Gk No 103493 Iune 19 1997

nILSLC INVLS1MLN1 CCkCkA1ICN 8IIN1LkNA1ICNAL IINANCL LIMI1LD and A1nCNA nCLDINGS NV peLlLloners
vs
1nL nCNCkA8LL CCUk1 CI ALALS 1488 INC DkAGC DAIC VLN1UkA C DUCA1 kLCICSC k LkLAS and WILLIAM n
CkAIG respondenLs
MLNDC2A
1hls case presenLs for deLermlnaLlon Lhe concluslveness of a forelgn [udgmenL upon Lhe rlghLs of Lhe parLles under Lhe same
cause of acLlon asserLed ln a case ln our local courL eLlLloners broughL Lhls case ln Lhe 8eglonal 1rlal CourL of MakaLl 8ranch
36 whlch ln vlew of Lhe pendency aL Lhe Llme of Lhe forelgn acLlon dlsmlssed Clvll Case no 16363 on Lhe ground of lltls
peoJeotlo ln addlLlon Lo fotom ooo cooveoleos Cn appeal Lhe CourL of Appeals afflrmed Pence Lhls peLlLlon for revlew on
cettlototl
1he facLs are as follows
Cn !anuary 13 1983 prlvaLe respondenL venLura C uucaL obLalned separaLe loans from peLlLloners Ayala lnLernaLlonal llnance
LlmlLed (hereafLer called A?ALA)
1
and hllsec lnvesLmenL CorporaLlon (hereafLer called PlLSLC) ln Lhe sum of uS$230000000
secured by shares of sLock owned by uucaL wlLh a markeL value of 1408899300 ln order Lo faclllLaLe Lhe paymenL of Lhe
loans prlvaLe respondenL 1488 lnc Lhrough lLs presldenL prlvaLe respondenL urago ualc assumed uucaLs obllgaLlon under an
AgreemenL daLed !anuary 27 1983 whereby 1488 lnc execuLed a WarranLy ueed wlLh vendors Llen by whlch lL sold Lo
peLlLloner ALhona Poldlngs nv (hereafLer called A1PCnA) a parcel of land ln Parrls CounLy 1exas uSA for uS$280720902
whlle PlLSLC and A?ALA exLended a loan Lo A1PCnA ln Lhe amounL of uS$230000000 as lnlLlal paymenL of Lhe purchase
prlce 1he balance of uS$30720902 was Lo be pald by means of a promlssory noLe execuLed by A1PCnA ln favor of 1488 lnc
SubsequenLly upon Lhelr recelpL of Lhe uS$230000000 from 1488 lnc PlLSLC and A?ALA released uucaL from hls
lndebLedness and dellvered Lo 1488 lnc all Lhe shares of sLock ln Lhelr possesslon belonglng Lo uucaL
As A1PCnA falled Lo pay Lhe lnLeresL on Lhe balance of uS$30720902 Lhe enLlre amounL covered by Lhe noLe became due and
demandable Accordlngly on CcLober 17 1983 prlvaLe respondenL 1488 lnc sued peLlLloners PlLSLC A?ALA and A1PCnA ln
Lhe unlLed SLaLes for paymenL of Lhe balance of uS$30720902 and for damages for breach of conLracL and for fraud allegedly
perpeLraLed by peLlLloners ln mlsrepresenLlng Lhe markeLablllLy of Lhe shares of sLock dellvered Lo 1488 lnc under Lhe
AgreemenL Crlglnally lnsLlLuLed ln Lhe unlLed SLaLes ulsLrlcL CourL of 1exas 163Lh !udlclal ulsLrlcL where lL was dockeLed as
Case no 8337746 Lhe venue of Lhe acLlon was laLer Lransferred Lo Lhe unlLed SLaLes ulsLrlcL CourL for Lhe SouLhern ulsLrlcL of
1exas where 1488 lnc flled an amended complalnL relLeraLlng lLs allegaLlons ln Lhe orlglnal complalnL A1PCnA flled an answer
wlLh counLerclalm lmpleadlng prlvaLe respondenLs hereln as counLerdefendanLs for allegedly consplrlng ln selllng Lhe properLy
aL a prlce over lLs markeL value rlvaLe respondenL erlas who had allegedly appralsed Lhe properLy was laLer dropped as
counLerdefendanL A1PCnA soughL Lhe recovery of damages and excess paymenL allegedly made Lo 1488 lnc and ln Lhe
alLernaLlve Lhe resclsslon of sale of Lhe properLy lor Lhelr parL PlLSLC and A?ALA flled a moLlon Lo dlsmlss on Lhe ground of
lack of [urlsdlcLlon over Lhelr person buL as Lhelr moLlon was denled Lhey laLer flled a [olnL answer wlLh counLerclalm agalnsL
prlvaLe respondenLs and Ldgardo v Cuevarra PlLSLCs own former presldenL for Lhe resclsslon of Lhe sale on Lhe ground LhaL
Lhe properLy had been overvalued Cn March 13 1990 Lhe unlLed SLaLes ulsLrlcL CourL for Lhe SouLhern ulsLrlcL of 1exas
dlsmlssed Lhe counLerclalm agalnsL Ldgardo v Cuevarra on Lhe ground LhaL lL was frlvolous and was broughL agalnsL hlm
slmply Lo humlllaLe and embarrass hlm lor Lhls reason Lhe uS courL lmposed socalled 8ule 11 sancLlons on PlLSLC and
A?ALA and ordered Lhem Lo pay damages Lo Cuevarra
Cn Aprll 10 1987 whlle Clvll Case no P86440 was pendlng ln Lhe unlLed SLaLes peLlLloners flled a complalnL lor Sum of
Money wlLh uamages and WrlL of rellmlnary ALLachmenL agalnsL prlvaLe respondenLs ln Lhe 8eglonal 1rlal CourL of MakaLl
where lL was dockeLed as Clvll Case no 16363 1he complalnL relLeraLed Lhe allegaLlon of peLlLloners ln Lhelr respecLlve
counLerclalms ln Clvll AcLlon no P86440 of Lhe unlLed SLaLes ulsLrlcL CourL of SouLhern 1exas LhaL prlvaLe respondenLs
commlLLed fraud by selllng Lhe properLy aL a prlce 400 percenL more Lhan lLs Lrue value of uS$80000000 eLlLloners clalmed
LhaL as a resulL of prlvaLe respondenLs fraudulenL mlsrepresenLaLlons A1PCnA PlLSLC and A?ALA were lnduced Lo enLer
lnLo Lhe AgreemenL and Lo purchase Lhe PousLon properLy eLlLloners prayed LhaL prlvaLe respondenLs be ordered Lo reLurn Lo
A1PCnA Lhe excess paymenL of uS$170000000 and Lo pay damages Cn Aprll 20 1987 Lhe Lrlal courL lssued a wrlL of
prellmlnary aLLachmenL agalnsL Lhe real and personal properLles of prlvaLe respondenLs
2

rlvaLe respondenL uucaL moved Lo dlsmlss Clvll Case no 16363 on Lhe grounds of (1) lltls peoJeotlo vlsovls Clvll AcLlon no P
86440 flled by 1488 lnc and ualc ln Lhe uS (2) fotom ooo cooveoleos and (3) fallure of peLlLloners PlLSLC and 8lllL Lo
sLaLe a cause of acLlon uucaL conLended LhaL Lhe alleged overprlclng of Lhe properLy pre[udlced only peLlLloner A1PCnA as
buyer buL noL PlLSLC and 8lllL whlch were noL parLles Lo Lhe sale and whose only parLlclpaLlon was Lo exLend flnanclal
accommodaLlon Lo A1PCnA under a separaLe loan agreemenL Cn Lhe oLher hand prlvaLe respondenLs 1488 lnc and lLs
presldenL ualc flled a [olnL Speclal Appearance and Cuallfled MoLlon Lo ulsmlss conLendlng LhaL Lhe acLlon belng ln personam
exLraLerrlLorlal servlce of summons by publlcaLlon was lneffecLual and dld noL vesL Lhe courL wlLh [urlsdlcLlon over 1488 lnc
whlch ls a nonresldenL forelgn corporaLlon and ualc who ls a nonresldenL allen
Cn !anuary 26 1988 Lhe Lrlal courL granLed uucaLs moLlon Lo dlsmlss sLaLlng LhaL Lhe evldenLlary requlremenLs of Lhe
conLroversy may be more sulLably Lrled before Lhe forum of Lhe lltls peoJeotlo ln Lhe uS under Lhe prlnclple ln prlvaLe
lnLernaLlonal law of fotom ooo cooveoleos even as lL noLed LhaL uucaL was noL a parLy ln Lhe uS case
A separaLe hearlng was held wlLh regard Lo 1488 lnc and ualcs moLlon Lo dlsmlss Cn March 9 1988 Lhe Lrlal courL
3
granLed
Lhe moLlon Lo dlsmlss flled by 1488 lnc and ualc on Lhe ground of lltls peoJeotlo conslderlng LhaL
Lhe molo foctool elemeot of Lhe cause of acLlon ln Lhls case whlch ls Lhe valldlLy of Lhe sale of real properLy ln
Lhe unlLed SLaLes beLween defendanL 1488 and plalnLlff A1PCnA ls Lhe sub[ecL maLLer of Lhe pendlng case ln
Lhe unlLed SLaLes ulsLrlcL CourL whlch under Lhe docLrlne of fotom ooo cooveoleos ls Lhe beLLer (lf noL
excluslve) forum Lo llLlgaLe maLLers needed Lo deLermlne Lhe assessmenL and/or flucLuaLlons of Lhe falr markeL
value of real esLaLe slLuaLed ln PousLon 1exas uSA from Lhe daLe of Lhe LransacLlon ln 1983 up Lo Lhe
presenL and verlly (emphasls by Lrlal courL)
1he Lrlal courL also held lLself wlLhouL [urlsdlcLlon over 1488 lnc and ualc because Lhey were nonresldenLs and Lhe
acLlon was noL an acLlon lo tem or poosl lo tem so LhaL exLraLerrlLorlal servlce of summons was lneffecLlve 1he Lrlal
courL subsequenLly llfLed Lhe wrlL of aLLachmenL lL had earller lssued agalnsL Lhe shares of sLocks of 1488 lnc and ualc
eLlLloners appealed Lo Lhe CourL of Appeals argulng LhaL Lhe Lrlal courL erred ln applylng Lhe prlnclple of llLls pendenLla and
fotom ooo cooveoleos and ln rullng LhaL lL had no [urlsdlcLlon over Lhe defendanLs desplLe Lhe prevlous aLLachmenL of shares of
sLocks belonglng Lo 1488 lnc and ualc
Cn !anuary 6 1992 Lhe CourL of Appeals
4
afflrmed Lhe dlsmlssal of Clvll Case no 16363 agalnsL uucaL 1488 lnc and ualc on
Lhe ground of llLls pendenLla Lhus
1he plalnLlffs ln Lhe uS courL are 1488 lnc and/or urago ualc whlle Lhe defendanLs are hllsec Lhe Ayala
lnLernaLlonal llnance LLd (8lllLs former name) and Lhe ALhona Poldlngs nv 1he case aL bar lnvolves Lhe
same parLles 1he LransacLlon sued upon by Lhe parLles ln boLh cases ls Lhe WarranLy ueed execuLed by and
beLween ALhona Poldlngs and 1488 lnc ln Lhe uS case breach of conLracL and Lhe promlssory noLe are sued
upon by 1488 lnc whlch llkewlse alleges fraud employed by hereln appellanLs on Lhe markeLablllLy of uucaLs
securlLles glven ln exchange for Lhe 1exas properLy 1he recovery of a sum of money and damages for fraud
purporLedly commlLLed by appellees ln overprlclng Lhe 1exas land consLlLuLe Lhe acLlon before Lhe hlllpplne
courL whlch llkewlse sLems from Lhe same WarranLy ueed
1he CourL of Appeals also held LhaL Clvll Case no 16363 was an acLlon ln personam for Lhe recovery of a sum of money
for alleged LorLlous acLs so LhaL servlce of summons by publlcaLlon dld noL vesL Lhe Lrlal courL wlLh [urlsdlcLlon over
1488 lnc and urago ualc 1he dlsmlssal of Clvll Case no 16363 on Lhe ground of fotom ooo cooveoleos was llkewlse
afflrmed by Lhe CourL of Appeals on Lhe ground LhaL Lhe case can be beLLer Lrled and declded by Lhe uS courL
1he uS case and Lhe case aL bar arose from only one maln LransacLlon and lnvolve forelgn elemenLs Lo wlL
1) Lhe properLy sub[ecL maLLer of Lhe sale ls slLuaLed ln 1exas uSA 2) Lhe seller 1488 lnc ls a nonresldenL
forelgn corporaLlon 3) alLhough Lhe buyer ALhona Poldlngs a forelgn corporaLlon whlch does noL clalm Lo be
dolng buslness ln Lhe hlllpplnes ls wholly owned by hllsec a domesLlc corporaLlon ALhona Poldlngs ls also
owned by 8lllL also a forelgn corporaLlon 4) Lhe WarranLy ueed was execuLed ln 1exas uSA
ln Lhelr presenL appeal peLlLloners conLend LhaL
1 1PL uCC18lnL Cl LnuLnC? Cl AnC1PL8 AC1lCn 8L1WLLn 1PL SAML A81lLS lC8 1PL SAML CAuSL
(ll1l5 lNuN1lA) 8LLlLu uCn 8? 1PL CCu81 Cl ALALS ln Alll8MlnC 1PL 18lAL CCu81S ulSMlSSAL Cl
1PL ClvlL AC1lCn lS nC1 ALlCA8LL
2 1PL 8lnClLL Cl lOkuM NON cONvNlN5 ALSC 8LLlLu uCn 8? 1PL CCu81 Cl ALALS ln Alll8MlnC
1PL ulSMlSSAL 8? 1PL 18lAL CCu81 Cl 1PL ClvlL AC1lCn lS LlkLWlSL nC1 ALlCA8LL
3 AS A CC8CLLA8? 1C 1PL ll8S1 1WC C8CunuS 1PL CCu81 Cl ALALS L88Lu ln nC1 PCLulnC 1PA1
PlLllnL u8LlC CLlC? 8LCul8Lu 1PL ASSuM1lCn nC1 1PL 8LLlnCulSPMLn1 8? 1PL 18lAL CCu81 Cl
l1S 8lCP1luL !u8lSulC1lCn ln 1PL ClvlL AC1lCn lC8 1PL8L lS LvL8? 8LASCn 1C 8C1LC1 Anu vlnulCA1L
L1l1lCnL8S 8lCP1S lC8 1C81lCuS C8 W8CnCluL AC1S C8 CCnuuC1 8lvA1L 8LSCnuLn1S (WPC A8L
MCS1L? nCn8LSluLn1 ALlLnS) lnlLlC1Lu uCn 1PLM PL8L ln 1PL PlLllnLS
We wlll deal wlLh Lhese conLenLlons ln Lhe order ln whlch Lhey are made
lltst lL ls lmporLanL Lo noLe ln connecLlon wlLh Lhe flrsL polnL LhaL whlle Lhe presenL case was pendlng ln Lhe CourL of Appeals
Lhe unlLed SLaLes ulsLrlcL CourL for Lhe SouLhern ulsLrlcL of 1exas rendered [udgmenL

ln Lhe case before lL 1he [udgmenL

whlch was ln favor of prlvaLe respondenLs was afflrmed on appeal by Lhe ClrculL CourL of Appeals

