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PART II
THE 1997 RULES OF CIVIL PROCEDURE

RULE 1
GENERAL PROVISIONS

Section 1
Title of the Rules. – These Rules shall be known and cited as the Rules of Court.

Section 2
In what courts applicable. – These Rules shall apply in all the courts, except as otherwise provided by
the Supreme Court.

Section 3
Cases governed. – These Rules shall govern the procedure to be observed in actions, civil or criminal,
and special proceedings.

(a) A civil action is one by which a party sues another for the enforcement or protection of a right, or
the prevention or redress of a wrong.

A civil action may either be ordinary or special. Both are governed by the rules for ordinary civil
actions, subject to the specific rules prescribed for a special civil action.

(b) A criminal action is one by which the State prosecutes a person for an act or omission punishable
by law.

(c) A special proceeding is a remedy by which a party seeks to establish a status, a right, or a
particular fact.

Section 4
In what cases not applicable. – These Rules shall not apply to election cases, land registration,
cadastral, naturalization and insolvency proceedings, and other cases not herein provided for, except by
analogy or in a suppletory character and whenever practicable and convenient.

Section 5
Commencement of action. – A civil action is commenced by the filing of the original complaint in a court.
If an additional defendant is impleaded in a later pleading, the action is commenced with regard to him
on the date of the filing of such later pleading, irrespective of whether the motion for its admission, if
necessary, is denied by the court.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
Section 6
Construction. – These Rules shall be liberally construed in order to promote their objective of securing a
just, speedy, and inexpensive disposition of every action and proceeding.

Case Title: Spouses Yu v Pacleb

Ticker: Langcaan Property
Facts

• Respondent Baltazar Pacleb and his late first wife, Angelita Chan, are the registered owners of a
parcel of land in Dasma, Cavite, i.e., the Langcaan Property.
• In 1992, the Langcaan Property became the subject of three documents purporting to transfer its
ownership. A Deed of Absolute Sale was entered into between Spouses Baltazar Pacleb and
Angelita Chan and Rebecca Del Rosario. A Deed of Absolute Sale was entered into between
Rebecca Del Rosario and Ruperto Javier. A Contract to Sell was entered into between Javier and
petitioner spouses Ernesto Yu and Elsie Ong Yu. In their contract, petitioner spouses Yu agreed
to pay Javier a total amount which was acknowledged as received by Javier with a remaining
balance. Javier undertook to deliver possession of the Langcaan Property and to sign a deed of
absolute sale within thirty (30) days from execution of the contract.
• All the aforementioned sales were not registered.
• In 1993, petitioner spouses Yu filed with the Regional Trial Court a Complaint, the first civil action,
Petitioner spouses argue that the decision of the Regional Trial Courtfor specific performance and
damages against Javier, to compel the latter to deliver to them ownership and possession, as
well as title to the Langcaan Property. In their Complaint, they alleged that Javier represented to
them that the Langcaan Property was not tenanted. However, after they already an initial
payment and entered into an Agreement for the sale of the Langcaan Property, they discovered it
was tenanted by Ramon Pacleb.
• Petitioner spouses demanded the cancellation of their agreement and the return of their initial
payment. Thereafter, petitioner spouses and Javier verified from Ramon if he was willing to
vacate the property and the latter was agreeable. Javier then promised to make arrangements
with Ramon to vacate the property and to pay the latter his disturbance compensation. Hence,
they proceeded to enter into a Contract to Sell canceling the Agreement mentioned. However,
Javier failed to comply with his obligations.
• Javier did not appear in the proceedings for the first civil case and was declared in default. The
RTC rendered a decision stating that spouses Yu are entitled to the ownership and possession
thereof.
• The said Decision and its Certificate of Finality were annotated on the TCT.
• In 1995, petitioner spouses and Ramon and the latter's wife, Corazon Bodino, executed a
"Kusangloob na Pagsasauli ng Lupang Sakahan at Pagpapahayag ng Pagtalikod sa Karapatan."
Under the said agreement, petitioner spouses paid Ramon an amount in in exchange for the
waiver of his tenancy rights over the Langcaan Property.
• The respondent filed a Complaint, the second civil case, for annulment of deed of sale and other
documents arising from it. The trial court dismissed such case.
• Petitioner spouses filed an action, the third civil case, for forcible entry against respondent with
the Municipal Trial Court. The MTC ruled in favor of petitioner spouses, which decision was
affirmed by the Regional Trial Court. However, the Court of Appeals set aside the decisions of the
lower courts and found that it was respondent who had prior physical possession of the property
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 as shown by his payment of real estate taxes thereon.
• In 1996, respondent filed the instant case for removal of cloud from title with damages and to
cancel specified entries in the TCT.
• During the pendency of the instant case before the trial court, respondent died without having
testified on the merits of his case. Hence, he was substituted by his surviving spouse, Antonieta
Pacleb, and Lorna Pacleb-Guerrero, Florencio Pacleb and Myrla Pacleb representing the children
with the first wife.
• In 2002, the trial court dismissed respondent's case and held that petitioner spouses are
purchasers in good faith.
• On appeal by respondent, the Court of Appeals reversed and set aside the decision of the trial
court.

Issue

• Whether petitioner spouses are innocent purchasers for value and in good faith [No]
• Whether ownership over the Langcaan Property was properly vested in petitioner spouses by
virtue of the decision in the initial civil case [No]

Ruling

• The petitioners spouses’ contentions are without merit.

• The Court notes that in petitioner Ernesto Yu's testimony, he stated that he inspected the
Langcaan Property and talked with the tenant, Ramon, before he purchased the same. However,
in his Complaint for specific performance and damages which he filed against Javier, he alleged
that it was only after he had entered into an Agreement for the sale of the property and his initial
payment that he discovered that the property was indeed being tenanted by Ramon who lives in
the said farm.
• This inconsistency casts grave doubt as to whether petitioner spouses personally inspected the
property before purchasing it.
• More importantly, however, several facts should have put petitioner spouses on inquiry as to the
alleged rights of their vendor, Javier, over the Langcaan Property.
• First, it should be noted that the property remains to be registered in the name of respondent
despite the two (2) Deeds of Absolute Sale purporting to transfer the Langcaan Property from
respondent and his late first wife, Angelita Chan, to Rebecca Del Rosario then from the latter to
Javier. Both deeds were not even annotated in the title of the Langcaan Property.
• Second, a perusal of the two deeds of absolute sale reveals that they were executed only about
two (2) months apart and that they contain identical provisions.
• Third, it is undisputed that the Langcaan Property is in the possession of Ramon, the son of the
registered owner. Regardless of the representations given by the latter, this bare fact alone
should have made petitioner spouses suspicious as to the veracity of the alleged title of their
vendor. Moreover, as noted by the Court of Appeals, petitioner spouses could have easily verified
the true status.
• Finally, the dismissal of the action to annul the successive sales of the property cannot serve to
validate the sale to petitioner spouses since the dismissal was ordered because Rebecca Del
Rosario and Javier could no longer be found. Indeed, the dismissal was without prejudice.
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 • Therefore, petitioner spouses cannot be considered as innocent purchasers in good faith.

• Petitioner spouses argue that the decision of the Regional Trial Court in the first civil case as to
the rightful owner of the Langcaan Property is conclusive and binding upon respondent even if
the latter was not a party thereto since it involved the question of possession and ownership of
real property, and is thus not merely an action in personam but an action quasi in rem.
• The said case is an action for specific performance and damages filed by petitioner spouses
against Javier to compel performance of the latter's undertakings under their Contract to Sell. As
correctly held by the Court of Appeals, its object is to compel Javier to accept the full payment of
the purchase price, and to execute a deed of absolute sale over the Langcaan Property in their
favor. The obligations of Javier under the contract to sell attach to him alone, and do not burden
the Langcaan Property.
• The Court has held in an unbroken string of cases that an action for specific performance is an
action in personam. In a case, the Court said that an action for specific performance praying for
the execution of a deed of sale in connection with an undertaking in a contract, such as the
contract to sell, in this instance, is an action in personam.
• Being a judgment in personam, the said civil case is binding only upon the parties properly
impleaded therein and duly heard or given an opportunity to be heard. Therefore, it cannot bind
respondent since he was not a party therein. Neither can respondent be considered as privy
thereto since his signature and that of his late first wife, Angelita Chan, were forged in the deed of
sale.

Final Ruling: The petition is denied.

