to positively assert the trial court lack of jurisdiction. In
fact, what was set forth therein was the substantial claim
that PDB failed to comply with the requirements of R.A.
No. 6552 on payment of cash surrender value, which
already delves into the merits of PDB’s cause of action.
In addition, Chandumal even appealed the RTC decision
to the CA, an act which demonstrates her recognition of
the trial court’s jurisdiction to render said judgment.
(3) R.A. No. 6552 recognizes the right of the seller to
cancel the contract but any such cancellation must be done
in conformity with the requirements therein prescribed. In
addition to the notarial act of rescission, the seller is
required to refund to the buyer the cash surrender value of
the payments on the property. The actual cancellation of
the contract can only be deemed to take place upon the
expiry of a thirty (30)-day period following the receipt by
the buyer of the notice of cancellation or demand for
rescission by a notarial act and the full payment of the
cash surrender value.
Petition is denied.
BIACO VS PHILIPPINE COUNTRYSIDE RURAL
BANK
515 SCRA 106 – Civil Procedure – In rem vs In personam
proceedings – Service of Summons – Resident Defendant
– Extrinsic Fraud
Ernesto Biaco, husband of Teresa Biaco, acquired several
loans from Philippine Countryside Rural Bank (PCRB)
from 1996 to 1998. To secure the loans, he mortgaged
certain property in favor of the bank. He was able to pay
loans from 1996 to 1997 but he defaulted in loans
obtained in 1998 which amounted to more than a million
pesos.
Eventually, PCRB filed a complaint for foreclosure
against the spouses Biaco. Summons were issued by the
trial judge. The Sherriff served the summons to Ernesto at
the latter’s office. No summons was served to Teresa.
Ernesto did not file a responsive pleading (so did Teresa
because she was not aware sans the summons being
served her). The case was heard ex-parte and the spouses
were ordered to satisfy the debt and failure to do so will
authorize the Sheriff to auction the mortgaged the
property.
6
Eventually, the mortgaged property was auctioned for
P150k which is not sufficient to cover the P1 M+ debt.
Upon motion by PCRB, a notice of levy was issued
against the personal properties of Teresa to satisfy the
deficiency.
It was only at this point that Teresa learned of the previous
ex parte proceedings. She then sought to have the
judgment annulled as she now claims that she was
deprived of due process when she did not receive
summons; that it was only her husband who received the
summons; that there was extrinsic fraud because her
husband deliberately hid the fact of the foreclosure
proceeding.
PRCB argued that the foreclosure proceeding is an action
quasi in rem, hence Teresa’s participation is not required
so long as the court acquires jurisdiction over the res
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
Ernesto.
ISSUE: Whether or not the judgment of the trial court
should be annulled.
HELD: Yes. It is admitted that the proceeding is a quasi
in rem proceeding and that the presence of Teresa is not
required because the trial court was able to acquire
jurisdiction over the res (mortgaged property).
HOWEVER, her constitutional right to due process is
superior over the procedural matters mentioned. Her right
to due process was violated when she did not receive
summons. Teresa, as a resident defendant, who does not
voluntary appear in court must be personally served with
summons as provided under Section 6, Rule 14 of the
Rules of Court. Even if the action is quasi in
rem, personal service of summons is essential in order to
afford her due process. The substituted service made by
the sheriff at her husband’s office cannot be deemed
proper service absent any explanation that efforts had
been made to personally serve summons upon her but that
such efforts failed. Further, the order of the trial court
compelling Teresa to pay off the debt using her personal
property is a judgment in personam which the court
cannot do because it only acquired jurisdiction over the
res and not over the person of Teresa.
On the issue of extrinsic fraud, the Court of Appeals,
agreeing with PCRB, is correct that there is none in the
case at bar. Extrinsic fraud exists when there is a
fraudulent act committed by the prevailing party outside
of the trial of the case, whereby the defeated party was
prevented from presenting fully his side of the case by
fraud or deception practiced on him by the prevailing
party. Extrinsic fraud is present where the unsuccessful
party had been prevented from exhibiting fully his case,
by fraud or deception practiced on him by
his opponent, as by keeping him away from court, a false
promise of a compromise; or where the defendant never
had knowledge of the suit, being kept in ignorance by the
acts of the plaintiff; or where an attorney fraudulently or
without authority assumes to represent a party and
connives at his defeat; or where the attorney regularly
employed corruptly sells out his client’s interest to the
other side. The above is not applicable in the case of
Teresa. It was not PCRB which made any fraud. It should
be noted that spouses Biaco were co-defendants in the
case and shared the same interest.
YU VS PACLEB
NATURE OF THE CASE: This petition was filed to set
aside the decision made by the Court of Appeals in ruling
that the respondent has the better right over the subject
property and is the true owner thereof.
FACTS: Respondent Baltazar Pacleb and his late first
wife, Angelita Chan, are the owners of parcel of land in
Langcaan, Dasmarinas, Cavite covered by a transfer
certificate of title.
Sometime in September 1992, Ruperto Javier offered the
said land to spouses Ernesto and Elsie Yu. Javier claimed
that he purchased the property from Rebecca Del Rosario
who bought it from spouses Baltazar Pacleb and Angelita
Chan. Despite the alleged sales being unregistered, the
spouses Yu accepted the offer and made a down payment
and entered into an Agreement for the sale of the property.
After giving the amount, the spouses Yu discovered that
a portion of the property was tenanted by Ramon Pacleb,
one of the respondent's sons. The petitioners then
demanded the cancellation of their agreement and the
return of their initial payment.
Javier then made arrangements with Ramon to vacate the
property and to pay Ramon for his disturbance
compensation. With that, Javier and the spouses YU
proceeded to enter into a Contract to Sell. But, Javier
failed to comply with his obligations. So, on April 23,
1993, the petitioners filed with the RTC a Complaint for
specific performance and damages against Javier to
7
compel Javier to deliver to them ownership and
possession, and the title to the property.
However, Javier did not appear in the proceedings
and was declared in default, so, the trial court rendered a
decision in favor of the petitioners. The decision and its
Certificate of Finality were annotated in the title of the
property.
On March 10, 1995, the petitioners and Ramon
and his wife entered into an agreement that the spouses
will pay Ramon P500,000 in exchange for the waiver of
his tenancy rights over the land.
On October 12, 1995, the respondent filed a
Complaint for annulment of deed of sale and other
documents arising from it claiming that the deed of sale
supposedly executed between him and his late first wife
and Del Rosario was spurious and the signatures were
forged. He also moved for the summons to be served upon
Del Rosario via publication since her address cannot be
found, but was denied. So, respondent moved to dismiss
the case which was granted by the trial court.
On November 23, 1995, the petitioners filed an
action for forcible entry against the respondent with the
MTC. They contend that they had prior physical
possession over the property through their trustee Ramon
Pacleb, until the respondent ousted them in September
1995. The MTC and the RTC ruled in favor of the
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
taxes thereon.
On May 29, 1996, respondent filed an instant case
for removal of cloud from title with damages alleging that
the deed of sale between him and his late first wife could
not have been executed on the date appearing thereon. He
claimed that he was residing in the US at that time and
that his late first wife died 20 years ago.
On May 28, 1997, while the case was still
pending, the respondent died, hence, he was substituted
by his surviving spouse and some of his children.
On December 27, 2002, the respondent's case was
dismissed and the petitioners were held to be purchasers
in good faith. The trial court also held that the petitioners'
action for specific performance against Javier was already
final, and the trial court also ordered the respondents' heirs
and all other persons claiming under them to surrender
the possession of the property to the petitioners. Upon
appeal by the respondent, the CA reversed the trial court's
decision. Hence, this petition.
ISSUE: WON the action for specific performance filed
by the petitioners against Javier is not merely an action in
personam, but an action in rem, and is thus, conclusive
and binding upon respondent even if he was not a party
thereto since it involves a question of possession and
ownership of real property.
HELD: The action for specific performance and damages
filed by petitioners against Javier to compel him to
perform his obligations under their Contract to Sell is an
action in personam.
The purpose of the action is to compel Javier to accept the
full payment of the purchase price, and to execute a deed
of absolute sale over the property in favor of the
petitioners. The obligations of Javier mentioned attach to
Javier alone and do not burden the property. Thus, the
complaint filed by the petitioners is an action in personam
and is binding only upon the parties properly impleaded
therein and duly heard or given an opportunity to be
heard. So, the action cannot bind the respondent since he
was not a party therein and considering the fact that his
signature and that of his late first wife were forged in the
deed of sale. Hence, the petition is denied and the Court
affirms the ruling of the CA finding the respondent having
a better right over the property as the true owner thereof.
MANCHESTER DEVT VS CA
149 SCRA 562 – Remedial Law – Civil Procedure –
Payment of Docket Fees – Claimed Damages must be
Stated in the BODY and PRAYER of pleadings
FACTS: A complaint for specific performance was filed
by Manchester Development Corporation against City
Land Development Corporation to compel the latter to
execute a deed of sale in favor Manchester. Manchester
also alleged that City Land forfeited the former’s tender
of payment for a certain transaction thereby causing
damages to Manchester amounting to P78,750,000.00.
This amount was alleged in the BODY of their Complaint
but it was not reiterated in the PRAYER of same
complaint. Manchester paid a docket fee of P410.00 only.
Said docket fee is premised on the allegation of
Manchester that their action is primarily for specific
performance hence it is incapable of pecuniary
estimation. The court ruled that there is an under
8
assessment of docket fees hence it ordered Manchester to
amend its complaint. Manchester complied but what it did
was to lower the amount of claim for damages to P10M.
Said amount was however again not stated in the
PRAYER.
ISSUE: Whether or not the amended complaint should be
admitted.
HELD: No. The docket fee, its computation, should be
based on the original complaint. A case is deemed filed
only upon payment of the appropriate docket fee
regardless of the actual date of filing in court. Here, since
the proper docket fee was not paid for the original
complaint, it’s as if there is no complaint to speak of. As
a consequence, there is no original complaint duly filed
which can be amended. So, any subsequent proceeding
taken in consideration of the amended complaint is void.
Manchester’s defense that this case is primarily an action
for specific performance is not merited. The Supreme
Court ruled that based on the allegations and the prayer of
the complaint, this case is an action for damages and for
specific performance. Hence, it is capable of pecuniary
estimation.
Further, the amount for damages in the original complaint
was already provided in the body of the complaint. Its
omission in the PRAYER clearly constitutes an attempt to
evade the payment of the proper filing fees. To stop the
happenstance of similar irregularities in the future, the
Supreme Court ruled that from this case on, all
complaints, petitions, answers and other similar pleadings
should specify the amount of damages being prayed for
not only in the body of the pleading but also in the prayer,
and said damages shall be considered in the assessment of
the filing fees in any case.
Any pleading that fails to comply with this requirement
shall not bib accepted nor admitted, or shall otherwise be
expunged from the record.
SUN INSURANCE OFFICE LTD VS ASUNCION
Facts: Petitioner Sun Insurance (or SIOL) files a
complaint for the annulment of a decision on the
consignation of fire insurance policy. Subsequently, the
Private Respondent (PR) files a complaint for the refund
of premiums and the issuance of a writ of preliminary
attachment in a civil case against SIOL. In addition, PR
also claims for damages, attorney’s fees, litigation costs,
etc., however, the prayer did not state the amount of
damages sought although from the body of the complaint
it can be inferred to be in amount of P 50 million. Hence,
PR originally paid only PhP 210.00 in docket fees.The
complaint underwent a number of amendments to make
way for subsequent re-assessments of the amount of
damages sought as well as the corresponding docket fees.
The respondent demonstrated his willingness to abide by
the rules by paying the additional docket fees as required.
Issue: Did the Court acquire jurisdiction over the case
even if private respondent did not pay the correct or
sufficient docket fees?
RULING YES.
It was held that it is not simply the filing of the complaint
or appropriate initiatory pleading, but the payment of the
prescribed docket fee, that vests a trial court with
jurisdiction over the subject matter or nature of the action.
Where the filing of the initiatory pleading is not
accompanied by payment of the docket fee, the court may
allow payment of the fee within a reasonable time but in
no case beyond the applicable prescriptive or
reglamentary period. Same rule goes for permissive
counterclaims, third party claims and similar pleadings.
In herein case, obviously, there was the intent on the part
of PR to defraud the government of the docket fee due not
only in the filing of the original complaint but also in the
filing of the second amended complaint. However, a more
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
Facts:
In 1985, Eden Ballatan constructed her house on
Lot No. 24 in Araneta University Village, Malabon.
During the construction, she noticed that the concrete
fence & side pathway of the adjoining house of Winston
Go encroached upon the entire length of the eastern side
of her property. Her building contractor informed her that
the area of her lot was actually less than that described in
the title.
Ballatan informed Go about the discrepancy and
encroachment, but Go claimed that his house (including
its fence and pathway) were built within the parameters of
his father’s lot.
The owner-developer of the subdivision, Araneta
Insitute of Agriculture (AIA) authorized a survey of the
land by Engr. Jose N. Quedding. Quedding found that the
lot area of Ballatan was less by a few meters & that of Li
Ching Yao (3 lots away), increased by 2 meters. He
declared that he made a verification survey of the lots
belonging to Go in 1983, and found the boundaries to be
in order. However he could not explain the reduction in
Ballatan’s area.
Engr. Quedding made another relocation survey
upon request of the parties. He found that Lot 24 lost
approx.. 25sqm. on its eastern boundary; that Lot 25 did
not lose nor gain any area; that Lot 26 lost around 3 sqm
which were however gained by Lot 27.
On the basis of this survey, Ballatan made a
written demand on Go to remove & dismantle their
improvements on Lot No. 24. Go refused, thus Ballatan
brought the issue before the barangay. Go did not appear.
Ballatan filed a case for recovery of possession
before the RTC of Malabon. The Go’s filed an answer
with third-party complaint, impleading Li Ching Yao,
AIA & Engr. Quedding.
The RTC decided in favor of Ballatan, ordering Go to
vacate Lot No. 24 and demolish their improvements and
to pay Ballatan actual damages. It also dismissed the
third-party complaint against AIA, Quedding & Li Ching
Yao.
On appeal, the CA modified the decision of the
RTC. It ordered Li Ching Yao & Engr. Quedding to pay
Ballatan; and Li Ching Yao to pay Go, a reasonable
amount for that portion of the lot which they encroached
– the value to be fixed at the time of taking.
Issues:
1) Is the award of damages proper, despite Go’s
failure to specify the amount prayer for & failure
to pay the corresponding additional filing fees
thereon?
2) Given the fact of encroachment on Ballatan’s
property, what are her rights?
Ruling:
1. YES, the award of damages is proper.
The third-party complaint in the instant case arose from
the complaint of accion publiciana of Ballatan against Go,
which is a real action. In real actions, the docket & filing
fees are based on the value of property & the amount of
damages claimed.
Where the fees prescribed for the real action have
been paid, but the fees of certain related damages are not,
the court, although having jurisdiction over the real
action, may not have acquired jurisdiction over the
accompanying claim for damages. Accordingly, the court
may expunge those claims for damages, or allow (on
motion) a reasonable time for amendment of the
complaint so as to allege the precise amount of damages
& accept payment of the requisite legal fees.
In the instant case, the third-party complaint
sought the same remedy as the principal complaint, but
added a prayer for attorney’s fees & costs without
specifying their amounts. The additional filing fee on this
claim is deemed to constitute a lien on the judgment
award.
2. The erroneous survey by Engr. Quedding triggered the
discrepancies. It was upon said erroneous survey that Go
relied upon in constructing his house on his father’s land.
Otherwise stated, Go had no knowledge that they
encroached on Ballatan’s lot. They are deemed builders
in good faith.
Li Ching Yao built his house on his lot before any
of the other parties did. There is no evidence, much less,
any allegation that Li Ching Yao was aware that when he
built his house he knew that a portion thereof encroached
on Go’s adjoining land. Good faith is always presumed,
& upon him who alleges bad faith on the part of a
possessor rests the burden of proof.
10
 Thus, Ballatan as owner of Lot No. 24, may
choose to purchase the improvement made by Go on their
land, or sell to Go the subject portion.
If buying the improvement is impractical as it
may render Go’s house useless, then Ballatan may sell to
Go that portion of Lot No. 24 on which their improvement
stands. If the Go’s are unwilling or unable to buy the lot,
then they must vacate the land and, until they vacate, they
must pay rent to Ballatan.
In the event that Ballatan elects to sell to Go the
subject portion of their lot, the price must be fixed at the
prevailaing market value at the time of payment. The time
of taking is determinative of just compensation in
expropriation proceedings; clearly the instant case is not
one for expropriation.
Ballatan was ordered to decide within 30 days
whether to buy the portion of Go’s improvement on Lot
24, or to sell to Go the portion of their land on which the
improvement stands. Engr. Quedding was ordered to pay
attorney’s fees of P5,000 to Go.
HEIRS OF REINOSO, SR VS CA
FACTS
The complaint for damages arose from the collision of a
passenger jeepney and a truck at around 7:00 oclock in
the evening of June 14, 1979 along E. Rodriguez
Avenue, Quezon City. As a result, a passenger of
the jeepney, Ruben Reinoso, Sr. (Reinoso), was killed.
The passenger jeepney was owned by Ponciano
Tapales (Tapales) and driven by Alejandro
Santos (Santos), while the truck was owned by Jose
Guballa (Guballa) and driven by Mariano
Geronimo (Geronimo).
On November 7, 1979, the heirs of
Reinoso (petitioners) filed a complaint for damages
against Tapales and Guballa. In turn, Guballa filed a third
party complaint against Filwriters Guaranty Assurance
Corporation (FGAC) under Policy Number OV-09527.
On March 22, 1988, the RTC rendered a decision in favor
of the petitioners and against Guballa.
On appeal, the CA, in its Decision dated May 20, 1994,
set aside and reversed the RTC decision and dismissed the
complaint on the ground of non-payment of docket fees
pursuant to the doctrine laid down in Manchester v.
CA.[4] In addition, the CA ruled that since prescription had
set in, petitioners could no longer pay the required docket
fees.[5]
Petitioners filed a motion for reconsideration of the CA
decision but it was denied
ISSUE
Whether or not The Court of Appeals
MISAPPLIED THE RULING of the Supreme Court in
the case of Manchester Corporation vs. Court of
Appeals to this case
RULING
The petitioners argue that the ruling in Manchester should
not have been applied retroactively in this case, since it
was filed prior to the promulgation of
the Manchesterdecision in 1987. They plead that though
this Court stated that failure to state the correct amount of
damages would lead to the dismissal of the complaint,
said doctrine should be applied prospectively.
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
amount of the lost income would still be finally
determined in the course of the trial of the case. They
claim that the jurisdiction of the trial court remains even
if there was failure to pay the correct filing fee as long as
the correct amount would be paid subsequently.
Finally, the petitioners stress that the alleged defect was
never put in issue either in the RTC or in the CA.
The Court finds merit in the petition.
The rule is that payment in full of the docket fees within
the prescribed period is mandatory.[8] In Manchester v.
Court of Appeals,[9] it was held that a court acquires
jurisdiction over any case only upon the payment of the
prescribed docket fee. The strict application of this rule
was, however, relaxed two (2) years after in the case
of Sun Insurance Office, Ltd. v. Asuncion,[10] wherein the
Court decreed that where the initiatory pleading is not
accompanied by the payment of the docket fee, the court
may allow payment of the fee within a reasonable period
of time, but in no case beyond the applicable prescriptive
or reglementary period. This ruling was made on the
premise that the plaintiff had demonstrated his
willingness to abide by the rules by paying the additional
docket fees required.[11] Thus, in the more recent case
of United Overseas Bank v. Ros,[12] the Court explained
11
that where the party does not deliberately intend to
defraud the court in payment of docket fees, and manifests
its willingness to abide by the rules by paying additional
docket fees when required by the court, the liberal
doctrine enunciated in Sun Insurance Office, Ltd., and not
the strict regulations set in Manchester, will apply. It has
been on record that the Court, in several instances,
allowed the relaxation of the rule on non-payment of
docket fees in order to afford the parties the opportunity
to fully ventilate their cases on the merits. In the case
of La Salette College v. Pilotin,[13] the Court stated:
Notwithstanding the mandatory nature of the requirement
of payment of appellate docket fees, we also recognize
that its strict application is qualified by the
following: first, failure to pay those fees within the
reglementary period allows only discretionary, not
automatic, dismissal; second, such power should be used
by the court in conjunction with its exercise of sound
discretion in accordance with the tenets of justice and fair
play, as well as with a great deal of circumspection in
consideration of all attendant circumstances.[14]
While there is a crying need to unclog court dockets on
the one hand, there is, on the other, a greater demand for
resolving genuine disputes fairly and equitably,[15] for it is
far better to dispose of a case on the merit which is a
primordial end, rather than on a technicality that may
result in injustice.