1hus Lhe prlnclpal lssue Lo

be resolved ln Lhls case ls wheLher Clvll Case no 16336 ls barred by Lhe [udgmenL of Lhe uS courL
rlvaLe respondenLs conLend LhaL for a forelgn [udgmenL Lo be pleaded as res [udlcaLa a [udgmenL admlLLlng Lhe forelgn
declslon ls noL necessary Cn Lhe oLher hand peLlLloners argue LhaL Lhe forelgn [udgmenL cannoL be glven Lhe effecL of res
[udlcaLa wlLhouL glvlng Lhem an opporLunlLy Lo lmpeach lL on grounds sLaLed ln 8ule 39 30 of Lhe 8ules of CourL Lo wlL wanL
of [urlsdlcLlon wanL of noLlce Lo Lhe parLy colluslon fraud or clear mlsLake of law or facL
eLlLloners conLenLlon ls merlLorlous Whlle Lhls CourL has glven Lhe effecL of res [udlcaLa Lo forelgn [udgmenLs ln several cases
7
lL was afLer Lhe parLles opposed Lo Lhe [udgmenL had been glven ample opporLunlLy Lo repel Lhem on grounds allowed under
Lhe law
8
lL ls noL necessary for Lhls purpose Lo lnlLlaLe a separaLe acLlon or proceedlng for enforcemenL of Lhe forelgn
[udgmenL WhaL ls essenLlal ls LhaL Lhere ls opporLunlLy Lo challenge Lhe forelgn [udgmenL ln order for Lhe courL Lo properly
deLermlne lLs efflcacy 1hls ls because ln Lhls [urlsdlcLlon wlLh respecL Lo acLlons ln personam as dlsLlngulshed from acLlons lo
tem a forelgn [udgmenL merely consLlLuLes ptlmo focle evldence of
Lhe [usLness of Lhe clalm of a parLy and as such ls sub[ecL Lo proof Lo Lhe conLrary
9
8ule 39 30 provldes
Sec 30 ffect of fotelqo joJqmeots 1he effecL of a [udgmenL of a Lrlbunal of a forelgn counLry havlng
[urlsdlcLlon Lo pronounce Lhe [udgmenL ls as follows
(a) ln case of a [udgmenL upon a speclflc Lhlng Lhe [udgmenL ls concluslve upon Lhe LlLle Lo Lhe Lhlng
(b) ln case of a [udgmenL agalnsL a person Lhe [udgmenL ls presumpLlve evldence of a rlghL as beLween Lhe
parLles and Lhelr successors ln lnLeresL by a subsequenL LlLle buL Lhe [udgmenL may be repelled by evldence of
a wanL of [urlsdlcLlon wanL of noLlce Lo Lhe parLy colluslon fraud or clear mlsLake of law or facL
1hus ln Lhe case of Ceoetol cotpototloo of tbe lblllpploes v uoloo losotooce 5oclety of cootoo ltJ
10
whlch prlvaLe
respondenLs lnvoke for clalmlng concluslve effecL for Lhe forelgn [udgmenL ln Lhelr favor Lhe forelgn [udgmenL was consldered
res [udlcaLa because Lhls CourL found from Lhe evldence as well as from appellanLs own pleadlngs
11
LhaL Lhe forelgn courL dld
noL make a clear mlsLake of law or facL or LhaL lLs [udgmenL was vold for wanL of [urlsdlcLlon or because of fraud or colluslon
by Lhe defendanLs 1rlal had been prevlously held ln Lhe lower courL and only afLerward was a declslon rendered declarlng Lhe
[udgmenL of Lhe Supreme CourL of Lhe SLaLe of WashlngLon Lo have Lhe effecL of res [udlcaLa ln Lhe case before Lhe lower courL
ln Lhe same veln ln lblllpploes lotetootloool 5blpploq cotp v coott of Appeols
12
Lhls CourL held LhaL Lhe forelgn [udgmenL was
valld and enforceable ln Lhe hlllpplnes Lhere belng no showlng LhaL lL was vlLlaLed by wanL of noLlce Lo Lhe parLy colluslon
fraud or clear mlsLake of law or facL 1he ptlmo focle presumpLlon under Lhe 8ule had noL been rebuLLed
ln Lhe case aL bar lL cannoL be sald LhaL peLlLloners were glven Lhe opporLunlLy Lo challenge Lhe [udgmenL of Lhe uS courL as
basls for declarlng lL res [udlcaLa or concluslve of Lhe rlghLs of prlvaLe respondenLs 1he proceedlngs ln Lhe Lrlal courL were
summary nelLher Lhe Lrlal courL nor Lhe appellaLe courL was even furnlshed coples of Lhe pleadlngs ln Lhe uS courL or apprlsed
of Lhe evldence presenLed LhereaL Lo assure a proper deLermlnaLlon of wheLher Lhe lssues Lhen belng llLlgaLed ln Lhe uS courL
were exacLly Lhe lssues ralsed ln Lhls case such LhaL Lhe [udgmenL LhaL mlghL be rendered would consLlLuLe res [udlcaLa As Lhe
Lrlal courL sLaLed ln lLs dlspuLed order daLed March 9 1988
Cn Lhe plalnLlffs clalm ln lLs CpposlLlon LhaL Lhe causes of acLlon of Lhls case and Lhe pendlng case ln Lhe
unlLed SLaLes are noL ldenLlcal pteclsely tbe OtJet of Iooooty 26 1988 oevet foooJ tbot tbe cooses of octloo of
tbls cose ooJ tbe cose peoJloq befote tbe u5A coott wete lJeotlcol (emphasls added)
lL was error Lherefore for Lhe CourL of Appeals Lo summarlly rule LhaL peLlLloners acLlon ls barred by Lhe prlnclple of res
[udlcaLa eLlLloners ln facL quesLloned Lhe [urlsdlcLlon of Lhe uS courL over Lhelr persons buL Lhelr clalm was brushed
aslde by boLh Lhe Lrlal courL and Lhe CourL of Appeals
13

Moreover Lhe CourL noLes LhaL on Aprll 22 1992 1488 lnc and ualc flled a peLlLlon for Lhe enforcemenL of [udgmenL ln Lhe
8eglonal 1rlal CourL of MakaLl where lL was dockeLed as Clvll Case no 921070 and asslgned Lo 8ranch 134 alLhough Lhe
proceedlngs were suspended because of Lhe pendency of Lhls case 1o susLaln Lhe appellaLe courLs rullng LhaL Lhe forelgn
[udgmenL consLlLuLes res [udlcaLa and ls a bar Lo Lhe clalm of peLlLloners would effecLlvely preclude peLlLloners from repelllng
Lhe [udgmenL ln Lhe case for enforcemenL An absurdlLy could Lhen arlse a forelgn [udgmenL ls noL sub[ecL Lo challenge by Lhe
plalnLlff agalnsL whom lL ls lnvoked lf lL ls pleaded Lo reslsL a clalm as ln Lhls case buL lL may be opposed by Lhe defendanL lf Lhe
forelgn [udgmenL ls soughL Lo be enforced agalnsL hlm ln a separaLe proceedlng 1hls ls plalnly unLenable lL has been held
Lherefore LhaL
A forelgn [udgmenL may noL be enforced lf lL ls noL recognlzed ln Lhe [urlsdlcLlon where afflrmaLlve rellef ls
belng soughL Pence ln Lhe lnLeresL of [usLlce Lhe complalnL should be consldered as a peLlLlon for Lhe
recognlLlon of Lhe Pongkong [udgmenL under SecLlon 30 (b) 8ule 39 of Lhe 8ules of CourL ln order LhaL Lhe
defendanL prlvaLe respondenL hereln may presenL evldence of lack of [urlsdlcLlon noLlce colluslon fraud or
clear mlsLake of facL and law lf appllcable
14

Accordlngly Lo lnsure Lhe orderly admlnlsLraLlon of [usLlce Lhls case and Clvll Case no 921070 should be consolldaLed
1
AfLer
all Lhe Lwo have been flled ln Lhe 8eglonal 1rlal CourL of MakaLl albelL ln dlfferenL salas Lhls case belng asslgned Lo 8ranch 36
(!udge lernando v Corospe) whlle Clvll Case no 921070 ls pendlng ln 8ranch 134 of !udge lgnaclo Capulong ln such
proceedlngs peLlLloners should have Lhe burden of lmpeachlng Lhe forelgn [udgmenL and only ln Lhe evenL Lhey succeed ln
dolng so may Lhey proceed wlLh Lhelr acLlon agalnsL prlvaLe respondenLs
5ecooJ nor ls Lhe Lrlal courLs refusal Lo Lake cognlzance of Lhe case [usLlflable under Lhe prlnclple of fotom ooo cooveoleos
llrsL a moLlon Lo dlsmlss ls llmlLed Lo Lhe grounds under 8ule 16 1 whlch does noL lnclude fotom ooo cooveoleos
1
1he
proprleLy of dlsmlsslng a case based on Lhls prlnclple requlres a facLual deLermlnaLlon hence lL ls more properly consldered a
maLLer of defense Second whlle lL ls wlLhln Lhe dlscreLlon of Lhe Lrlal courL Lo absLaln from assumlng [urlsdlcLlon on Lhls ground
lL should do so only afLer vlLal facLs are esLabllshed Lo deLermlne wheLher speclal clrcumsLances requlre Lhe courLs
deslsLance
17

ln Lhls case Lhe Lrlal courL absLalned from Laklng [urlsdlcLlon solely on Lhe basls of Lhe pleadlngs flled by prlvaLe respondenLs ln
connecLlon wlLh Lhe moLlon Lo dlsmlss lL falled Lo conslder LhaL one of Lhe plalnLlffs (PlLSLC) ls a domesLlc corporaLlon and one
of Lhe defendanLs (venLura uucaL) ls a llllplno and LhaL lL was Lhe exLlngulshmenL of Lhe laLLers debL whlch was Lhe ob[ecL of
Lhe LransacLlon under llLlgaLlon 1he Lrlal courL arblLrarlly dlsmlssed Lhe case even afLer flndlng LhaL uucaL was noL a parLy ln Lhe
uS case
1bltJ lL was error we Lhlnk for Lhe CourL of Appeals and Lhe Lrlal courL Lo hold LhaL [urlsdlcLlon over 1488 lnc and ualc could
noL be obLalned because Lhls ls an acLlon ln personam and summons were served by exLraLerrlLorlal servlce 8ule 14 17 on
exLraLerrlLorlal servlce provldes LhaL servlce of summons on a nonresldenL defendanL may be effecLed ouL of Lhe hlllpplnes by
leave of CourL where among oLhers Lhe properLy of Lhe defendanL has been aLLached wlLhln Lhe hlllpplnes
18
lL ls noL
dlspuLed LhaL Lhe properLles real and personal of Lhe prlvaLe respondenLs had been aLLached prlor Lo servlce of summons
under Lhe Crder of Lhe Lrlal courL daLed Aprll 20 1987
19

loottb As for Lhe Lemporary resLralnlng order lssued by Lhe CourL on !une 29 1994 Lo suspend Lhe proceedlngs ln Clvll Case no
921443 flled by Ldgardo v Cuevarra Lo enforce socalled 8ule 11 sancLlons lmposed on Lhe peLlLloners by Lhe uS courL Lhe
CourL flnds LhaL Lhe [udgmenL soughL Lo be enforced ls severable from Lhe maln [udgmenL under conslderaLlon ln Clvll Case no
16363 1he separablllLy of Cuevaras clalm ls noL only admlLLed by peLlLloners
20
lL appears from Lhe pleadlngs LhaL peLlLloners
only belaLedly lmpleaded Cuevarra as defendanL ln Clvll Case no 16363
21
Pence Lhe 18C should be llfLed and Clvll Case no
921443 allowed Lo proceed
WPL8LlC8L Lhe declslon of Lhe CourL of Appeals ls 8LvL8SLu and Clvll Case no 16363 ls 8LMAnuLu Lo Lhe 8eglonal 1rlal
CourL of MakaLl for consolldaLlon wlLh Clvll Case no 921070 and for furLher proceedlngs ln accordance wlLh Lhls declslon 1he
Lemporary resLralnlng order lssued on !une 29 1994 ls hereby Lll1Lu
SC C8uL8Lu
keqoloJo kometo looo ooJ 1ottes It II coocot




PlLvlLLL uLvLLCMLn1 Anu PCuSlnC
CC8C8A1lCn and CL8CnlnA CuL
letltlooets


vetsos



ML8CLuLS !AvlL8 ln her personal CapaclLy and as
represenLaLlve of Lhe PLl8S Cl 1PL LA1L
C8lSAn1C !AvlL8
kespooJeots