Case Title: Domagas v Jensen

Ticker: Unserved Summons
Facts

• In 1999, petitioner Filomena Domagas filed a complaint for forcible entry against respondent
Vivian Jensen before the MTC. The petitioner alleged in her complaint that she was the
registered owner of a parcel of land and that the respondent, by means of force, strategy and
stealth, gained entry into the petitioner's property by excavating a portion thereof and thereafter
constructing a fence thereon. As such, the petitioner was deprived of her property along the
boundary line.
• The case was docketed. The summons and the complaint were not served on the respondent
because the latter was apparently out of the country. This was relayed to the Sheriff by her (the
respondent's) brother, Oscar Layno, who was then in the respondent's house. The Sheriff left the
summons and complaint with Oscar Layno, who received the same.
• The court rendered judgment ordering the respondent and all persons occupying the property for
and in the latter's behalf to vacate the disputed area and to pay monthly rentals therefor, including
actual damages, attorney's fees, and exemplary damages.
• The respondent failed to appeal the decision. Consequently, a writ of execution was issued.
• In 2000, the respondent filed a complaint against the petitioner before the RTC the annulment of
the decision of the MTC, on the ground that due to the Sheriff's failure to serve the complaint and
summons on her because she was in Oslo, Norway, the MTC never acquired jurisdiction over her
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 person.
• After due proceedings, the trial court rendered a decision in favor of the respondent.
• The trial court declared that there was no valid service of the complaint and summons on the
respondent, considering that she left the Philippines and her brother Oscar Layno was never
authorized to receive the said complaint and summons for and in her behalf.
• The petitioner appealed the decision to the CA which rendered judgment affirming the appealed
decision with modifications.
• Hence, the present petition.

Issue

• Whether the action of the petitioner in the MTC against the respondent herein is an action in
personam or quasi in rem [In Personam]
• Whether there was a valid service of the summons and complaint in the first civil case on the
respondent herein who was the defendant in the said case [No]

Ruling

• The action of the petitioner for forcible entry is a real action and one in personam.
• The settled rule is that the aim and object of an action determine its character. Whether a
proceeding is in rem, or in personam, or quasi in rem for that matter, is determined by its nature
and purpose, and by these only. A proceeding in personam is a proceeding to enforce personal
rights and obligations brought against the person and is based on the jurisdiction of the person,
although it may involve his right to, or the exercise of ownership of, specific property, or seek to
compel him to control or dispose of it in accordance with the mandate of the court. The purpose
of a proceeding in personam is to impose, through the judgment of a court, some responsibility or
liability directly upon the person of the defendant. Of this character are suits to compel a
defendant to specifically perform some act or actions to fasten a pecuniary liability on him. An
action in personam is said to be one which has for its object a judgment against the person, as
distinguished from a judgment against the propriety to determine its state. It has been held that
an action in personam is a proceeding to enforce personal rights or obligations; such action is
brought against the person. As far as suits for injunctive relief are concerned it is well-settled that
it is an injunctive act in personam.
• In a case, the appellate court held that proceedings to enforce personal rights and obligations and
in which personal judgments are rendered adjusting the rights and obligations between the
affected parties is in personam. Actions for recovery of real property are in personam.
• On the other hand, a proceeding quasi in rem is one brought against persons seeking to subject
the property of such persons to the discharge of the claims assailed. In an action quasi in rem, an
individual is named as defendant and the purpose of the proceeding is to subject his interests
therein to the obligation or loan burdening the property. Actions quasi in rem deal with the status,
ownership or liability of a particular property but which are intended to operate on these questions
only as between the particular parties to the proceedings and not to ascertain or cut off the rights
or interests of all possible claimants. The judgments therein are binding only upon the parties who
joined in the action.
• According to the provisions of the Rules of Court, an action for unlawful detainer or forcible entry
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 is a real action and in personam because the plaintiff seeks to enforce a personal obligation or
liability on the defendant under the Civil Code, for the latter to vacate the property subject of the
action, restore physical possession thereof to the plaintiff, and pay actual damages by way of
reasonable compensation for his use or occupation of the property.
• As gleaned from the averments of the petitioner's complaint in the MTC, she sought a writ of a
preliminary injunction from the MTC and prayed that the said writ be made permanent. Under its
decision, the MTC ordered the defendant therein (the respondent in this case), to vacate the
property and pay a "monthly rental” to the plaintiff.

• In a case, the Court ruled that in an action in personam, jurisdiction over the person of the
defendant is necessary for the court to validly try and decide the case. Jurisdiction over the
person of a resident defendant who does not voluntarily appear in court can be acquired by
personal service of summons. If he cannot be personally served with summons within a
reasonable time, substituted service may be made. If he is temporarily out of the country, any of
the following modes of service may be resorted to: (a) substituted service; personal service
outside the country, with leave of court; (3) service by publication, also with leave of court; or (4)
any other manner the court may deem sufficient.
• Thus, any judgment of the court which has no jurisdiction over the person of the defendant is null
and void.
• In the present case, the records show that the respondent, before and after his marriage to Jarl
Jensen in 1987, remained a resident of Pangasinan. This can be gleaned from the Deed of
Absolute Sale in which she declared that she was a resident of said barangay. Moreover, in the
Real Estate Mortgage Contract dated ten days before the complaint in the first civil case, the
petitioner categorically stated that she was a Filipino and a resident of Pangasinan. Considering
that the respondent was in Oslo, Norway, having left the Philippines, the summons and complaint
in the second civil action may only be validly served on her through substituted service.
• Strict compliance with the mode of service is required in order that the court may acquire
jurisdiction over the person of the defendant. The statutory requirement of substituted service
must be followed faithfully and strictly and any substituted service other than that authorized by
the statute is rendered ineffective.
• In a case, the Court held that the term "dwelling house" or "residence" are generally held to refer
to the time of service; hence, it is not sufficient to leave the summons at the former's dwelling
house, residence or place of abode, as the case may be. Dwelling house or residence refers to
the place where the person named in the summons is living at the time when the service is made,
even though he may be temporarily out of the country at the time. It is, thus, the service of the
summons intended for the defendant that must be left with the person of suitable age and
discretion residing in the house of the defendant. Compliance with the rules regarding the service
of summons is as much important as the issue of due process as of jurisdiction.
• As gleaned from the Return of Service filed by the sheriff, there is no showing that the house
where the Sheriff found Oscar Layno was the latter's residence or that of the respondent herein.
Neither is there any showing that the Sheriff tried to ascertain where the residence of the
respondent was on the said date. It turned out that the occupant of the house was a lessor,
Eduardo Gonzales, and that Oscar Layno was in the premises only to collect the rentals from
him. The service of the summons on a person at a place where he was a visitor is not considered
to have been left at the residence or place or abode, where he has another place at which he

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 ordinarily stays and to which he intends to return.
• In sum, then, the respondent was not validly served with summons and the complaint in the first
civil case, by substituted service. Hence, the MTC failed to acquire jurisdiction over the person of
the respondent; as such, the decision of the MTC is null and void.

Final Ruling: The petition is denied.

Case Title: Go v UCPB

Ticker: Noah’s Ark Empire
Facts

• Petitioner Jimmy Go and Alberto Looyuko are co-owners of Noah's Ark International, Noah's Ark
Sugar Carriers, Noah's Ark Sugar Truckers, Noah's Ark Sugar Repacker, Noah's Ark Sugar
Insurers, Noah's Ark Sugar Terminal, Noah's Ark Sugar Building, and Noah's Ark Sugar Refinery.
• In 1996, petitioner Jimmy Go and Alberto Looyuko applied for an Omnibus Line accommodation
with respondent United Coconut Planters Bank and was favorably acted upon by the latter.
• The transaction was secured by Real Estate Mortgages over parcels of land, located at
Mandaluyong City, registered in the name of Mr. Looyuko; and another land, also located at
Mandaluyong City, in the name of Noah's Ark Sugar Refinery.
• In 1997, the approved Omnibus Line accommodation granted to petitioner was subsequently
cancelled by respondent UCPB. As a consequence, petitioner Jimmy Go demanded from UCPB
the return of the two TCTs covered by Real Estate Mortgages earlier executed. UCPB refused to
return the same and proceeded to have the two (2) pre-signed Real Estate Mortgages notarized
and caused the registration thereof before the Registry of Deeds of Mandaluyong City.
• Respondent UCPB filed with the Office of the Clerk of Court and Ex-Officio Sheriff of
Mandaluyong City an extrajudicial foreclosure of real estate mortgage for nonpayment of the
obligation secured by said mortgage. As a result, the public auction sale of the mortgaged
property was set.
• To protect his interest, petitioner Jimmy Go filed a complaint for Cancellation of Real Estate
Mortgage and damages, with prayer for temporary restraining order and/or writ of preliminary
injunction, against respondent bank and its officers.
• The respondent bank, instead of filing an answer, filed a motion to dismiss.
• The trial court denied respondent bank's motion to dismiss.
• The CA set aside the order by the trial court and ordered the latter to dismiss the civil case.
• Hence, this petition for review.