In this case, it cannot be denied that the case was litigated
before the RTC and said trial court had already rendered
a decision. While it was at that level, the matter of non-
payment of docket fees was never an issue. It was only
the CA which motu propio dismissed the case for said
reason.
Considering the foregoing, there is a need to suspend the
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
justice on a technicality, for, indeed, the general objective
of procedure is to facilitate the application of justice to the
rival claims of contending parties, bearing always in mind
that procedure is not to hinder but to promote the
administration of justice.[16]
The Court also takes into account the fact that the case
was filed before the Manchester ruling came out. Even if
said ruling could be applied retroactively, liberality
should be accorded to the petitioners in view of the
recency then of the ruling. Leniency because of recency
was applied to the cases of Far Eastern Shipping
Company v. Court of Appeals[17] and Spouses Jimmy and
Patri Chan v. RTC of Zamboanga.[18] In the case
of Mactan Cebu International Airport Authority v.
Mangubat (Mactan),[19] it was stated that the intent of the
Court is clear to afford litigants full opportunity to comply
with the new rules and to temper enforcement of sanctions
in view of the recency of the changes introduced by the
new rules. In Mactan, the Office of the Solicitor
General (OSG) also failed to pay the correct docket fees
on time.
The petitioners, however, are liable for the difference
between the actual fees paid and the correct payable
docket fees to be assessed by the clerk of court which shall
constitute a lien on the judgment pursuant to Section 2 of
Rule 141 which provides:
SEC. 2. Fees in lien. Where the court in its final judgment
awards a claim not alleged, or a relief different from, or
more than that claimed in the pleading, the party
concerned shall pay the additional fees which shall
constitute a lien on the judgment in satisfaction of said
lien. The clerk of court shall assess and collect the
corresponding fees.
As the Court has taken the position that it would be
grossly unjust if petitioners claim would be dismissed on
a strict application of the Manchester doctrine, the
appropriate action, under ordinary circumstances, would
be for the Court to remand the case to the CA.
Considering, however, that the case at bench has been
pending for more than 30 years and the records thereof are
already before this Court, a remand of the case to the CA
would only unnecessarily prolong its resolution. In the
higher interest of substantial justice and to spare the
parties from further delay, the Court will resolve the case
on the merits.
RE: IN THE MATTER OF EXEMPTION FROM
PAYMENT OF ALL COURT AND SHERIFF’S
FEES OF COOPERATIVES DULY REGISTERED
IN ACCORDANCE WITH RA NO 9520
FACTS
In a Petition, Perpetual Help Community Cooperative
(PHCCI), through counsel, requests for the issuance of a
court order to clarify and implement the exemption of
cooperatives from the payment of court and sheriffs fees
pursuant to Republic Act No. 6938, as amended by
12
Republic Act No. 9520, otherwise known as
the Philippine Cooperative Act of 2008.
PHCCI contends that as a cooperative it enjoys the
exemption provided for under Section 6, Article 61 of
Republic Act No. 9520, which states:
(6) Cooperatives shall be exempt from the payment of all
court and sheriffs fees payable to the Philippine
Government for and in connection with all actions
brought under this Code, or where such actions is brought
by the Authority before the court, to enforce the payment
of obligations contracted in favor of the cooperative.
It claims that this was a reiteration of Section 62,
paragraph 6 of Republic Act No. 6938, An Act to Ordain
a Cooperative Code of the Philippines,[2] and was made
basis for the Courts Resolution in A.M. No. 03-4-01-0, as
well as of Office of the Court Administrator (OCA)
Circular No. 44-2007.[3]
It avers that despite the exemptions granted by the
aforesaid laws and issuances, PHCCI had been
continuously assessed and required to pay legal and other
fees whenever it files cases in court.
PHCCI reports that it filed with the Office of the
Executive Judge of the Municipal Trial Court in Cities
(MTCC), Dumaguete City, Negros Oriental, a Motion to
implement the exemption of cooperatives from the
payment of court and sheriffs fees in cases filed before the
courts in his jurisdiction, but the Executive Judge ruled
that the matter is of national concern and should be
brought to the attention of the Supreme Court for it to
come up with a straight policy and uniform system of
collection. In the meantime, the MTCC has continued the
assessment of filing fees against cooperatives.
Records reveal that on 21 September 2011, Executive
Judge Antonio Estoconing (Executive Judge Estoconing),
MTCC, Dumaguete City, Negros Oriental, issued an
Order treating the motion filed by PHCCI as a
mere consulta considering that no main action was filed
in his court. Executive Judge Estoconing submits that he
had second thoughts in considering the exemption in view
of the guidelines laid down in the Rules. He reported that
many cases filed by PHCCI are small claims cases and
under Section 8 of the Rule on Small Claims, the plaintiff
is required to pay docket fees and other related costs
unless he is allowed to litigate the case as an indigent.
ISSUE
Whether or not cooperatives are exempt from the payment
of court and sheriffs fees. The fees referred to are those
provided for under Rule 141 (Legal Fees) of the Rules of
Court.
RULING
The term all court fees under Section 6, Article 61 of
Republic Act No. 9520 refers to the totality of legal fees
imposed under Rule 141 of the Rules of Court as an
incident of instituting an action in court.[4] These fees
include filing or docket fees, appeal fees, fees for issuance
of provisional remedies, mediation fees, sheriffs fees,
stenographers fees and commissioners fees.[5]
With regard to the term sheriffs fees, this Court, in an
extended minute Resolution dated 1 September 2009,
held that the exemptions granted to cooperatives under
Section 2, paragraph 6 of Republic Act No. 6938; Section
6, Article 61 of Republic Act No. 9520; and OCA Circular
No. 44-2007 clearly do not cover the amount required to
defray the actual travel expenses of the sheriff, process
server or other court-authorized person in the service of
summons, subpoena and other court processes issued
relative to the trial of the case,[6] which are neither
considered as court and sheriffs fees nor are amounts
payable to the Philippine Government.[7]
In fine, the 1 September 2009 Resolution exempted the
cooperatives from court fees but not from sheriffs
fees/expenses.
On 11 February 2010, however, the Supreme Court En
Banc issued a Resolution in A.M. No. 08-2-01-0,[8] which
denied the petition of the Government Service Insurance
System (GSIS) for recognition of its exemption from
payment of legal fees imposed under Section 22 of Rule
141 of the Rules of Court. In the GSIS case, the Court
citing Echegaray v. Secretary of Justice,[9] stressed that
the 1987 Constitution molded an even stronger and more
independent judiciary; took away the power of Congress
to repeal, alter, or supplement rules concerning pleading,
practice and procedure; and held that the power to
promulgate these Rules is no longer shared by the Court
with Congress, more so, with the Executive,[10] thus:
Since the payment of legal fees is a vital component of the
rules promulgated by this Court concerning pleading,
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
procedure is now the Courts exclusive domain. That
power is no longer shared by this Court with Congress,
much less with the Executive.[11]
xxxx
The separation of powers among the three co-equal
branches of our government has erected an impregnable
wall that keeps the power to promulgate rules of pleading,
practice and procedure within the sole province of this
Court. The other branches trespass upon this prerogative
if they enact laws or issue orders that effectively repeal,
alter or modify any of the procedural rules promulgated
by this Court. Viewed from this perspective, the claim of
a legislative grant of exemption from the payment of legal
fees under Section 39 of R.A. 8291 necessarily fails.
Congress could not have carved out an exemption for the
GSIS from the payment of legal fees without
transgressing another equally important institutional
safeguard of the Courts independence - fiscal
autonomy.[12] Fiscal autonomy recognizes the power and
authority of the Court to levy, assess and collect
fees,[13] including legal fees. Moreover, legal fees under
Rule 141 have two basic components, the Judiciary
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
purpose of these funds to guarantee the independence of
the Judiciary as mandated by the Constitution and public
policy.[16] Legal fees therefore do not only constitute a
vital source of the Courts financial resources but also
comprise an essential element of the Courts fiscal
independence. Any exemption from the payment of legal
fees granted by Congress to government-owned or
controlled corporations and local government units will
necessarily reduce the JDF and the SAJF. Undoubtedly,
such situation is constitutionally infirm for it impairs the
Courts guaranteed fiscal autonomy and erodes its
independence.[17]
In a decision dated 26 February 2010 in Baguio Market
Vendors Multi-Purpose Cooperative (BAMARVEMPCO)
v. Cabato-Cortes,[18] this Court reiterated its ruling in
the GSIScase when it denied the petition of the
cooperative to be exempted from the payment of legal
fees under Section 7(c) of Rule 141 of the Rules of Court
relative to fees in petitions for extra-judicial foreclosure.
On 10 March 2010, relying again on the GSIS ruling, the
Court En Banc issued a resolution clarifying that the
National Power Corporation is not exempt from the
payment of legal fees.[19]
With the foregoing categorical pronouncements of the
Supreme Court, it is evident that the exemption of
cooperatives from payment of court and sheriffs fees no
longer stands.Cooperatives can no longer invoke
Republic Act No. 6938, as amended by Republic Act No.
9520, as basis for exemption from the payment of legal
fees.
WHEREFORE, in the light of the foregoing premises,
the petition of PHCCI requesting for this Court to issue an
order clarifying and implementing the exemption of
cooperatives from the payment of court and sheriffs fees
is hereby DENIED.
The Office of the Court Administrator is DIRECTED to
issue a circular clarifying that cooperatives are not exempt
from the payment of the legal fees provided for under
Rule 141 of the Rules of Court.
RICARDO RIZAL VS LEONCIA NAREDO
(see full)
GOODLAND COMPANY INC VS ASIA UNITED
BANK
Facts: Sometime in July 1999, petitioner Goodland
Company, Inc. (petitioner) mortgaged its two parcels of
land situated in Sta. Rosa, Laguna.
The Third Party Real Estate Mortgage (REM) secured
the loans extended by respondent Asia United Bank
(“AUB”) to Radio Marine Network (Smartnet), Inc.
(RMNSI), doing business as Smartnet Philippines, under
the latter’s P250,000,000.00 Omnibus Credit Line with
AUB. In addition to the aforesaid collaterals, petitioner
executed a Third Party REM over its 5,801-square meter
property located at Pasong Tamo St., Makati City.
The REMs, both signed by Gilbert G. Guy, President of
Goodland Company, Inc., were duly registered by AUB
with the Registry of Deeds for Calamba, Laguna and
Registry of Deeds for Makati City, and annotated on the
said titles. Subsequently, however, petitioner repudiated
the REMs by claiming that AUB and its officers
unlawfully filled up the blank mortgage forms and
falsified the entries therein.
14
The Laguna properties were the subject of two suits filed
by petitioner to forestall their imminent foreclosure, and
similar actions were likewise instituted by petitioner
involving the Makati property which is the subject of the
present case. However, the only subject of the present
petition is the Makati Property. The Laguna Properties
were the subject of separate petitions.
Petitioner instituted two suits involving the Makati
Property. The first suit filed by petitioner was an action
for an annulment of the REM covering the Makati
Property on the ground of its fraudulent and irregular
execution and registration filed before the Regional Trial
Court (RTC), Branch 56 of Makati City. On the other
hand, the second suit filed by petitioner prayed for
injunctive relief and/or nullification of the extrajudicial
foreclosure sale which petitioner alleged to be
procedurally and legally defective filed before the RTC,
Branch 145 of Makati City.
The RTC (Branch 145) issued an Order denying
petitioner’s application for the issuance of a writ of
preliminary injunction, as well as respondents’ motion to
dismiss based on forum shopping, non-payment of correct
docket fees and failure to state a cause of action.
However, the court reserved the issuance of the
corresponding order requiring petitioner to pay the
appropriate docket fees after respondents shall have
submitted what they believed should have been the
correct computation thereof.
On motion of respondents, Civil Case No. 06-1032 was
consolidated with Civil Case No. 03-045. Prior to the
consolidation, respondents moved to dismiss with
prejudice the two cases on the grounds of forum shopping,
and that no jurisdiction was acquired by the RTC in Civil
Case No. 03-045 for failure to pay the proper docket and
other legal fees.
In a Joint Order, the RTC (Branch 56) dismissed with
prejudice the complaints in both cases. Petitioner filed
two separate motions for reconsideration, which the RTC
likewise denied. Petitioner again filed separate appeals
before the Court of Appeals (CA), which were docketed
under only one case (CA-G.R. CV No. 90418).
The appellate court sustained the dismissal made by trial
court on the ground of forum shopping, but not on the
ground of improper docket and other legal fees.
Issue: Whether or not petitioner violated the rule against
forum shopping.
Ruling: Yes. For forum shopping can be said to exist, the
following must concur: (1) identity of parties, or at least
such parties as represent the same interests in both
actions, (2) identity of rights asserted and relief prayed
for, the relief being founded on the same facts, and (3) the
identity of the two preceding particulars is such that any
judgment rendered in the other action will, regardless of
which party is successful, amount to res judicata in the
action under consideration.
The Court ruled that these elements are present in the
instant case. There is identity of parties in the instant case
notwithstanding that in the first case (Civil Case No. 03-
045), only one bank officer (Co), the notary public
(Pelicano) and the Register of Deeds were impleaded
along with AUB as defendants, whereas in the second
case (Civil Case No. 06-1032), AUB and its two officers
(Chan and Del Mundo), along with the RTC Clerk of
Court (Escasinas, Jr.), Sheriff (Magsajo) and the Register
of Deeds of Makati City (Ortile) were the named
defendants.
The parties in both cases are substantially the same as they
represent the same interests and offices/positions, and
who were impleaded in their respective capacities with
corresponding liabilities/duties under the claims asserted.
The prayer for relief in the two cases was based on the
same attendant facts in the execution of REMs over
petitioner’s properties in favor of AUB. While the
extrajudicial foreclosure of mortgage, consolidation of
ownership in AUB and issuance of title in the latter’s
name were set forth only in the second case (Civil Case
No. 06-1032), these were simply the expected
consequences of the REM transaction in the first case
(Civil Case No. 03-045). These eventualities are precisely
what petitioner sought to avert when it filed the first case.
Undeniably then, the injunctive relief sought against the
extrajudicial foreclosure, as well as the cancellation of the
new title in the name of the creditor-mortgagee AUB,
were all premised on the alleged nullity of the REM due
to its allegedly fraudulent and irregular execution and
registration—the same facts set forth in the first case. In
both cases, petitioner asserted its right as owner of the
property subject of the REM, while AUB invoked the
rights of a foreclosing creditor-mortgagee.
With respect to identity of cause of action, a cause of
action is defined in Section 2, Rule 2 of the Rules of Court
as the act or omission by which a party violates the right
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
evidence support and establish both the present and
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.
In the first case, petitioner alleged the fraudulent and
irregular execution and registration of the REM which
violated its right as owner who did not consent thereto,
while in the second case petitioner cited further violation
of its right as owner when AUB foreclosed the property,
consolidated its ownership and obtained a new TCT in its
name. Considering that the aforesaid violations of
petitioner’s right as owner in the two cases both hinge on
the binding effect of the REM, i.e., both cases will rise or
fall on the issue of the validity of the REM, it follows that
the same evidence will support and establish the first and
second causes of action. The procedural infirmities or
non-compliance with legal requirements for extrajudicial
foreclosure raised in the second case were but additional
grounds in support of the injunctive relief sought against
the foreclosure which was, in the first place, illegal on
account of the mortgage contract’s nullity. Evidently,
petitioner never relied solely on the alleged procedural
irregularities in the extrajudicial foreclosure when it
sought the reliefs in the second case.
Lastly, Under Sec. 7, Rule 5 of the Rules of Court: The
plaintiff is required under oath to certify, among others,
his undertaking to report to the court the fact of filing of
a similar case, failing which shall be cause for the
dismissal of the case, to wit: “(c) if he should thereafter
learn that the same or similar action or claim has been
filed or is pending, he shall report that fact within five (5)
days therefrom to the court wherein his aforesaid
complaint or initiatory pleading has been filed. …non-
compliance with any of the undertakings therein shall
constitute indirect contempt of court, without prejudice to
the corresponding administrative and criminal actions. If
the acts of the party or his counsel clearly constitute
willful and deliberate forum shopping, the same shall be
ground for summary dismissal with prejudice and shall
constitute direct contempt, as well as a cause for
administrative sanctions.”
The Court ruled that petitioner’s act of forum shopping
was deliberate and malicious considering that it
knowingly filed Civil Case No. 06-1032 despite the
pendency of Civil Case No. 03-045. This being the case,
the act of petitioner is punishable by and results in the
summary dismissal of the actions filed. Both Civil Case
No. 03-045 and Civil Case No. 06-1032 are therefore
correctly dismissed with prejudice.
RELUCIO VS LOPEZ
Facts: Private respondent Angelina Mejia Lopez filed a
petition for APPOINTMENT AS SOLE
ADMINISTRATRIX OF CONJUGAL PARTNERSHIP
OF PROPERTIES, FORFEITURE, ETC., against
defendant Alberto Lopez and petitioner Imelda Relucioin
a special proceeding. In the petition, privaterespondent
alleged that sometime in 1968, defendant Lopez, who is
legally married to the private respondent, abandoned the
latter and their four legitimate children; that he arrogated
unto himself full and exclusive control and administration
of the conjugal properties, spending and using the same
for his sole gain and benefit to the total exclusion of the
private respondent and their four children; that defendant
Lopez, after abandoning his family, maintained an illicit
relationship and cohabited with herein petitioner since
1976.
It was further alleged that defendant Lopez and petitioner
Relucio, during their period of cohabitation since 1976,
have amassed a fortune consisting mainly of
stockholdings in Lopez-owned or controlled corporations,
residential, agricultural, commercial lots, houses,
apartments and buildings, cars and other motor vehicles,
bank accounts and jewelry. In order to avoid defendant
Lopez obligations as a father and husband, he excluded
the private respondent and their four children from
sharing or benefiting from the conjugal properties and the
income or fruits therefrom. He placed substantial portions
of these conjugal properties in the name of petitioner
Relucio.
On December 8, 1993, a Motion to Dismiss the Petition
was filed by herein petitioner on the ground that private
respondent has no cause of action against her.
An Order dated February 10, 1994 was issued by the
judge denying petitioner Relucio’s Motion to Dismiss on
the ground that she is impleaded as a necessary or
indispensable party because some of the subject
properties are registered in her name and defendant
Lopez, or solely in her name.
Issues:
(1) Whether respondents petition for appointment as sole
administratrix of the conjugal property, accounting, etc.
16
against her husband Alberto J. Lopez established a cause
of action against petitioner.
(2) Whether petitioner’s inclusion as party defendant is
essential in the proceedings for a complete adjudication
of the controversy
Ruling:
(1) No, the complaint is by an aggrieved wife against her
husband.Nowhere in the allegations does it appear that
relief is sought against petitioner. Respondent’s causes of
action were all against her husband.
The first cause of action is for judicial appointment of
respondent as administratrix of the conjugal partnership
or absolute community property arising from her
marriage to Alberto J. Lopez. Petitioner is a complete
stranger to this cause of action.
Article 128 of the Family Code refers only to spouses. Art
128: “If a spouse without just cause abandons the other or
fails to comply with his or her obligations to the family,
the aggrieved spouse may petition the court for
receivership, for judicial separation of property, or for
authority to be the sole administrator of the conjugal
partnership property xxx”
Respondent alleges that Alberto J. Lopez is her husband.
Therefore, her first cause of action is against Alberto J.
Lopez. There is no right-duty relation between petitioner
and respondent that can possibly support a cause of
action.
The second cause of action is for an accounting by
respondent husband. The accounting of conjugal
partnership arises from or is an incident of marriage.
Petitioner has nothing to do with the marriage between
respondent Alberto J. Lopez. Hence, no cause of action
can exist against petitioner on this ground.
The third cause of action is essentially for forfeiture of
Alberto J. Lopez share in property co-owned by him and
petitioner. It does not involve the issue of validity of the
co-ownership between Alberto J. Lopez and petitioner.