C8 no 147738

resenL


AnCAnl8AnI Chalrman
SAnuCvALCu1lL88LZ
CC8CnA
CA8lC MC8ALLS and
CA8ClA II


romulgaLed

uecember 13 2003
xx

u L C l S l C n


SAnuCvALCu1lL88LZ I

lor our resoluLlon ls Lhe lnsLanL peLlLlon for revlew on cettlototl seeklng Lo reverse Lhe ueclslon1 daLed uecember 22 2000
and Lhe 8esoluLlon2 daLed Aprll 17 2001 of Lhe CourL of Appeals (SlxLh ulvlslon) ln CAC8 Cv no 39913
1hls case Lraces lLs anLecedenLs Lo a verlfled complalnL flled by Mercedes !avler hereln respondenL on lebruary 14 1990 wlLh
Lhe 8eglonal 1rlal CourL 8ranch 16 Malolos ClLy for damages and ln[uncLlon dockeLed as Clvll Case no 122M90 lmpleaded
as defendanL was PlLvlLLL uevelopmenL and Pouslng CorporaLlon (PlLvlLLL) one of hereln peLlLloners
1he complalnL alleges LhaL spouses CrlsanLo (now deceased) and Mercedes !avler have been LenanLculLlvaLors of a 33 hecLare
parcel of rlce land locaLed aL Camallg Meycauayan 8ulacan owned by lellmon Lmperado a holder of a free paLenL SomeLlme
ln 1977 PlLvlLLL proposed Lo buy Lhe land for converslon lnLo a houslng subdlvlslon Spouses !avler PlLvlLLL and Lmperado
Lhen enLered lnLo a osolotoo oq loqsosollo ot osooq loob oo loqsosoko Among Lhe Lerms agreed upon by Lhe parLles was
LhaL Lhe !avlers would be glven a 2000 square meLer loL as a dlsLurbance compensaLlon Powever lnsLead of glvlng Lhem a
slngle loL measurlng 2000 square meLers whaL Lhey recelved were 2 separaLe loLs of 1000 square meLers each locaLed far
aparL 1hls prompLed Mercedes Lo sue PlLvlLLL for damages
ln lLs answer PlLvlLLL speclflcally denled Lhe allegaLlons ln Lhe complalnL and ralsed Lhe followlng afflrmaLlve and speclal
defenses (1) Lhe complalnL falls Lo sLaLe a cause of acLlon (2) lL does noL allege LhaL Lhe parLles resorLed Lo conclllaLlon
proceedlngs before Lhe barangay and (3) plalnLlff ls esLopped from flllng Lhe complalnL
lorLhwlLh Mercedes flled a moLlon for leave of courL Lo amend her complalnL ln her aLLached amended complalnL she alleged
LhaL Lhe osolotoo dld noL express Lhe Lrue agreemenL of Lhe parLles and LhaL Lhe sale ls vold as lL was execuLed wlLhln Lhe 3
year prohlblLlve perlod from Lhe lssuance of Lhe free paLenL
1he Lrlal courL lssued an Crder denylng Mercedes moLlon holdlng LhaL Lhe proposed amendmenL ls lnconslsLenL wlLh Lhe cause
of acLlon ln Lhe orlglnal complalnL and LhaL Lhe proposed amendmenL ls Lhe sub[ecL of Clvll Case no 172M90 beLween Lhe
same parLles pendlng before anoLher branch of Lhe Lrlal courL
Mercedes flled a moLlon for reconslderaLlon of Lhe Lrlal courLs Crder buL lL was denled
Cn november 13 1991 PlLvlLLL moved Lo dlsmlss Lhe orlglnal complalnL alleglng LhaL Lhe plalnLlff had flled a proLesL wlLh Lhe
Land ManagemenL 8ureau seeklng Lhe revocaLlon of Lhe free paLenL lssued Lo lellmon Lmperado and Lhe reverslon of Lhe land
Lo Lhe publlc domaln

Cn november 29 1991 Lhe Lrlal courL lssued an Crder granLlng PlLvlLLLs moLlon Lo dlsmlss Lhus
lor Lhe reasons sLaLed ln Lhe MoLlon Lo ulsmlss flled by Lhe defendanLs Lhru counsel on november 13 1991
and lL appearlng from Lhe records LhaL plalnLlffs have no ob[ecLlon LhereLo as shown by Lhe laLLers fallure Lo
appear before Lhls CourL durlng Lhe hearlng of Lhe sald moLlon on november 29 1991 noLwlLhsLandlng
proper servlce of noLlce Lhereof Lhe same ls hereby C8An1Lu
WPL8LlC8L as prayed for leL Lhls be as lL ls hereby ulSMlSSLu


Cn uecember 27 1991 Mercedes flled a moLlon for reconslderaLlon of Lhe sald Crder buL lL was denled 1hls prompLed her Lo
lnLerpose an appeal Lo Lhe CourL of Appeals
Cn uecember 22 2000 Lhe CourL of Appeals rendered lLs ueclslon reverslng Lhe Lrlal courLs assalled Crders and remandlng Lhe
case Lo Lhe Lrlal courL for furLher proceedlngs
PlLvlLLL flled a moLlon for reconslderaLlon buL lL was denled by Lhe AppellaLe CourL ln a 8esoluLlon daLed Aprll 17 2001
Pence Lhe lnsLanL peLlLlon for revlew on cettlototl
1he sole lssue for our resoluLlon ls wheLher Lhe CourL of Appeals erred ln reverslng Lhe challenged Crders of Lhe Lrlal courL
dlsmlsslng Lhe complalnL ln Clvll Case no 122M90
We flnd no merlL ln Lhe peLlLlon
SecLlon 1 8ule 16 of Lhe 8evlsed 8ules of CourL Lhen appllcable provldes
SLC 1 CtoooJs W|th|n the t|me for p|ead|ng a moLlon Lo dlsmlss Lhe acLlon may be made on any of Lhe
followlng grounds

(a) 1haL Lhe courL has no [urlsdlcLlon over Lhe person of Lhe defendanL or over Lhe sub[ecL of Lhe acLlon or
sulL
(b) 1haL Lhe courL has no [urlsdlcLlon over Lhe naLure of Lhe acLlon or sulL
(c) 1haL venue ls lmproperly lald
(d) 1haL Lhe plalnLlff has no legal capaclLy Lo sue
(e) 1hat there |s another act|on pend|ng between the same part|es for the same cause
(f) 1haL Lhe cause of acLlon ls barred by a prlor [udgmenL or by sLaLuLe of llmlLaLlons
(g) 1haL Lhe complalnL sLaLes no cause of acLlon
(h) 1haL Lhe clalm or demand seL forLh ln Lhe plalnLlffs pleadlng has been pald walved abandoned or
oLherwlse exLlngulshed
(l) 1haL Lhe clalm on whlch Lhe acLlon or sulL ls founded ls unenforceable under Lhe provlslons of Lhe
sLaLuLe of frauds
([) 1he sulL ls beLween members of Lhe same famlly and no earnesL efforLs Lowards a compromlse have
been made