Issue

• Whether petitioner's complaint for cancellation of real estate mortgage is a personal or real action
for the purpose of determining venue.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Ruling

• In a real action, the plaintiff seeks the recovery of real property, or as provided by the Rules of
Court, a real action is an action affecting title to or possession of real property, or interest therein.
These include partition or condemnation of, or foreclosure of mortgage on, real property. The
venue for real actions is the same for regional trial courts and municipal trial courts — the court
which has territorial jurisdiction over the area where the real property or any part thereof lies.
• Personal action is one brought for the recovery of personal property, for the enforcement of some
contract or recovery of damages for its breach, or for the recovery of damages for the
commission of an injury to the person or property. The venue for personal actions is likewise the
same for the regional and municipal trial courts — the court of the place where the plaintiff or any
of the principal plaintiffs resides, or where the defendant or any of the principal defendants
resides, at the election of the plaintiff.
• It is quite clear then that the controlling factor in determining venue for cases of the above nature
is the primary objective for which said cases are filed.
• In a case, the Court held that an action for nullification of the mortgage documents and
foreclosure of the mortgaged property is a real action that affects the title to the property. Thus,
venue of the real action is before the court having jurisdiction over the territory in which the
property lies.
• In a relatively recent case, it was succinctly stated that the prayer for the nullification of the
mortgage is a prayer affecting real property, hence, is a real action.
• In sum, the cancellation of the real estate mortgage, subject of the instant petition, is a real
action, considering that a real estate mortgage is a real right and a real property by itself. An
action for cancellation of real estate mortgage is necessarily an action affecting the title to the
property. It is, therefore, a real action which should be commenced and tried in Mandaluyong
City, the place where the subject property lies.

Final Ruling: The instant petition is denied.

Case Title: Cabutihan v Landcenter Construction & Development Corporation

Ticker: Agreement + Deed
Facts

• In 1996, herein respondent — Landcenter Construction & Development Corporation, represented

by Wilfredo Maghuyop — entered into an Agreement with Petitioner Rebecca Cabutihan. The
agreement stipulates that the corporation is the absolute owner of the parcel of land located in
Parañaque City and that it decided to engage the assistance of the petitioner for the purpose of
facilitating and arranging the recovery of the property in question.
• Armed with Board Resolution which had authorized her to represent the corporation, Luz Baylon
Ponce entered into a Deed of Undertaking with a group composed of petitioner Rebecca
Cabutehan, Wenifredo Forro, Nicanor Radan Sr. and Atty. Prospero Anave. The Deed states that
the respondent corporation acknowledges the assistance of certain persons in recovering,
arranging, and financing the undertaking up to completion/ consummation of the same. The Deed
stipulates that the respondent corporation commits to pay the petitioner, among others, and
undertakes the execution of a deed of assignment unto and in favor of the persons specified
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 therein corresponding to their respective shares in the subject parcel of the land or in the
proceeds thereof.
• An action for specific performance with damages was filed by petitioner before the RTC of Pasig
City. She prayed that respondent corporation be ordered to execute the appropriate document
assigning, conveying, transferring and delivering the particular lots in her favor. The lots
represented compensation for the undertakings she performed and accomplished, as embodied
in the Agreement.
• Respondent then filed a Motion to Dismiss. In the Motion, respondent sought the dismissal of the
Complaint on the grounds of (1) improper venue, (2) lack of jurisdiction over the subject matter,
and (3) nonpayment of the proper docket fees.
• The RTC dismissed the complaint and ruled that since the suit would affect the title to the
property, it should have been instituted in the trial court where the property was situated.
• Hence, the petition.

Issue

• Whether the action was properly dismissed [No]

Arguments
Ruling
Petitioner
The petition is meritorious.
Maintaining that the
action is in personam,
The Court agrees with the petitioner. Sections 1 and 2, Rule 4 of the Rules
not in rem, petitioner
of Court provide an answer to the issue of venue. Actions affecting title to or
alleges that the venue
possession of real property or an interest therein (real actions), shall be
was properly laid. The
commenced and tried in the proper court that has territorial jurisdiction over
fact that "she ultimately
the area where the real property is situated. On the other hand, all other
sought the conveyance
actions, (personal actions) shall be commenced and tried in the proper
of real property" not
courts where the plaintiff or any of the principal plaintiffs resides or where
located in the territorial
the defendant or any of the principal defendants resides.
jurisdiction of the RTC of
Pasig is an anticipated
In the present case, petitioner seeks payment of her services in accordance
consequence and
with the undertaking the parties signed. Breach of contract gives rise to a
beyond the cause for
cause of action for specific performance or for rescission. If petitioner had
which the action was
filed an action in rem for the conveyance of real property, the dismissal of
instituted.
the case would have been proper on the ground of lack of cause of action.
She was duly authorized The Court sides with the petitioner.
and empowered to
represent the members Neither a misjoinder nor a non-joinder of parties is a ground for the dismissal
of her group and to of an action. Parties may be dropped or added by order of the court, on
prosecute their claims on motion of any party or on the court's own initiative at any stage of the action.
their behalf via a Special The RTC should have ordered the joinder of such party, and noncompliance
Power of Attorney with the said order would have been ground for dismissal of the action.
executed by Forro,
Radan and Anave. Although the Complaint prayed for the conveyance of the whole 36.5
Besides, she argues that percent claim without impleading the companions of petitioner as party-

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
the omission of her litigants, the RTC could have separately proceeded with the case as far as
companions as plaintiffs her 20 percent share in the claim was concerned, independent of the other
did not prevent the RTC 16.5 percent. This fact means that her companions are not indispensable
from proceeding with the parties without whom no final determination can be had. At best, they are
action, because whatever mere necessary parties who ought to be impleaded for a complete
judgment would be determination or settlement of the claim subject of the action. The non-
rendered would be inclusion of a necessary party does not prevent the court from proceeding
without prejudice to their with the action, and the judgment rendered therein shall be without prejudice
rights. to the rights of such party.
Final Ruling: The petition is granted.

Case Title: Gochan v Gochan

Ticker: Shares and Lands
Facts

• Respondents were stockholders of the Felix Gochan and Sons Realty Corporation and the
Mactan Realty Development Corporation. Sometime in 1996, respondents offered to sell their
shares in the two corporations to the individual petitioners, the heirs of the late Ambassador
Esteban Gochan, for and in consideration of the sum. Petitioners accepted and paid the said
amount to respondents. Accordingly, respondents issued to petitioners the necessary "Receipts."
In addition, respondents executed their respective "Release, Waiver and Quitclaim," wherein
.they undertook that they would not initiate any suit, action or complaint against petitioners for
whatever reason or purpose.
• In turn, respondents, through Crispo Gochan, Jr., required individual petitioners to execute a
"promissory note," undertaking not to divulge the actual consideration they paid for the shares of
stock. For this purpose, Crispo Gochan, Jr. drafted a document entitled "promissory note" in his
own handwriting and had the same signed by Felix Gochan, III, Louise Gochan and Esteban
Gochan, Jr.
• Unbeknown to petitioners, Crispo Gochan, Jr. inserted in the "promissory note" a phrase that
says, "Said amount is in partial consideration of the sale."
• In 1998, respondents filed a complaint against petitioners for specific performance and damages
with the Regional Trial Court of Cebu City. They alleged that, petitioner Louise Gochan, on behalf
of all the petitioners, offered to buy their shares of stock, consisting of 254 shares in the Felix
Gochan and Sons Realty Corporation and 1,624 shares of stock in the Mactan Realty
Development Corporation; and that they executed a Provisional Memorandum of Agreement,
wherein they enumerated the consideration for the sale. Accordingly, respondents claimed that
they are entitled to the conveyance of the aforementioned properties.
• Petitioners filed their answer, raising affirmative defenses. They then filed with the trial court a
motion for a preliminary hearing on the affirmative defenses. The trial court denied the motion.
• Petitioner thus filed a petition for certiorari with the Court of Appeals.
• The Court of Appeals rendered the appealed decision dismissing the petition.
• Hence, the petition.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Issue

• Whether the action is a real action [Yes]

Ruling

• The Court of Appeals found that the complaint was one for specific performance and incapable of
pecuniary estimation. The Court does not agree.
• It is necessary to determine the true nature of the complaint in order to resolve the issue of
whether or not respondents paid the correct amount of docket fees therefor. In this jurisdiction,
the dictum adhered to is that the nature of an action is determined by the allegations in the body
of the pleading or complaint itself, rather than by its title or heading. The caption of the complaint
below was denominated as one for "specific performance and damages." The relief sought,
however, is the conveyance or transfer of real property, or ultimately, the execution of deeds of
conveyance in their favor of the real properties enumerated in the provisional memorandum of
agreement. Under these circumstances, the case below was actually a real action, affecting as it
does title to or possession of real property.
• In a case, the Court said that a real action is one where the plaintiff seeks the recovery of real
property or, as indicated in Section 1, Rule 4 of the 1997 Rules of Civil Procedure, a real action is
an action affecting title to or recovery of possession of real property.
• It has also been held that where a complaint is entitled as one for specific performance but
nonetheless prays for the issuance of a deed of sale for a parcel of land, its primary objective and
nature is one to recover the parcel of land itself and, thus, is deemed a real action. In such a
case, the action must be filed in the proper court where the property is located.
• In the case at bar, therefore, the complaint filed with the trial court was in the nature of a real
action, although ostensibly denominated as one for specific performance. Consequently, the
basis for determining the correct docket fees shall be the assessed value of the property, or the
estimated value thereof as alleged by the claimant.