The issue is whether there is basis in law to forfeit Alberto
J. Lopez share.Respondents asserted right to forfeit
extends to Alberto J. Lopez share alone, such cause of
action, however, pertains to Alberto J. Lopez, not
petitioner.The respondent also sought support. Support
cannot be compelled from a stranger.
(2) No, petitioner would not be affected by any judgment
in Special Proceeding.
If petitioner is not a real party in interest, she cannot be an
indispensable party. An indispensable party is one
without whom there can be no final determination of an
action. Petitioner’s participation in Special Proceeding is
not indispensable.The trial court can issue a judgment
ordering Alberto J. Lopez to make an accounting of his
conjugal partnership with respondent, and give support to
respondent and their children, and dissolve Alberto J.
Lopez conjugal partnership with respondent, and forfeit
Alberto J. Lopez share in property co-owned by him and
petitioner. Such judgment would be perfectly valid and
enforceable only against Alberto J. Lopez.
In the context of her petition in the lower court,
respondent would be accorded complete relief if Alberto
J. Lopez were ordered to account for his alleged conjugal
partnership property with respondent, give support to
respondent and her children, turn over his share in the co-
ownership with petitioner and dissolve his conjugal
partnership or absolute community property with
respondent. Petitioner is not a necessary party because her
cause of action is against her husband, not the petitioner.
JUANA COMPLEX I HOMEOWNERS ASSOC INC
VS FIL-ESTATE LAND INC
Facts: Juana Complex I together with its individual
residents and other neighboring subdivisions instituted a
complaint for damages as a class suit representing the
regular commuters and motorists of Juana Complex I
(Juana) and neighboring subdivisions who were deprived
of the use of La Paz Road (Road) , against Fil-Estate (Fil-
Estate). The complaint alleged that Juana et.al. were
regular commuters and motorists who constantly travelled
Road for more than ten years until Fil-Estate excavated
and permanently closed the Road.
Juana prayed for the immediate issuance of a Temporary
Restraining Order (TRO) or a writ of preliminary
injunction (WPI) to enjoin Fil-Estate from stopping and
intimidating them in their use of the Roas. A TRO was
issued ordering Fil-Estate for 20 days to stop preventing
or harassing Juana from using the Road. The Regional
Trial Court (RTC) conducted several hearings to
determine the propriety of the issuance of WPI. Fil-Estate
filed a Motion to Dismiss arguing that complaint failed to
state a cause of action and that it was improperly files as
a class suit. RTC granted WPI thus Fil-Estate filed a
Motion for Reconsideration. RTC then issued Omnibus
Order denying both Motion to Dismiss and Motion for
17
Reconsideration file by Fil-Estate. Not satisfied, Fil-
Estate filed a petition foe certiorari and prohibit before the
Court of Appeals (CA) to annul the Order and Omnibus
Order issued by RTC contending that Juana failed to state
a cause of action, improperly filed class suit and failed to
show that Juana had a clear and unmistakable right to the
use of the Road since Road was a Torrens registered
private road and there was neither a voluntary nor legal
easement constituted over it. CA partially granted petition
on the merit of the last contention. Hence, this petition for
review
Issues:
(1) Whether or not the complaint states a cause of action;
(2) Whether the complaint has been properly filed as a
class suit;
(3) Whether or not a WPI is warranted.
Ruling:
(1) Yes, the complaint states a cause of action. Whether
the complaint states a cause of action is determined by its
averments regarding the acts committed by the defendant.
Thus, contains a concise statement of the ultimate or
essential facts constituting plaintiff’s cause of action.
First, Juana’s averments show a demandable right over
Road. Second, there is an alleged violation of such right
by Fil-Estate when they excavated and prevented Juana
from using it. Third, Juana consequently suffered injury.
(2) Yes, the complaint has been properly filed as a class
suit. The necessary elements of a class suit are present in
this case namely: common interest, numerous parties
affected and sufficient number of parties bringing the
class suit. The suit is clearly one that benefits all
commuters and motorists who use the Road.
(3) No, the WPI is not warranted. A WPI under Sec. 3,
Rule 58 is available to prevent a threatened or continuous
irremediable injury to parties before their claims can be
thoroughly studied and adjudicated. The requisites for its
issuance are (1) existence of clear and unmistakable right
that must be protected and (2) an urgent and paramount
necessity for the writ to prevent serious damage. Juana
failed to establish a prima facie proof of violation of their
right to justify issuance of WPI. Their right to use the
Road is disputable since Juana has no clear legal right
therein. Juana merely anchor their purported right over the
Road on the bare allegation that they use the Road for
more than ten yeas. A mere allegation does not meet the
standard of proof that would warrant issuance of WPI.
MISAMIS OCCIDENTAL II COOPERATIVE INC
VS DAVID
Facts: Private respondent Virgilio S. David, a supplier of
electrical hardware, filed a case for specific performance
and damages against MOELCI II, a rural electric
cooperative in Misamis Occidental. The case was
essentially a collection suit, predicated on a document
attached as Annex A to the Amended Complaint that
according to David is the contract pursuant to which he
sold to MOELCI II one unit of 10 MVA Transformer.
MOELCI II filed its Answer to Amended Complaint,
affirmative defenses which constitutes grounds for
dismissal. These grounds were lack of cause of action,
there being allegedly no enforceable contract between the
parties under the Statute of Frauds and improper venue.
MOELCI II in essence argued that the document attached
as Annex A was only a quotation letter and not a contract
as alleged by David. Thus, it contends that David`s
Amended Complaint is dismissible for failure to state a
cause of action.
David contended in the main that because a motion to
dismiss on the ground of failure to state a cause of action
is required to be based only on the allegations of the
complaint, the “quotation letter”, being merely an
attachment to the complaint and not part of its allegations,
cannot be inquired into.
MOELCI II filed a rejoinder to the opposition in which it
asserted that a complaint cannot be separated from its
annexes; hence the trial court in resolving a motion to
dismiss on the ground of failure to state a cause of action
must consider the complaint`s annexes.
The RTC, issued an order denying MOELCI II`s motion
for preliminary hearing of affirmative defenses. The
Court of Appeals dismissed MOELCI II`s petition
holding that the allegations in David`s complaint
constitutes a cause of action.
Petitioner is now before the Supreme Court seeking a
review of the appelate court`s pronouncements, MOELCI
II asserts that the Court of Appeals committed serious
error in: 1) ruling that the resolution of its motion to
dismiss on the ground for lack of cause of action
necessitated hearing by the trial court with the end in view
of determining whether or not the document attached as
Annex A to the Amended Complaint is a contract as
alleged in the body of the pleading; and 2) not ordering
the trial court to dismiss the amended complaint on the
lack of cause of action.
18
Issue: Whether the Court of Appeals erred in dismissing
the petition for certiorari and in holding that the trial court
did not commit grave abuse of discretion in denying
petitioner`s Motion.
Ruling: There is no error in the ruling of the Court of
Appeals.
Under the old Rules of Court a preliminary hearing
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
Procedure. Section 6, Rule 16 provides that a grant of
preliminary hearing rests on the sound discretion of the
court.
Moreover, as MOELCI II`s Motion is anchored on the
ground that the Complaint allegedly stated no cause of
action, a preliminary hearing thereon is more than
unnecessary as it constitutes an erroneous and
improvident move. No error therefore could be ascribed
to the trial court in the denial of such Motion.
To determine the existence of a cause of action, ony the
statements in the complaint may be properly considered.
It is error for the court to take cognizance of external facts
of hold preliminary hearing to determine their existence.
If the allegations in a complaint furnish sufficient basis by
which the complaint can be maintained, the same should
not be dismissed regardless of the defenses that may be
averred by the defendants.
The test of sufficiency of facts alleged in the complaint as
constituting a cause of action is whether or not admitting
the facts alleged, the court could render a valid verdict in
accordance with the prayer of said complaint.
It has been hypothetically admitted that the parties had
entered into a contract sale, David bound himself to
supply petitioner 1 unit of MVA Power transformer plus
69 KV Line Accessories; that despite written and verbal
demands, petitioner has failed to pay the price thereof.
Contrary to MOELCI II`s assertion, Annex A is not an
“undisguied quotation letter”. While Annex A is
captioned as such, the presence of the signatures of both
the General Manager and the Chairman of the Committee
of Management immediately below the word
“CONFORME” appearing on the document`s last page
lends credulity to David`s contention that there was, or
might have been, a meeting of minds on the terms
embodied therein. Thus, the appendage of Annex A does
not entirely serve to snuff out David`s claim.
Finally, we do not agree with MOELCI II`s contention
that the Court of Appeals sanctioned the trial court`s
deferment of the resolution of MOELCI II`s Motion. The
trial court squarely denied the Motion and not merely
deferred its resolution. Thus, there is no deferment to
speak of that should be enjoined.
JUANA COMPLEX I HOMEOWNERS ASSOC INC
VS FIL-ESTATE LAND INC (see before Misamis)
BSP VS LEGASPI
Doctrines:
CIVIL PROCEDURE (Jurisdiction) –
Annexes to a complaint are deemed part of, and should
be considered together with the complaint.
The Honorable Supreme Court has ruled that: “The non-
inclusion on the face of the complaint of the amount of
the property, however, is not fatal because attached in the
complaint is a tax declaration of the property in question.”
Facts:
BSP filed a Complaint for annulment of title, revocation
of certificate and damages (with application for TRO /
writ of preliminary injunction) against respondent. The
RTC issued the preliminary injunction against
respondent. In one of his defenses, Legaspi alleged that
RTC failed to acquire jurisdiction over the action because
the complaint, a real action, failed to allege the assessed
value of the subject property. BSP countered that a tax
declaration showing the assessed value and latest zonal
value was annexed to the complaint.
Issues:
 Whether or not failure to allege the amount in the
face of the complaint would tantamount to a lack
of a cause of action;
Held:
 It depends. The Honorable Supreme Court stated
that:
“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”
in the complaint) of the property in question showing that
it has an assessed value of P215,320.00. It must be
emphasized that annexes to a complaint are deemed part
of, and should be considered together with the
complaint (emphasis mine). In Fluor Daniel, Inc. –
Philippines vs. E.B. Villarosa and Partners Co.,
Ltd., this Court ruled that in determining the sufficiency
of a cause of action, the courts should also consider the
attachments to the complaint, thus:
We have ruled that a complaint should not be dismissed
for insufficiency of cause of action if it appears clearly
from the complaint and its attachmentsthat the plaintiff
is entitled to relief. The converse is also true. The
complaint may be dismissed for lack of cause of action
if it is obvious from the complaint and its annexes that
the plaintiff is not entitled to any relief” (emphasis
mine).
GOODLAND COMPANY INC VS ASIA UNITED
BANK (see before Relucio)
PNB VS GATEWAY PROPERTY HOLDINGS INC
Facts: Respondent GPHI was a subsidiary company of
Gateway Electronics Company (GEC). GEC obtained
long term loans from the Land Bank of the Philippines
(LBP) in the amount of P600 million and the loans were
secured by mortgages executed by GEC over its
properties.LBP invited other banks to lend money to
GEC. It is alleged that LBP agreed to submit the
mortgaged properties to it by GEC as part of the latters
assets that will be covered by a Mortgage Trust Indenture
(MTI), ensuring that all participating banks in the loan
syndicate will have equal security position. LBP and a
consortium of banks entered into a Memorandum of
Understanding (MOU), whereby LBP agreed to release
the mortgaged properties to the consortium of banks on
the basis of an MTI. The participating banks released
funds in favor of GEC. Petitioner PNB became part of this
consortium of creditor banks.
GEC then requested PNB to convert its long-term loans
into a Convertible Omnibus Credit Line due to its
difficulty in paying its obligation. PNB approved such a
conversion subject to certain conditions- GPHI was made
a co-borrower in the agreement and was obligated to
execute in favor of PNB a real estate mortgage over two
parcels of land.GEC filed a complaint for specific
performance against LBP due to the latter’s refusal to
share the mortgaged properties with the consortium of
creditor banks.
PNB demanded payment from GEC and when the latter
discovered the former’s intent to foreclose the REM, it
prayed that a (TRO) be issued to enjoin PNB from
foreclosing on the properties of GPHI and judgment be
issued declaring that the real estate mortgage involving
the properties of GPHI and executed in favor of PNB is
null and void. GPHI contended that the understanding
between GEC and PNB is that the GPHI properties would
stand merely as a temporary security pending the outcome
of case filed by GEC against LBP.
Since no TRO was issued by the Court, PNB was able to
foreclosed the mortgaged properties.
Thereafter, GPHI filed a Petition for Annulment of
Foreclosure of Mortgage. GPHI argued that, in
conducting the foreclosure proceedings, the sheriff failed
to observe the requirement of Section 4 of Act No. 3135
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
of action and reliefs prayed for, the reliefs being founded
on the same facts. Where a single cause of action has been
split and pursuant to Rule 16, Section 1(e) of the 1997
Rules on Civil Procedure, the Motion to Dismiss filed by
PNB, on the ground that there is another action pending
between the same parties for the same cause, or litis
pendentia is proper.
On appeal, the CA set aside the decision of the RTC and
ruled that the third requisite of litis pendentia (the identity
in the two cases should be such that the judgment that may
be rendered in one would, regardless of which party is
successful, amount to res adjudicata to the other) is not
present
Issue: Whether or not the requisites of litis pendentia exist
to warrant the dismissal of Civil Case for Annulment of
the Foreclosure Sale.
Ruling: Yes. All the requisites of litis pendentia exist.
There is litis pendentia if the following requisites are
present: (a) identity of parties, or at least such parties as
represent the same interests in both actions; (b) identity of
rights asserted and relief prayed for, the relief being
founded on the same facts; and (c) the identity of the two
preceding particulars is such that any judgment rendered
20
in the other action, will, regardless of which party is
successful, amount to res judicata in the action under
consideration.
As to the first requisite, GPHI is the plaintiff in both civil
cases while PNB is the party against whom GPHI is
asserting a claim.
As to the second requisite, allegations in Civil for
Annulment of the Real Estate Mortgage and Annulment
of the Foreclosure Sale reveal that the said cases invoke
the same fundamental issue which is the temporary nature
of the security that was to be provided by the mortgaged
properties of GPHI.
As to the third requisite, While the appeal of the dismissal
of Annulment of the Foreclosure Sale was still pending
with the Court of Appeals, GPHI filed on a Motion for
Leave to Amend Complaint to Conform to the Evidence
in Civil Case Annulment of the Real Estate Mortgage.
GPHI stated therein that after the parties presented their
evidence, the fact of foreclosure and the acquisition of the
mortgaged properties by PNB were duly established. In
the accompanying Amended Complaint in Annulment of
the Real Estate Mortgage, GPHI prayed, for the
declaration of the nullity of the foreclosure and auction
sale of the mortgaged properties. As a consequence of
such an action, the two cases that GPHI filed before the
court a quo henceforth contained an identity of rights
asserted and reliefs prayed for, the relief being founded
on the same factual allegations.
SALONGA VS WARNER BARNES & CO
Facts: Westchester Fire Insurance Company of New
York entered into a contract with Tina J. Gamboa
whereby said company insured one case of rayon yardage
which said Tina J. Gamboa shipped from San Francisco,
California to Manila, Philippines and consigned to Jovito
Salonga, plaintiff herein. According to the contract of
insurance, the insurance company undertook to pay to the
sender or her consignee the damages that may be caused
to the goods shipped subject to the condition that the
liability of the company will be limited to the actual loss
which the insured may suffer not to the exceed the sum of
P2,000. The ship arrived in Manila, and the shipment was
later on examined by C. B. Nelson and Co., marine
surveyors, at the request of the plaintiff, and in their
examination the surveyors found a shortage in the
shipment in the amount of P1,723,12.
Plaintiff filed a claim for damages in the amount of
P1,723.12 against the American President Lines, agents
of the ship, demanding settlement, and when no action
was taken on this claim, plaintiff demanded payment
thereof from Warner, Barnes and Co., Ltd., as agent of the
insurance company in the Philippines, and this agent
having refused to pay the claim, plaintiff instituted the
present action.
After trial, at which both parties presented their respective
evidence, the court rendered judgment against Jovito
Salonga. The motion for reconsideration filed by the
defendant having been denied, the case was appealed to
this court.
Issue: Whether or not the trial court erred in holding that
defendant, as agent of Westchester Fire Insurance
Company of New York, United States of America, is
responsible upon the insurance claim subject to the suit.
Ruling: Yes.
1. Defendant has no contractual relation with either
plaintiff or his consignor
It is a well known rule that a contractual obligation or
liability, or an action ex-contractu, must be founded upon
a contract, oral or written, either express or implied. This
is axiomatic. If there is no contract, there is no
corresponding liability, and no cause of action may arise
therefrom. This is what is provided for in article 1257 of
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
obligations are not transmissible, and when the contract
contains a stipulation in favor of a third person, he may
demand its fulfillment if he gives notice of his acceptance
before it is revoked.
Warner, Barnes and Co., as principal or agent, did not
make any contract, either oral or written, with the
plaintiff. The contracts were made between the respective
insurance companies and the insured, and were made by
the insurance companies, through Warner, Barnes and
Co., as their agent.
The defendant has not taken part, directly or indirectly, in
the contract in question. The evidence shows that the
defendant did not enter into any contract either with the
plaintiff or his consignor — Tina J. Gamboa
The contract of marine insurance was made and executed
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:
1. In order to determine whether the recourse of
petitioners is proper or not, it is necessary to draw a line
between an error of judgment and an error of jurisdiction.
An error of judgment is one which the court may
commit in the exercise of its jurisdiction, and which error
is reviewable only by an appeal. On the other hand,
an error of jurisdiction is one where the act complained
of was issued by the court, officer or a quasi-judicial
body without or in excess of jurisdiction, or with grave
abuse of discretion which is tantamount to lack or in
excess of jurisdiction. This error is correctable only by the
extraordinary writ of certiorari.
It is true that under Rule 43, appeals from awards,
judgments, final orders or resolutions of any quasi-
judicial agency exercising quasi-judicial
functions, including the Office of the President, may be
taken to the Court of Appeals by filing a verified petition
for review within fifteen (15) days from notice of the said
judgment, final order or resolution, whether the appeal
involves questions of fact, of law, or mixed questions of
fact and law.
However, in this particular case, the remedy prescribed in
Rule 43 is inapplicable considering that the present
petition contains an allegation that the challenged
resolution is patently illegal and was issued with grave
abuse of discretion and beyond his (respondent Secretary
Renato C. Coronas) jurisdiction when said resolution
substantially modified the earlier OP Decision of March
29, 1996 which had long become final and executory. In
other words, the crucial issue raised here involves an error
of jurisdiction, not an error of judgment which is
reviewable by an appeal under Rule 43. Thus, the
appropriate remedy to annul and set aside the assailed
resolution is an original special civil action for certiorari
under Rule 65, as what the petitioners have correctly
done. The pertinent portion of Section 1 thereof provides:
SECTION 1. Petition for certiorari. When any tribunal,
board or officer exercising judicial or quasi-judicial
functions has acted without or in excess of its or his
jurisdiction, or with grave abuse of discretion amounting
to lack or excess of jurisdiction, and there is no appeal, or
any plain, speedy, and adequate remedy in the ordinary
course of law, a person aggrieved thereby may file a
verified petition in the proper court, alleging the facts with
certainty and praying that judgment be rendered annulling
or modifying the proceedings of such tribunal, board or
officer, and granting such incidental reliefs as law and
justice may require.
The office of a writ of certiorari is restricted to truly
extraordinary cases in which the act of the lower court or
quasi-judicial body is wholly void.
The aforequoted Section 1 of Rule 65 mandates that the
person aggrieved by the assailed illegal act may file a
verified petition (for certiorari) in the proper court. The
proper court where the petition must be filed is stated in
Section 4 of the same Rule 65 which reads:
SEC. 4. Where petition filed.- The petition may be filed
not later than sixty (60) days from notice of the judgment,
order or resolution sought to be assailed in the Supreme
Court or, if it relates to the acts or omissions of a lower
court or of a corporation, board, officer or person, in the
Regional Trial Court exercising jurisdiction over the
territorial area as defined by the Supreme Court. It may
also be filed in the Court of Appeals whether or not the
same is in aid of its appellate jurisdiction, or in the
Sandiganbayan if it is in aid of its jurisdiction. If it
involves the acts or omissions of a quasi-judicial agency,
and unless otherwise provided by law or these Rules, the
petition shall be filed in and cognizable only by the Court
of Appeals.