ln IM 1oosoo co loc v kofot3 Lhls CourL lnLerpreLed wlLhln Lhe Llme for pleadlng Lo mean w|th|n the t|me to answer
under SecLlon 1 8ule 11 Lhe Llme Lo answer ls 13 days afLer servlce of summons upon Lhe defendanL ln Lhe lnsLanL case we
noLe LhaL PlLvlLLLs moLlon Lo dlsmlss Lhe complalnL ln Clvll Case no 122M90 was flled afLer lL had flled lLs answer ln elts of
Motlooo loqotoo v lcoo4 Lhls CourL held LhaL where a moLlon Lo dlsmlss was flled Lhree monLhs afLer Lhe defendanLs had flled
Lhelr amended answer Lhe sald moLlon was flled ouL of Llme ln kolz It v coott of Appeols3 Lhls CourL ruled LhaL where an
answer has been flled Lhe defendanL ls esLopped from flllng a moLlon Lo dlsmlss 1he only excepLlons Lo Lhe rule as correcLly
polnLed ouL by Lhe CourL of Appeals are (1) where Lhe ground ralsed ls lack of [urlsdlcLlon of Lhe courL over Lhe sub[ecL maLLer
(2) where Lhe complalnL does noL sLaLe a cause of acLlon (3) prescrlpLlon and (4) where Lhe evldence LhaL would consLlLuLe a
ground for Lhe dlsmlssal of Lhe complalnL was dlscovered only durlng Lhe Lrlal We flnd LhaL none of Lhe foregolng grounds ls
presenL ln PlLvlLLLs moLlon Lo dlsmlss
WnLkLICkL Lhe peLlLlon ls DLNILD 1he challenged ueclslon and 8esoluLlon of Lhe CourL of Appeals (SlxLh ulvlslon) ln CAC8
Cv no 39913 are AIIIkMLD IN ALL kLSLC1S CosLs agalnsL peLlLloners
SC CkDLkLD
Gk No 14041 Iu|y 29 200
kCSLNDC AL8A m|nor represented by h|s mother and natura| guard|an Arm| A A|ba andAkMI A AL8A |n her persona|
capac|ty Petitioners vs CCUk1 CI ALALS and kCSLNDC C nLkkLkA kespondents
u L C l S l C n
?nA8LSSAn1lACC I
Assalled ln Lhls peLlLlon for cettlototl1 are Lhe lebruary 27 2004 declslon2 and Lhe May 14 2004 resoluLlon3 of Lhe CourL of
Appeals ln CAC8 S no 61883 whlch dlsmlssed peLlLloners orlglnal acLlon for annulmenL of [udgmenL4 of Lhe 8eglonal 1rlal
CourL of Manlla 8ranch 37 and denled Lhe moLlon for reconslderaLlon respecLlvely
1he anLecedenL facLs show LhaL on CcLober 21 1996 prlvaLe respondenL 8osendo C Perrera flled a peLlLlon3 for cancellaLlon
of Lhe followlng enLrles ln Lhe blrLh cerLlflcaLe of 8osendo Alba Perrera !r Lo wlL (1) Lhe surname Perrera as appended Lo Lhe
name of sald chlld (2) Lhe reference Lo prlvaLe respondenL as Lhe faLher of 8osendo Alba Perrera !r and (3) Lhe alleged
marrlage of prlvaLe respondenL Lo Lhe chllds moLher Arml A Alba (Arml) on AugusL 4 1982 ln Mandaluyong ClLy Pe clalmed
LhaL Lhe challenged enLrles are false and LhaL lL was only someLlme ln SepLember 1996 LhaL he learned of Lhe exlsLence of sald
blrLh cerLlflcaLe
rlvaLe respondenL alleged LhaL he marrled only once le on !une 28 1963 wlLh Lzperanza C SanLos and never conLracLed
marrlage wlLh Arml nor faLhered 8osendo Alba Perrera !r ln supporL Lhereof he presenLed cerLlflcaLlons from Lhe Clvll
8eglsLrar of Mandaluyong ClLy6 and Lhe naLlonal SLaLlsLlcs Cfflce7 boLh sLaLlng LhaL Lhey have no record of marrlage
beLween prlvaLe respondenL and Arml
Cn november 12 1996 prlvaLe respondenL flled an amended peLlLlon8 lmpleadlng Arml and all Lhe persons who have or
clalm any lnLeresL ln Lhe peLlLlon9chanroblesvlrLuallawllbrary
Cn november 27 1996 Lhe Lrlal courL lssued an Crder seLLlng Lhe peLlLlon for hearlng on !anuary 24 1997 and dlrecLed Lhe
publlcaLlon and servlce of sald order Lo Arml aL her address appearlng ln Lhe blrLh cerLlflcaLe whlch ls no 418 Arqulza SL LrmlLa
Manlla and Lo Lhe Clvll 8eglsLrar of Lhe ClLy of Manlla and Lhe SollclLor Ceneral 1he full LexL of Lhe order reads
ln a verlfled Amended eLlLlon for CorrecLlon of LnLry Lhe eLlLloner prays lnLer alla LhaL Lhe followlng enLrles appearlng ln Lhe
sub[ecL CerLlflcaLe of Llve 8lrLh be deleLed
1 All lnformaLlons havlng reference Lo hlm as Lhe faLher of Lhe chlld menLloned Lhereln
2 1he surname Perrera appended Lo Lhe chllds name
3 Pls alleged marrlage wlLh Lhe naLural moLher of Lhe chlld
llndlng Lhe eLlLlon Lo be sufflclenL ln form and subsLance leL Lhe eLlLlon be seL for hearlng on !anuary 24 1997 aL nlne oclock
ln Lhe mornlng before Lhls 8ranch aL 8ooms 447449 lourLh lloor Manlla ClLy Pall All lnLeresLed parLles are hereby noLlfled of
Lhe sald hearlng and are ordered Lo show cause why Lhe eLlLlon should noL be granLed
LeL a copy of Lhls Crder be publlshed aL Lhe expense of Lhe eLlLloner once a week for Lhree (3) consecuLlve weeks ln a
newspaper of general clrculaLlon ln Lhe ClLy of Manlla and raffled pursuanL Lo u 1079
lurnlsh Lhe Cfflce of Lhe SollclLor Ceneral and Lhe Cfflce of Lhe Local Clvll 8eglsLrar of Lhe ClLy of Manlla wlLh coples of Lhe
eLlLlon and of Lhls Crder
LeL Lhe same be llkewlse furnlshed Lhe rlvaLe 8espondenL Arml Alba Perrera aL Lhe address lndlcaLed ln Lhe sub[ecL CerLlflcaLe
of Llve 8lrLh
SC C8uL8Lu10chanroblesvlrLuallawllbrary
Cn !anuary 13 1997 before Lhe scheduled !anuary 24 1997 hearlng Lhe Lrlal courL lssued an Amended Crder11 wlLh
subsLanLlally Lhe same conLenLs excepL LhaL Lhe hearlng was rescheduled Lo lebruary 26 1997 A copy of sald Amended Crder
was publlshed ln 1oday a newspaper of general clrculaLlon ln Manlla ln lLs !anuary 20 27 and lebruary 3 1997 lssues Coples
Lhereof were also senL Lo Arml aL no 418 Arqulza SL LrmlLa Manlla on !anuary 17 1997 Lhe Local Clvll 8eglsLrar of Manlla and
Lhe SollclLor Ceneral
AL Lhe scheduled hearlng on lebruary 26 1997 Lhe counsel from Lhe Cfflce of Lhe SollclLor Ceneral appeared buL flled no
opposlLlon Lo Lhe peLlLlon Arml on Lhe oLher hand was noL presenL 1he reLurn of Lhe noLlce senL Lo her had Lhe followlng
noLaLlon
1hls ls Lo cerLlfy LhaL on !anuary 17 1997 Lhe underslgned process server personally served a copy of Lhe Amended Crder ln
Sp roc no 9680312 daLed !anuary 13 1997 Lo Lhe prlvaLe respondenL Arml Alba Perrera aL 418 Arqulza SL LrmlLa Manlla
but fa||ed and unava|||ng for reason that (s|c) pr|vate respondent |s no |onger res|d|ng at sa|d g|ven
address12chanroblesvlrLuallawllbrary
Cn Aprll 1 1997 Lhe courL o poo rendered a declslon whlch became flnal and execuLory on !une 2 199713 1he dlsposlLlve
porLlon Lhereof sLaLes
ACCC8ulnCL? and pursuanL Lo 8ule 108 of Lhe 8evlsed 8ules of CourL [udgmenL ls hereby rendered orderlng Lhe correcLlon of
Lhe enLrles ln Lhe CerLlflcaLe of Llve 8lrLh of 8osendo Alba Perrera !r ln such a way LhaL Lhe enLry under Lhe name of Lhe chlld
Lhe surname Perrera !r ls ordered deleLed and Lhe chlld shall be known as 8CSLnuC AL8A and LhaL Lhe enLry under Lhe
daLe and place of marrlage Lhe daLe AugusL 4 1982 Mandaluyong MM ls llkewlse ordered deleLed or cancelled
LeL a copy of Lhls ueclslon be furnlshed Lhe Local Clvll 8eglsLrar of Manlla for proper correcLlon and enLry
SC C8uL8Lu14chanroblesvlrLuallawllbrary
rlvaLe respondenL flled a moLlon13 for amendmenL of Lhe decreLal porLlon of Lhe declslon Lo lnclude Lhe cancellaLlon of all
enLrles havlng reference Lo hlm as Lhe faLher of peLlLloner mlnor 1hls was granLed ln Lhe AugusL 11 1997 order of Lhe Lrlal courL
as follows
ACCC8ulnCL? and pursuanL Lo 8ule 108 of Lhe 8evlsed 8ules of CourL [udgmenL ls hereby rendered orderlng Lhe correcLlon of
Lhe enLrles ln Lhe CerLlflcaLe of Llve 8lrLh of 8osendo Alba Perrera !r ln such a way LhaL Lhe enLrles under Lhe name of Lhe
chlld Lhe surname Perrera !r and Lhe name of Lhe faLher 8osendo Caparas Perrera are ordered deleLed and Lhe chlld shall be
known as 8CSLnuC AL8A and Lhe enLry under Lhe daLe and place of marrlage Lhe daLe AugusL 4 1982 Mandaluyong MM ls
llkewlse ordered deleLed or cancelled
SC C8uL8Lu16chanroblesvlrLuallawllbrary
Cn november 24 2000 Arml and peLlLloner mlnor flled a peLlLlon for annulmenL of [udgmenL before Lhe CourL of Appeals on
Lhe grounds of exLrlnslc fraud and lack of [urlsdlcLlon over Lhelr person She allegedly came Lo know of Lhe declslon of Lhe Lrlal
courL only on lebruary 26 1998 when San 8eda College where her son was enrolled as a hlgh school sLudenL was furnlshed by
prlvaLe respondenL wlLh a copy of a courL order dlrecLlng Lhe change of peLlLloner mlnors surname from Perrera Lo Alba
Arml averred LhaL prlvaLe respondenL was aware LhaL her address ls aL unlL 302 laza 1owers Condomlnlum 1173 Lorenzo
Cuerrero SL LrmlLa Manlla because such was her resldence when she and prlvaLe respondenL cohablLed as husband and wlfe
from 1982 Lo 1988 and her abode when peLlLloner mlnor was born on March 8 1983 Lven afLer Lhelr separaLlon prlvaLe
respondenL conLlnued Lo glve supporL Lo Lhelr son unLll 1998 and LhaL unlL 302 was conveyed Lo her by prlvaLe respondenL on
!une 14 1991 as parL of hls supporL Lo peLlLloner mlnor Accordlng Lo Arml her address le no 418 Arqulza SL LrmlLa Manlla
as appearlng ln Lhe blrLh cerLlflcaLe of Lhelr son was enLered ln sald cerLlflcaLe Lhrough Lhe erroneous lnformaLlon glven by her
slsLer Corazon LsplrlLu She sLressed LhaL prlvaLe respondenL knew all along LhaL no 418 Arqulza SL ls Lhe resldence of her
slsLer and LhaL he dellberaLely caused Lhe servlce of noLlce Lhereln Lo prevenL her from opposlng Lhe peLlLlon
ln hls answer prlvaLe respondenL denled paLernlLy of peLlLloner mlnor and hls purporLed cohablLaLlon wlLh Arml Pe branded
Lhe allegaLlons of Lhe laLLer as false sLaLemenLs comlng from a polluLed source17chanroblesvlrLuallawllbrary
Cn lebruary 27 2004 Lhe CourL of Appeals dlsmlssed Lhe peLlLlon holdlng among oLhers LhaL peLlLloner falled Lo prove LhaL
prlvaLe respondenL employed fraud and purposely deprlved Lhem of Lhelr day ln courL lL furLher held LhaL as an llleglLlmaLe
chlld peLlLloner mlnor should bear Lhe surname of hls moLher18 eLlLloners flled a moLlon for reconslderaLlon buL was
denled
Pence Lhe lnsLanL peLlLlon
under SecLlon 2 8ule 47 of Lhe 1997 8evlsed 8ules of Clvll rocedure [udgmenLs may be annulled on Lhe grounds of lack of
[urlsdlcLlon and exLrlnslc fraud19chanroblesvlrLuallawllbrary
WheLher or noL Lhe Lrlal courL acqulred [urlsdlcLlon over Lhe person of peLlLloner and her mlnor chlld depends on Lhe naLure of
prlvaLe respondenLs acLlon LhaL ls lo petsooom lo tem or poosl lo tem An acLlon lo petsooom ls lodged agalnsL a person based
on personal llablllLy an acLlon lo tem ls dlrecLed agalnsL Lhe Lhlng lLself lnsLead of Lhe person whlle an acLlon poosl lo tem
names a person as defendanL buL lLs ob[ecL ls Lo sub[ecL LhaL persons lnLeresL ln a properLy Lo a correspondlng llen or
obllgaLlon20chanroblesvlrLuallawllbrary
Pence peLlLlons dlrecLed agalnsL Lhe Lhlng lLself or Lhe tes21 whlch concerns Lhe sLaLus of a person22 llke a peLlLlon for
adopLlon23 annulmenL of marrlage24 or correcLlon of enLrles ln Lhe blrLh cerLlflcaLe23 as ln Lhe lnsLanL case are acLlons lo
tem
ln an acLlon lo petsooom [urlsdlcLlon over Lhe person of Lhe defendanL ls necessary for Lhe courL Lo valldly Lry and declde Lhe
case ln a proceedlng lo tem or poosl lo tem [urlsdlcLlon over Lhe person of Lhe defendanL ls noL a prerequlslLe Lo confer
[urlsdlcLlon on Lhe courL provlded LhaL Lhe laLLer has [urlsdlcLlon over Lhe tes !urlsdlcLlon over Lhe tes ls acqulred elLher (a) by
Lhe selzure of Lhe properLy under legal process whereby lL ls broughL lnLo acLual cusLody of Lhe law or (b) as a resulL of Lhe
lnsLlLuLlon of legal proceedlngs ln whlch Lhe power of Lhe courL ls recognlzed and made effecLlve26 1he servlce of summons
or noLlce Lo Lhe defendanL ls noL for Lhe purpose of vesLlng Lhe courL wlLh [urlsdlcLlon buL merely for saLlsfylng Lhe due process
requlremenLs27chanroblesvlrLuallawllbrary
ln Lhe case aL bar Lhe flllng wlLh Lhe Lrlal courL of Lhe peLlLlon for cancellaLlon vesLed Lhe laLLer [urlsdlcLlon over Lhe tes
SubsLanLlal correcLlons or cancellaLlons of enLrles ln clvll reglsLry records affecLlng Lhe sLaLus or leglLlmacy of a person may be