Final Ruling: The petition is granted and the case is

remanded to the RTC for the conduct of preliminary
hearing on the affirmative defenses.

Case Title: Redeña v Tacay

Ticker: Common Father
Facts

• The present controversy sprung from an action for partition filed by petitioner Tancredo against
his older half-brother, herein private respondent Leocadio Redeña before the then Court of First
Instance of Laguna.
• The basic complaint for partition alleges that plaintiff Tancredo and defendant Leocadio are both
sons of one Maximo Redeña: Tancredo, by Maximo's marriage to Magdalena Fernandez, and
Leocadio, by Maximo's previous marriage to Emerenciana Redeña. The complaint further alleged
that the parties' common father, Maximo, left several pieces of realty, to wit: a residential lot, a
riceland, and a parcel of land, all in Laguna.
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 In a decision, the trial court, based on the evidence presented, confined the partition to only the
property actually pertaining to the estate of the parties' deceased father and co-owned by them,
namely, the parcel of land. It rendered judgment ordering Leocadio to partition only the parcel of
land. It said that partition cannot be effected as regards the two other properties because they
belong to Tancredo.
• In 1997, petitioner filed with the trial court a Notice of Appeal. The CA dismissed the appeal.
• Hence, the petition.

Issue

• Whether the two properties shall be partitioned [No]

Ruling

• The Court dismisses the petition.

• From the petition, it is clear that this Court is called upon to relax the application of procedural
rules, or suspend them altogether, in favor of petitioner's substantial rights. There is no doubt as
to the power of the Court to do that.
• The Rules itself expressly states in Section 2 of Rule 1 that the rules shall be liberally construed
in order to promote their object and to assist the parties in obtaining just, speedy and inexpensive
determination of every action and proceeding. Courts, therefore, not only have the power but the
duty to construe and apply technical rules liberally in favor of substantive law and substantial
justice. Furthermore, this Court, unlike courts below, has the power not only to liberally construe
the rules, but also to suspend them, in favor of substantive law or substantial rights. Such power
inherently belongs to this Court, which is expressly vested with rule-making power by no less than
the Constitution.
• It is equally settled, however, that this Court's power to liberally construe and even to suspend the
rules, presupposes the existence of substantial rights in favor of which, the strict application of
technical rules must concede. The facts are borne out by the records pertaining to petitioner's
purported undivided share in the properties clearly showed that these two properties had been
subject of an agreement whereby petitioner recognized respondent's rights to said properties.
This fact binds this Court, there being nothing on record with the trial court as to the herein
alleged fraud against the petitioner. Upon thorough deliberation of the supposed substantial rights
claimed by the petitioner with the court below, the Court finds no cogent basis to favorably rule on
the merits of the appeal even if it may be given due course which is indispensable to justify this
Court in considering this case as an exception to the rules.

Final Ruling: Petition is dismissed.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
Case Title: Tacay v RTC of Tagum
Ticker: Versus Three
Facts

• In the Regional Trial Court at Tagum, three actions for recovery of possession (acciones
publicianas) separately instituted by Godofredo Pineda against three defendants, namely Antonia
Noel, Ponciano Panes, and Maximo Tacay.
• The first and third cases were raffled to the trial court presided over by Judge Marcial Hernandez
while the second case was raffled to the trial court presided over by Judge Jesus Matas.
• The complaints all alleged the same essential facts: (1) Pineda was the owner of a parcel of land,
his ownership being evidenced by TCT; (2) the previous owner had allowed the defendants to
occupy portions of the land by mere tolerance; (3) having himself need to use the property,
Pineda had made demands on the defendants to vacate the property and pay reasonable rentals
therefor, but these demands had been refused; and (4) the last demand had been made more
than a year prior to the commencement of suit.
• The complaints prayed for the same reliefs: that plaintiff be declared owner of the areas occupied
by the defendants, that defendants and their "privies and allies" be ordered to vacate and deliver
the portions of the land usurped by them, that each defendants be made to pay monthly rents for
the period they occupied the properties.
• Motions to dismiss were filed in behalf of each of the defendants by common counsel. Judge
Matas and Judge Hernandez denied the motions to dismiss.
• Ascribing grave abuse of discretion to both Judges Matas and Fernandez in the rendition of the
Orders above described, the defendants in all three (3) actions have filed with the SC a "Joint
Petition" for certiorari, prohibition and mandamus, with prayer for temporary restraining order
and/or writ of preliminary prohibitory injunction.”

Issue

• Whether the decisions were properly dismissed [Yes]

Ruling

• The joint petition should be, as it is hereby, dismissed.