Under the above-quoted Section 4, the Supreme Court,
Court of Appeals and Regional Trial Court have original
concurrent jurisdiction to issue a writ of
certiorari, prohibition and mandamus. But the
jurisdiction of these three (3) courts are also delineated in
that, if the challenged act relates to acts or omissions of a
lower court or of a corporation, board, officer or person,
the petition must be filed with the Regional Trial Court
which exercises jurisdiction over the territorial area as
defined by the Supreme Court. And if it involves the act
or omission of a quasi-judicial agency, the petition shall
be filed only with the Court of Appeals, unless otherwise
provided by law or the Rules of Court. We have clearly
discussed this matter of concurrence of jurisdiction
in People vs. Cuaresma, et. al., through now Chief
Justice Andres R. Narvasa, thus:
This Courts original jurisdiction to issue writs
of certiorari (as well as prohibition, mandamus, quo
warranto, habeas corpus and injunction) is not
24
exclusive. It is shared by this Court with Regional Trial
Courts , which may issue the writ, enforceable in any part
of their respective regions. It is also shared by this Court,
and by the Regional Trial Court, with the Court of
Appeals, although prior to the effectivity of Batas
Pambansa Bilang 129, the latters competence to issue the
extraordinary writs was restricted to those in aid of its
appellate jurisdiction. This concurrence of jurisdiction is
not, however, to be taken as according to parties seeking
any of the writs an absolute, unrestrained freedom of
choice of the court to which application therefor will be
directed.
But the Supreme Court has the full discretionary power to
take cognizance of the petition filed directly to it if
compelling reasons, or the nature and importance of the
issues rose, warrant. This has been the judicial policy to
be observed.
Pursuant to said judicial policy, we resolve to take
primary jurisdiction over the present petition in the
interest of speedy justice and to avoid future litigations so
as to promptly put an end to the present controversy
which, as correctly observed by petitioners, has sparked
national interest because of the magnitude of the problem
created by the issuance of the assailed
resolution. Moreover, as will be discussed later, we find
the assailed resolution wholly void and requiring the
petitioners to file their petition first with the Court of
Appeals would only result in a waste of time and money.
2. The rules and regulations governing appeals to the
Office of the President of the Philippines are embodied in
Administrative Order No. 18. Section 7 thereof provides:
SEC. 7. Decisions/resolutions/orders of the Office of the
President shall, except as otherwise provided for by
special laws, become final after the lapse of fifteen (15)
days from receipt of a copy thereof by the
parties, unless a motion for reconsideration thereof is
filed within such period.
Only one motion for reconsideration by any one party
shall be allowed and entertained, save in exceptionally
meritorious cases.
It is further provided for in Section 9 that The Rules of
Court shall apply in a suppletory character whenever
practicable.
When the Office of the President issued the Order dated
June 23,1997 declaring the Decision of March 29, 1996
final and executory, as no one has seasonably filed a
motion for reconsideration thereto, the said Office had
lost its jurisdiction to re-open the case, more so modify its
Decision. Having lost its jurisdiction, the Office of the
President has no more authority to entertain
the second motion for reconsideration filed by
respondent DAR Secretary, which second motion became
the basis of the assailed Win-Win Resolution. Section 7
of Administrative Order No. 18 and Section 4, Rule 43 of
the Revised Rules of Court mandate that only one (1)
motion for reconsideration is allowed to be taken from the
Decision of March 29, 1996. And even if a second motion
for reconsideration was permitted to be filed in
exceptionally meritorious cases, as provided in the second
paragraph of Section 7 of AO 18, still the said motion
should not have been entertained considering that the first
motion for reconsideration was not seasonably filed,
thereby allowing the Decision of March 29, 1996 to lapse
into finality. Thus, the act of the Office of the President in
re-opening the case and substantially modifying its March
29,1996 Decision which had already become final and
executory, was in gross disregard of the rules and basic
legal precept that accord finality to administrative
determinations.
In San Luis, et al. vs. Court of Appeals, et al. we held:
Since the decisions of both the Civil Service Commission
and the Office of the President had long become final and
executory, the same can no longer be reviewed by the
courts. It is well-established in our jurisprudence that the
decisions and orders of administrative agencies, rendered
pursuant to their quasi-judicial authority, have upon their
finality, the force and binding effect of a final judgment
within the purview of the doctrine of res judicata The rule
of res judicata which forbids the reopening of a matter
once judicially determined by competent authority applies
as well to the judicial and quasi-judicial acts of public,
executive or administrative officers and boards acting
within their jurisdiction as to the judgments of courts
having general judicial powers.
The orderly administration of justice requires that the
judgments/resolutions of a court or quasi-judicial body
must reach a point of finality set by the law, rules and
regulations. The noble purpose is to write finis to disputes
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
must always be maintained by those who wield the power
of adjudication. Any act which violates such principle
must immediately be struck down.
3. There is forum-shopping whenever, as a result of an
adverse opinion in one forum, a party seeks a favorable
opinion (other than by appeal or certiorari) in
another. The principle applies not only with respect to
suits filed in the courts but also in connection with
litigation commenced in the courts while an
administrative proceeding is pending, as in this case, in
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,
where the court in which the second suit was brought, has
no jurisdiction.
The test for determining whether a party violated the rule
against forum shopping has been laid down in the 1986
case of Buan vs. Lopez and that is, forum shopping
exists where the elements of litis pendentia are present
or where a final judgment in one case will amount
to res judicata in the other, as follows:
There thus exists between the action before this Court and
RTC Case No. 86-36563 identity of parties, or at least
such parties as represent the same interests in both
actions, as well as identity of rights asserted and relief
prayed for, the relief being founded on the same facts,
and the identity on the two preceding particulars is such
that any judgment rendered in the other action, will,
regardless of which party is successful, amount to res
adjudicata in the action under consideration: all the
requisites, in fine, of auter action pendant.
It is clear from the above-quoted rule that the petitioners
are not guilty of forum shopping. The test for determining
whether a party has violated the rule against forum
shopping is where a final judgment in one case will
amount to res adjudicata in the action under
consideration. A cursory examination of the cases filed by
the petitioners does not show that the said cases are
similar with each other. The petition for certiorari in the
Court of Appeals sought the nullification of the DAR
Secretarys order to proceed with the compulsory
acquisition and distribution of the subject property. On
the other hand, the civil case in RTC of Malaybalay,
Bukidnon for the annulment and cancellation of title
issued in the name of the Republic of the Philippines, with
damages, was based on the following grounds: (1) the
DAR, in applying for cancellation of petitioner
NQSRMDCs title, used documents which were earlier
declared null and void by the DARAB; (2) the
cancellation of NQSRMDCs title was made without
payment of just compensation; and (3) without notice to
NQSRMDC for the surrender of its title. The present
petition is entirely different from the said two cases as it
seeks the nullification of the assailed Win-Win
Resolution of the Office of the President dated November
7, 1997, which resolution was issued long after the
previous two cases were instituted.
SAMANIEGO VS AGUILA
Facts: Petitioners are tenants in a landholding owned by
respondents’ mother with an aggregate area of 10.4496
hectares in Patul, Santiago, Isabela.The subject land was
identified by the DAR-Region 2 as covered by the
Operation Land Transfer Program of the government.
After sometime, respondent’s mother on their behalf filed
a petition for exemption from the coverage of PD 27
(Land Reform Program). Thus, petitioners opposed the
application for respondents’ mother transferred the title of
the lands to respondents in violation of the rules and
regulations of the DAR.
The Regional Director granted the application for
exemption. The decision was affirmed on appeal to the
DAR, which was reversed by the same on motion of the
petitioners. Thus, DAR denied the application for
exemption and declared petitioners as rightful farmer-
beneficiaries of the land.Respondents appealed to the
Office of the President which set aside the decision of the
DAR and reinstated DAR’s prior decision.
On appeal in the CA, the petition was dismissed for failure
to implead the Office of the President (OP) as an
indispensable party (as the one whose decision and
resolution is being questioned). Joinder of indispensable
parties is mandatory. Failure to implead the OP was fatal
and the petition must be dismissed.
Issue: Whether or not the OP was an indispensable party
and had to be impleaded.
Ruling: No. At the time the petitioners brought the case
to the CA, the rule on appeals to the said court from quasi-
judicial agencies was that, “petition for review shall (a)
state the full names of the parties, without impleading the
court or agencies either as petitioners or respondents.”
26
Also, the CA was not an indispensable party or a party in
interest without whom no final determination can be had
of an action without being impleaded. Indispensable
parties are those with such an interest in the matter that a
final decree would necessarily affect their rights and the
court cannot proceed without their presence.
The word “interest” in this rule should be material,
directly in issue and to be affected by the decree, as
distinguished from a mere incidental interest in the
question involved, as opposed to a nominal or pro forma
party who is joined as a plaintiff or defendant, not because
such party has any real interest in the subject matter or
because any relief is demanded, but merely because the
technical rules of pleadings require the presence of such
party on the record. Thus, the OP not having any interest
in the case except to entertain appeals from the DAR, is
not an indispensable party.CA was ordered to decide on
the matter
THEODORE AND NANCY ANG VS SPS ALAN
AND EM ANG
Facts: Spouses Alan and Em Ang, the respondents,
obtained a loan worth $300,000 from Theodore and
Nancy Ang, the petitioners. When the loan became
demandable, respondent spouses executed a Promissory
Note promising to pay the loan and 10% annual interest
on demand. Petitioners made several demands but
respondents failed to pay, their obligation amounting to
$719, 627.21 inclusive of the 10% interest. Theodore and
Nancy Ang, the petitioners, were residing in Los Angeles,
California. They executed a Special Power of Attorney in
favor of one Atty. Eldrige Marvin Aceron in order for him
to file an action against the respondent spouses. Atty.
Aceron filed a complaint for the collection of a sum of
money with the RTC of Quezon City, his residence. The
respondent spouses moved to dismiss, on the ground of
improper venue. They contend that the complaint against
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
as basis for the venue of the action. Respondents filed a
petition for certiorari with the CA based on their earlier
ground and on the ground that Atty. Aceron, a mere
attorney-in-fact, is not the real party in interest; that his
residence should not be considered in determining the
proper venue for the complaint. The CA reversed the RTC
and dismissed the complaint filed by the petitioners. The
CA held that the complaint should have been filed in
Bacolod City instead. Petitioners moved to reconsider but
were denied by the CA
Issue: Did the CA commit an error of law when it ruled
that the complaint must be dismissed on the ground of
improper venue?
Ruling: No, the CA did not commit an error of law.
While the fixing of the venue in personal actions may be
done for the convenience of the plaintiffs and their
witnesses, the choice is not left to the caprice of the
plaintiff. The Rules of court still regulate the fixing of the
venue for filing a personal action.
The collection of a sum of money is a personal action in
order to enforce a contract. The Rules of Court give the
plaintiff the choice where to file the action; whether in the
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
only choice left for venue was the residence of the
defendant.
Atty. Aceron, the attorney-in-fact of the petitioners is not
a real party in interest for the court to consider his
residence as a basis for setting the venue. He is only a
representative of the petitioners, and under Rule 3, sec. 3
of the Rules of Court “the beneficiary shall be included in
the title of the case and shall be deemed to be the real party
in interest”. Atty. Aceron did not subrogate petitioners as
real parties in interest, he merely represents them. The real
party in interest still remains Theodore Ang and Nancy
Ang; Atty. Aceron cannot replace their residence with that
of his own for purposes of setting the venue. The rules of
venue are designed to facilitate the just and orderly
administration of justice. This objective will be frustrated
if the plaintiffs are given unbridled freedom to choose the
venue, as they may have ulterior motives for filing the
complaint in a specific court of their choosing.
MOST REVEREND PEDRO ARIGO VS SWIFT
FACTS:
The USS Guardian is an Avenger-class mine
countermeasures ship of the US Navy. In December 2012,
the US Embassy in the Philippines requested diplomatic
clearance for the said vessel “to enter and exit the
territorial waters of the Philippines and to arrive at the
27
port of Subic Bay for the purpose of routine ship
replenishment, maintenance, and crew liberty.” On
January 6, 2013, the ship left Sasebo, Japan for Subic Bay,
arriving on January 13, 2013 after a brief stop for fuel in
Okinawa, Japan.
On January 15, 2013, the USS Guardian
departed Subic Bay for its next port of call in Makassar,
Indonesia. On January 17, 2013 at 2:20 a.m. while
transiting the Sulu Sea, the ship ran aground on the
northwest side of South Shoal of the Tubbataha Reefs,
about 80 miles east-southeast of Palawan. No one was
injured in the incident, and there have been no reports of
leaking fuel or oil.
Petitioners claim that the grounding, salvaging
and post-salvaging operations of the USS Guardian cause
and continue to cause environmental damage of such
magnitude as to affect the provinces of Palawan, Antique,
Aklan, Guimaras, Iloilo, Negros Occidental, Negros
Oriental, Zamboanga del Norte, Basilan, Sulu, and Tawi-
Tawi, which events violate their constitutional rights to a
balanced and healthful ecology.
ISSUES:
1. Whether or not petitioners have legal standing.
2. Whether or not US respondents may be held
liable for damages caused by USS Guardian.
3. Whether or not the waiver of immunity from suit
under VFA applies in this case.
HELD:
First issue: YES.
Petitioners have legal standing
Locus standi is “a right of appearance in a court
of justice on a given question.” Specifically, it is “a
party’s personal and substantial interest in a case where
he has sustained or will sustain direct injury as a result”
of the act being challenged, and “calls for more than just
a generalized grievance.” However, the rule on standing
is a procedural matter which this Court has relaxed for
non-traditional plaintiffs like ordinary citizens, taxpayers
and legislators when the public interest so requires, such
as when the subject matter of the controversy is of
transcendental importance, of overreaching significance
to society, or of paramount public interest.
In the landmark case of Oposa v. Factoran, Jr.,
we recognized the “public right” of citizens to “a balanced
and healthful ecology which, for the first time in our
constitutional history, is solemnly incorporated in the
fundamental law.” We declared that the right to a
balanced and healthful ecology need not be written in the
Constitution for it is assumed, like other civil and polittcal
rights guaranteed in the Bill of Rights, to exist from the
inception of mankind and it is an issue of transcendental
importance with intergenerational implications. Such
right carries with it the correlative duty to refrain from
impairing the environment.
On the novel element in the class suit filed by
the petitioners minors in Oposa, this Court ruled that not
only do ordinary citizens have legal standing to sue for
the enforcement of environmental rights, they can do so
in representation of their own and future generations.
Second issue: YES.
The US respondents were sued in their official
capacity as commanding officers of the US Navy who had
control and supervision over the USS Guardian and its
crew. The alleged act or omission resulting in the
unfortunate grounding of the USS Guardian on the TRNP
was committed while they were performing official
military duties. Considering that the satisfaction of a
judgment against said officials will require remedial
actions and appropriation of funds by the US government,
the suit is deemed to be one against the US itself. The
principle of State immunity therefore bars the exercise of
jurisdiction by this Court over the persons of respondents
Swift, Rice and Robling.
During the deliberations, Senior Associate
Justice Antonio T. Carpio took the position that the
conduct of the US in this case, when its warship entered a
restricted area in violation of R.A. No. 10067 and caused
damage to the TRNP reef system, brings the matter within
the ambit of Article 31 of the United Nations Convention
on the Law of the Sea (UNCLOS). He explained that
while historically, warships enjoy sovereign immunity
from suit as extensions of their flag State, Art. 31 of
the UNCLOS creates an exception to this rule in cases
where they fail to comply with the rules and
regulations of the coastal State regarding passage
through the latter’s internal waters and the territorial
sea.
28
 In the case of warships, as pointed out by
Justice Carpio, they continue to enjoy sovereign
immunity subject to the following exceptions:
Article 30: Non-compliance by warships with the laws
and regulations of the coastal State
If any warship does not comply with the laws and
regulations of the coastal State concerning passage
through the territorial sea and disregards any request for
compliance therewith which is made to it, the coastal
State may require it to leave the territorial sea
immediately.
Article 31: Responsibility of the flag State for damage
caused by a warship or other government ship operated
for non-commercial purposes
The flag State shall bear international responsibility for
any loss or damage to the coastal State resulting from the
non-compliance by a warship or other government ship
operated for non-commercial purposes with the laws and
regulations of the coastal State concerning passage
through the territorial sea or with the provisions of this
Convention or other rules of international law.
Article 32: Immunities of warships and other government
ships operated for non-commercial purposes
With such exceptions as are contained in
subsection A and in articles 30 and 31, nothing in this
Convention affects the immunities of warships and other
government ships operated for non-commercial
purposes. A foreign warship’s unauthorized entry into
our internal waters with resulting damage to marine
resources is one situation in which the above
provisions may apply.
But what if the offending warship is a non-party to the
UNCLOS, as in this case, the US?
According to Justice Carpio, although the US to date has
not ratified the UNCLOS, as a matter of long-standing
policy the US considers itself bound by customary
international rules on the “traditional uses of the oceans”
as codified in UNCLOS.
Moreover, Justice Carpio emphasizes that “the US refusal
to join the UNCLOS was centered on its disagreement
with UNCLOS” regime of deep seabed mining (Part XI)
which considers the oceans and deep seabed commonly
owned by mankind,” pointing out that such “has nothing
to do with its the US’ acceptance of customary
international rules on navigation.”
The Court also fully concurred with Justice Carpio’s view
that non-membership in the UNCLOS does not mean that
the US will disregard the rights of the Philippines as a
Coastal State over its internal waters and territorial sea.
We thus expect the US to bear “international
responsibility” under Art. 31 in connection with the USS
Guardian grounding which adversely affected the
Tubbataha reefs. Indeed, it is difficult to imagine that our
long-time ally and trading partner, which has been
actively supporting the country’s efforts to preserve our
vital marine resources, would shirk from its obligation to
compensate the damage caused by its warship while
transiting our internal waters. Much less can we
comprehend a Government exercising leadership in
international affairs, unwilling to comply with the
UNCLOS directive for all nations to cooperate in the
global task to protect and preserve the marine
environment as provided in Article 197 of UNCLOS
Article 197: Cooperation on a global or regional basis
States shall cooperate on a global basis and, as
appropriate, on a regional basis, directly or through
competent international organizations, in formulating and
elaborating international rules, standards and
recommended practices and procedures consistent with
this Convention, for the protection and preservation of the
marine environment, taking into account characteristic
regional features.
In fine, the relevance of UNCLOS provisions to the
present controversy is beyond dispute. Although the
said treaty upholds the immunity of warships from the
jurisdiction of Coastal States while navigating the
latter’s territorial sea, the flag States shall be required
to leave the territorial sea immediately if they flout the
laws and regulations of the Coastal State, and they will
be liable for damages caused by their warships or any
other government vessel operated for non-commercial
purposes under Article 31.
Third issue: NO.
The waiver of State immunity under the VF A
pertains only to criminal jurisdiction and not to special
civil actions such as the present petition for issuance of a
writ of Kalikasan. In fact, it can be inferred from Section
17, Rule 7 of the Rules that a criminal case against a
person charged with a violation of an environmental law
is to be filed separately.
The Court considered a view that a ruling on the
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
further taking part in the case.Gilbert’s siblings filed a
manifestation claiming that the complaint is a nuisance
and harassment suit.
In an Order dated 6 November 2008,22 the RTC denied
the motion for inhibition, as well as dismissed the case,
declaring it a nuisance and harassment suit.This
constrained Gilbert to assail the above Order before the
Court of Appeals (CA).
In a Decision dated 27 May 2009, the CA upheld Judge
Sorongon’s refusal to inhibit.The CA, in the same
decision, also denied Gilbert’s Petition for the Issuance of
Writ of Preliminary Injunction for failure to establish a
clear and unmistakable right that was violated as required
under Section 3, rule 58 of the 1997 Rules of Civil
Procedure.
The CA, however, found merit on Gilbert’s contention
that the complaint should be heard on the merits. Hence,
these consolidated petitions.
G.R. No. 189486 is a Petition for Review under Rule 45
of the Rules of Court filed by petitioners which prays that
this Court declare Civil Case No. SEC-MC08-112, a
harassment or nuisance suit.