effecLed Lhrough Lhe lnsLlLuLlon of a peLlLlon under 8ule 108 of Lhe 8evlsed 8ules of CourL wlLh Lhe proper 8eglonal 1rlal
CourL28 8elng a proceedlng lo tem acqulslLlon of [urlsdlcLlon over Lhe person of peLlLloner ls Lherefore noL requlred ln Lhe
presenL case lL ls enough LhaL Lhe Lrlal courL ls vesLed wlLh [urlsdlcLlon over Lhe sub[ecL maLLer
1he servlce of Lhe order aL no 418 Arqulza SL LrmlLa Manlla and Lhe publlcaLlon Lhereof ln a newspaper of general clrculaLlon
ln Manlla sufflclenLly complled wlLh Lhe requlremenL of due process Lhe essence of whlch ls an opporLunlLy Lo be heard Sald
address appeared ln Lhe blrLh cerLlflcaLe of peLlLloner mlnor as Lhe resldence of Arml Conslderlng LhaL Lhe CerLlflcaLe of 8lrLh
bears her slgnaLure Lhe enLrles appearlng Lhereln are presumed Lo have been enLered wlLh her approval Moreover Lhe
publlcaLlon of Lhe order ls a noLlce Lo all lndlspensable parLles lncludlng Arml and peLlLloner mlnor whlch blnds Lhe whole world
Lo Lhe [udgmenL LhaL may be rendered ln Lhe peLlLlon An lo tem proceedlng ls valldaLed essenLlally Lhrough publlcaLlon29 1he
absence of personal servlce of Lhe order Lo Arml was Lherefore cured by Lhe Lrlal courLs compllance wlLh SecLlon 4 8ule 108
whlch requlres noLlce by publlcaLlon Lhus
SLC 4 Notlce ooJ pobllcotloo upon Lhe flllng of Lhe peLlLlon Lhe courL shall by an order flx Lhe Llme and place for Lhe hearlng
of Lhe same and cause reasonable noLlce Lhereof Lo be glven Lo Lhe persons named ln Lhe peLlLlon 1he courL shall also cause
Lhe order Lo be publlshed once a week for Lhree (3) consecuLlve weeks ln a newspaper of general clrculaLlon ln Lhe provlnce
ln 8otco v coott of Appeols Lhe Lrlal courL granLed a peLlLlon for correcLlon/change of enLrles ln a mlnors blrLh cerLlflcaLe Lo
reflecL Lhe name of Lhe mlnors real faLher as well as Lo effecL Lhe correspondlng change of her surname ln seeklng Lo annul sald
declslon Lhe oLher chlldren of Lhe alleged faLher clalmed LhaL Lhey are lndlspensable parLles Lo Lhe peLlLlon for correcLlon
hence Lhe fallure Lo lmplead Lhem ls a ground Lo annul Lhe declslon of Lhe Lrlal courL 1he CourL of Appeals denled Lhe peLlLlon
whlch was susLalned by Lhls CourL on Lhe ground lotet ollo LhaL whlle peLlLloner ls lndeed an lndlspensable parLy Lhe fallure Lo
lmplead her was cured by Lhe publlcaLlon of Lhe order of hearlng 1hus
undoubLedly 8arco ls among Lhe parLles referred Lo ln SecLlon 3 of 8ule 108 Per lnLeresL was affecLed by Lhe peLlLlon for
correcLlon as any [udlclal deLermlnaLlon LhaL !une was Lhe daughLer of Armando would affecL her wards share ln Lhe esLaLe of
her faLher lL cannoL be esLabllshed wheLher nadlna knew of Mary !oys exlsLence aL Lhe Llme she flled Lhe peLlLlon for
correcLlon lndeed doubL may always be casL as Lo wheLher a peLlLloner under 8ule 108 would know of all Lhe parLles whose
lnLeresLs may be affecLed by Lhe granLlng of a peLlLlon lor example a peLlLloner cannoL be presumed Lo be aware of all Lhe
leglLlmaLe or llleglLlmaLe offsprlngs of hls/her spouse or paramour 1he facL LhaL nadlna amended her peLlLlon Lo lmplead
lranclsco and CusLllo lndlcaLes earnesL efforL on her parL Lo comply wlLh SecLlon 3 as quoLed above
?eL even Lhough 8arco was noL lmpleaded ln Lhe peLlLlon Lhe CourL of Appeals correcLly polnLed ouL LhaL Lhe defecL was cured
by compllance wlLh SecLlon 4 8ule 108 whlch requlres noLlce by publlcaLlon Lhus
SecLlon 4 upon Lhe flllng of Lhe peLlLlon Lhe courL shall by order flx Lhe Llme and place for Lhe hearlng of Lhe same and cause
reasonable noLlce Lhereof Lo be glven Lo Lhe persons named ln Lhe peLlLlon 1he courL shall also cause Lhe order Lo be publlshed
once a week for Lhree (3) consecuLlve weeks ln a newspaper of general clrculaLlon ln Lhe provlnce
1he purpose prec|se|y of Sect|on 4 ku|e 108 |s to b|nd the who|e wor|d to the subsequent [udgment on the pet|t|on 1he
sweep of the dec|s|on wou|d cover even part|es who shou|d have been |mp|eaded under Sect|on 3 ku|e 108 but were
|nadvertent|y |eft out 1he Court of Appea|s correct|y noted
1he publlcaLlon belng ordered was ln compllance wlLh and borne ouL by Lhe Crder of !anuary 7 1983 1he acLual publlcaLlon of
Lhe SepLember 22 1983 Crder conferred [urlsdlcLlon upon Lhe respondenL courL Lo Lry and declde Lhe case Whlle nobody
appeared Lo oppose Lhe lnsLanL peLlLlon durlng Lhe uecember 6 1984 hearlng LhaL dld noL dlvesL Lhe courL from lLs [urlsdlcLlon
over Lhe case and of lLs auLhorlLy Lo conLlnue Lrylng Lhe case lor Lhe rule ls wellseLLled LhaL [urlsdlcLlon once acqulred
conLlnues unLll LermlnaLlon of Lhe case
verlly a peLlLlon for correcLlon ls an acLlon lo tem an acLlon agalnsL a Lhlng and noL agalnsL a person 1he declslon on Lhe
peLlLlon blnds noL only Lhe parLles LhereLo buL Lhe whole world An lo tem proceedlng ls valldaLed essenLlally Lhrough
publlcaLlon ubllcaLlon ls noLlce Lo Lhe whole world LhaL Lhe proceedlng has for lLs ob[ecL Lo bar lndeflnlLely all who mlghL be
mlnded Lo make an ob[ecLlon of any sorL agalnsL Lhe rlghL soughL Lo be esLabllshed lL ls Lhe publlcaLlon of such noLlce LhaL
brlngs ln Lhe whole world as a parLy ln Lhe case and vesLs Lhe courL wlLh [urlsdlcLlon Lo hear and declde
lL30chanroblesvlrLuallawllbrary
lurLhermore exLrlnslc fraud whlch was prlvaLe respondenLs alleged concealmenL of Armls presenL address was noL proven
LxLrlnslc fraud exlsLs when Lhere ls a fraudulenL acL commlLLed by Lhe prevalllng parLy ouLslde of Lhe Lrlal of Lhe case whereby
Lhe defeaLed parLy was prevenLed from presenLlng fully hls slde of Lhe case by fraud or decepLlon pracLlced on hlm by Lhe
prevalllng parLy Pere Arml conLended LhaL prlvaLe respondenL ls aware of her presenL address because Lhey llved LogeLher as
husband and wlfe ln Lhe condomlnlum unlL from 1982 Lo 1988 and because prlvaLe respondenL conLlnued Lo glve supporL Lo
Lhelr son unLll 1998 1o prove her clalm she presenLed (1) prlvaLe respondenLs LlLle over Lhe condomlnlum unlL (2) recelpLs
allegedly lssued Lo prlvaLe respondenL for paymenL of homeowners or assoclaLlon dues (2) a phoLocopy of a !anuary 14 1991
deed of sale of Lhe sub[ecL unlL ln favor of Arml and (3) Lhe subsequenL LlLle lssued Lo Lhe laLLer Powever Lhese documenLs
only Lend Lo prove prlvaLe respondenLs prevlous ownershlp of Lhe unlL and Lhe subsequenL Lransfer Lhereof Lo Arml buL noL Lhe
clalmed llveln relaLlonshlp of Lhe parLles nelLher does Lhe sale prove LhaL Lhe conveyance of Lhe unlL was parL of prlvaLe
respondenLs supporL Lo peLlLloner mlnor lndeed lnLlmaLe relaLlonshlps and famlly relaLlons cannoL be lnferred from whaL
appears Lo be an ordlnary buslness LransacLlon
AlLhough Lhe !anuary 14 1991 deed of sale31 sLaLed LhaL Arml resldes aL 1173 L Cuerrero SL LrmlLa Manlla Lhe same ls noL
sufflclenL Lo prove LhaL prlvaLe respondenL has knowledge of Armls address because Lhe former ob[ecLed Lo Lhe offer of Lhe
deed for belng a mere phoLocopy32 1he counsel for peLlLloners even admlLLed LhaL Lhey do noL have Lhe orlglnal of Lhe deed
and LhaL per cerLlflcaLlon of Lhe Clerk of CourL Lhe noLary ubllc who noLarlzed Lhe deed of sale dld noL submlL a copy of Lhe
noLarlzed documenL as requlred by Lhe rules33 1he deed cannoL Lhus be Lhe basls of ascrlblng knowledge of Armls address Lo
prlvaLe respondenL lnasmuch as Lhe auLhenLlclLy Lhereof was nelLher admlLLed by prlvaLe respondenL nor proven by peLlLloners
Whlle Arml presenLed Lhe alleged love leLLers/noLes from prlvaLe respondenL Lhey were only aLLached as annexes Lo Lhe
peLlLlon and noL formally offered as evldence before Lhe CourL of Appeals More lmporLanLly sald leLLers/noLes do noL have
probaLlve value because Lhey were mere phoLocoples and never proven Lo be an auLhenLlc wrlLlng of prlvaLe respondenL ln Lhe
same veln Lhe affldavlLs34 of Arml and her slsLer Corazon LsplrlLu are of no evldenLlary welghL 1he baslc rule of evldence ls
LhaL unless Lhe afflanLs Lhemselves are placed on Lhe wlLness sLand Lo LesLlfy on Lhelr affldavlLs such affldavlLs musL be re[ecLed
for belng hearsay SLaLed dlfferenLly Lhe declaranLs of wrlLLen sLaLemenLs perLalnlng Lo dlspuLed facLs musL be presenLed aL Lhe
Lrlal for crossexamlnaLlon33 lnasmuch as Arml and her slsLer were noL presenLed before Lhe CourL of Appeals Lo afflrm Lhe
veraclLy of Lhelr affldavlLs Lhe same are consldered hearsay and wlLhouL probaLlve value
l locomblt ptobotlo pol Jlclt ooo pol oeqot Pe who asserLs noL he who denles musL prove36 Armls clalm LhaL prlvaLe
respondenL ls aware of her presenL address ls anchored on Lhe asserLlon of a llveln relaLlonshlp and supporL Lo her son Slnce
Lhe evldence presenLed by Arml ls noL sufflclenL Lo prove Lhe purporLed cohablLaLlon and supporL lL follows LhaL prlvaLe
respondenLs knowledge of Armls address was llkewlse noL proven 1hus prlvaLe respondenL could noL have dellberaLely
concealed from Lhe courL LhaL whlch was noL shown Lo be known Lo hlm 1he CourL of Appeals Lherefore correcLly dlsmlssed Lhe
peLlLlon for annulmenL of [udgmenL on Lhe ground of fallure Lo esLabllsh exLrlnslc fraud
1he proper remedy of a parLy aggrleved by a declslon of Lhe CourL of Appeals ln an acLlon Lo annul a [udgmenL of a 8eglonal 1rlal
CourL ls a peLlLlon for revlew on cettlototl under 8ule 43 of Lhe 8evlsed 8ules of Clvll rocedure where only quesLlons of law
may be ralsed 1he resorL of peLlLloner Lo Lhe lnsLanL clvll acLlon for cettlototl under 8ule 63 ls Lherefore erroneous 1he speclal
clvll acLlon of cettlototl wlll noL be allowed as a subsLlLuLe for fallure Lo Llmely flle a peLlLlon for revlew under 8ule 43 whlch
should be lnsLlLuLed wlLhln 13 days37 from recelpL of Lhe assalled declslon or resoluLlon 1he wrong cholce of remedy Lhus
provldes anoLher reason Lo dlsmlss Lhls peLlLlon38chanroblesvlrLuallawllbrary
llnally peLlLloner falled Lo esLabllsh Lhe merlLs of her peLlLlon Lo annul Lhe Lrlal courLs declslon ln an acLlon for annulmenL of
[udgmenL Lhe peLlLloner musL convlnce Lhe courL LhaL someLhlng may lndeed be achleved should Lhe assalled declslon be
annulled39 under ArLlcle 17640 of Lhe lamlly Code as amended by 8epubllc AcL (8A) no 9233 whlch Look effecL on March
19 2004 llleglLlmaLe chlldren shall use Lhe surname of Lhelr moLher unless Lhelr faLher recognlzes Lhelr flllaLlon ln whlch case
Lhey may bear Lhe faLhers surname ln wooq v cebo clvll keqlsttot41 lL was held LhaL an llleglLlmaLe chlld whose flllaLlon ls
noL recognlzed by Lhe faLher bears only a glven name and hls moLhers surname 1he name of Lhe unrecognlzed llleglLlmaLe
chlld ldenLlfles hlm as such lL ls only when sald chlld ls recognlzed LhaL he may use hls faLhers surname reflecLlng hls sLaLus as
an acknowledged llleglLlmaLe chlld
ln Lhe presenL case lL ls clear from Lhe allegaLlons of Arml LhaL peLlLloner mlnor ls an llleglLlmaLe chlld because she was never
marrled Lo prlvaLe respondenL Conslderlng LhaL Lhe laLLer sLrongly asserLs LhaL he ls noL Lhe faLher of peLlLloner mlnor Lhe laLLer
ls Lherefore an unrecognlzed llleglLlmaLe chlld As such he musL bear Lhe surname of hls moLher
ln sum Lhe subsLanLlve and procedural aspecLs of Lhe lnsLanL conLroversy do noL warranL Lhe annulmenL of Lhe Lrlal courLs
declslon
WnLkLICkL Lhe peLlLlon ls ulSMlSSLu 1he lebruary 27 2004 declslon and Lhe May 14 2004 resoluLlon of Lhe CourL of
Appeals ln CAC8 S no 61883 are Alll8MLu
SC C8uL8Lu
uavlde !r C! (Chalrman) Culsumblng Carplo and Azcuna !! concur
k No 103200 August 31 1994
LA NAVAL DkUG CCkCkA1ICN peLlLloner
vs
1nL nCNCkA8LL CCUk1 CI ALALS and WILSCN C AC respondenLs
Ietome 1 lotos fot petltlooet
Ooosbo Aspetlllo Aocbeto leo Nolosco fot ptlvote tespooJeot