• It is true that the complaints do not state the amounts being claimed as actual, moral and nominal
damages. It is also true, however, that the actions are not basically for the recovery of sums of
money. They are principally for recovery of possession of real property, in the nature of an accion
publiciana. Determinative of the court's jurisdiction in this type of actions is the nature thereof, not
the amount of the damages allegedly arising from or connected with the issue of title or
possession, and regardless of the value of the property. Quite obviously, an action for recovery of
possession of real property (such as an accion plenaria de posesion) or the title thereof, or for
partition or condemnation of, or the foreclosure of a mortgage on, said real property - in other
words, a real action — may be commenced and prosecuted without an accompanying claim for
actual, moral, nominal or exemplary damages; and such an action would fall within the exclusive,
original jurisdiction of the Regional Trial Court.
• Batas Pambansa Bilang 129 provides that Regional Trial Courts shall exercise exclusive original
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 jurisdiction inter alia over "all civil actions which involve the title to, or possession of, real property,
or any interest therein, except actions for forcible entry into and unlawful detainer of lands or
buildings, original jurisdiction over which is conferred upon Metropolitan Trial Courts, Municipal
Trial Courts, and Municipal Circuit Trial Courts." The rule applies regardless of the value of the
real property involved, whether it be worth more than P20,000.00 or not. The rule also applies
even where the complaint involving realty also prays for an award of damages; the amount of
those damages would be immaterial to the question of the Court's jurisdiction. The rule is unlike
that in other cases — e.g., actions simply for recovery of money or of personal property, or
actions in admiralty and maritime jurisdiction - in which the amount claimed, or the value of the
personal property, is determinative of jurisdiction; i.e., the value of the personal property or the
amount claimed should exceed twenty thousand pesos in order to be cognizable by the Regional
Trial Court.
• Circular No. 7 of the Court cannot thus be invoked, as the petitioner does, as authority for the
dismissal of the actions at bar. That circular has but limited application to said actions, as shall
presently be discussed. Moreover, the rules therein laid down have since been clarified and
amplified by the Court.
• Circular No. 7 was aimed at the practice of certain parties who omit from the prayer of their
complaints "any specification of the amount of damages," the omission being "clearly intended for
no other purposes than to evade the payment of the correct filing fees if not to mislead the docket
clerk, in the assessment of the filing fee."
• As will be noted, the requirement in Circular No. 7 that complaints, petitions, answers, and similar
pleadings should specify the amount of damages being prayed for not only in the body of the
pleading but also in the prayer, has not been altered. What has been revised is the rule that
subsequent "amendment of the complaint or similar pleading will not thereby vest jurisdiction in
the Court, much less the payment of the docket fee based on the amount sought in the amended
pleading," the trial court now being authorized to allow payment of the fee within a reasonable
time but in no case beyond the applicable prescriptive or reglementary period. Moreover, a new
rule has been added, governing awards of claims not specified in the pleading — i.e., damages
arising after the filing of the complaint or similar pleading — as to which the additional filing fee
therefor shall constitute a lien on the judgment.
• Now, under the Rules of Court, docket or filing fees are assessed on the basis of the "sum
claimed," on the one hand, or the "value of the property in litigation or the value of the estate," on
the other. There are, in other words, as already above intimated, actions or proceedings involving
real property, in which the value of the property is immaterial to the court's jurisdiction, account
thereof being taken merely for assessment of the legal fees; and there are actions or
proceedings, involving personal property or the recovery of money and/or damages, in which the
value of the property or the amount of the demand is decisive of the trial court's competence
(aside from being the basis for fixing the corresponding docket fees).
• Where the action is purely for the recovery of money or damages, the docket fees are assessed
on the basis of the aggregate amount claimed, exclusive only of interests and costs. In this case,
the complaint or similar pleading should, according to Circular No. 7 of this Court, "specify the
amount of damages being prayed for not only in the body of the pleading but also in the prayer,
and said damages shall be considered in the assessment of the filing fees in any case."
• Two situations may arise. One is where the complaint or similar pleading sets out a claim purely
for money or damages and there is no precise statement of the amounts being claimed. In this
event the rule is that the pleading will "not be accepted nor admitted, or shall otherwise be
expunged from the record." In other words, the complaint or pleading may be dismissed, or the
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 claims as to which the amounts are unspecified may be expunged, although as aforestated the
Court may, on motion, permit amendment of the complaint and payment of the fees provided the
claim has not in the meantime become time-barred. The other is where the pleading does specify
the amount of every claim, but the fees paid are insufficient; and here again, the rule now is that
the court may allow a reasonable time for the payment of the prescribed fees, or the balance
thereof, and upon such payment, the defect is cured and the court may properly take cognizance
of the action, unless in the meantime prescription has set in and consequently barred the right of
action.
• Where the action involves real property and a related claim for damages as well, the legal fees
shall be assessed on the basis of both (a) the value of the property and (b) the total amount of
related damages sought. The Court acquires jurisdiction over the action if the filing of the initiatory
pleading is accompanied by the payment of the requisite fees, or, if the fees are not paid at the
time of the filing of the pleading, as of the time of full payment of the fees within such reasonable
time as the court may grant, unless, of course, prescription has set in the meantime. But where —
as in the case at bar — the fees prescribed for an action involving real property have been paid,
but the amounts of certain of the related damages (actual, moral and nominal) being demanded
are unspecified, the action may not be dismissed. The Court undeniably has jurisdiction over the
action involving the real property, acquiring it upon the filing of the complaint or similar pleading
and payment of the prescribed fee. And it is not divested of that authority by the circumstance
that it may not have acquired jurisdiction over the accompanying claims or damages because of
lack of specification thereof. What should be done is simply to expunge those claims for damages
as to which no amounts are stated, which is what the respondent Courts did, or allow, on motion,
a reasonable time for the amendment of the complaints so as to allege the precise amount of
each item of damages and accept payment of the requisite fees therefor within the relevant
prescriptive period.

Final Ruling: The petition is dismissed.

CIVIL ACTIONS
ORDINARY CIVIL ACTIONS

RULE 2
CAUSE OF ACTION

Section 1
Ordinary civil actions, basis of. – Every ordinary civil action must be based on a cause of action.

Section 2
Cause of action, defined. – A cause of action is the act or omission by which a party violates a right of
another.

Section 3
One suit for a single cause of action. – A party may not institute more than one suit for a single cause of
action.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
Section 4
Splitting a single cause of action; effect of. – If two or more suits are instituted on the basis of the same
cause of action, the filing of one or a judgment upon the merits in any one is available as a ground for
the dismissal of the others.

Section 5
Joinder of causes of action. – A party may in one pleading assert, in the alternative or otherwise, as
many causes of action as he may have against an opposing party, subject to the following conditions:

(a) The party joining the causes of action shall comply with the rules on joinder of parties;
(b) The joinder shall not include special civil actions or actions governed by special rules;
(c) Where the causes of actions are between the same parties but pertain to different venues or
jurisdictions, the joinder may be allowed in the Regional Trial Court provided one of the causes of
action falls within the jurisdiction of said court and the venue lies therein; and
(d) Where the claims in all the causes of action are principally for recovery of money, the aggregate
amount claimed shall be the test of jurisdiction.

Section 6
Misjoinder of causes of action. – Misjoinder of causes of action is not a ground for dismissal of an action.
A misjoined cause of action may, on motion of a party or on the initiative of the court, be severed and
proceeded with separately.

Case Title: Juana Complex I Homeowners Association, Inc. v Fil-Estate Land Inc.
Ticker: La Paz Road
Facts

• In 1999, Juana Complex I Homeowners Association, Inc. (JCHA) , together with individual
residents of Juana Complex I and other neighboring subdivisions instituted a complaint for
damages, in its own behalf and as a class suit representing the regular commuters and motorists
of Juana Complex I and neighboring subdivisions who were deprived of the use of La Paz Road,
against Fil-Estate Land, Inc. (Fil-Estate), Fil-estate Ecocentrum Corporation (FEEC), La Paz
Housing & Development Corporation (La Paz) , and Warbird Security Agency and their respective
officers.
• The complaint alleged that JCHA, et al., were regular commuters and motorists who constantly
travelled towards the direction of Manila and Calamba; that they used the entry and exit toll gates
of South Luzon Expressway by passing through right-of-way public road known as La Paz Road;
that they had been using La Paz Road for more than ten (10) years; that in August 1998, Fil-
estate excavated, broke and deliberately ruined La Paz Road that led to SLEX so JCHA, et al.,
would not be able to pass through the said road; that La Paz Road was restored by the residents
to make it passable but Fil-estate excavated the road again; that JCHA reported the matter to the
Municipal Government and the Office of the Municipal Engineer but the latter failed to repair the
road to make it passable and safe to motorists and pedestrians; that the act of Fil-estate in
excavating La Paz Road caused damage, prejudice, inconvenience, annoyance, and loss of
precious hours to them, to the commuters and motorists because traffic was re-routed to narrow
streets that caused terrible traffic congestion and hazard; and that its permanent closure would
not only prejudice their right to free and unhampered use of the property but would also cause
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 great damage and irreparable injury.
• A TRO was issued ordering Fil-Estate, et al., for a period of twenty (20) days, to stop preventing,
coercing, intimidating or harassing the commuters and motorists from using the La Paz Road.
• The RTC filed a motion to dismiss arguing that the complaint failed to state a cause of action and
that it was improperly filed as a class suit.
• The RTC denied the motion to dismiss.
• The CA upheld the denial of the motion to dismiss.
• Hence, the petition for review.

Issue

• Whether the complaint states a cause of action [Yes]

• Whether the complaint has been properly filed as a class suit [Yes]

Ruling

• Section 2, Rule 2 of the Rules of Court defines a cause of action as an act or omission by which a
party violates the right of another. A complaint states a cause of action when it contains three (3)
essential elements of a cause of action, namely:

1. The legal right of the plaintiff;

2. The correlative obligation of the defendant; and
3. The act or omission of the defendant in violation of said legal right.
• The question of whether the complaint states a cause of action is determined by its averments
regarding the acts committed by the defendant. Thus, it must contain a concise statement of the
ultimate or essential facts constituting the plaintiff's cause of action. To be taken into account are
only the material allegations in the complaint; extraneous facts and circumstances or other
matters aliunde are not considered.
• The test of sufficiency of facts alleged in the complaint as constituting a cause of action is
whether or not admitting the facts alleged, the court could render a valid verdict in accordance
with the prayer of said complaint. Stated differently, if the allegations in the complaint furnish
sufficient basis by which the complaint can be maintained, the same should not be dismissed
regardless of the defense that may be asserted by the defendant.
• In the present case, the Court finds the allegations in the complaint sufficient to establish a cause
of action. First, JCHA, et al.'s averments in the complaint show a demandable right over La Paz
Road. These are: (1) their right to use the road on the basis of their allegation that they had been
using the road for more than 10 years; and (2) an easement of a right of way has been
constituted over the said roads. There is no other road as wide as La Paz Road existing in the
vicinity and it is the shortest, convenient and safe route towards SLEX Halang that the commuters
and motorists may use. Second, there is an alleged violation of such right committed by Fil-
Estate, et al., when they excavated the road and prevented the commuters and motorists from
using the same. Third, JCHA, et al., consequently suffered injury and that a valid judgment could
have been rendered in accordance with the relief sought therein.
• With respect to the issue that the case was improperly instituted as a class suit, the Court finds
the opposition without merit.
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 • The necessary elements for the maintenance of a class suit are: 1) the subject matter of
controversy is one of common or general interest to many persons; 2) the parties affected are so
numerous that it is impracticable to bring them all to court; and 3) the parties bringing the class
suit are sufficiently numerous or representative of the class and can fully protect the interests of
all concerned.
• In this case, the suit is clearly one that benefits all commuters and motorists who use La Paz
Road. The subject matter of the instant case, i.e., the closure and excavation of the La Paz Road,
is initially shown to be of common or general interest to many persons. The records reveal that
numerous individuals have filed manifestations with the lower court, conveying their intention to
join private respondents in the suit and claiming that they are similarly situated with private
respondents for they were also prejudiced by the acts of petitioners in closing and excavating the
La Paz Road. Moreover, the individuals sought to be represented by private respondents in the
suit are so numerous that it is impracticable to join them all as parties and be named individually
as plaintiffs in the complaint. These individuals claim to be residents of various barangays in
Biñan, Laguna and other barangays in San Pedro, Laguna.