Meanwhile, during the pendency of G.R. No. 189486, the
trial court set the pre-trial conference on the case subject
of this controversy, constraining the petitioners to file a
Motion to defer the pre-trial, which was, however, denied
by the court a quo.
The denial of the petitioners’ motion to defer pre-trial,
compelled them to file with this Court a Petition for
Certiorari with Urgent Application for the Issuance of
TRO and/or A Writ of Preliminary Injunction, docketed
as G.R. No. 189699.
Because of the pendency of the G.R. No. 189486 before
us, the petitioners deemed proper to question the said
denial before us as an incident arising from the main
controversy
RULING: The absence of an indispensable party in a
case renders all subsequent actions of the court null and
void for want of authority to act, not only as to the absent
parties but even as to those present.
It bears emphasis that this controversy started with
Gilbert’s complaint filed with the RTC of Mandaluyong
City in his capacity as stockholder, director and Vice-
President of GoodGold
Gilbert’s complaint essentially prayed for the return of
his original 519,997 shares in GoodGold, by praying that
the court declare that "there were no valid transfers of the
contested shares to defendants and Francisco.”
The transfer of the shares cannot be, as Gilbert wanted,
declared entirely fraudulent without including those of
Francisco who owns almost a third of the total number.
Francisco, in both the 2004 and 2008 complaints, is an
indispensable party without whom no final determination
can be had for the following reasons: (a) the complaint
prays that the shares now under the name of the
defendants and Francisco be declared fraudulent; (b)
Francisco owns 195,000 shares some of which, Gilbert
prays be returned to him; (c) Francisco signed the
certificates of stocks evidencing the alleged fraudulent
shares previously in the name of Gilbert.
The inclusion of the shares of Francisco in the complaint
makes Francisco an indispensable party. Moreover, the
pronouncement about the shares of Francisco would
impact on the hereditary rights of the contesting parties or
on the conjugal properties of the spouses to the effect that
Francisco, being husband of Simny and father of the other
contesting parties, must be included for, otherwise, in his
absence, there cannot be a determination between the
parties already before the court which is effective,
complete, or equitable.
It bears emphasis that Gilbert, while suing as a
stockholder against his co-stockholders, should have also
impleaded GoodGold as defendant. His complaint also
prayed for the annulment of the 2004 stockholders’
annual meeting, the annulment of the 2004 election of the
board of directors and of its officers, the annulment of
2004 GIS submitted to the SEC, issuance of an order for
the accounting of all monies and rentals of GoodGold, and
the issuance of a writ of preliminary and mandatory
injunction. We have made clear that GoodGold is a
separate juridical entity distinct from its stockholders and
from its directors and officers. The trial court, acting as a
special commercial court, cannot settle the issues with
finality without impleading GoodGold as defendant. Like
Francisco, and for the same reasons, GoodGold is an
indispensable party which Gilbert should have impleaded
as defendant in his complaint.
Allegations of deceit, machination, false pretenses,
misrepresentation, and threats are largely conclusions of
law that, without supporting statements of the facts to
32
which the allegations of fraud refer, do not sufficiently
state an effective cause of action.
"In all averments of fraud or mistake, the circumstances
constituting fraud or mistake must be stated with
particularity" to "appraise the other party of what he is to
be called on to answer, and so that it may be determined
whether the facts and circumstances alleged amount to
fraud." These particulars would necessarily include the
time, place and specific acts of fraud committed. "The
reason for this rule is that an allegation of fraud concerns
the morality of the defendant’s conduct and he is entitled
to know fully the ground on which the allegations are
made, so he may have every opportunity to prepare his
case to clear himself at the trial."
Tested against established standards, we find that the
charges of fraud which Gilbert accuses his siblings are not
supported by the required factual allegations. In Reyes v.
RTC of Makati, which we now reiterate, mutatis
mutandis, while the complaint contained allegations of
fraud purportedly committed by his siblings, these
allegations are not particular enough to bring the
controversy within the special commercial court’s
jurisdiction; they are not statements of ultimate facts, but
are mere conclusions of law: how and why the alleged
transfer of shares can be characterized as "fraudulent"
were not explained and elaborated on. As emphasized in
Reyes:
Not every allegation of fraud done in a corporate setting
or perpetrated by corporate officers will bring the case
within the special commercial court’s jurisdiction. To fall
within this jurisdiction, there must be sufficient nexus
showing that the corporation’s nature, structure, or
powers were used to facilitate the fraudulent device or
scheme.
Significantly, no corporate power or office was alleged to
have facilitated the transfer of Gilbert’s shares. How the
petitioners perpetrated the fraud, if ever they did, is an
indispensable allegation which Gilbert must have had
alleged with particularity in his complaint, but which he
failed to.
Failure to specifically allege the fraudulent acts in intra-
corporate controversies is indicative of a harassment or
nuisance suit and may be dismissed motu proprio.
In ordinary cases, the failure to specifically allege the
fraudulent acts does not constitute a ground for dismissal
since such a defect can be cured by a bill of particulars.
Thus: Failure to allege fraud or mistake with as much
particularity as is desirable is not fatal if the general
purport of the claim or defense is clear, since all pleadings
should be so construed as to do substantial justice. Doubt
as to the meaning of the pleading may be resolved by
seeking a bill of particulars.
A bill of particulars may be ordered as to a defense of
fraud or mistake if the circumstances constituting fraud or
mistake are not stated with the particularity required by
the rule.
The above-stated rule, however, does not apply to intra-
corporate controversies. It did not escape us that Gilbert,
instead of particularly describing the fraudulent acts that
he complained of, just made a sweeping denial of the
existence of stock certificates by claiming that such were
not necessary, GoodGold being a mere family
corporation.As sweeping and bereft of particulars is his
claim that he "is unaware of any document signed by him
that would justify and support the transfer of his shares to
herein petitioners." Even more telling is the contradiction
between the denial of the existence of stock certificates
and the denial of the transfer of his shares of stocks "under
his name under the books of the corporations."
Even beyond the vacant pleadings, its nature as nuisance
is palpable. To recapitulate, it was only after five years
following the redistribution of GoodGold’s shares of
stock, that Gilbert filed with the RTC of Manila a
complaint. Gilbert withdrew this complaint after the NBI
submitted a report to the RTC of Manila authenticating
Gilbert’s signature in the endorsed certificates
And, it was only after three years from the withdrawal of
the Manila complaint, that Gilbert again filed in 2008 a
complaint also for declaration of nullity of the transfer of
the shares of stock, this time with the RTC of
Mandaluyong
When a stock certificate is endorsed in blank by the owner
thereof, it constitutes what is termed as "street certificate,"
so that upon its face, the holder is entitled to demand its
transfer his name from the issuing corporation.
With Gilbert’s failure to allege specific acts of fraud in his
complaint and his failure to rebut the NBI report, this
Court pronounces, as a consequence thereof, that the
signatures appearing on the stock certificates, including
his blank endorsement thereon were authentic. With the
stock certificates having been endorsed in blank by
Gilbert, which he himself delivered to his parents, the
same can be cancelled and transferred in the names of
herein petitioners.
33
In Santamaria v. Hongkong and Shanghai Banking
Corp.,61 this Court held that when a stock certificate is
endorsed in blank by the owner thereof, it constitutes what
is termed as "street certificate," so that upon its face, the
holder is entitled to demand its transfer into his name from
the issuing corporation. Such certificate is deemed quasi-
negotiable, and as such the transferee thereof is justified
in believing that it belongs to the holder and transferor.
While there is a contrary ruling, as an exception to the
general rule enunciated above, what the Court held in
Neugene Marketing Inc., et al., v CA,62 where stock
certificates endorsed in blank were stolen from the
possession of the beneficial owners thereof constraining
this Court to declare the transfer void for lack of delivery
and want of value, the same cannot apply to Gilbert
because the stock certificates which Gilbert endorsed in
blank were in the undisturbed possession of his parents
who were the beneficial owners thereof and who
themselves as such owners caused the transfer in their
names. Indeed, even if Gilbert’s parents were not the
beneficial owners, an endorsement in blank of the stock
certificates coupled with its delivery, entitles the holder
thereof to demand the transfer of said stock certificates in
his name from the issuing corporation
LIVING SENSE INC VS MALAYAN INSURANCE
COMPANY
Facts: Petitioner was the main contractor of the FOC
Network Project of Globe Telecom in Mindanao.
Petitioner entered into a Sub-Contract Agreement
(Agreement) with Dou Mac, Inc. (DMI), under which the
latter was tasked to undertake an underground open-
trench work. Petitioner required DMI to give a bond, in
the event that DMI fails to perform its obligations under
the Agreement.
Thus, DMI secured surety and performance bonds, both
in the amount of P 5,171,488.00, from respondent
Malayan Insurance Company, Inc. (respondent) to
answer: (1) for the unliquidated portion of the
downpayment, and (2) for the loss and damage that
petitioner may suffer, respectively, should DMI fail to
perform its obligations under the Agreement. Under the
bonds, respondent bound itself jointly and severally liable
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
corrective measures, prompting petitioner to terminate the
Agreement and seek indemnification from respondent in
the total amount of P 1,040,895.34.
However, respondent effectively denied petitioner’s
claim on the ground that the liability of its principal, DMI,
should first be ascertained before its own liability as a
surety attaches. Hence, the instant complaint, premised on
respondent’s liability under the surety and performance
bonds secured by DMI.
Respondent claimed that DMI is an indispensable party
that should be impleaded and whose liability should first
be determined before respondent can be held liable. On
the other hand, petitioner asserted that respondent is a
surety who is directly and primarily liable to indemnify
petitioner, and that the bond is "callable on demand" in
the event DMI fails to perform its obligations under the
Agreement.
Issue: Whether or not DMI is an indispensable party in
this case.
Ruling: No. DMI is not an indispensable party because
petitioner can claim indemnity directly from respondent,
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
severally" expresses a solidary obligation granting
petitioner, as creditor, the right to proceed against its
debtors. The nature of the solidary obligation under the
surety does not make one an indispensable party.An
indispensable party is a party-in-interest without whom
no final determination can be had of an action, and who
shall be joined mandatorily either as plaintiffs or
defendants. The presence of indispensable parties is
necessary to vest the court with jurisdiction, thus, without
their presence to a suit or proceeding, the judgment of a
court cannot attain real finality. The absence of an
indispensable party renders all subsequent actions of the
court null and void for want of authority to act, not only
as to the absent parties but even as to those present.When
DMI secured the surety and performance bonds from
respondent in compliance with petitioner’s requirement,
respondent bound itself "jointly and severally" with DMI
for the damages and actual loss that petitioner may suffer
should DMI fail to perform its obligations.
34
PHILIP GO VS DISTINCTION PROPERTIES
DEVT AND CONSTRUCTION INC
FACTS Philip L. Go, Pacifico Q. Lim and Andrew Q.
Lim (petitioners) are registered individual owners of
condominium units in Phoenix Heights Condominium
developed by the
respondent.
In August 2008, petitioners, as condominium unit-
owners, filed a complaint before the HLURB against
DPDCI for unsound business practices and violation of
the MDDR, alleging that DPDCI committed
misrepresentation in their circulated flyers and brochures
as to the facilities or amenities that would be available in
the condominium and failed to perform its obligation to
comply with the MDDR.
In defense, DPDCI alleged that the brochure attached to
the complaint was “a mere preparatory draft”. HLURB
rendered its decision in favor of petitioners. DPDCI filed
with the CA its Petition for Certiorari and Prohibition on
the ground that HLURB acted without or beyond its
jurisdiction.
The CA ruled that the HLURB had no jurisdiction over
the complaint filed by petitioners as the controversy did
not fall within the scope of the administrative agency’s
authority.
ISSUES:
1. Whether the HLURB has jurisdiction over the
complaint filed by the petitioners
2. Whether PHCC is an indispensable party
HELD:
1. Jurisdiction over the subject matter of a case is
conferred by law and determined by the allegations in the
complaint which comprise a concise statement of the
ultimate facts constituting the plaintiff's cause of action.
The nature of an action, as well as which court or body
has jurisdiction over it, is determined based on the
allegations contained in the complaint of the plaintiff,
irrespective of whether or not the plaintiff is entitled to
recover upon all or some of the claims asserted therein.
The averments in the complaint and the character of
the relief sought are the ones to be consulted. Once
vested by the allegations in the complaint, jurisdiction
also remains vested irrespective of whether or not the
plaintiff is entitled to recover upon all or some of the
claims asserted therein. Thus, it was ruled that the
jurisdiction of the HLURB to hear and decide cases is
determined by the nature of the cause of action, the
subject matter or property involved and the parties.
In this case, the complaint filed by petitioners alleged
causes of action that apparently are not cognizable by the
HLURB considering the nature of the action and the
reliefs sought.
2. An indispensable party is defined as one who has such
an interest in the controversy or subject matter that a final
adjudication cannot be made, in his absence, without
injuring or affecting that interest. It is "precisely ‘when
an indispensable party is not before the court (that) an
action should be dismissed.’ The absence of an
indispensable party renders all subsequent actions of
the court null and void for want of authority to act, not
only as to the absent parties but even to those present.
The purpose of the rules on joinder of indispensable
parties is a complete determination of all issues not only
between the parties themselves, but also as regards other
persons who may be affected by the judgment.
PHCC is an indispensable party and should have been
impleaded, as it would be directly and adversely affected
by any determination therein. Evidently, the cause of
action rightfully pertains to PHCC.
SEPULVEDA VS PELAEZ
SUMMARY: Atty. Pelaez filed a complaint against his
granduncle Pedro Sepulveda, Sr. for the recovery of
possession and ownership of his undivided share of
several parcels of land. RTC and CA decided in favor of
Pelaez, but the SC ordered the case dismissed for the
failure of Pelaez to implead the ff. indispensable parties
in his complaint: his father, Rodolfo Pelaez; the heirs of
Santiago Sepulveda, namely, Paz Sepulveda and their
children; and the City of Danao.
DOCTRINE: The presence of all indispensable parties is
a condition sine qua non for the exercise of judicial power.
It is precisely when an indispensable party is not before
the court that the action should be dismissed. Thus, the
plaintiff is mandated to implead all the indispensable
parties, considering that the absence of one such party
renders all subsequent actions of the court null and void
for want of authority to act, not only as to the absent
parties but even as to those present.
FACTS: On December 6, 1972, private respondent Atty.
Pacifico Pelaez filed a complaint against his granduncle,
35
Pedro Sepulveda, Sr., for the recovery of possession and
ownership of his 1/2 undivided share of several parcels of
land; his undivided 1/3 share in several other lots; and for
the partition thereof among the co-owners.
The 11 lots were among the 25 parcels of land, which
Dulce (private respondent's mother) and her uncles Pedro
and Santiago co-owned, each with an undivided 1/3 share
thereof.
In his complaint, the private respondent claims that his
grandmother Carlota repeatedly demanded the delivery of
her mother’s share in the 11 parcels of land, but Pedro
Sepulveda, Sr. who by then was the Municipal Mayor of
Tudela, refused to do so. Dulce, likewise, later demanded
the delivery of her share in the eleven parcels of land, but
Pedro still refused. The private respondent alleged that he
himself demanded the delivery of his mother’s share in
the subject properties on so many occasions, the last of
which was in 1972, to no avail.
The private respondent further narrated that his
granduncle executed an affidavit stating that he was the
sole heir of Dionisia when she died intestate in 1921,
when, in fact, the latter was survived by her three sons,
Santiago, Pedro and Vicente. Pedro also executed a Deed
of Absolute Sale over the property covered by T.D. No.
19804 in favor of the City of Danao, and received P7,492
without his (private respondent’s) knowledge.
The private respondent prayed that he be declared the
absolute owner of his portions of the parcels of land, that
said parcels of land be partitioned and segregated, and that
he be given his share of P7,492 representing the purchase
price of the parcel of land sold to the City of Danao.
In his answer to the complaint, Pedro Sepulveda, Sr.
admitted having executed a deed of sale over the parcel of
land covered by T.D. No. 19804 in favor of Danao City,
but averred that the latter failed to pay the purchase price
thereof; besides, the private respondent had no right to
share in the proceeds of the said sale. He likewise denied
having received any demand for the delivery of Dulce’s
share of the subject properties from the latter’s mother
Carlota, or from the private respondent.
During the trial, Pedro Sepulveda, Sr. died intestate. A
petition for the settlement of his estate was filed with the
RTC of Cebu. His daughter, petitioner Socorro Sepulveda
Lawas, was appointed administratrix of his estate and
substituted the deceased in this case.
According to the petitioner, Dulce and Pedro Sepulveda,
Sr. had a verbal agreement wherein the eleven parcels of
land covered by the complaint would serve as the latter’s
compensation for his services as administrator of
Dionisia’s estate. Thus, upon the termination of Special
Proceeding No. 778-0, and subsequent to the distribution
of the shares of Dionisia’s heirs, Pedro Sepulveda, Sr.
then became the sole owner of Dulce’s shares.
The petitioner likewise adduced evidence that Santiago
Sepulveda died intestate and was survived by his wife,
Paz Velez Sepulveda and their then minor children. It was
pointed out that the private respondent failed to implead
Paz Sepulveda and her minor children as parties-
defendants in the complaint
It was further claimed that Pedro Sepulveda, Sr. declared
the property covered by T.D. No. 18199 under his name
for taxation purposes since the beginning of 1948. It was
likewise alleged that the 11 parcels of land deeded to
Dulce under the Project of Partition had been declared for
taxation purposes under the name of Pedro Sepulveda
since 1974, and that he and his heirs paid the realty taxes
thereon.
TC in favor of the private respondent: The private
respondent’s action for reconveyance based on
constructive trust had not yet prescribed when the
complaint was filed; that he was entitled to a share in the
proceeds of the sale of the property to Danao City; and
that the partition of the subject property among the
adjudicatees thereof was in order. Petitioner appealed the
decision to the CA. CA affirmed the appealed decision
with modification. The petitioner now comes to the Court
via a petition for review on certiorari.
ISSUE: WON private respondent's action will prosper,
despite having failed to implead all the indispensable
parties in his complaint – NO
RATIO: It appears that when the private respondent filed
the complaint, his father, Rodolfo Pelaez, was still alive.
Thus, when his mother Dulce Pelaez died intestate on
March 2, 1944, she was survived by her husband Rodolfo
and their son, the private respondent.
Section 1, Rule 69 of the Rules of Court provides that in
an action for partition, all persons interested in the
property shall be joined as defendants. Section 1.
Complaint in action for partition of real estate.- A person
having the right to compel the partition of real estate may
do so as 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
is demanded and joining as defendants all the other
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
partition will not lie without the joinder of the said parties.
In the present action, the private respondent failed to
implead the following indispensable parties: his father,
Rodolfo Pelaez; the heirs of Santiago Sepulveda, namely,
Paz Sepulveda and their children; and the City of Danao
which purchased the property from Pedro Sepulveda, Sr.
and maintained that it had failed to pay for the purchase
price of the property.
Rodolfo Pelaez is an indispensable party he being entitled
to a share in usufruct, equal to the share of the respondent
in the subject properties. There is no showing that
Rodolfo Pelaez had waived his right to usufruct.
Section 7, Rule 3 of the Rules of Court reads: SEC. 7.
Compulsory joinder of indispensable parties. – Parties in
interest without whom no final determination can be had
of an action shall be joined either as plaintiffs or
defendants.
Indeed, the presence of all indispensable parties is a
condition sine qua non for the exercise of judicial power.
It is precisely when an indispensable party is not before
the court that the action should be dismissed. Thus, the
plaintiff is mandated to implead all the indispensable
parties, considering that the absence of one such party
renders all subsequent actions of the court null and void
for want of authority to act, not only as to the absent
parties but even as to those present. One who is a party to
a case is not bound by any decision of the court,
otherwise, he will be deprived of his right to due process.
Without the presence of all the other heirs as plaintiffs,
the trial court could not validly render judgment and grant
relief in favor of the private respondent. The failure of the
private respondent to implead the other heirs as parties-
plaintiffs constituted a legal obstacle to the trial court and
the appellate court’s exercise of judicial power over the
said case, and rendered any orders or judgments rendered
therein a nullity.
To reiterate, the absence of an indispensable party renders
all subsequent actions of the court null and void for want
of authority to act, not only as to the absent parties but
even as to those present. Hence, the trial court should have
ordered the dismissal of the complaint. Petition is
GRANTED. RTC and CA decisions are set aside. RTC is
ordered to dismiss the complaint without prejudice.