VI1UG
ln an efforL Lo declog Lhe courLs of an lncreaslng volume of work load and mosL lmporLanLly ln order Lo accord conLendlng
parLles wlLh expendlLlous alLernaLlves for seLLllng dlspuLes Lhe law auLhorlLles lndeed encourages ouL of courL seLLlemenLs or
ad[udlcaLlons Compromlses and arblLraLlon are wldely known and used as such accepLable meLhods of resolvlng adversarlal
clalms
ArblLraLlons ln parLlcular ls governed by a speclal law 8epubllc AcL 876 suppleLory Lo whlch are laws and rules of general
appllcaLlon 1hls case before us concerns Lhe [urlsdlcLlon of courLs ln relaLlon Lo Lhe provlslons of SecLlon 6 of 8epubllc AcL no
876 and ln LhaL respecL Lhe appllcablllLy of Lhe docLrlne of esLoppel 1he law (8A 876) speclflcally SecLlon 6 Lhereof provldes
Sec 6 Pearlng by courL A parLy aggrleved by Lhe fallure neglecL or refusal of anoLher Lo perform under an
agreemenL ln wrlLlng provldlng for arblLraLlon may peLlLlon Lhe courL for an order dlrecLlng LhaL such
arblLraLlon proceed ln Lhe manner provlded for ln such agreemenL llve days noLlce ln wrlLlng of Lhe hearlng of
such appllcaLlon shall be served elLher personally or by reglsLered mall upon Lhe parLy ln defaulL 1he courL
shall hear Lhe parLles and upon belng saLlsfled LhaL Lhe maklng of Lhe agreemenL or such fallure Lo comply
LherewlLh ls noL ln lssue shall make an order dlrecLlng Lhe parLles Lo proceed Lo arblLraLlon ln accordance wlLh
Lhe Lerms of Lhe agreemenL lf Lhe maklng of Lhe agreemenL or defaulL be ln lssue Lhe courL shall proceed Lo
summarlly hear such lssue lf Lhe flndlng be LhaL no agreemenL ln wrlLlng provldlng for arblLraLlon was made
or LhaL Lhere ls no defaulL ln Lhe proceedlng Lhereunder Lhe proceedlng shall be dlsmlssed lf Lhe flndlng be
LhaL a wrlLLen provlslon for arblLraLlon was made and Lhere ls a defaulL ln proceedlng Lhereunder an order
shall be made summarlly dlrecLlng Lhe parLles Lo proceed wlLh Lhe arblLraLlon ln accordance wlLh Lhe Lerms
Lhereof
1he courL shall declde all moLlons peLlLlons or appllcaLlon flled under Lhe provlslons of Lhls AcL wlLhln Len
days afLer such moLlons peLlLlons or appllcaLlons have been heard by lL
ln chronology Lhe evenLs LhaL have led Lo Lhe case aL bench are deLalled ln Lhe appealed declslon of respondenL appellaLe courL
whlch we here reproduce lo toto
Crlglnal acLlon for cettlototl and rohlblLlon for AnnulmenL of Lhe Crders daLed Aprll 26 1990 and !une 22
1990 respecLlvely of 8ranch Lxl 8eglonal 1rlal CourL Angeles ClLy ln Speclal Case no 6024 for LnforcemenL
of A88l18A1lCn AgreemenL wlLh uamages eLlLloner assalls LhaL porLlon of sub[ecL Crder of Aprll 26 1990
sLaLlng as follows
(1) eLlLloners clalm for damages predlcaLed on alleged LorLuous acLs of respondenLs La
naval urug corporaLlon such as Lhelr alleged lnLerference and dllaLory LacLlcs eLc ln Lhe
lmplemenLaLlon of Lhe ArblLraLlon AgreemenL ln Lhe ConLracL of Lease Lhereby compelllng
among oLhers Lhe peLlLloner Lo go Lo CourL for redress and respondenL La naval urug
CorporaLlons counLerclalm for damages may be enLerLalned by Lhls CourL ln a hearlng noL
summary for Lhe purpose under Lhe 8ules of CourL
(2) A prellmlnary hearlng of Lhe speclal and afflrmaLlve defense Lo show LhaL eLlLloner has
noL cause of acLlon agalnsL respondenLs clalm for damages ls denled a resoluLlon on Lhls
lssue ls deferred afLer Lhe Lrlal of Lhe case on Lhe merlLs
And challenges Lhe Crder of !une 22 1990 denylng lLs moLlon for reconslderaLlon of Lhe sald earller Crder
lrom Lhe peLlLlon below of respondenL ?ao lL appears LhaL he ls Lhe presenL owner of a commerclal bulldlng a
porLlon of whlch ls leased Lo peLlLloner under a conLracL of lease execuLed on uecember 23 1993 wlLh Lhe
former owner Lhereof La roveedora lnc whlch conLracL explred on Aprll 30 1989 Powever peLlLloner
exerclsed lLs opLlon Lo lease Lhe same bulldlng for anoLher flve years 8uL peLlLloner and respondenL ?ao
dlsagreed on Lhe renLal raLe and Lo resolve Lhe conLroversy Lhe laLLer Lhru wrlLLen noLlces Lo Lhe former
expressed hls lnLenLlon Lo submlL Lhelr dlsagreemenL Lo arblLraLlon ln accordance wlLh 8epubllc AcL 876
oLherwlse known as Lhe ArblLraLlon Law and paragraph 7 of Lhelr lease conLracL provldlng LhaL
7 Should Lhe parLles fall Lo agree on Lhe raLe of renLals Lhe same shall be submlLLed Lo a
group of ArblLraLors composed of Lhree (3) members one Lo be appolnLed by LLSSC8
anoLher by LLSSLL and Lhe Lhlrd one Lo be agreed upon by Lhe Lwo arblLraLors prevlously
chosen and Lhe parLles hereLo shall submlL Lo Lhe declslon of Lhe arblLraLors
1hus on May 6 1989 respondenL ?ao appolnLed uomlngo Alamarez !r as hls arblLraLor whlle on !une 3
1989 peLlLloner chose ALLy Caslano Sablle as lLs arblLraLor 1he conflrmaLlon of Lhe appolnLmenL of Aurello
1upang as Lhlrd arblLraLor was held ln abeyance because peLlLloner lnsLrucLed ALLy Sablle Lo defer Lhe same
unLll lLs 8oard of ulrecLors could convene and approve 1upangs appolnLmenL 8espondenL ?ao Lheorlzes LhaL
Lhls was peLlLloners deslgn Lo delay Lhe arblLraLlon proceedlngs ln vlolaLlon of Lhe ArblLraLlon Law and Lhe
governlng sLlpulaLlon of Lhelr conLracL of lease
Cn Lhe basls of Lhe aforesald allegaLlons respondenL ?ao prayed LhaL afLer summary hearlng pursuanL Lo
SecLlon 6 of Lhe ArblLraLlon Law ALLy Caslano Sablle and uomlngo Alamarez be dlrecLed Lo proceed wlLh Lhe
arblLraLlon ln accordance wlLh SecLlon 7 of sub[ecL ConLracL of Lease and Lhe appllcable provlslons of Lhe
ArblLraLlon law by appolnLlng and conflrmlng Lhe appolnLmenL of Lhe 1hlrd ArblLraLor and LhaL Lhe 8oard of
1hree ArblLraLors be ordered Lo lmmedlaLely convene and resolve Lhe conLroversy before lL pursuanL Lo
SecLlon 12 and Lhe succeedlng secLlons of Lhe ArblLraLlon Law (Annex A eLlLlon)
ln lLs Answer wlLh CounLerclalm (Annex C eLlLlon) peLlLloner here speclflcally denled Lhe avermenLs of Lhe
peLlLlon below Lheorlzlng LhaL such peLlLlon ls premaLure slnce respondenL ?ao has noL yeL formally requlred
arblLraLors Alamarez and Sablle Lo agree on Lhe Lhlrd arblLraLor wlLhln Len (10) days from noLlce and LhaL Lhe
delay ln Lhe arblLraLlon was due Lo respondenL ?aos fallure Lo perform whaL ls lncumbenL upon hlm of
noLlfylng and LhereafLer requlrlng boLh arblLraLors Lo appolnL Lhe Lhlrd member of Lhe 8oard of ArblLraLors
Accordlng Lo peLlLloner lL acLually gave arblLraLors Sablle and Alamarez a free hand ln chooslng Lhe Lhlrd
arblLraLor and Lherefore respondenL ?ao has no cause of acLlon agalnsL lL (peLlLloner) 8y way of
CounLerclalm peLlLloner alleged LhaL lL suffered acLual damages of 10000000 and lncurred aLLorneys fees
of 3000000 plus 30000 for every courL appearance of lLs counsel
Cn CcLober 20 1989 respondenL ?ao flled an amended peLlLlon for LnforcemenL of ArblLraLlon AgreemenL
wlLh uamages praylng LhaL peLlLloner be ordered Lo pay lnLeresL on Lhe unpald renLs aL Lhe prevalllng raLe of
lnLeresL ln commerclal banks and exemplary damages of aL leasL 23000000
Cn CcLober 24 1989 desplLe peLlLloners opposlLlon Lo Lhe moLlon Lo admlL Lhe amended peLlLlon Lhe
respondenL courL admlLLed Lhe same
Cn CcLober 31 1989 peLlLloner answered Lhe amended peLlLlon conLendlng among oLhers LhaL Lhe
amended peLlLlon should be dlsmlssed on Lhe ground of nonpaymenL of Lhe requlslLe flllng fees Lherefor and
lL belng ln Lhe naLure of an ordlnary clvll acLlon a full blown and regular Lrlal ls necessary so LhaL respondenL
?aos proposlLlon for a summary hearlng of Lhe arblLraLlon lssue and separaLe Lrlal for hls clalm for damages ls
procedurally unLenable and lmplauslble
lnvoklng SecLlon 3 8ule 16 of Lhe 8ules of CourL peLlLloner presenLed a MoLlon Lo SeL Case for rellmlnary
Pearlng of lLs speclal and afflrmaLlve defenses whlch are grounds fro a moLlon Lo dlsmlss
ln lLs Crder of november 14 1989 Lhe respondenL courL announced LhaL Lhe Lwo arblLraLors chose Mrs Llolsa
8 narclso as Lhe Lhlrd arblLraLor And on november 21 1989 lL ordered Lhe parLles Lo submlL Lhelr poslLlon
papers on Lhe lssue as Lo wheLher or noL respondenL ?aos clalm for damages may be llLlgaLed upon ln Lhe
summary proceedlng for enforcemenL of arblLraLlon agreemenL lL llkewlse lnformed Lhe parLles LhaL
peLlLloners MoLlon Lo SeL Case for rellmlnary Pearlng of Speclal and AfflrmaLlve uefenses would be resolved
LogeLher wlLh Lhe quesLlon of damages
Cn Aprll 26 1990 Lhe aforequoLed assalled Crder lssued ln movlng for reconslderaLlon of Lhe sald Crder
peLlLloner argued LhaL ln Speclal Case no 6024 Lhe respondenL courL slLs as a speclal courL exerclslng llmlLed
[urlsdlcLlon and ls noL compeLenL Lo acL on respondenL ?aos clalm for damages whlch poses an lssue llLlgable
ln an ordlnary clvll acLlon 8uL Lhe respondenL courL was noL persuaded by peLlLloners submlsslon Cn !une 22
1990 lL denled Lhe moLlon for reconslderaLlon (kollo pp 8993)
Whlle Lhe appellaLe courL has agreed wlLh peLlLloner LhaL under SecLlon 6 of 8epubllc AcL no 876 a courL acLlng wlLhln Lhe
llmlLs of lLs speclal [urlsdlcLlon may ln Lhls case solely deLermlne Lhe lssue of wheLher Lhe llLlganLs should proceed or noL Lo
arblLraLlon lL however consldered peLlLloner ln esLoppel from quesLlonlng Lhe compeLence of Lhe courL Lo addlLlonally hear
and declde ln Lhe summary proceedlngs prlvaLe respondenLs clalm for damages lL (peLlLloner) havlng lLself flled slmllarly lLs
own counLerclalm wlLh Lhe courL o poo
lL ls hardly dlspuLable LhaL when a courL ls called upon Lo exerclse llmlLed and speclal [urlsdlcLlon LhaL courL cannoL sLray Lo
maLLers ouLslde Lhe area of lLs declared auLhorlLy or beyond whaL has been expressly lnvesLed by law (Llumbarlng vs
Llumbarlng 12 hll 384 387) parLlcularly such as ln Lhls lnsLance where Lhe proceedlngs are summary ln naLure
refaLorlly recalllng Lhe dlsLlncLlons perLlnenL Lo Lhe case beLween Lhe courLs lack of [urlsdlcLlon over Lhe petsoo of Lhe
defendanL on Lhe one hand and lLs lack of [urlsdlcLlon over Lhe sobject mottet or Lhe ootote of Lhe acLlon upon Lhe oLher hand
should be useful
1he lack of [urlsdlcLlon over Lhe person of Lhe defendanL may be walved elLher expressly or lmplledly When a defendanL
volunLarlly appears he ls deemed Lo have submlLLed hlmself Lo Lhe [urlsdlcLlon of Lhe courL lf he so wlshes noL Lo walve Lhls
defense he musL do so seasonably by moLlon for Lhe purpose of ob[ecLlng Lo Lhe [urlsdlcLlon of Lhe courL oLherwlse he shall be
deemed Lo have submlLLed hlmself Lo LhaL [urlsdlcLlon 1he declslons promulgaLed hereLofore by Lhls CourL would llkewlse
seemlngly apply esLoppel Lo bar Lhe defendanL from pursulng LhaL defense by alleglng ln hls answer any oLher lssue for
dlsmlsslng Lhe acLlon
A clLaLlon of a few of our declslons mlghL be optopos
ln wooq lobotototles loc vs MeoJozo (136 SC8A 44) Lhls CourL has ruled LhaL lf Lhe defendanL besldes seLLlng up ln a moLlon
Lo dlsmlss hls ob[ecLlon Lo Lhe [urlsdlcLlon of Lhe courL alleges aL Lhe same Llme any oLher ground for dlsmlsslng Lhe acLlon he ls
deemed Lo have submlLLed hlmself Lo Lhe [urlsdlcLlon of Lhe courL ln Lhe process lL has equaLed Lhe maLLer Lo a slLuaLlon
where such as ln lmmocoloto vs IoJqe Novotto et ol (146 SC8A 3) Lhe defendanL lnvokes an offltmotlve tellef agalnsL hls
opponenL
ln ue MlJqely vs IoJqe letooJos (64 SC8A 23 31) Lhe CourL elaboraLed Lhusly
We are of Lhe oplnlon LhaL Lhe lower courL has acqulred [urlsdlcLlon over Lhe person of Mrs Mldgely by reason
of her volunLary appearance 1he reservaLlon ln her moLlon Lo dlsmlss LhaL she was maklng a speclal
appearance Lo conLesL Lhe courLs [urlsdlcLlon over her person may be dlsregarded
lL may be dlsregarded because lL was nulllfled by Lhe facL LhaL ln her moLlon Lo dlsmlss she relled noL only on
Lhe ground of lack of [urlsdlcLlon over her person buL also on Lhe ground LhaL Lhere was no showlng LhaL
earnesL efforLs were exerLed Lo compromlse Lhe case and because she prayed for such oLher rellef as may be
deemed approprlaLe and proper
xxx xxx xxx
When Lhe appearance ls by moLlon for Lhe purpose of ob[ecLlng Lo Lhe [urlsdlcLlon of Lhe courL over Lhe
person lL musL be for Lhe sole and separaLe purpose of ob[ecLlng Lo Lhe [urlsdlcLlon of Lhe courL lf hls moLlon
ls for any oLher purpose Lhan Lo ob[ecL Lo Lhe [urlsdlcLlon of Lhe courL over hls person he Lhereby submlLs