Final Ruling:

Case Title: Samson v Spouses Gabor

Ticker: Land as Attorney’s Fees
Facts

• Respondent spouses Jose and Guillermina Gabor are the registered owners of a parcel of land in
the Rizal Province.
• In 1985, the Spouses Gabor executed a Deed of Assignment transferring an undivided portion of
the aforementioned parcel of land in favor of petitioner Emiliano Samson as attorney's fees in
payment for the services rendered by the latter for the former.
• In 1987, petitioner Samson executed a Deed of Assignment transferring the same undivided
portion in favor of Ma. Remedios Ramos. Upon learning of the sale, respondent spouses filed an
action for legal redemption with the RTC of Tanay, Rizal. Immediately thereafter, petitioner
Samson and Ramos executed an Agreement of Rescission revoking the transfer of the undivided
portion. The dismissed the suit for legal redemption. On appeal, however, the CA reversed the
decision of the RTC and upheld the Spouses Gabor's right of legal redemption. No further
appeals were pursued.
• Instead, during the pendency of the case, petitioner Samson filed an action for Partition of Real
Property and Damages against respondent spouses with the RTC of Morong, Rizal, which
dismissed the same on the ground that the finality of the said case effectively barred the action
for partition. The CA upheld the lower court's decision. Petitioner Samson then appealed to the
Court via petition for review on certiorari , but the same was dismissed in a minute resolution. The
Court further denied Samson's motion for reconsideration with finality in its Resolution.
• In 2006, petitioner Samson filed a Complaint before the RTC of Pasig City for Recovery of
Property or its Value against respondent spouses, Tanay Rural Bank, Inc., and the Register of
Deeds claiming that he had been paying his one-third share of realty taxes covering the subject
portion of land for the years 2002 to 2004. In 2005, however, his payment was rejected by the
Municipal Treasurer of Tanay, Rizal, at such time he discovered that respondent spouses had
already mortgaged the entire property in favor of respondent Bank back in November 2002.
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 • The RTC of Pasig City dismissed the complaint.
• The CA likewise dismissed the same for having been improperly brought before it.
• Hence, the petition.

Issue

• Whether there is a cause of action [No]

Ruling

• The petition lacks merit.

• The Court agrees with the RTC of Pasig City when it dismissed petitioner's complaint on the
ground that the same states no cause of action.
• A perusal of the complaint would show that aside from the fact that respondent spouses had
mortgaged the property subject herein to respondent bank, there is no other allegation of an act
or omission on the part of respondent Bank in violation of a right of petitioner.
• In a case, the Court discussed that a cause of action is a formal statement of the operative facts
that give rise to a remedial right. The question of whether the complaint states a cause of action
is determined by its averments regarding the acts committed by the defendant. Thus it "must
contain a concise statement of the ultimate or essential facts constituting the plaintiff's cause of
action." Failure to make a sufficient allegation of a cause of action in the complaint "warrants its
dismissal."
• As defined in Section 2, Rule 2 of the Rules of Court, a cause of action is the act or omission by
which a party violates the right of another. Its essential elements are as follows:

1. A right in favor of the plaintiff by whatever means and under whatever law it arises or is
created;
2. An obligation on the part of the named defendant to respect or not to violate such right; and
3. Act or omission on the part of such defendant in violation of the right of the plaintiff or
constituting a breach of the obligation of the defendant to the plaintiff for which the latter may
maintain an action for recovery of damages or other appropriate relief.
• It is, thus, only upon the occurrence of the last element that a cause of action arises, giving the
plaintiff the right to maintain an action in court for recovery of damages or other appropriate relief.
In determining whether an initiatory pleading states a cause of action, "the test is as follows:
admitting the truth of the facts alleged, can the court render a valid judgment in accordance with
the prayer?" To be taken into account are only the material allegations in the complaint;
extraneous facts and circumstances or other matters aliunde are not considered. The court may
consider in addition to the complaint the appended annexes or documents, other pleadings of the
plaintiff, or admissions in the records.
• As already mentioned, there is nothing in the complaint herein which states specific overt acts to
show that respondent Bank acted in disregard of the petitioner's rights. Nowhere in the complaint
was it alleged that respondent Bank had knowledge nor could have known with the exercise of
due diligence that respondent spouses had acted illegally, in order to commit a wrong against the
petitioner. Petitioner should have at least specified the details of his cause of action against
respondent Bank.
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 • In contrast, the most that petitioner's complaint herein stated was Articles 19, 20, and 21 of the
Civil Code and that "he found out that in November 2002, defendants Gabor mortgaged the whole
property . . . in favor of the defendant bank." Said bare allegation is insufficient to establish any
right or cause of action in favor of the petitioner.

Final Ruling: The petition is denied.

Case Title: Del Rosario and DATICOR v Far East Bank & Trust Company
Ticker: Dollar and Peso Loans
Facts

• In 1974, petitioner Davao Timber Corporation (DATICOR) and respondent Private Development
Corporation of the Philippines (PDCP) entered into a loan agreement under which PDCP
extended to DATICOR a foreign currency loan and a peso loan, computed at the then prevailing
rate of exchange of the dollar with the peso.
• The loan agreement provided, among other things, that DATICOR shall pay: (1) a service fee of
one percent per annum on the outstanding balance of the peso loan; (2) 12 percent (12%) per
annum interest on the peso loan; and (3) penalty charges of two percent (2%) per month in case
of default.
• The loans were secured by real estate mortgages over six parcels of land — one situated in
Manila (the Otis property) which was registered in the name of petitioner Ernesto Del Rosario,
and five in Mati, Davao Oriental — and chattel mortgages over pieces of machinery and
equipment.
• Petitioners paid a total of P3 million to PDCP, which the latter applied to interest, service fees and
penalty charges. This left petitioners, by PDCP's computation, with an outstanding balance on the
principal.
• In 1982, petitioners had filed a complaint against PDCP before the then Court of First Instance of
Manila for violation of the Usury Law, annulment of contract and damages. The case was
dismissed by the CFI.
• On appeal, the then Intermediate Appellate Court set aside the CFI's dismissal of the complaint
and declared void and of no effect the stipulation of interest in the loan agreement between
DATICOR and PDCP.
• PDCP appealed the IAC's decision to the Court.
• In the interim, PDCP assigned a portion of its receivables from petitioners (the receivables) to its
co-respondent Far East Bank and Trust Company (FEBTC) under a Deed of Assignment.
• FEBTC, as assignee of the receivables, and petitioners later executed a Memorandum of
Agreement whereby petitioners agreed to, as they did pay FEBTC as full settlement of the
receivables.
• In 1992, the Court promulgated its Decision affirming in toto the decision of the IAC. It determined
that after deducting the amount earlier paid by petitioners to PDCP, their remaining balance on
the principal loan was only PHP 1.4 million.
• Petitioners thus filed a Complaint for sum of money against PDCP and FEBTC before the RTC of
Makati, mainly to recover the excess payment which they computed.
• The RTC rendered a decision ordering PDCP to pay petitioners a specified sum.
• As for the complaint of petitioners against respondent FEBTC, the trial court dismissed it for lack
of cause of action.
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 • From the trial court's decision, petitioners and respondent PDCP appealed to the Court of
Appeals. The CA held that the claim of PDCP against DATICOR for the payment of P1.4 million
had no basis, DATICOR's obligation having already been paid in full, overpaid in fact. It further
held that the party bound to refund the excess payment was FEBTC as it received the
overpayment.
• In 2000, petitioners filed before the RTC of Makati a Complaint against FEBTC to recover the
balance of the excess payment.
• The trial court issued the assailed decision dismissing petitioners' complaint on the ground of res
judicata and splitting of cause of action.
• Hence, the present petition.