SOCORRO LIMOS VS SPS ODIONES
Non-joinder of indispensable parties is not a ground for
dismissal of an action. The remedy is to implead the non-
party claimed to be indispensable. Parties may be 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 times as
are just. It is only when the plaintiff refuses to implead an
indispensable party despite the order of the court, that the
latter may dismiss the complaint. In this case, no such
order was issued.
Facts:
Private respondents Sps Odones filed a complaint for
Annulment of Deed, Title and Damages against
petitioners Limos, Rosa delos Reyes and Sps Delos Reyes
before Tarlac RTC.
The complaint alleged that they are the owners of a 940
sq m land by virtue of an Extrajudicial Succession of
Estate and Sale dated Jan 29, 2004, executed by the
surviving heirs of Donata Lardizabal, in whom the
original title was vested.
After registering the document of conveyance, they found
out that the OCT was cancelled and replaced by a TCT in
the petitioners’ name.
Petitioners were able to secure TCT by virtue of a Deed
of Sale allegedly executed by Donata and husband on
April 18, 1972. Respondents sought the cancellation of
said TCTs on the ground that the Sps Lardizabal’s
signatures were forgeries.
In response, petitioners filed a Motion for Bill of
Particulars, which was denied, and in their answer
pleaded affirmative defenses: (a) failure to state a cause
of action inasmuch as the respondents’ alleged title is void
& are not real parties-in-interest (b) non-joinder of the
other heirs of Donata as indispensable parties (c)
respondents’ claim is barred by laches. In reply,
respondents maintained their standing and appended a
sworn statement of heir Amadeo Razalan. *
Petitioners also served upon respondents a Request for
Admission, which respondents failed to respond to,
prompting petitioners to file a Motion to Set for
Preliminary Hearing on the Special and Affirmative
37
Defenses. RTC & CA denied said motion because
respondents had already replied*, hence this petition for
certiorari.
Issue:
W/N respondents’ failure to respond to the Request for
Admission amounted to an implied admission & a
preliminary hearing should therefore be conducted
W/N the affirmative defense of non-joinder of
indispensable parties is a ground for dismissal of action
Held:
No. The application of the rules and determination of
sanction to be imposed upon failure to comply with modes
of discovery rests on sound judicial discretion. Matters set
forth in the petitioners’ Request for Admission were the
same affirmative defenses in their answer which
respondents already traversed in their Reply.
No. Non-joinder of indispensable parties is not a ground
for dismissal of an action. The remedy is to implead the
non-party claimed to be indispensable. Parties may be
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
times as are just. It is only when the plaintiff refuses to
implead an indispensable party despite the order of the
court, that the latter may dismiss the complaint. In this
case, no such order was issued.
HEIRS OF AUSTINO MESINA VS HEIRS OF FIAN
Definition of Terms:
Non-joinder - failure to bring a person who is a necessary
party or in this case an indispensable party into a lawsuit.
Indispensable party - is a party-in-interest without whom
no final determination can be had of the action, and who
shall be joined either as plaintiff or defendant.
Parties in interest. – A real party in interest is the party
who stands to be benefited or injured by the judgment in
the suit, or the party entitled to the avails of the suit.
Facts of the Case:
The late spouses Mesina, during their lifetime, bought
from the spouses Fian two parcels of land on installment.
The properties described:
Parcel 1 – A parcel of land, Cadastral Lot No. 6791-Rem.
Albuera, Leyte; Containing an area of ONE THOUSAND
SIX HUNDRED THIRTY TWO (1,632) SQUARE
METERS.
Parcel 2 – A parcel of land, Cadastral Lot No. 6737-Rem,
Albuera, Leyte; Containing an area of THREE
THOUSAND SEVEN HUNDRED THIRTY (3,730).
Upon the death of the spouses Fian, their heirs––whose
names do not appear on the records, claiming ownership
of the parcels of land and taking possession of them––
refused to acknowledge the payments for the lots and
denied that their late parents sold the property to the
spouses Mesina.
Notwithstanding repeated demands, the Heirs of Fian
refused to vacate the lots and to turn possession over to
the heirs of the spouses Mesina, namely: Norman, Victor,
Maria and Lorna. Thus, on August 8, 2005, Norman, as
attorney-in-fact of his siblings, filed an action for quieting
of title and damages before the Regional Trial Court
(RTC), Branch 14 in Baybay, Leyte against the Heirs of
Fian, naming only Theresa Fian Yray (Theresa) as the
representative of the Heirs of Fian. The case, was
docketed as Civil Case No. B-05-08-20.
On September 5, 2005, respondent Theresa filed a Motion
to Dismiss the complaint, arguing that the complaint
states no cause of action and that the case should be
dismissed for gross violation of Sections 1 and 2, Rule 3
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
by law may be parties in a civil action.”
She claims that the "Heirs of Mesina" could not be
considered as a juridical person or entity authorized by
law to file a civil action. Neither could the "Heirs of Fian"
be made as defendant, not being a juridical person as well.
She added that since the names of all the heirs of the late
spouses Mesina and spouses Fian were not individually
named, the complaint is infirmed, warranting its
dismissal.
On November 24, 2005, petitioners filed their Opposition
to the Motion to Dismiss.
RTC Ruling:
The Rules of Court is explicit that only natural or juridical
persons or entities authorized by law may be parties in a
civil action (Section 1, Rule 3, Revised Rules of Court).
Certainly, the Heirs of Faurstino s. Mesina and Genoveva
S. Mesina, represented by Norman Mesina as plaintiffs as
38
well as Heirs of Domingo Fian, Sr. represented by
Theresa Fian Yray as defendants, do not fall within the
category as natural or juridical persons as contemplated
by law to institute or defend civil actions. Said heirs not
having been individually named could not be the real
parties in interest. Hence, the complaint states no cause of
action.
Accordingly, the case is hereby dismissed.
Ruling of the CA
In affirming the RTC, the CA, on April 29, 2011, rendered
its Decision, ruling that all the heirs of the spouses Fian
are indispensable parties and should have been impleaded
in the complaint. The appellate court explained that this
failure to implead the other heirs of the late spouses Fian
is a legal obstacle to the trial court’s exercise of judicial
power over the case and any order or judgment that would
be rendered is a nullity in view of the absence of
indispensable parties. The CA further held that the RTC
correctly dismissed the complaint for being improperly
verified.
Issue:
1. W/N the court correctly dismissed the complaint
for lack of cause of action.
2. W/N the court correctly dismissed the complaint
for being improperly verified.
Ruling of the SC
1. Failure to state a cause of action refers to the
insufficiency of the pleading. A complaint states
a cause of action if it avers the existence of the
three essential elements of a cause of action,
namely:
(a) The legal right of the plaintiff;
(b) The correlative obligation of the defendant; and
(c) The act or omission of the defendant in violation of
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
Theresa’s co-heirs does not fall under any of the above
elements. The infirmity is, in fact, not a failure to state a
cause of action but a non-joinder of an indispensable
party.
As such, this is properly a non-joinder of indispensable
party, the indispensable parties who were not included in
the complaint being the other heirs of Fian, and not a
failure of the complaint to state a cause of action.
Thus, the dismissal of the case for failure to state a cause
of action is improper. What the trial court should have
done is to direct petitioner Norman Mesina to implead all
the heirs of Domingo Fian, Sr. as defendants within a
reasonable time from notice with a warning that his failure
to do so shall mean dismissal of the complaint.
2. Verification, like in most cases required by the
rules of procedure, is a formal requirement, not
jurisdictional. It is mainly intended to secure an
assurance that matters which are alleged are done
in good faith or are true and correct and not of
mere speculation. Thus, when circumstances so
warrant, as in the case at hand, "the court may
simply order the correction of unverified
pleadings or act on it and waive strict compliance
with the rules in order that the ends of justice may
thereby be served.
WHEREFORE, the petition is GRANTED. The assailed
April 29, 2011 Decision and April 12, 2012 Resolution of
the CA in CA-G.R. CV No. 01366, and the November 22,
2005 Order and February 29,2006 Resolution of the RTC,
Branch 14 in Baybay, Leyte, dismissing the complaint in
Civil Case No. 8-05-08-20, are hereby REVERSED and
SET ASIDE. Petitioner Norman Mesina is ORDERED to
implead all the Heirs of Domingo Fian, Sr. as defendants
in said civil case within thirty (30) days from notice of
finality of this Decision. Failure on the part of petitioner
Mesina to comply with this directive shall result in the
dismissal of Civil Case No. B-05-08-20. Upon
compliance by petitioner Mesina with this directive, the
RTC, Branch 14 in Baybay, Leyte is ORDERED to
undertake appropriate steps and proceedings to expedite
adjudication of the case.
THEODORE AND NANCY AND VS SPS ALAN
AND EM ANG (see previous case)
SENO VS MANGUBAT
Facts: Plaintiff Crisanta Seno agreed to mortgage a
parcel of land to Marcos Mangubat for a sum of P15,000
with interest of 2% a month and that the property will not
be foreclosed as long as the interest is paid monthly.
39
On July 17, 1961, plaintiff agreed to the execution of a
deed of absolute sale over the subject property for a
consideration of P5,000 in favor of Mangubat and certain
Andres Evangelista and Bienvenido Mangubat on the
condition that Marcos Mangubat who is a lawyer will
respect the true agreement which is the mortgage. On
january8, 1962, Andres and Bienvenido executed a deed
of absolute sale in favor of Marcos Mangubat who was
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
and Vergita Luzame for a sum of P10,000. On August 29,
1969, plaintiff file a complaint seeking the reformation of
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
ordered on October 20, 1971 the inclusion of defendants
of Andres and Bienvenido on the ground that they are
indispensable parties.
On December 29, 1971, plaintiff filed amended complaint
in compliance with the court's order impleading Andres
and Bienvenido. The newly impleaded defendants moved
for the dismissal of the complaint on groundof
prescription while defendants spouses Luzame and
Mangubat asked the court to dismiss against all the
defendants.
The trial court granted the motions and dismissed the
case. A motion for reconsideration by plaintiff was denied
and an appeal was filed with Court of Appeals which
subsequently certified the case to the SC on purely legal
question.
ISSUE:
whether or not defendants Andres and Bienvenido are
indispensable parties in the case without whom no action
can be properly taken thereon.
RULING:
No. Under Sec. 7 Rule 3, indispensable patries must
always be joined either as plaintiff or defendants for the
court cannot proceed without them. Necessary parties
must be joined, under Sec. 8, in order to adjudicate the
whole controversy and avoid multiplicity of suits.
Indispensable parties are those with such interest in the
controversy that a final decree would necessarily affect
their rights, so that the courts cannot proceed without their
presence. Necessary parties are those whose presence is
necessary to adjudicate the whole controversy but whose
interest are so far separable that a final decree can be made
in their absence without affecting them.
In the present case, there are no rights of defendants
Andres and Bienvenido to be safeguarded if the sale
should be held to be in fact an absolute sale nor it the sale
is held to be equitable mortgage as they sold their shares
in the property. However, being parties to the instrument
being reformed, their presence is necessary.
IN THE MATTER OF HEIRSHIP OF
HERMOGENES RODRIGUEZ VS JAIME ROBLES
(see full)
BORLOSA VS POLISTICO
FACTS: The plaintiffs and defendants, together with
several hundred other persons, formed an association
under the name of Turuhan Polistico & Co. Polistico, the
principal defendant herein, was elected president and
treasurer of the association, and his house in Lilio,
Laguna, was made its principal place of business. Under
the by-laws, each member obligated himself to pay to
Polistico, before 3 o'clock in the afternoon of every
Sunday the sum of 50 centavos, except that on every fifth
Sunday the amount was P1, if the president elected to call
this amount, as he always did. It is alleged that from April,
1911, until April, 1917, the sums of money mentioned
above were paid weekly by all of the members of the
society with few irregularities. The inducement to these
weekly contributions was found in provisions of the by-
laws to the effect that a lottery should be conducted
weekly among the members and that the successful
member should be paid the amount collected each week,
from which, however, the president-treasurer of the
society was to receive the sum of P200, to be held by him
as funds of the society, to which, Polistico allegedly
received P74,000.
Borlasa and others filed an action against Vicente
Polistico and others, chiefly for the purpose of securing
the dissolution of Turuhan Polistico & Co., and to compel
the defendants to account for and surrender the money and
property of the association in order that its affairs may be
liquidated and its assets applied according to law. The
defendants in the complaint are the members of the board
of directors of the association.
In an amended answer the defendants raised the question
of lack of parties and set out a list of some hundreds of
40
persons whom they alleged should be brought in as parties
defendant on the ground, among others, that they were in
default in the payment of their dues to the association.
The court made an order requiring the plaintiffs to amend
their complaint within a stated period so as to include all
of the members of theTurnuhan Polistico & Co. either as
plaintiffs or defendants. The plaintiffs excepted to this
order, but acquiesced to the extent of amending their
complaint by adding as additional parties plaintiff some
hundreds of persons. The defendants demurred to the
amended complaint on the ground that it showed on its
face a lack of necessary parties. The trial judge having
sustained a demurrer for defect of parties and the plaintiffs
electing not to amend, the cause was dismissed, and from
this order an appeal was taken by the plaintiffs to Supreme
Court.
ISSUE: Whether or not all the members of the association
must be pleaded either as plaintiffs or defendants.
HELD: NO. The situation involved is precisely the one
contemplated in section 118 of the Code of Civil
Procedure, where one or more may sue for the benefit of
all. It is evident from the showing made in the complaint,
and from the proceedings in the court below, that it would
be impossible to make all of the persons in interest parties
to the cases and to require all of the members of the
association to be joined as parties would be tantamount to
a denial of justice.
The general rule with reference to the making of parties
in a civil action requires, of course, the joinder of all
necessary parties wherever possible, and the joinder of all
indispensable parties under any and all conditions, the
presence of those latter being a sine qua non of the
exercise of judicial power. The class suit contemplates an
exceptional situation where there are numerous persons
all in the same plight and all together constituting a
constituency whose presence in the litigation is absolutely
indispensable to the administration of justice. Here the
strict application of the rule as to indispensable parties
would require that each and every individual in the class
should be present. But at this point the practice is so far
relaxed as to permit the suit to proceed, when the class is
sufficient represented to enable the court to deal properly
and justly with that interest and with all other interest
involved in the suit. In the class suit, then, representation
of a class interest which will be affected by the judgment
is indispensable; but it is not indispensable to make each
member of the class an actual party
The addition of some hundreds of persons to the number
of the plaintiffs, was unnecessary, and as the presence of
so many parties is bound to prove embarrassing to the
litigation from death or removal. Upon the return of this
record to the lower court for further proceedings, the
plaintiff shall again amend their complaint by dismissing
as to unnecessary parties plaintiffs, but retaining a
sufficient number of responsible persons to secure
liability for costs and fairly to present all the members of
the association.
The order appealed from is reversed, the demurrer of the
defendants based upon supposed lack of parties is
overruled, and the defendants are required to answer to
the amended complaint within the time allowed by law
and the rules of the court.
NEWSWEEK INC VS IAC
Facts:
· "An Island of Fear" was published
by Newsweek in its Feb 23, 1981. It allegedly portrayed
the island province of Negros Occidental as a place
dominated by big landowners or sugarcane
planters who not only exploited the impoverished
workers, but also brutalized and killed them with
impunity.
· Newsweek filed a motion to dismiss on the
grounds that
o the printed article sued upon is not actionable in fact
and in law;
o the complaint is bereft of allegations that state, much
less support a cause of action.
· Trial court denied the motion to
dismiss. Complaint on its face states a valid cause of
action; and the question as to whether the printed article
sued upon its actionable or not is a matter of evidence.
· Petitioner: Complaint failed to state a cause of
action because:
o Complaint made no allegation the article referred
specifically to any one of the private respondents;
o Libel can be committed only against individual
reputation;
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
damage to a specific, individual group member's
reputation.
Issue: WON the complaint must be dismissed?
RULING: YES.
· Corpus vs. Cuaderno, Sr.:
o "in order to maintain a libel suit, it is essential that the
victim be identifiable, although it is not necessary that he
be named (19 A.L.R. 116)."
· Uy Tioco vs. Yang Shu Wen:
o Defamatory remarks directed at a class or group of
persons in general language only, are not actionable by
individuals composing the class or group unless the
statements are sweeping.
· The case at bar is not a class suit. It is not a case
where one or more may sue for the benefit of all
· We have here a case where each of the plaintiffs
has a separate and distinct reputation in the community.
They do not have a common or general interest in the
subject matter of the controversy.
OPOSA VS FACTORAN
FACTS: A taxpayer’s class suit was filed by minors Juan
Antonio Oposa, et al., representing their generation and
generations yet unborn, and represented by their parents
against Fulgencio Factoran Jr., Secretary of DENR. They
prayed that judgment be rendered ordering the defendant,
his agents, representatives and other persons acting in his
behalf to:
1. Cancel all existing Timber Licensing Agreements
(TLA) in the country;
2. Cease and desist from receiving, accepting, processing,
renewing, or appraising new TLAs: and granting the
plaintiffs “such other reliefs just and equitable under the
premises.”
They alleged that they have a clear and constitutional right
to a balanced and healthful ecology and are entitled to
protection by the State in its capacity as parens patriae.
Furthermore, they claim that the act of the defendant in
allowing TLA holders to cut and deforest the remaining
forests constitutes a misappropriation and/or impairment
of the natural resources property he holds in trust for the
benefit of the plaintiff minors and succeeding generations.
The defendant filed a motion to dismiss the complaint on
the following grounds:
1. Plaintiffs have no cause of action against him;
2. The issues raised by the plaintiffs is a political question
which properly pertains to the legislative or executive
branches of the government.
ISSUE: Whether or not the petitioner-minors have a
cause of action in filing a class suit to prevent the
misappropriation or impairment of Philippine rainforests.
HELD: Yes. Petitioner-minors assert that they represent
their generation as well as generations to come. The
Supreme Court ruled that they can, for themselves, for
others of their generation, and for the succeeding
generation, file a class suit. Their personality to sue in
behalf of succeeding generations is based on the concept
of intergenerational responsibility insofar as the right to a
balanced and healthful ecology is concerned. Such a right
considers the “rhythm and harmony of nature” which
indispensably include, inter alia, the judicious disposition,
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
their exploration, development, and utilization be
equitably accessible to the present as well as the future
generations. Needless to say, every generation has a
responsibility to the next to preserve that rhythm and
harmony for the full enjoyment of a balanced and
healthful ecology. Put a little differently, the minor’s
assertion of their right to a sound environment constitutes
at the same time, the performance of their obligation to
ensure the protection of that right for the generations to
come
ORTIGAS & CO LIMITED PARTNERSHIP VS
RUIZ
FACTS: The case involves a large tract of land located in
the boundaries of Pasig, Rizal and Ortigas wherein the
said petitioners thru their predecessors-in-interest
"Provincial del Santisima Nombre de Jesus de Agustinos
Calzados," has been in continuous possession since 1862
or 125 years ago, as confirmed by the Court in Compana
Agricola de Ultramar v. Marcos Domingo, et al., 6 Phil.
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,
owner of the lands in question to the exclusion of the
claims of contestants or any persons holding under them.
Said titles are in the Registry of Deeds of Rizal.
Pedro del Rosario and three others in behalf of 104 others,
as a class suit, filed a civil case against the petitioner
alleging that said title of the petitioner should be declared
as null and void for lack of publication in the land registry
proceedings and declaring that they are the lawful owners
of the said land.
Another civil case was instituted by Inocencio Bernardo
and five others in behalf of 37 others, as a class suit,
concerning another portion of the said land. Said case was
identical to the case file by Pedro del Rosario and
others.An urgent ex-parte motion of private respondents,
opposing among others, petitioner's construction of
fences and high walls, roads, streets and canals on the land
in dispute.In the resolution of the Supreme Court directed
the issuance of a writ of preliminary injunction upon
petitioner's filing of a bond in the sum of ten thousand
pesos (P10,000.00), enjoining respondent Court from
enforcing the restraining order.
ISSUE: Whether or not there is a valid class suit.