hlmself Lo Lhe [urlsdlcLlon of Lhe courL A speclal appearance by moLlon made for Lhe purpose of ob[ecLlng Lo
Lhe [urlsdlcLlon of Lhe courL over Lhe person wlll be held Lo be a general appearance lf Lhe parLy ln sald moLlon
should for example ask for a dlsmlssal of Lhe acLlon upon Lhe furLher ground LhaL Lhe courL had no [urlsdlcLlon
over Lhe sub[ecL maLLer (Syllabus llores vs ZurblLo sopto aL page 731 1haL rule was followed ln Ccampo vs
Mlna and Are[ola 41 hll 308)
1he [usLlflcaLlon for Lhe rule was expressed ln kepobllc vs et ooJ compooty ltJ (18 SC8A 207 213214) ln Lhls wlse
We observed LhaL Lhe moLlon Lo dlsmlss flled on Aprll 14 1962 aslde from dlspuLlng Lhe lower courLs
[urlsdlcLlon over defendanLs person prayed for dlsmlssal of Lhe complalnL on Lhe ground LhaL plalnLlffs cause
of acLlon had prescrlbed 8y lnLerposlng such second ground ln lLs moLlon Lo dlsmlss ker Co LLd avalled of
an afflrmaLlve defense on Lhe basls of whlch lL prayed Lhe courL Lo resolve conLroversy ln lLs favor lor Lhe
courL Lo valldly declde Lhe sald plea of defendanL ker Co LLd lL necessarlly had Lo acqulre [urlsdlcLlon upon
Lhe laLLers person who belng Lhe proponenL of Lhe afflrmaLlve defense should be deemed Lo have
abandoned lLs speclal appearance and volunLarlly submlLLed lLself Lo Lhe [urlsdlcLlon of Lhe courL
volunLary appearance cures defecLs of summons lf any Such defecL lf any was furLher cured when defendanL
flled lLs answer Lo Lhe complalnL A defendanL can noL be permlLLed Lo speculaLe upon Lhe [udgmenL of Lhe
courL by ob[ecLlng Lo Lhe courLs [urlsdlcLlon over lLs person lf Lhe [udgmenL ls adverse Lo lL and accedlng Lo
[urlsdlcLlon over lLs person lf and when Lhe [udgmenL susLalns lLs defenses
1he docLrlne of esLoppel ls predlcaLed on and has lLs orlgln ln equlLy whlch broadly deflned ls [usLlce accordlng Lo naLural law
and rlghL lL ls a prlnclple lnLended Lo avold a clear case of ln[usLlce 1he Lerm ls hardly dlsLlngulshable from a walver of rlghL
LsLoppel llke lLs sald counLerparL musL be unequlvocal and lnLenLlonal for when mlsapplled lL can easlly become a mosL
convenlenL and effecLlve means of ln[usLlce LsLoppel ls noL undersLood Lo be a prlnclple LhaL as a rule should prevalenLly apply
buL such as lL concededly ls as a mere excepLlon from Lhe sLandard legal norms of general appllcaLlon LhaL can be lnvoked only
ln hlghly excepLlonal and [usLlflable cases
1esLed by Lhe above crlLerla Lhe CourL sees lL proplLlous Lo reexamlne speclflcally Lhe quesLlon of wheLher or noL Lhe
submlsslon of oLher lssues ln a moLlon Lo dlsmlss or of an afflrmaLlve defense (as dlsLlngulshed from an afflrmaLlve rellef) ln an
answer would necessarlly foreclose and have Lhe effecL of a walver of Lhe rlghL of a defendanL Lo seL up Lhe courLs lack of
[urlsdlcLlon over Lhe person of Lhe defendanL
noL lnevlLably
SecLlon 1 8ule 16 of Lhe 8ules of CourL provldes LhaL a moLlon Lo dlsmlss may be made on Lhe followlng grounds
(a) 1haL Lhe courL has no [urlsdlcLlon over Lhe person of Lhe defendanL or over Lhe sub[ecL of Lhe acLlon or sulL
(b) 1haL Lhe courL has no [urlsdlcLlon over Lhe naLure of Lhe acLlon or sulL
(c) 1he venue ls lmproperly lald
(d) 1haL Lhe plalnLlff has no legal capaclLy Lo sue
(e) 1haL Lhere ls anoLher acLlon pendlng beLween Lhe same parLles for Lhe same cause
(f) 1haL Lhe cause of acLlon ls barred by a prlor [udgmenL or by sLaLuLe of llmlLaLlons
(g) 1haL Lhe complalnL sLaLes no cause of acLlon
(h) 1haL Lhe clalm or demand seL forLh ln Lhe plalnLlffs pleadlng has been pald walved abandoned or
oLherwlse exLlngulshed
( l ) 1haL Lhe clalm on whlch Lhe acLlon or sulL ls founded ls unenforceable under Lhe provlslons of Lhe sLaLuLe
of frauds
( [ ) 1haL Lhe sulL ls beLween members of Lhe same famlly and no earnesL efforLs Lowards a compromlse have
been made
Any ground for dlsmlssal ln a moLlon Lo dlsmlss excepL lmproper venue may as furLher seL forLh ln SecLlon 3 of Lhe same rule
be pleaded as an afflrmaLlve defense and a prellmlnary hearlng may be had Lhereon as lf a moLlon Lo dlsmlss had been flled An
answer lLself conLalns Lhe negaLlve as well as afflrmaLlve defenses upon whlch Lhe defendanL may rely (SecLlon 4 8ule 6 8ules
of CourL) A negaLlve defense denles Lhe maLerlal facLs averred ln Lhe complalnL essenLlal Lo esLabllsh Lhe plalnLlffs cause of
acLlon whlle an afflrmaLlve defense ln an allegaLlon of a new maLLer whlch whlle admlLLlng Lhe maLerlal allegaLlons of Lhe
complalnL would neverLheless prevenL or bar recovery by Lhe plalnLlff lncluslve of Lhese defenses are Lhose menLloned ln 8ule
16 of Lhe 8ules of CourL whlch would permlL Lhe flllng of a moLlon Lo dlsmlss
ln Lhe same manner LhaL Lhe plalnLlff may asserL Lwo or more causes of acLlon ln a courL sulL a defendanL ls llkewlse expressly
allowed under SecLlon 2 8ule 8 of Lhe 8ules of CourL Lo puL up hls own defenses alLernaLlvely or even hypoLheLlcally lndeed
under SecLlon 2 8ule 9 of Lhe 8ules of CourL defenses and ob[ecLlons noL pleaded elLher ln a moLlon Lo dlsmlss or ln an answer
excepL for Lhe fallure Lo sLaLe a cause of acLlon are deemed walved We Lake Lhls Lo mean LhaL a defendanL may ln facL feel
en[olned Lo seL up along wlLh hls ob[ecLlon Lo Lhe courLs [urlsdlcLlon over hls person all oLher posslble defenses lL Lhus appears
LhaL lL ls noL Lhe lnvocaLlon of any of such defenses buL Lhe fallure Lo so ralse Lhem LhaL can resulL ln walver or esLoppel 8y
defenses of course we refer Lo Lhe grounds provlded for ln 8ule 16 of Lhe 8ules of CourL LhaL musL be asserLed ln a moLlon Lo
dlsmlss or by way of afflrmaLlve defenses ln an answer
Mlndful of Lhe foregolng ln 5lqoetlcs cotpototloo vs coott of Appeols ooJ lteoboof lecttoolcs lblls loc (223 SC8A 737 738)
we laLely ruled
1hls ls noL Lo say however LhaL Lhe peLlLloners rlghL Lo quesLlon Lhe [urlsdlcLlon of Lhe courL over lLs person ls
now Lo be deemed a foreclosed maLLer lf lL ls Lrue as SlgneLlcs clalms LhaL lLs only lnvolvemenL ln Lhe
hlllpplnes was Lhrough a passlve lnvesLmenL ln Slgfll whlch lL even laLer dlsposed of and LhaL 1LAM aclflc ls
noL lLs agenL Lhen lL cannoL really be sald Lo be dolng buslness ln Lhe hlllpplnes lL ls a defense however LhaL
requlres Lhe conLravenLlon of Lhe allegaLlons of Lhe complalnL as well as full venLllaLlon ln effecL of Lhe maln
merlLs of Lhe case whlch should noL Lhus be wlLhln Lhe provlnce of a mere moLlon Lo dlsmlss So also Lhe
lssue posed by Lhe peLlLloner as Lo wheLher a forelgn corporaLlon whlch has done buslness ln Lhe counLry buL
whlch has ceased Lo do buslness aL Lhe Llme of Lhe flllng of a complalnL can sLlll be made Lo answer for a cause
of acLlon whlch accrued whlle lL was dolng buslness ls anoLher maLLer LhaL would yeL have Lo awalL Lhe
recepLlon and admlsslon of evldence Slnce Lhese polnLs have seasonably been ralsed by Lhe peLlLloner Lhere
should be no real cause for whaL may undersLandably be lLs apprehenslon le LhaL by lLs parLlclpaLlon durlng
Lhe Lrlal on Lhe merlLs lL may absenL an lnvocaLlon of separaLe or lndependenL rellefs of lLs own be
consldered Lo have volunLarlly submlLLed lLself Lo Lhe courLs [urlsdlcLlon
Lack of [urlsdlcLlon over Lhe sub[ecL maLLer of Lhe sulL ls yeL anoLher maLLer Whenever lL appears LhaL Lhe courL has no
[urlsdlcLlon over Lhe sub[ecL maLLer Lhe acLlon shall be dlsmlssed (SecLlon 2 8ule 9 8ules of CourL) 1hls defense may be
lnLerposed aL any Llme durlng appeal (8oxas vs 8afferLy 37 hll 937) or even afLer flnal [udgmenL (Cruzcosa vs !udge
Concepclon eL al 101 hll 146) Such ls undersLandable as Lhls klnd of [urlsdlcLlon ls conferred by law and noL wlLhln Lhe
courLs leL alone Lhe parLles Lo Lhemselves deLermlne or convenlenLly seL aslde ln eople vs Caslano (111 hll 73 9394) Lhls
CourL on Lhe lssue of esLoppel held
1he operaLlon of Lhe prlnclple of esLoppel on Lhe quesLlon of [urlsdlcLlon seemlngly depends upon wheLher Lhe
lower courL acLually had [urlsdlcLlon or noL lf lL had no [urlsdlcLlon buL Lhe case was Lrled and declded upon
Lhe Lheory LhaL lL had [urlsdlcLlon Lhe parLles are noL barred on appeal from assalllng such [urlsdlcLlon for
Lhe same musL exlsL as a maLLer of law and may noL be conferred by consenL of Lhe parLles or by esLoppel (3
C!S 861863) Powever lf Lhe lower courL had [urlsdlcLlon and Lhe case was heard and declded upon a glven
Lheory such for lnsLance as LhaL Lhe courL had no [urlsdlcLlon Lhe parLy who lnduced lL Lo adopL such Lheory
wlll noL be permlLLed on appeal Lo assume an lnconslsLenL poslLlon LhaL Lhe lower courL had [urlsdlcLlon
Pere Lhe prlnclple of esLoppel applles 1he rule LhaL [urlsdlcLlon ls conferred by law and does noL depend
upon Lhe wlll of Lhe parLles has noL bearlng Lhereon
1he rule was relLeraLed ln collmllm vs komltez (118 SC8A 399 406) and qulLe recenLly ln 5ootbeost Asloo llsbetles
uevelopmeot ceotetApoocoltote uepottmeot vs Notloool lobot kelotloos commlssloo (206 SC8A 283)
!urlsdlcLlon over Lhe naLure of Lhe acLlon ln concepL dlffers from [urlsdlcLlon over Lhe sub[ecL maLLer lllusLraLed lack of
[urlsdlcLlon over Lhe naLure of Lhe acLlon ls Lhe slLuaLlon LhaL arlses when a courL whlch ordlnarlly would have Lhe auLhorlLy and
compeLence Lo Lake a case ls rendered wlLhouL lL elLher because a speclal law has llmlLed Lhe exerclse of lLs normal [urlsdlcLlon
on a parLlcular maLLer or because Lhe Lype of acLlon has been reposed by law ln cerLaln oLher courLs or quasl[udlclal agencles
for deLermlnaLlon neverLheless lL can hardly be quesLloned LhaL Lhe rules relaLlng Lo Lhe effecLs of wanL of [urlsdlcLlon over Lhe
sub[ecL maLLer should apply wlLh equal vlgor Lo cases where Lhe courL ls slmllarly berefL of [urlsdlcLlon over Lhe naLure of Lhe
acLlon
ln summary lL ls our consldered vlew as we now so hereby express
LhaL
(1) !urlsdlcLlon over Lhe person musL be seasonably ralsed le LhaL lL ls pleaded ln a moLlon Lo dlsmlss or by way of an
afflrmaLlve defense ln an answer volunLary appearance shall be deemed a walver of Lhls defense 1he asserLlon however of
afflrmaLlve defenses shall noL be consLrucLed as an esLoppel or as a walver of such defense
(2) Where Lhe courL lLself clearly has no [urlsdlcLlon over Lhe sub[ecL maLLer or Lhe naLure of Lhe acLlon Lhe lnvocaLlon of Lhls
defense may be done aL any Llme lL ls nelLher for Lhe courLs nor Lhe parLles Lo vlolaLe or dlsregard LhaL rule leL alone Lo confer
LhaL [urlsdlcLlon Lhls maLLer belng leglslaLlve ln characLer 8arrlng hlghly merlLorlous and excepLlonal clrcumsLances such as
herelnbefore exempllfled nelLher esLoppel nor walver shall apply
ln Lhe case aL bench Lhe wanL of [urlsdlcLlon by Lhe courL ls lndlspuLable glven Lhe naLure of Lhe conLroversy 1he arblLraLlon
law expllclLly conflnes Lhe courLs auLhorlLy only Lo pass upon Lhe lssue of wheLher Lhere ls or Lhere ls no agreemenL ln wrlLlng
provldlng for arblLraLlon ln Lhe afflrmaLlve Lhe sLaLuLe ordalns LhaL Lhe courL shall lssue an order summarlly dlrecLlng Lhe
parLles Lo proceed wlLh Lhe arblLraLlon ln accordance wlLh Lhe Lerms Lhereof lf Lhe courL upon Lhe oLher hand flnds LhaL no
such agreemenL exlsLs Lhe proceedlng shall be dlsmlssed 1he proceedlngs are summary ln naLure
All consldered Lhe courL o poo musL Lhen refraln from Laklng up Lhe clalms of Lhe conLendlng parLles for damages whlch upon
Lhe oLher hand may be venLllaLed ln separaLe regular proceedlngs aL an opporLune Llme and venue 1he clrcumsLances
obLalnlng ln Lhls case are far we hold from [usLlfylng Lhe appllcaLlon of esLoppel agalnsL elLher parLy
WPL8LlC8L Lhe declslon of Lhe CourL of Appeals and Lhe orders of Lhe Lrlal courL ln quesLlon are SL1 ASluL 1he courL o poo ln
Lhe lnsLanL proceedlngs ls ordered Lo uLSlS1 from furLher hearlng prlvaLe respondenLs clalm as well as peLlLloners
counLerclalm for damages no cosLs
SC C8uL8Lu
Notvoso cI ctoz loJlllo 8lJlo keqoloJo uovlJe It kometo 8elloslllo Melo Oolosoo looo opoooo ooJ
MeoJozo II coocot
Republic oI the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 29341 August 21, 1989
EDITH SUSTIGUER and ISABEL APOSAGA, plaintiIIs-appellants, vs. 1OSE TAMAYO and CITY
OF BACOLOD, deIendants-appellees,
RAMON VILLAMARZO, intervenor.