Issue

• Whether the case was properly dismissed on the ground of splitting of cause of action [Yes]

Ruling

• The petition is bereft of merit.

• It bears remembering that a cause of action is the delict or the wrongful act or omission
committed by the defendant in violation of the primary rights of the plaintiff.
• In the two cases, petitioners imputed to FEBTC the same alleged wrongful act of mistakenly
receiving and refusing to return an amount in excess of what was due it in violation of their right to
a refund. The same facts and evidence presented in the first case were the very same facts and
evidence that petitioners presented in the second case.
• The Court finds well-taken then the pronouncement of the court a quo that to allow the re-
litigation of an issue that was finally settled as between petitioners and FEBTC in the prior case is
to allow the splitting of a cause of action, a ground for dismissal under Section 4 of Rule 2 of the
Rules of Court.
• This rule proscribes a party from dividing a single or indivisible cause of action into several parts
or claims and instituting two or more actions based on it. Because the plaintiff cannot divide the
grounds for recovery, he is mandated to set forth in his first action every ground for relief which
he claims to exist and upon which he relies; he cannot be permitted to rely upon them by
piecemeal in successive actions to recover for the same wrong or injury.
• Clearly then, the judgment in the first civil case operated as a bar to the present civil case.

Final Ruling: The petition is denied.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
Case Title: Progressive Development Corporation, Inc. v Court of Appeals
Ticker: Agreement Suspended Proceedings
Facts

• In 1991, petitioner Progressive Development Corporation leased to private respondent Westin

Seafood Market, Inc., a parcel of land with a commercial building thereon located at Quezon City,
for a period of nine (9) years and three (3) months.
• Private respondent failed to pay rentals despite several demands by petitioner. Admittedly, non-
payment of rentals constituted breach of their contract; thus, pursuant to the express authority
granted petitioner under their lease agreement, petitioner repossessed the leased premises,
inventoried the movable properties found within and owned by private respondent and scheduled
public auction for the sale of the movables with notice to private respondent.
• The private respondent filed with the Metropolitan Trial Court of Quezon City a complaint against
petitioner for forcible entry with damages and a prayer for a temporary restraining order and/or
writ of preliminary injunction. The judge issued a temporary restraining order enjoining petitioner
from selling private respondent's properties at a public auction.
• At the continuance of the hearing, the parties agreed that private respondent would deposit with
the Philippine Commercial and Industrial Bank in the name of the Metropolitan Trial Court a
specified amount to guarantee payment of its back rentals; that petitioner would defer the sale of
the personal properties of the Westin Seafood Market, Inc., until a final settlement of the case had
been arrived at; that petitioner shall allow private respondent to retrieve all the perishable goods
from inside the leased premises like frozen meat, vegetables and fish, all properly receipted for;
that petitioner shall allow three (3) maintenance personnel of private respondent to enter the
premises at reasonable working hours to maintain the restaurant equipment; and that the parties
shall negotiate for the restoration of the premises to private respondent, and if no settlement be
arrived at, the hearing on the merits of the case shall proceed and the disposition of the amount
deposited representing the rental arrearages shall be left to the discretion of the court.
• This agreement was incorporated in the order of the court which in effect terminated for all intents
and purposes the incident on the issuance of a preliminary writ of injunction.
• Private respondent did not comply with its undertaking to deposit with the designated bank the
amount representing its back rentals. Instead, with the forcible entry case still pending with the
MeTC, private respondent instituted another action for damages against petitioner with the
Regional Trial Court of Quezon City.
• Petitioner filed a motion to dismiss the damage suit.
• Before petitioner's motion to dismiss could be resolved, private respondent filed with the RTC an
amended complaint for damages.
• The RTC judge denied the motion to dismiss.
• Thus, petitioner filed with the Court of Appeals a special civil action for certiorari. The CA
dismissed the petition.
• Hence, the petition.

Issue
• Whether an action for damages filed with the Regional Trial Court by the lessee against the
lessor should be dismissed on the ground of pendency of another action for forcible entry and
damages earlier filed by the same lessee against the same lessor before the Metropolitan Trial
Court
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Ruling

• There is merit in the petition.

• Section 1 of Rule 70 of the Rules of Court provides that any person deprived of the possession of
any land or building by force, intimidation, threat, strategy or stealth, or against whom the
possession of any land or building is unlawfully withheld, may bring an action in the proper
Municipal Trial Court against the person or persons unlawfully withholding or depriving of
possession, together with damages and costs. The mandate under this rule is categorical: that all
cases for forcible entry or unlawful detainer shall be filed before the Municipal Trial Court which
shall include not only the plea for restoration of possession but also all claims for damages and
costs arising therefrom. Otherwise expressed, no claim for damages arising out of forcible entry
or unlawful detainer may be filed separately and independently of the claim for restoration of
possession.
• This is consistent with the principle laid down in Sec. 1, par (e), of Rule 16 of the Rules of Court
which states that the pendency of another action between the same parties for the same cause is
a ground for dismissal of an action.
• It is likewise basic under Sec. 3 of Rule 2 of the Revised Rules of Court, as amended, that a party
may not institute more than one suit for a single cause of action. Under Sec. 4 of the same Rule,
if two or more suits are instituted on the basis of the same cause of action, the filing of one or a
judgment upon the merits in any one is available as a ground for the dismissal of the other or
others. "Cause of action" is defined by Sec. 2 of Rule 2 as the act or omission by which a party
violates a right of another. These premises obtaining, there is no question at all that private
respondent's cause of action in the forcible entry case and in the suit for damages is the alleged
illegal retaking of possession of the leased premises by the lessor, petitioner herein, from which
all legal reliefs arise. Simply stated, the restoration of possession and demand for actual
damages in the case before the MeTC and the demand for damages with the RTC both arise
from the same cause of action, i.e., the forcible entry by petitioner into the leased premises.
• A comparative study of the two (2) complaints filed by private respondent against petitioner
before the two (2) trial courts shows that not only are the elements of res adjudicata present, at
least insofar as the claim for actual and compensatory damages is concerned, but also that the
claim for damages — moral and exemplary in addition to actual and compensatory — constitutes
splitting a single cause of action. Since this runs counter to the rule against multiplicity of suits,
the dismissal of the second action becomes imperative.
• The amended complaint for damages filed by private respondent alleges basically the same
factual circumstances and issues as bases for the relief prayed for.
• Restated in its bare essentials, the forcible entry case has one cause of action, namely, the
alleged unlawful entry by petitioner into the leased premises out of which three (3) reliefs
(denominated by private respondent as its causes of action) arose: (a) the restoration by the
lessor (petitioner herein) of the possession of the leased premises to the lessee; (b) the claim for
actual damages due to the losses suffered by private respondent such as the deterioration of
perishable foodstuffs stored inside the premises and the deprivation of the use of the premises
causing loss of expected profits; and, (c) the claim for attorney's fees and costs of suit.
• On the other hand, the complaint for damages prays for a monetary award consisting of moral,
exemplary, and actual damages and attorney’s fees, are all based on the alleged forcible
takeover of the leased premises by petitioner. Since actual and compensatory damages were

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 already prayed for in the forcible entry case before the MeTC, it is obvious that this cannot be
relitigated in the damage suit before the RTC by reason of res adjudicata.
• The other claims for moral and exemplary damages cannot also succeed considering that these
sprung from the main incident being heard before the MeTC. Jurisprudence is unequivocal that
when a single delict or wrong is committed — like the unlawful taking or detention of the property
of another — there is but one single cause of action regardless of the number of rights that may
have been violated, and all such rights should be alleged in a single complaint as constituting one
single cause of action. In a forcible entry case, the real issue is the physical possession of the
real property. The question of damages is merely secondary or incidental, so much so that the
amount thereof does not affect the jurisdiction of the court. In other words, the unlawful act of a
deforciant in taking possession of a piece of land by means of force and intimidation against the
rights of the party actually in possession thereof is a delict or wrong, or a cause of action that
gives rise to two (2) remedies, namely, the recovery of possession and recovery of damages
arising from the loss of possession, but only to one action. For obvious reasons, both remedies
cannot be the subject of two (2) separate and independent actions, one for recovery of
possession only, and the other, for the recovery of damages. That would inevitably lead to what is
termed in law as splitting up a cause of action.
• A claim cannot be divided in such a way that a part of the amount of damages may be recovered
in one case and the rest, in another.
• What then is the effect of the dismissal of the other action? Since the rule is that all such rights
should be alleged in a single complaint, it goes without saying that those not therein included
cannot be the subject of subsequent complaints for they are barred forever. If a suit is brought for
a part of a claim, a judgment obtained in that action precludes the plaintiff from bringing a second
action for the residue of the claim, notwithstanding that the second form of action is not identical
with the first or different grounds for relief are set for the second suit. This principle not only
embraces what was actually determined, but also extends to every matter which the parties might
have litigated in the case. This is why the legal basis upon which private respondent anchored its
second claim for damages, not otherwise raised and cited by private respondent in the forcible
entry case, cannot be used as justification for the second suit for damages. We note, not without
some degree of displeasure, that by filing a second suit for damages, private respondent was not
only able to press a claim for moral and exemplary damages which by its failure to allege the
same in its suit before the MeTC foreclosed its right to sue on it, but it was also able to obtain
from the RTC, by way of another temporary restraining order, a second reprieve from an
impending public auction sale of its movables which it could not anymore secure from the MeTC
before which the matter of the issuance of a preliminary writ of injunction was already closed.