HELD: No. The Supreme Court cited the case of (Borlaza
v. Polistico, 47 Phil. 348; Newsweek, Inc. v. The
Intermediate Appellate Court, et al., G.R. No. 63559,
promulgated May 30, 1986) where in it stated that, “It is
not a case where one or more may sue for the benefit of
all or where the representation of class interest affected by
the judgment or decree is indispensable to make each
member of the class an actual party.”Furthermore, class
suit will not lie because each defendant has an interest
only in the particular portion of the said land that each of
them occupies. They do not have any common interest in
the subject matter in controversy
BANDA VS ERMITA
FACTS: The present controversy arose from a Petition
forCertiorari and prohibition challenging the
constitutionality of Executive Order No. 378 dated
October 25, 2004, issued by President Gloria Macapagal
Arroyo (President Arroyo). Petitioners characterize their
action as a class suit filed on their own behalf and on
behalf of all their co-employees at the National Printing
Office (NPO).
The NPO was formed on July 25, 1987, during the term
of former President Corazon C. Aquino (President
Aquino), by virtue of Executive Order No. 285which
provided, among others, the creation of the NPO from the
merger of the Government Printing Office and the
relevant printing units of the Philippine Information
Agency (PIA). Section 6 of Executive Order No. 285
reads:
SECTION 6. Creation of the National Printing Office.
There is hereby created a National Printing Office out of
the merger of the Government Printing Office and the
relevant printing units of the Philippine Information
Agency. The Office shall have exclusive printing
jurisdiction over the following:
a. Printing, binding and distribution of all standard and
accountable forms of national, provincial, city and
municipal governments, including government
corporations;
b. Printing of officials ballots;
c. Printing of public documents such as the Official
Gazette, General Appropriations Act, Philippine Reports,
and development information materials of the Philippine
Information Agency.
The Office may also accept other government printing
jobs, including government publications, aside from those
enumerated above, but not in an exclusive basis.
The details of the organization, powers, functions,
authorities, and related management aspects of the Office
shall be provided in the implementing details which shall
be prepared and promulgated in accordance with Section
II of this Executive Order.
The Office shall be attached to the Philippine Information
Agency.
On October 25, 2004, President Arroyo issued the herein
assailed Executive Order No. 378, amending Section 6 of
Executive Order No. 285 by, inter alia, removing the
exclusive jurisdiction of the NPO over the printing
services requirements of government agencies and
instrumentalities.
Pursuant to Executive Order No. 378, government
agencies and instrumentalities are allowed to source their
43
printing services from the private sector through
competitive bidding, subject to the condition that the
services offered by the private supplier be of superior
quality and lower in cost compared to what was offered
by the NPO. Executive Order No. 378 also limited NPOs
appropriation in the General Appropriations Act to its
income.
Perceiving Executive Order No. 378 as a threat to their
security of tenure as employees of the NPO, petitioners
now challenge its constitutionality, contending that: (1) it
is beyond the executive powers of President Arroyo to
amend or repeal Executive Order No. 285 issued by
former President Aquino when the latter still exercised
legislative powers; and (2) Executive Order No. 378
violates petitioners security of tenure, because it paves the
way for the gradual abolition of the NPO.
ISSUE: Whether the E.O no. 378 is Constitutional.
HELD: Yes. It is constitutional
POLITICAL LAW: reorganization
In the present case, involving neither an abolition nor
transfer of offices,the assailed action is a mere
reorganization under the general provisions of the law
consisting mainly of streamlining the NTA in the interest
of simplicity, economy and efficiency. It is an act well
within the authority of the President motivated and carried
out, according to the findings of the appellate court, in
good faith, a factual assessment that this Court could only
but accept.
In the more recent case of Tondo Medical Center
Employees Association v. Court of Appeals 527 SCRA
746which involved a structural and functional
reorganization of the Department of Health under an
executive order, we reiterated the principle that the power
of the President to reorganize agencies under the
executive department by executive or administrative
order is constitutionally and statutorily recognized. We
held in that case:
This Court has already ruled in a number of cases that the
President may, by executive or administrative order,
direct the reorganization of government entities under the
Executive Department. This is also sanctioned under the
Constitution, as well as other statutes.
Section 17, Article VII of the 1987 Constitution, clearly
states: "[T]he president shall have control of all executive
departments, bureaus and offices." Section 31, Book III,
Chapter 10 of Executive Order No. 292, also known as
the Administrative Code of 1987 reads:
SEC. 31. Continuing Authority of the President to
Reorganize his Office - The President, subject to the
policy in the Executive Office and in order to achieve
simplicity, economy and efficiency, shall have continuing
authority to reorganize the administrative structure of the
Office of the President.:
The Administrative Code provides that the Office of the
President consists of the Office of the President Proper
and the agencies under it. The agencies under the Office
of the President are identified in Section 23, Chapter 8,
Title II of the Administrative Code:
Sec. 23. The Agencies under the Office of the
President.The agencies under the Office of the President
refer to those offices placed under the chairmanship of the
President, those under the supervision and control of the
President, those under the administrative supervision of
the Office of the President, those attached to it for policy
and program coordination, and those that are not placed
by law or order creating them under any specific
department.
The power of the President to reorganize the executive
department is likewise recognized in general
appropriations laws.
Clearly, Executive Order No. 102 is well within the
constitutional power of the President to issue. The
President did not usurp any legislative prerogative in
issuing Executive Order No. 102. It is an exercise of the
Presidents constitutional power of control over the
executive department, supported by the provisions of the
Administrative Code, recognized by other statutes, and
consistently affirmed by this Court.
In establishing an executive department, bureau or office,
the legislature necessarily ordains an executive agencys
position in the scheme of administrative structure. Such
determination is primary, but subject to the Presidents
continuing authority to reorganize the administrative
structure. As far as bureaus, agencies or offices in the
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
President the broad authority to carry out reorganization
measures. The Administrative Code of 1987 is one such
law.
The issuance of Executive Order No. 378 by President
Arroyo is an exercise of a delegated legislative power
granted by the aforementioned Section 31, Chapter 10,
Title III, Book III of the Administrative Code of 1987,
which provides for the continuing authority of the
President to reorganize the Office of the President, "in
order to achieve simplicity, economy and efficiency."
This is a matter already well-entrenched in jurisprudence.
The reorganization of such an office through executive or
administrative order is also recognized in the
Administrative Code of 1987.
The Petition is denied.
JUANA COMPLEX I HOMEOWNERS ASSOC INC
VS FIL-ESTATE LAND INC (SEE PREVIOUS
CASE)
PHIL CHARTER INSURANCE VS EXPLORER
MARITIME (see full)
RIVIERA FILIPINA VS CA
FACTS: Respondent Juan L. Reyes (Reyes) executed a
Contract of Lease with Riviera. The ten-year (10)
renewable lease of Riviera, which started on August 1,
1982, involved a 1,018 square meter parcel of land located
along EDSA, Quezon City, covered and described in
Transfer Certificate of Title No. 186326 of the Registry
of Deeds of Quezon City in the name of Juan L. Reyes.
The subject land is mortgaged in favor of Prudential
Bank. Since Reyes’ loan remained unpaid, the bank
extrajudicially foreclosed the property. At the auction
sale, the bank was declared as the highest bidder. The
redemption period was set to expire on March 7, 1989.
Realizing that he could not possibly raise in time the
money needed to redeem the subject property, Reyes
decided to sell the same. Recognizing Riviera’s right of
first refusal, the subject land was first offered to Riviera,
through its President Vicente C. Angeles. The first offer
made by Reyes was at 5,000/sqm. However, Angeles
bargained at 3,500/sqm. After seven months, Angeles
offered to buy the property at 4,000/sqm. Reyes did not
accept the offer as he wanted to sell it at 6,000/sqm. At
this point, no agreement was still arrived. On Nov. 2,
1988,Reyes, through its counsel, sent a letter informing
Riviera that Reyes was selling the property at 6,000/sqm
and that Riviera is given 10 days to purchase the property.
As reply, Riviera sent a letter making an offer at
5,000/sqm. However, still no agreement was made
between the parties.
Meanwhile, on December 4, 1988, Reyes confided to
Rolando P. Traballo, a close family friend and President
of Cypress, his predicament about the nearing expiry date
of the redemption period of the foreclosed mortgaged
property with Prudential Bank, the money for which he
could not raise on time thereby offering the subject
property to him for Six Thousand Pesos (P6,000.00) per
square meter. Traballo expressed interest in buying the
said property, told Reyes that he will study the matter and
suggested for them to meet the next day.
They met the next day, December 5, 1988, at which time
Traballo bargained for Five Thousand Three Hundred
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
the amount with which to pay Reyes, he told the latter that
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
offer was for Five Thousand Pesos (P5,000.00) per square
meter.
Sometime in January 1989, apprehensive of the
impending expiration in March 1989 of the redemption
period of the foreclosed mortgaged property with
Prudential Bank and the deal between Reyes and Traballo
was not yet formally concluded, Reyes decided to
approach anew Riviera. For this purpose, he requested his
nephew, Atty. Estanislao Alinea, to approach Angeles and
find out if the latter was still interested in buying the
subject property and ask him to raise his offer for the
purchase of the said property a little higher. As instructed,
Atty. Alinea met with Angeles and asked the latter to
increase his offer of Five Thousand Pesos (P5,000.00) per
square meter but Angeles said that his offer is Five
Thousand Pesos (P5,000.00) per square meter.
Following the meeting, Angeles sent a letter dated
February 4, 1989 to Reyes, through Atty. Alinea, that his
offer is Five Thousand Pesos (P5,000.00) per square
meter payment of which would be fifty percent (50%)
45
down within thirty (30) days upon submission of certain
documents in three (3) days, the balance payable in five
(5) years in equal monthly installments at twelve percent
(12%) interest in diminishing balance.With the terms of
this second offer, Angeles admittedly downgraded the
previous offer of Riviera on December 2, 1988.
Atty. Alinea conveyed to Reyes Riviera’s offer of Five
Thousand Pesos (P5,000.00) per square meter but Reyes
did not agree. Consequently, Atty. Alinea contacted again
Angeles and asked him if he can increase his price.
Angeles, however, said he cannot add anymore. Reyes did
not expressly offer his subject property to Riviera at the
price of Five Thousand Three Hundred Pesos (P5,300.00)
per square meter.
Sometime in February 1989, Cypress and its partner in the
venture, Cornhill Trading Corporation, were able to come
up with the amount sufficient to cover the redemption
money, with which Reyes paid to the Prudential Bank to
redeem the subject property. On May 1, 1989, a Deed of
Absolute Sale covering the subject property was executed
by Reyes in favor of Cypress and Cornhill for the
consideration of Five Million Three Hundred Ninety Five
Thousand Four Hundred Pesos (P5,395,400.00). On the
same date, Cypress and Cornhill mortgaged the subject
property to Urban Development Bank for Three Million
Pesos (P3,000,000.00).
Thereafter, Riviera sought from Reyes, Cypress and
Cornhill a resale of the subject property to it claiming that
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
Urban Development Bank to transfer the disputed title to
the land in favor of Riviera upon its payment of the price
paid by Cypress and Cornhill.Both the trial court and the
appellate court rendered judgment in favor of Reyes.
ISSUE: Whether or not the CA committee a grave abuse
of discretion tantamount to lack or excess of its
jurisdiction in deciding petitioner’s appeal at a time when
the principal appellee is allegedly dead and no proper
substitution of the alleged deceased party has been made;
Hence, the decision of the CA and its resolution denying
reconsideration, is null and void.
HELD: No. On the last error attributed to the Court of
Appeals which is the effect on the jurisdiction of the
appellate court of the non-substitution of Reyes, who died
during the pendency of the appeal, the Court notes that
when Riviera filed its petition with this Court and
assigned this error, it later filed on October 27, 1994 a
Manifestation with the Court of Appeals stating that it has
discovered that Reyes is already dead, in view of which
the appellate court issued a Resolution dated December
16, 1994 which noted the manifestation of Riviera and
directed the counsel of Reyes to submit a copy of the
latter’s death certificate and to file the proper motion for
substitution of party.Complying therewith, the necessary
motion for substitution of deceased Reyes, who died on
January 7, 1994, was filed by the heirs, namely, Estefania
B. Reyes, Juanita R. de la Rosa, Juan B. Reyes, Jr. and
Fidel B. Reyes. Acting on the motion for substitution, the
Court of Appeals granted the same.
Notwithstanding the foregoing, Section 16 and 17 of
Rule 3 of the Revised Rules of Court, upon which Riviera
anchors its argument, has already been amended by the
1997 Rules of Civil Procedure. Even applying the old
Rules, the failure of a counsel to comply with his duty
under Section 16 of Rule 3 of the Revised Rules of Court,
to inform the court of the death of his client and no
substitution of such is effected, will not invalidate the
proceedings and the judgment thereon if the action
survives the death of such party, as this case does, since
the death of Reyes did not extinguish his civil personality.
The appellate court was well within its jurisdiction to
proceed as it did with the case since the death of a party
is not subject to its judicial notice. Needless to stress, the
purpose behind the rule on substitution of parties is the
protection of the right of every party to due process
LAWAS VS CA
FACTS: This is an appeal by certiorari under Rule 45 of
the Revised Rules of Court from the decision of the Court
of Appeals which dismissed the petition for certiorari
under, Rule 65 of said Rules against respondent Judge
Bernardo L. Salas of the Court of First Instance (CFI) of
Cebu. The antecedent facts are briefly as follows:
Private respondent Pacifico Pelaez filed a Complaint on
December 6, 1972 against petitioner's father, Pedro
Sepulveda, for ownership and partition of certain parcels
of land. Defendant Pedro Sepulveda filed his Answer
dated December 31, 1972 resisting the claim and raising
the special defenses of laches, prescription and failure to
ventilate in a previous special proceeding. During the
presentation of evidence for the plaintiff, the defendant
died on March 25, 1975. On May 21, 1975, counsels for
the deceased defendant filed a notice of death wherein
46
were enumerated the thirteen children and surviving
spouse of the deceased.
On May 5, 1975, petitioner filed a petition for letters of
administration and she was appointed judicial
administratrix of the estate of her late father in July, 1976.
At the hearing of the case on November 27, 1975, Attys.
Domingo Antigua and Serafin Branzuela, former
counsels for the deceased defendant, manifested in open
court that with the death of their client, their contract with
him was also terminated and none of the thirteen children
nor the surviving spouse had renewed the contract, but
instead they had engaged the services of other lawyers in
the intestate proceedings. Notwithstanding the
manifestation of the former counsels of the deceased
defendant, the respondent trial judge set the case for
hearing on January 13, 1976 and sent the notice of hearing
to said counsels.
On January 13, 1976, the respondent trial judge issued
three orders. The first order substituted the heirs of the
deceased defendant, namely, his thirteen children and
surviving spouse, as defendants; the second order
authorized Atty. Teodoro Almase, counsel for the
plaintiff, to present his evidence in the absence of Attys.
Antigua and Branzuela and the third order treated the case
submitted for decision, after the plaintiff had presented
his evidence and rested his case, and directed that said
counsels and the fourteen heirs of the deceased defendant
be furnished copies thereof.
On January 28, 1976, the respondent trial judge rendered
a decision against the heirs of the deceased defendant. On
February 19, 1976, ten of the children of the deceased
defendant, who apparently did not know that a decision
had already been rendered, filed an Answer in-
substitution of the deceased defendant through their
counsel Atty. Jesus Yray. This was denied admission by
the respondent trial judge for being already moot and
academic because of the earlier decision.
On March 9, 1976, the widow and two other children of
the deceased defendant, through their counsel Atty.
Delfin Quijano, filed a motion for substitution and for
reconsideration of the decision dated January 28, 1976.
On April 7, 1976, the respondent trial judge issued an
order setting aside his decision and setting the case in the
calendar for cross-examination of the plaintiff, Pacifico
Pelaez, with a proviso that said order was applicable only
to the three heirs who had filed the motion. On July 14,
1976, the respondent trial judge lifted the order setting
aside his decision, despite the verbal petition for
postponement of the hearing made by one of the three
heirs on the ground of the absence of their counsel.
On July 9, 1976, petitioner, who had been appointed
judicial administratrix of the estate of the deceased
defendant and who was one of the heirs who had filed an
Answer on February 19, 1976, filed a motion to intervene
and/or substitute the deceased defendant. On August 25,
1976, the respondent trial judge denied the motion for the
reason that the decision had already become final.
Petitioner then filed a special civil action of certiorari with
the Court of Appeals to annul the proceedings in the
respondent trial court. However, the Court of Appeals
dismissed the petition for certiorari. Hence, the present
appeal.
ISSUE: Whether or not the CFI and CA erred in its
decision for failure to comply with Sec. 16, Rule 3, Rules
of Court.
HELD: Yes. The appeal is meritorious. Section 16 of
Rule 3 provides as follows:
Duty of attorney upon death, incapacity, or incompetency
of party. — Whenever a party to a pending case dies,
becomes incapacitated or incompetent, it shall be the duty
of his attorney to inform the court promptly of such death,
incapacity or incompetency, and to give the name and
residence of his executor, administrator, guardian or other
legal representative.
The former counsels for the deceased defendant, Pedro
Sepulveda, complied with this rule by filing a notice of
death on May 21, 1975. They also correctly manifested in
open court at the hearing of the case on November 27,
1975, that with the death of their client their contract with
him was also terminated and none of the heirs of the
deceased had renewed the contract, and the heirs had
instead engaged the services of other lawyers in the
intestate proceedings.
Both the respondent trial judge and the CA erred in
considering the former counsels of the deceased
defendant as counsels for the heirs of the deceased. The
statement in the decision of the CA that "the appearance
of the lawyers of their deceased father in court on January
13, 1976 carries the presumption that they were
authorized by the heirs of the deceased defendant" is
erroneous. Moreover, such a presumption was not
warranted in view of the manifestation of said lawyers in
open court on November 27, 1975 that they were not
representing the heirs of the deceased defendant.
47
Consequently, when on the same date, November 27,
1975, the respondent trial judge issued an order setting the
continuation of the trial of the case on January 13, 1976,
with notices sent to Atty. Almase for the plaintiff and
Attys. Antigua and Branzuela for the deceased defendant,
he acted with grave abuse of discretion amounting to
excess of jurisdiction. It was only at the hearing on
January 13, 1976 that the respondent trial judge issued an
order substituting the deceased defendant with his
fourteen heirs. This was followed with an order
authorizing counsel for the plaintiff to present his
evidence in the absence of Attys. Antigua and Branzuela,
and lastly, an order treating the case as submitted for
decision.
In the order of the respondent trial judge dated November
10, 1976, denying petitioner's motion for reconsideration
of the order denying her motion for intervention, mention
was made of the delayed arrival of Attys. Antigua and
Branzuela at the hearing on January 13, 1976 and of their
being allowed to cross-examine the plaintiff himself.
The refusal of said former counsels of the deceased
defendant to cross-examine the plaintiff was justified —
... in view of the intervening event of appellant's death and
the interposition of the equally established principle that
the relationship of attorney and client is terminated by the
death of the client, as acknowledged by respondent court
itself as well as respondents. In the absence of a retainer
from the heirs or authorized representatives of his
deceased defendant the attorney would have no further
power or authority to appear or take any further action in
the case, save to inform the court of the client's death and
take the necessary steps to safeguard the decedent's rights
in the case. (Vda. de Haberer vs. Court of Appeals, May
26, 1981, 104 SCRA 534, 540)
Moreover, as above stated, petitioner had as early as May
5, 1975 filed a petition for letters of administration, and
the same was granted in July, 1975. Section 17 of Rule 3
provides as follows:
Death of party. After a party dies and the claim is not
thereby extinguished, the court shag order, upon proper
notice, the legal representative of the deceased to appear
and to be substituted for the deceased, within a period of
thirty (30) days, or within such time as may be granted. If
the legal representative fails to appear within said time,
the court may order the opposing party to procure the
appointment of a legal representative of the deceased
within a time to be specified by the court, and the
representative shall immediately appear for and on behalf
of the interest of the deceased. The court charges involved
in procuring such appointment, if defrayed by the
opposing party, may be recovered as costs. The heirs of
the de ceased may be allowed to be substituted for the
deceased, without requiring the appointment of an
executor or administrator and the court may appoint
guardian ad litem for the minor heirs.