FERNAN,
Assailed in the instant appeal elevated to this Court on a question oI law by appellant Edith Sustiguer are the
order dated December 8, 1977
1
issued by the then Court oI First Instance oI Negros Occidental, Branch IV,
dismissing Ior lack oI cause oI action appellant's complaint Ior annulment oI sale on installment and award
oI Lot No. 379-B-34, as well as the order dated January 30, 1968
2
denying the motion Ior reconsideration oI
the aIoresaid order.ch anrobl esv irtual awlib r ar y chan r obl esvirtual l awlibr ary
The controversy at bar involves a 234-square meter lot known as Lot No. 379-B-34 situated at the corner oI
Lacson and Burgos Sts., Bacolod City, Negros Occidental. It is one oI the 42 lots acquired by the City
Government oI Bacolod Irom the deIunct Rehabilitation Finance Corporation, now the Development Bank
oI the Philippines, which lots were later converted into a subdivision known as Bacolod City RFC
Subdivision Ior sale to qualiIied occupants. The rules and regulations governing the sale oI said subdivision
lots are contained in Ordinance No. 149, Series oI 1958, enacted by the City Council oI Bacolod.ch anrobl esvi rtual awlibr ary ch anrobl esv irtual l aw libr ary
Since under Ordinance No. 149, there shall be only one (1) buyer or awardee Ior a sublot, the adverse
possessors oI Lot No. 379-B-34 were invited to the OIIice oI the City Mayor Ior a determination oI who the
awardee shall be. The records show that on November 2, 1960, the OIIice oI the Mayor awarded the lot in
question to Isabel Aposaga as Iollows:
Lot No. 379-B-34 ch anrobl esvi rtual l awl ibr ary
In connection with the award oI Lot No. 379-B-34, it is agreed between EDITH
SUSTIGUER and ISABEL APOSAGA that the award oI the said lot be given to ISABEL
and that a down payment oI twenty percent (20) oI the total cost oI the lot shall be made on
or beIore November 15, 1960.ch an robl esv irtual awlib r ary chanrobl esvir tual l awlibrary
Failure to make the down payment on said date, the City oI Bacolod will be Iree to dispose or
award the lot to any oI the applicants.ch an robl esvirtual awl ibr ary ch anrobl esvi rtual l awlibrary
AGREED BEFORE me this 2nd day oI November, at the OIIice oI the Mayor, City oI
Bacolod.
Accordingly, the OIIice oI the Mayor issued the Iollowing certiIicate:
REPUBLIC OF THE PHILIPPINES
CITY OF BACOLOD
OIIice oI the Mayor
LOT NO. 379-B-34 ch anrob lesvi rtual l awlibr ary
With the conIormity oI the interested parties and without resorting to a raIIle Lot No. 379-B-
34 is hereby awarded to Mrs. Isabel Aposaga, actual occupant oI Lot No. 379-B-34.ch anrobl esvir tual awlibr ary ch anrobl esvi rtual l awl ibr ary
City oI Bacolod, November 3, 1960.
When Isabel Aposaga went to the Secretary oI the Mayor to make the down payment, she was allegedly
advised to come back later as the Secretary was out oI tovrn. Having thus Iailed to make the required down
payment, Aposaga was not able to eIIect the execution oI the sale.ch anrobl esvi rtual awlib r ary chan robl esvirtual l awlibr ary
Subsequently, on May 16, 1961, the City Government oI Bacolod, thru the City Mayor executed a Contract
oI Sale on Installment over said Lot No. 379-B-34 in Iavor oI one Jose Tamayo.ch anrob lesvi rtual awlib rary ch an robl es virtual law libr ary
On the principal allegation that the City Goverrnment oI Bacolod sold Lot No. 379-B-34 to Jose Tamayo
without notice to Edith Sustiguer and Isabel Aposaga or any one oI them in violation oI its commitment to
award said lot to them, Edith Sustiguer and Isabel Aposaga Iiled on March 8, 1962 a complaint docketed as
Civil Case No. 6528 Ior annulment oI the sale on installment and award
5
oI said lot against the Government
oI Bacolod and Jose Tamayo, claiming that the latter is neither qualiIied to apply Ior the award nor to
purchase the said lot under the provisions oI Ordinance No. 149, Series oI 1958. It was also claimed that
aIter the execution oI the sale between Tamayo and the City oI Bacolod, the Iormer maliciously Iiled Civil
Case No. 2867 Ior unlawIul detainer against Aposaga and Sustiguer beIore the Municipal Court oI the same
City.chan r obl esvirt ualawlibr ar y ch anrob lesvi rtual l awlibr ary
The City Government oI Bacolod and Jose Tamayo Iiled their respective answers,
6
denying that the
Secretary oI the Mayor was absent during the alleged period when Aposaga Iailed to deposit the required
twenty percent (20) oI the total cost oI the land under litigation and that because oI such Iailure plaintiIIs
lost whatever preIerential rights they may have therein. ThereaIter, Ramon Villamarzo, upon being allowed
to intervene, Iiled on August 1, 1964, a complaint in intervention,
7
claiming among others to have been
occupying 2/3 oI subject land Ior the last ten (10) years by virtue oI a house built thereon, and has thereIore,
the preIerential right to purchase the same land under Section 3, paragraph (b) oI said City Ordinance No.
149 and praying, among others: |a| that the contract executed by the City Mayor oI Bacolod City and Jose
Tamayo be declared as without having complied with the requisites oI aIoresaid Ordinance and |b| that he
be given preIerence to acquire Lot No. 379-B-34.ch anrobl esvir tual awlib r ary chan robl esvirtual l awlibr ary
On August 11, 1967, or Iive (5) years and Iive (5) months aIter the complaint was Iiled, Isabel Aposaga, one
oI the parties-plaintiIIs, Iiled a "Motion to Withdraw Civil Case No. 6528 and ConIess Judgment in Civil
Case No. 7512,"
8
declaring that she had been paid Ior all her claim in said case, hence, she is no longer
interested in its prosecution.chanrobl esvir tualawlibr ary ch anrob lesvi rtual l awli br ary
Edith Sustiguer, Ior her part, Iiled on September 8, 1967 a maniIestation
9
stating that the withdrawal oI
Isabel Aposaga as party-plaintiII in Civil Case No. 6528 (Annulment oI Sale on Installment and Award) and
as party deIendant in Civil Case No. 7512 does not change the status and character oI the said cases
considering that she was merely accommodated by her co-deIendant in occupying the lot in question.ch an robl esvirtual awlibr ary ch anrob lesvi rtual l awlibr ary
On September 9, 1967, the lower court issued an order
10
allowing the withdrawal oI Isabel Aposaga as party
plaintiII, who was accordingly declared out oI the case.ch an robl esvirtual awl ibr ary ch anrobl esvi rtual l awlibr ary
On September 16, 1967, Jose Tamayo moved Ior a preliminary hearing on his aIIirmative and special
deIenses and thereaIter to dismiss both the complaint and complaint in intervention invoking Section 5 oI
Rule 16 oI the Rules oI Court.
11
He prayed that he be allowed to submit a written memorandum in support
oI his aIIirmative and special deIenses.ch anrobl esvi rtual awlib r ary ch an robl esvirtual l awlibr ary
Jose Tamayo Iiled on September 28, 1967 his memorandum
12
on the issue whether or not Edith Sustiguer
has any cause oI action against the deIendants as shown by the recital oI the complaint. Edith Sustiguer, on
the other hand, Iiled on October 11, 1967, an opposition to the motion to dismiss Ior lack oI cause oI action
and moved Ior judgment on the pleadings pursuant to Section 1 oI Rule 19 oI the Rules oI Court.
13
chan robl esv irtual l aw library
On December 8, 1967, the lower court issued an order
14
dismissing the complaint oI Edith Sustiguer Ior
lack oI cause oI action, stating thus:
The allegations in the complaint show a cause oI action in Iavor oI plaintiII Isabel Aposaga
but none in Iavor oI the plaintiII Edith Sustiguer. AIter the plaintiII Isabel Aposaga had
withdrawn her complaint, there is no more cause oI action leIt in Iavor oI the remaining
plaintiII Edith Sustiguer. This proviso in the Court's order simply means that iI Edith
Sustiguer had any cause oI action under the complaint, then such cause oI action shall remain
standing notwithstanding the withdrawal oI Isabel Aposaga. But the order oI this Court in
question did not create a cause oI action in Iavor oI the plaintiII Edith Sustiguer. The order oI
this Court merely preserves and keeps intact whatever cause oI action was existing in Iavor oI
the plaintiII Edith Sustiguer; but iI there was none at the beginning, then the order oI this
Court could not create one in her Iavor.
Edith Sustiguer then Iiled on January 2, 1968 a motion Ior reconsideration and new trial claiming that the
dismissal oI the complaint is contrary to law as there was no preliminary hearing and that as plaintiII she
still has a valid cause oI action even aIter the withdrawal oI Isabel Aposaga Irom the case as she was suing
in her own right as an awardee entitled to the award in question.
15
chanrobl esvi rtual l awli brary
AIter Jose Tamayo Iiled his opposition
16
to the motion Ior reconsideration and new trial, the lower court
issued an order
17
on January 20, 1968 denying the motion Ior reconsideration and new trial.ch an robl esvirtual awl ibr ary ch anrob lesvi rtual l awlibr ary
Hence, this appeal by Edith Sustiguer assigning the Iollowing errors:ch anrobl esvi rtual l awli br ary
I chanrobl esvir tual l awlibrary
THE LOWER COURT COMMITTED AN ERROR OF LAW IN DISMISSING THE COMPLAINT
WITHOUT HOLDING A TRIAL ON THE MERITS ON A MERE MOTION OF THE APPELLEE THAT
THE SAID COMPLAINT STATES NO CAUSE OF ACTION ALTHOUGH THE ALLEGATIONS
THEREIN ARE SUFFICIENT TO CONSTITUTE THE CAUSES OF ACTION AGAINST THE
APPELLEES.chanrobl esvir tualawlibr ary chan r obl esvirtual l awlibr ary
II ch an r obl es virtual l aw libr ar y
THE LOWER COURT COMMITTED AN ERROR OF LAW IN MAKING A SWEEPING
CONCLUSION THAT AFTER ISABEL APOSAGA WITHDREW AS PARTY-PLAINTIFF FROM THE
COMPLAINT, THERE IS NO MORE CAUSE OF ACTION LEFT IN FAVOR OF THE REMAINING
PLAINTIFF EDITH SUSTIGUER, THE HEREIN APPELLANT.ch anrob lesvi rtual awlib rary ch anrob lesvi rtual l awlibr ary
We aIIirm the order oI dismissal oI appellant's complaint Ior lack oI cause oI action. The lower court
dismissed the complaint aIter Isabel Aposaga, a co-plaintiII oI appellant, herein, withdrew her complaint,
which was allowed by the lower court in its order dated September 9, 1967, thus leaving appellant herein,
Edith Sustiguer, as the remaining party-plaintiII.ch an robl esvirtual awl ibr ary chan robl esvirtual l awlibrary
The dismissal oI the complaint Ior lack oI cause oI action in the instant case was basically premised on the
procedural rule set Iorth under Section 2 oI Rule 3 oI the Rules oI Court that every action must be
prosecuted and deIended in the name oI the real party-in-interest and that all persons having an interest in
the subject oI the action and in obtaining the relieI demanded shall be joined as plaintiIIs. Section 2, Rule 3
oI the Rules oI Court provides, thus:
SEC. 2. Parties in interest. - Every action must be prosecuted and deIended in the name oI
the real party-in-interest. All persons having an interest in the subject oI the action and in
obtaining the relieI demanded shall be joined as plaintiIIs. ...
The real party-in-interest is the party who stands to be beneIited or injured by the judgment or the party
entitled to the avails oI the suit.
18
"Interest" within the meaning oI the rule means material interest, an
interest in issue and to be aIIected by the decree, as distinguished Irom mere interest in the question
involved, or a mere incidental interest.
19
As a general rule, one having no right or interest to protect cannot
invoke the jurisdiction oI the court as a party-plaintiII in an action.
20
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In the instant case, the recitals oI the complaint Iiled beIore the lower court seek principally to annul and set
aside the Contract oI Sale on Installment executed by and between the City Government oI Bacolod and
Jose Tamayo on May 16, 1961 and in lieu thereoI to order the City Government oI Bacolod to execute a
Contract oI Sale on Installment in Iavor oI the plaintiIIs.
21
The challenge on the validity oI the contract oI
sale on installment is anchored on the allegation that the City Government oI Bacolod violated its
commitment to award Lot No. 379-B-34 to the plaintiIIs therein when it awarded and sold the disputed lot to
one Jose Tamayo who is neither qualiIied to apply Ior the award nor to purchase the same under the
provisions oI Ordinance No. 149, Series oI 1958.ch anrob lesvi rtual awlib r ary ch anroblesvi rtu all awlib r ary
From the allegations oI the complaint, it appears that Isabel Aposaga and Edith Sustiguer jointly claimed
that they are qualiIied and entitled to purchase Lot No. 379-B-34 Ior the reason that under Section 3, par. (a)
oI Ordinance No. 149, Series oI 1958, they possess the preIerential right to buy the same Irom the City
Government oI Bacolod, being the "actual occupant or occupants" oI the disputed lot. In the same
complaint, however, it was disclosed by the plaintiIIs that the disputed lot was awarded by the OIIice oI the
City Mayor to plaintiII Isabel Aposaga in accordance with Ordinance No. 149, Series oI 1958, as stated in
the oIIicial statement dated November 2, 1960
22
and quoted at the same time in the certiIicate issued by the
OIIice oI the Mayor, dated November 3, 1960 to the eIIect that Lot No. 379-B-34 is awarded to Mrs. Isabel
Aposaga, actual occupant oI Lot No. 379-B-34.
23
In other words, on the basis alone oI the material and
relevant Iacts pleaded in the complaint, whatever preIerential right allegedly claimed by appellant, Edith
Sustiguer or interest in the award oI the disputed lot is contingent upon the Iinal award to and subsequent
execution oI a contract oI sale in Iavor oI Isabel Aposaga by the City Government oI Bacolod upon
compliance by the Iormer with the requirements oI the ordinance.chanrobl esvirt ualawlibr ary ch anrob lesvi rtual l awlibr ary
Records, however, reveal that Isabel Aposaga withdrew her complaint as she is no longer interested in
prosecuting her claim over the disputed lot. When the withdrawal oI her complaint was allowed by the lower
court, the mere allegation oI Edith Sustiguer that she has a preIerential right to purchase the disputed lot on
the basis oI the Iact that she actually occupied the same together with Isabel Aposaga does not give rise to a
cause oI action independent Irom that which has been withdrawn. Appellant Edith Sustiguer cannot claim an
interest to protect over the disputed lot as she is not a real party-in-interest who would be beneIited or
injured by the judgment in the event trial proceeded in the instant case. The interest appellant had, iI any, on
the disputed lot cannot be categorized as material interest within the meaning oI Section 2, Rule 3 oI the
Rules oI Court considering that it is contingent upon the Iinal execution oI the contract oI sale on installment
in Iavor oI Isabel Aposaga upon compliance with the requirements oI Ordinance No. 149, Series oI 1958 oI
the City Government oI Bacolod.ch anrobl esvir tual awlibr ary ch anrobl esv irtual l awl ibr ary
Under the Iacts pleaded in the complaint, it appears with certainty that appellant Edith Sustiguer is not
entitled to the relieI prayed Ior, she not being the real party-in-interest. Hence, the dismissal oI the complaint
Ior lack oI cause oI action is proper under the circumstances in the instant case. For, it is well-settled that
where the plaintiII is not the real party-in-interest, the ground Ior the motion to dismiss is lack oI cause oI
action.
24
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Although the ground oI lack oI cause oI action was pleaded by appellee Jose Tamayo as one oI his special
and aIIirmative deIenses in his answer, the said ground Ior dismissal oI the complaint may be heard
preliminarily as iI a motion to dismiss had been Iiled pursuant to Section 5 oI Rule 16 oI the Rules oI Court.
Appellee Tamayo took this procedural step by Iiling on September 16, 1967 a motion Ior preliminary
hearing and thereaIter to dismiss the complaint and the complaint in intervention. Records show that instead
oI a preliminary hearing, the parties Iiled their respective memoranda on the issue whether or not Edith
Sustiguer has a cause oI action against the City Government oI Bacolod and Jose Tamayo.ch anrobl esvi rtual awlib r ary ch an robl esvirtual law libr ary
When the ground Ior dismissal is that the complaint states no cause oI action, the rule provides that its
suIIiciency can only be determined by considering the Iacts alleged in the complaint and no other, the test
being whether the court can render a valid judgment Irom the Iacts set Iorth.
25
The rule is that when the
motion to dismiss is based on the ground that the complaint states no cause oI action, no evidence may be
allowed and the issue should only be determined in the light oI the allegations oI the complaint.
26
Thus it
was erroneous Ior appellant to claim that the lower court should have conducted a trial on the merits instead
oI dismissing the complaint upon a mere motion.ch an robl esv irtual awlib r ary chan robl esvirt ual l awlibrary
As ruled by this Court in upholding an order oI dismissal where beIore the trial court issued the questioned
order dismissing petitioner's complaint, it had the opportunity to examine the merits thereoI, the answer with
counterclaim, the petitioner's answer to the counterclaim, and the answer to the request Ior admission, to
determine whether or not there was suIIicient cause oI action, the order oI dismissal was in the nature oI a
summary judgment.
27
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Neither can appellant claim that she was denied due process since she Iiled a motion Ior reconsideration and
new trial which the lower court considered upon appellee's Iiling oI his opposition thereto.ch anrob lesvi rtual awlib rary ch an robl es virtual law libr ar y
On the other hand, iI the instant case is viewed Irom the standpoint oI the law on contracts, appellant's
theory oI suIIiciency oI cause oI action to annul the contract oI sale on installment and award oI the disputed
lot against the City Government oI Bacolod and Jose Tamayo would likewise Iall, considering that appellant
Edith Sustiguer is not a party to said contract oI sale. Under Article 1311 oI the Civil Code, a contract takes
eIIect between the parties who made it, and also their assigns and heirs, except in cases where the rights and
obligations arising Irom the contract are not transmissible by their nature, or by stipulation or by provision
oI law. Since a contract may be violated only by the parties thereto as against each other, in an action upon
that contract, the real parties-in-interest, either as plaintiII or as deIendant, must be parties to said contract.
ThereIore, a party who has not taken part in it cannot, sue or be sued Ior perIormance or Ior cancellation
thereoI, unless he shows that he has a real interest aIIected thereby.
28
In order that one who is not obligated
in a contract either principally or subsidiarily may maintain an action Ior nulliIying the same, the record
must show the injury that would positively result to him Irom the contract in which he has not intervened in
connection with at least one oI the contracting parties.
29
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In the instant case, the allegations in the complaint did not show appellant's relation to or interest in the
contract oI sale on installment. Neither has appellant clearly shown the injury that would positively result to
her iI the contract is not nulliIied.ch an robl esvirtual awl ibr ary ch anrobl esvi rtual l awlibr ary
WHEREFORE, the appeal is hereby dismissed Ior lack oI merit. The order, dated December 8, 1977,
dismissing the complaint Ior lack oI cause oI action, as well as the order dated January 20, 1968, denying the
motion Ior reconsideration thereoI, are aIIirmed. No cost.ch an robl esvirtual awl ibr ary ch anrobl esvi rtual l awlibr ary
SO ORDERED.
:tierre:, Jr., Feliciano, Bidin and Cortes, JJ.,