As this Court has held:
... Under the Rule, it is the court that is called upon, after
notice of a party's death and the claim is not thereby
extinguished, to order upon proper notice the legal
representative of the deceased to appear within a period
of 30 days or such time as it may grant. Since no
administrator of the estate of the deceased appellant had
yet been appointed as the same was still pending
determination in the Court of First Instance of Quezon
City, the motion of the deceased's counsel for the
suspension of the running of the period within which to
file appellant's brief was well-taken. More, under the
Rule, it should have set a period for the substitution of the
deceased party with her legal representative or heirs,
failing which, the court is called upon to order the
opposing party to procure the appointment of a legal
representative of the deceased at the cost of the deceased's
estate, and such representative shall then 'immediately
appear for and on behalf of the interest of the deceased.
Respondent court gravely erred in not following the Rule
and requiring the appearance of the legal representative of
the deceased and instead dismissing the appeal of the
deceased who yet had to be substituted in the pending
appeal Thus, it has been held that when a party dies in an
action that survives, and no order is issued by the court
for the appearance of the legal representative or of the
heirs of the deceased in substitution of the deceased, and
as a matter of fact no such substitution has ever been
effected, the trial held by the court without such legal
representatives or heirs and the judgment rendered after
such trial are null and void because the court acquired no
jurisdiction over the persons of the legal representatives
or of the heirs upon whom the trial and the judgment
would be binding. (Ordoveza vs. Raymundo, 63 Phil 275
[1936]; Obut vs. Court of Appeals, et al., 70 SCRA 546)
(Vda. de Haberer vs. Court of Appeals, supra, p. 541.
Under the said Rule, priority is given to the legal
representative of the deceased, that is, the executor or
administrator of his estate. It is only in cases of
unreasonable delay in the appointment of an executor or
48
administrator, or in cases where the heirs resort to an
extrajudicial settlement of the estate, that the court may
adopt the alternative of allowing the heirs of the deceased
to be substituted for the deceased.
In the case at bar, in view of the pendency of Special
Proceeding No. 37-SF Intestate Estate of Pedro
Sepulveda, and the pending application of petitioner to be
appointed judicial administratrix of the estate, the
respondent trial judge should have awaited the
appointment of petitioner and granted her motion to
substitute the deceased defendant. While the lower courts
correctly held that the death of Pedro Sepulveda did not
obliterate his verified Answer to the Complaint filed by
private respondent and that the Answer filed by the ten
heirs and the Answer filed by the Administratrix were
both unnecessary, the said heirs or the administratrix
could, with leave of court, file an Amended Answer.
In view of the foregoing, the Court rules that the
proceedings conducted by the respondent trial judge after
the death of the deceased defendant are null and void.
NOCUM AND PHIL DAILY INQUIRER VS TAN
FACTS: On September 27, 1998, Lucio Tan filed a
complaint against reporter Armand Nocum, Capt.
Florendo Umali, ALPAP and Inquirer with the Regional
Trial Court of Makati seeking moral and exemplary
damages for the alleged malicious and defamatory
imputations contained in a news article. INQUIRER and
NOCUM filed their joint answer, dated October 27, 1998,
wherein they alleged that: (1) the complaint failed to state
a cause of action; (2) the defamatory statements alleged
in the complaint were general conclusions without factual
premises; (3) the questioned news report constituted fair
and true report on the matters of public interest
concerning a public figure and therefore, was privileged
in nature; and (4) malice on their part was negated by the
publication in the same article of plaintiffs or PALs side
of the dispute with the pilots union. ALPAP and UMALI
likewise filed their joint answer, dated October 31, 1998,
and alleged therein that: (1) the complaint stated no cause
of action; (2) venue was improperly laid; and (3) plaintiff
Lucio Tan was not a real party in interest. It appeared that
the complaint failed to state the residence of the
complainant at the time of the alleged commission of the
offense and the place where the libelous article was
printed and first published.
RTC Makati: Dismissed the complaint without prejudice
on the ground of improper venue.
Tan filed an Omnibus Motion dated February 24, 1999,
seeking reconsideration of the dismissal and admission of
the amended complaint. It included, inter alia, that: the
questioned article was printed and first published in the
City of Makati and that the questioned caricature was
printed and first published in the City of Makati.
RTC Makati: admitted the amended complaint and
deemed set aside the previous order of dismissal, inter
alia, that: The mistake or deficiency in the original
complaint appears now to have been cured in the
Amended Complaint which can still be properly admitted,
pursuant to Rule 10 of the 1997 Rules of Civil Procedure,
inasmuch as the Order of dismissal is not yet final.
Besides, there is no substantial amendment in the
Amended Complaint which would affect the defendants’
defenses and their Answers. The Amendment is merely
formal, contrary to the contention of the defendants that it
is substantial.
CA: Two petitions for certiorari were filed, one filed by
petitioners and the other by defendants Umali and
ALPAP. The two petitions were consolidated. In April
2000, it ordered the dismissal of the petition and thereby
affirming the RTC decision. Motions for reconsideration
was filed but was denied.
On 11 December 2000, the Court required respondent Tan
to comment on the petition filed by
petitioners.Respondent filed his comment on 22 January
2001[4] to which petitioners filed a reply on 26 April
2001.In a Manifestation filed on 19 February 2001,
respondent stated that the petition[6] filed by defendants
Umali and ALPAP has already been denied by the Court
in a resolution dated 17 January 2001.On 20 August 2003,
the Court resolved to give due course to the petition and
required the parties to submit their respective memoranda
within thirty (30) days from notice. Both petitioners and
respondent complied.
ISSUE: Whether or not the RTC of Makati has
jurisdiction over the case upon the filing of the original
complaint for damages.
HELD: Yes. It is settled that jurisdiction is conferred by
law based on the facts alleged in the complaint since the
latter comprises a concise statement of the ultimate facts
constituting the plaintiff's causes of action. In the case at
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,
respondent’s cause of action is for damages arising from
libel, the jurisdiction of which is vested with the RTC.
Petitioners are confusing jurisdiction with venue. Hon.
Florenz D. Regalado differentiated jurisdiction and venue
as follows: (a) Jurisdiction is the authority to hear and
determine a case; venue is the place where the case is to
be heard or tried; (b) Jurisdiction is a matter of substantive
law; venue, of procedural law; (c) Jurisdiction establishes
a relation between the court and the subject matter; venue,
a relation between plaintiff and defendant, or petitioner
and respondent; and, (d) Jurisdiction is fixed by law and
cannot be conferred by the parties; venue may be
conferred by the act or agreement of the parties.
In the case at bar, the additional allegations in the
Amended Complaint that the article and the caricature
were printed and first published in the City of Makati
referred only to the question of venue and not jurisdiction.
These additional allegations would neither confer
jurisdiction on the RTC nor would respondents failure to
include the same in the original complaint divest the lower
court of its jurisdiction over the case. Respondents failure
to allege these allegations gave the lower court the power,
upon motion by a party, to dismiss the complaint on the
ground that venue was not properly laid.
The rules on venue in Article 360 as follows:
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
libelous article is printed and first published.
2. If the offended party is a private individual, the criminal
action may also be filed in the Court of First Instance of
the province where he actually resided at the time of the
commission of the offense.
3. If the offended party is a public officer whose office is
in Manila at the time of the commission of the offense,
the action may be filed in the Court of First Instance of
Manila.
4. If the offended party is a public officer holding office
outside of Manila, the action may be filed in the Court of
First Instance of the province or city where he held office
at the time of the commission of the offense.
It is a well-established rule that venue has nothing to do
with jurisdiction, except in criminal actions. Assuming
that venue were properly laid in the court where the action
was instituted, that would be procedural, not a
jurisdictional impediment. In fact, in civil cases, venue
may be waived. Consequently, by dismissing the case on
the ground of improper venue, the lower court had
jurisdiction over the case. Apparently, the herein
petitioners recognized this jurisdiction by filing their
answers to the complaint, albeit, questioning the propriety
of venue, instead of a motion to dismiss.
The Court held that dismissal of the complaint by the
lower court was proper considering that the complaint,
indeed, on its face, failed to allege neither the residence
of the complainant nor the place where the libelous article
was printed and first published. Nevertheless, before the
finality of the dismissal, the same may still be amended
as in fact the amended complaint was admitted, in view
of the court a quos jurisdiction, of which it was never
divested. In so doing, the court acted properly and without
any grave abuse of discretion.
Petitioners argument that the lower court has no
jurisdiction over the case because respondent failed to
allege the place where the libelous articles were printed
and first published would have been tenable if the case
filed were a criminal case. The failure of the original
complaint to contain such information would be fatal
because this fact involves the issue of venue which goes
into the territorial jurisdiction of the court. This is not to
be because the case before us is a civil action where venue
is not jurisdictional.
PAGLAUM MGMT AND DEVT COPR AND
HEALTH MARKETING TECH INC VS UNION
BANK OF THE PHLS (SEE PREVIOUS CASE)
FACTS: Paglaum Management and Development
Corporation is the registered owner of three parcels of
land located in Cebu. Union Bank extended HealthTech a
credit line and to secure this obligation Paglaum exectuted
three Real Estate Mortgages in favor of Union Bank. The
parties entered into a Restructuring Agreement, which
states that any action or proceeding arising out of the
transaction shall be commenced in Makati City, with both
parties waiving any other venue. The restructuring was
due to HealthTech’s failure to meet its obligations after
the Asian financial crisis adversely affected its business.
Despite the restructuring, Heatltech still failed to pay its
obligation which prompted Union Bank to institute
foreclosure proceedings. Union Bank extra-judicially
foreclosed the mortgaged properties. The bank filed a
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Petition for Consolidation of Title after it won the auction
sale.
HealthTech later filed a Complaint for Annulment of Sale
and Titles with Damages and Application for Temporary
Restraining Order and Writ of Injunction, praying for: (a)
the issuance of a temporary restraining order, and later a
writ of preliminary injunction, directing Union Bank to
refrain from exercising acts of ownership over the
foreclosed properties; (b) the annulment of the extra-
judicial foreclosure of real properties; (c) the cancellation
of the registration of the Certificates of Sale and the
resulting titles issued; (d) the reinstatement of
PAGLAUMs ownership over the subject properties; and
(e) the payment of damages. The complaint was filed in
Makati City.
Union Bank filed a motion to dismiss of the grounds of,
lack of jurisdiction over the issuance of the injunctive
relief, improper venue, and lack of authority if the person
who signed the Complaint. This motion was granted
resulting in the dismissal of the case. Paglaum and
HealhTech elevated the case to the CA but was denied.
Now, PAGLAUM and HealthTech argue that: (a) the
Restructuring Agreement governs the choice of venue
between the parties, and (b) the agreement on the choice
of venue must be interpreted with the convenience of the
parties in mind and the view that any obscurity therein
was caused by Union Bank
ISSUE: Whether or not Makati City is the proper venue
to assail the foreclosure of the subject real estate
mortgage.
HELD: Yes, Makati City is the proper venue to assail the
foreclosure of the subject real estate mortgage.
In the present case, although the action is a real action,
where the properties are situated in Cebu, Paglaum and
Union Bank have stipulated that the venue of any case
arising from their transaction would be in Makati City.
The phrase “ waive any other venue” shows that the
choice of venue was only Makati City
According to Section 1of Rule 4 of the Rules of Court:
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
involved, or a portion thereof, is situated. Forcible entry
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
According to Sec 3. Rule 4 of the Rules of Court: Sec. 3.
When Rule not applicable. This Rule shall not apply
a) In those cases where a specific rule or law provides
otherwise; or b) Where the parties have validly agreed in
writing before the filing of the action on the exclusive
venue thereof
According to the Supreme Court in Sps. Lantin v.
Lantion, “the general rules on venue of actions shall not
apply where the parties, before the filing of the action,
have validly agreed in writing on an exclusive venue. The
mere stipulation on the venue of an action, however, is not
enough to preclude parties from bringing a case in other
venues. The parties must be able to show that such
stipulation is exclusive. In the absence of qualifying or
restrictive words, the stipulation should be deemed as
merely an agreement on an additional forum, not as
limiting venue to the specified place.”
Motion for Reconsideration April 17, 2013
Union Bank for the first time, raised three new arguments.
First that the restructuring agreement was null and void
because the condition precedent that the borrower should
not be in default, was not complied with. Second even if
the Restructuring Agreement is enforceable, it was only
between Health Tech and Union Bank. PAGLAUM was
a party only to the Real Estate Mortgages (which was
entered into before the Restructuring Agreement) and not
to the Restructuring Agreement. Therefore, the venue
insofar as it is concerned is exclusively in Cebu City
pursuant to the venue stipulation in the mortgage
contracts. Third, that the RTC’s assumption of
jurisdiction over the case was without basis because, the
Complaint being an accion reinvindicatoria the assessed
value of the real property determines which court has
jurisdiction. It further argues that the complaint does not
show the assessed value of the parcels of land.
The Supreme Court denied the Motion for
Reconsideration because the issues were raised for the
first time in a motion for reconsideration. All new issues
or defences were deemed waived because they should
have been brought up in the first opportunity
THEODORE AND NANCY AND VS SPS ALAN
AND EM ANG (SEE PREVIOUS CASE)
51
SPS TEODORO SARAZA VS WILLIAM
FRANCISCO (see full)
THEODORE AND NANCY AND VS SPS ALAN
AND EM ANG (SEE PREVIOUS CASE)
PAGLAUM MGMT AND DEVT CORP AND
HEALTECH VS UNION BANK OF THE PHILS
(SEE PREVIOUS CASE)
POLYTRADE CORP VS BLANCO
FACTS: Suit before the Court of First Instance of
Bulacan on four causes of action to recover the purchase
price of rawhide delivered by plaintiff to defendant.
Plaintiff corporation has its principal office and place of
business in Makati, Rizal. Defendant is a resident of
Meycauayan, Bulacan. Defendant moved to dismiss upon
the ground of improper venue. He claims that by contract
suit may only be lodged in the courts of Manila. The
Bulacan court overruled him. He did not answer the
complaint. In consequence, a default judgment was
rendered against him on September 21, 1966, thus:
WHEREFORE, judgment is hereby rendered in favor of
plaintiff and against defendant ordering defendant to pay
plaintiff the following amounts:
First Cause of Action — P60,845.67, with interest thereon
at 1% a month from May 9, 1965 until the full amount is
paid.
Second Cause of Action — P51,952.55, with interest
thereon at 1% a month from March 30, 1965 until the full
amount is paid.
Third Cause of Action — P53,973.07, with interest
thereon at 1% a month from July 3, 1965 until the full
amount is paid.
Fourth Cause of Action — P41,075.22, with interest
thereon at 1% a month until the full amount is paid.
In addition, defendant shall pay plaintiff attorney's fees
amounting to 25% of the principal amount due in each
cause of action, and the costs of the suit. The amount of
P400.00 shall be deducted from the total amount due
plaintiff in accordance with this judgment.
Defendant appealed.
ISSUE: Whether or not venue was properly laid in the
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
courts of first instance — and this is one — provides that
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
resides, at the election of the plaintiff." Qualifying this
provision in Section 3 of the same Rule which states that
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
another."
Defendant places his case upon Section 3 of Rule 4 just
quoted. According to defendant, plaintiff and defendant,
by written contracts covering the four causes of action,
stipulated that: "The parties agree to sue and be sued in
the Courts of Manila." This agreement is valid. Defendant
says that because of such covenant he can only be sued in
the courts of Manila. We are thus called upon to shake
meaning from the terms of the agreement just quoted.
No such stipulation appears in the contracts covering the
first two causes of action. The general rule set forth in
Section 2 (b), Rule 4, governs, and as to said two causes
of action, venue was properly laid in Bulacan, the
province of defendant's residence. The stipulation
adverted to is only found in the agreements covering the
third and fourth causes of action. An accurate reading,
however, of the stipulation, "The parties agree to sue and
be sued in the Courts of Manila," does not preclude the
filing of suits in the residence of plaintiff or defendant.
The plain meaning is that the parties merely consented to
be sued in Manila. Qualifying or restrictive words which
would indicate that Manila and Manila alone is the venue
are totally absent therefrom. We cannot read into that
clause that plaintiff and defendant bound themselves to
file suits with respect to the last two transactions in
question only or exclusively in Manila. It simply is
permissive.
The parties solely agreed to add the courts of Manila as
tribunals to which they may resort. They did not waive
their right to pursue remedy in the courts specifically
mentioned in Section 2(b) of Rule 4. Renuntiatio non
praesumitur
52
SWEET LINES VS TEVES
FACTS: Respondents Atty. Leovigildo Tandog and
Rogelio Tiro bought two tickets in the branch office of
Sweet Lines at Cagayan de Oro City (CDO) for Voyage
90 aswere scheduled to board in the petitioner’s vessel
M/S Sweet Hope bound for Tagbilaran City via the port
of Cebu. However, upon knowing that the vessel will not
anymore proceed to Bohol, Tandog and Tiro went again
to the branch office of Sweet Lines for proper relocation
to M/S Sweet Town. And while on board on the said
vessel, the two were forced to hide at the cargoes section
of the ship to avoid the inspection being conducted by the
Philippine Coastguard since the vessel already reached its
passenger capacity. During the trip, Tandog and Tiro
alleged that they were exposed to the scorching heat of
the sun and dust coming from the cargoes. They also
claimed that the tickets they bought in CDO were
dishonored as they were constrained to pay for other
tickets. The incident prompted Tandog and Tiro to sue
Sweet Lines for damages and for breach of contract of
carriage before the CFI of Misamis Oriental.
Sweet Lines moved to dismiss the case on the ground of
improper venue basing the said dismissal on the condition
printed at the back of the tickets that where in any case,
all actions arising out of the conditions and provisions of
the said tickets shall only be filed in the courts in the city
of Cebu.
Thereafter, Respondent Judge Teves denied the motion to
dismiss filed by Sweet Lines which thereafter filed a
motion for reconsideration from the order of denial but to
no avail. Thus, Sweet Lines filed an instant petition for
prohibition for preliminary injunction to the Supreme
Court praying that the respondent judge be restrained
from proceeding further with the case filed by Tandog and
Tiro for grave abuse of discretion amounting to lack of
jurisdiction.
Sweet Lines contends that the condition printed on the
tickets is valid and enforceable since Tandog and Tiro
acceded to it when they purchased the same in CDO and
took its vessel M/S Sweet Town as a relocation vessel.
They also argued that the condition is binding among the
respondents since it is a valid waiver of venue. On the
other hand, respondents countered that the said condition
is invalid considering that the same is not an essential
element of the contract of carriage, being in itself a
separate agreement which requires the mutual consent of
both parties. They also claimed that such condition is
prepared solely by Sweet Lines by which they could not
refuse, leaving them no choice but to pay and avail the
said tickets out of necessity.
ISSUES: (1) Whether or not the condition printed at the
back of the ticket which limits the venue of actions arising
from the contract of carriage is valid and enforceable.
(2) Whether or not the condition constitutes a valid waiver
as to venue
HELD: (1) No. The condition printed on the ticket is void
and unenforceable.
The one involved in the case is a contract of adhesion in
which the validity and/or enforceability will have to be
determined by peculiar circumstances obtaining in each
case and the nature of the conditions or terms sought to be
enforced. Generally, contracts of adhesion are drafted and
prepared only by one party and is sought to be accepted
or adhered by the other party who cannot change the same
and who are thus made to adhere thereto on the “take it”
or “leave it” basis. Because of such imbalance nature of
this kind of contract, jurisprudence formulated certain
guidelines in the determination of their validity and
enforceability in order to establish justice and fair play by
placing the weaker party on equal footing with another
who solely prepared the same.
In the case at bar, the Court ruled that such condition
imposed on the ticket by petitioner Sweet Lines is void
and unenforceable for it would be unfair, considering that
Sweet Lines is engaged in inter-land shipping
transportation business, to bind passengers to the terms of
conditions printed at the back of the tickets and prejudice
their rights and interests to file suits against the petitioner
as it solely imposed that such actions should only be filed
in the courts of Cebu city. And under these circumstances,
it is hardly just and proper to expect the passengers to
examine their tickets received from crowded/congested
counters, more often than not during rush hours, for
conditions that may be printed much charge them with
having consented to the conditions, so printed, especially
if there are a number of such conditions in fine print, as in
this case.
With regard to the rules on venue, the Court held that:
“The condition cited above is subversive of public policy
on transfers of venue of actions. For, although venue may
be changed or transferred from one province to another by
agreement of the parties in writing in relation to Rule 4,
Section 3, of the Rules of Court, such agreement will not
be held valid where it practically negates the action of the
53
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