Final Ruling: The petition is granted.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
Case Title: Joseph v Bautista
Ticker: Collission
Facts

• Respondent Patrocinio Perez is the owner of a cargo truck for conveying cargoes and
passengers for a consideration from Dagupan City to Manila. In 1973, said cargo truck driven by
defendant Domingo Villa was on its way to Valenzuela, Bulacan from Pangasinan. Petitioner, with
a cargo of livestock, boarded the cargo truck at Dagupan City after paying the sum as one-way
fare to Valenzuela, Bulacan. While said cargo truck was negotiating the National Highway
proceeding towards Manila, defendant Domingo Villa tried to overtake a tricycle likewise
proceeding in the same direction. At about the same time, a pick-up truck, supposedly owned by
respondents Antonio Sioson and Jacinto Pagarigan, then driven by respondent Lazaro
Villanueva, tried to overtake the cargo truck which was then in the process of overtaking the
tricycle, thereby forcing the cargo truck to veer towards the shoulder of the road and to ram a
mango tree. As a result, petitioner sustained a bone fracture in one of his legs.
• The following proceedings thereafter took place:
- Petitioner filed a complaint for damages against respondent Patrocinio Perez, as owner of the
cargo truck, based on a breach of contract of carriage and against respondents Antonio Sioson
and Lazaro Villanueva, as owner and driver, respectively, of the pick-up truck, based on quasi-
delict.
- Without leave of court, the petitioner filed his amended complaint impleading respondents Jacinto
Pazarigan and a certain Rosario Vargas as additional alternative defendants. Petitioner
apparently could not ascertain who the real owner of said cargo truck was, whether respondents
Patrocinio Perez or Rosario Vargas, and who was the real owner of said pick-up truck, whether
respondents Antonio Sioson or Jacinto Pagarigan.
- Respondents Lazaro Villanueva, Alberto Cardeno, Antonio Sioson and Jacinto Pagarigan, thru
their insurer, Insurance Corporation of the Philippines, paid petitioner's claim for injuries. By
reason thereof, petitioner executed a release of claim releasing from liability the following parties,
viz : Insurance Corporation of the Philippines, Alberto Cardeno, Lazaro Villanueva, Antonio
Sioson and Jacinto Pagarigan.
- Respondents Lazaro Villanueva, Alberto Cardeno and their insurer, the Insurance Corporation of
the Philippines, paid respondent Patrocinio Perez' claim for damages to her cargo truck.
- Consequently, respondents Sioson, Pagarigan, Cardeno and Villanueva filed a "Motion to
Exonerate and Exclude Defs./Cross defs. Alberto Cardeno, Lazaro Villanueva, Antonio Sioson
and Jacinto Pagarigan on the Instant Case."
- Thereafter, respondent Perez filed her "Opposition to Crossdefs” Motion and counter motion to
dismiss. The so-called counter motion to dismiss was premised on the fact that the release of
claim executed by petitioner in favor of the other respondents inured to the benefit of respondent
Perez, considering that all the respondents are solidarily liable to herein petitioner.
• Respondent judge issued the questioned order dismissing the case, and a motion for the
reconsideration thereof was denied. Hence, this appeal.

Issue

• Whether there was splitting of action [Yes]

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Ruling

• The Court finds the present recourse devoid of merit.

• The argument that there are two causes of action embodied in petitioner's complaint, hence the
judgment on the compromise agreement under the cause of action based on quasi-delict is not a
bar to the cause of action for breach of contract of carriage, is untenable.
• A cause of action is understood to be the delict or wrongful act or omission committed by the
defendant in violation of the primary rights of the plaintiff. It is true that a single act or omission
can be violative of various rights at the same time, as when the act constitutes juridically a
violation of several separate and distinct legal obligations. However, where there is only one
delict or wrong, there is but a single cause of action regardless of the number of rights that may
have been violated belonging to one person.
• The singleness of a cause of action lies in the singleness of the delict or wrong violating the rights
of one person. Nevertheless, if only one injury resulted from several wrongful acts only one cause
of action arises. In the case at bar, there is no question that the petitioner sustained a single
injury on his person. That vested in him a single cause of action, albeit with the correlative rights
of action against the different respondents through the appropriate remedies allowed by law.
• The trial court was, therefore, correct in holding that there was only one cause of action involved
although the bases of recovery invoked by petitioner against the defendants therein were not
necessarily identical since the respondents were not identically circumstanced. However, a
recovery by the petitioner under one remedy necessarily bars recovery under the other. This, in
essence, is the rationale for the proscription in our law against double recovery for the same act
or omission which, obviously, stems from the fundamental rule against unjust enrichment.
• There is no question that the respondents herein are solidarily liable to petitioner. On the
evidence presented in the court below, the trial court found them to be so liable. It is undisputed
that petitioner, in his amended complaint, prayed that the trial court hold respondents jointly and
severally liable. Furthermore, the allegations in the amended complaint clearly impleaded
respondents as solidary debtors. The Court cannot accept the vacuous contention of petitioner
that said allegations are intended to apply only in the event that execution be issued in his favor.
There is nothing in law or jurisprudence which would countenance such a procedure.
• The respondents having been found to be solidarily liable to petitioner, the full payment made by
some of the solidary debtors and their subsequent release from any and all liability to petitioner
inevitably resulted in the extinguishment and release from liability of the other solidary debtors,
including herein respondent Patrocinio Perez.
• The claim that there was an agreement entered into between the parties during the pre-trial
conference that, after such payment made by the other respondents, the case shall proceed as
against respondent Perez is both incredible and unsubstantiated. There is nothing in the records
to show, either by way of pre-trial order, minutes or a transcript of the notes of the alleged pre-trial
hearing, that there was indeed such an agreement.

Final Ruling: The challenged orders are hereby

affirmed.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
Case Title: Flores v Mallare-Phillipps
Ticker: Unpaid Truck Tires
Facts

• Petitioner has appealed by certiorari from the order of Judge Heilia Mallare-Phillipps of the
Regional Trial Court of Baguio City and Benguet Province which dismissed his complaint for lack
of jurisdiction.
• The order appealed from states that the first cause of action alleged in the complaint was against
respondent Ignacio Binongcal for refusing to pay the amount representing cost of truck tires
which he purchased on credit from petitioner on various occasions in 1981; and the second cause
of action was against respondent Fernando Calion for allegedly refusing to pay the amount
representing cost of truck tires which he purchased on credit from petitioner on several occasions
in 1982.
• In 1983, counsel for respondent Binongcal filed a Motion to Dismiss on the ground of lack of
jurisdiction since the amount of the demand against said respondent was under the amount
specified in the BP 129 over which the RTC would have jurisdiction.

Issue

• Whether there was a misjoinder [Yes]

Arguments
Ruling
Petitioner
The pertinent portion of Section 33(1) of BP 129 reads as follows: “…Provided, That
where there are several claims or causes of action between the same or different parties,
embodied in the same complaint, the amount of the demand shall be the totality of the
claims in all the causes of action, irrespective of whether the causes of action arose out of
the same or different transactions…”

The Interim Rules provides thus that in actions where the jurisdiction of the court is
The lower
dependent on the amount involved, the test of jurisdiction shall be the aggregate sum of
court has
all the money demands, exclusive only of interest and costs, irrespective of whether or not
jurisdiction
the separate claims are owned by or due to different parties. If any demand is for
over the
damages in a civil action, the amount thereof must be specifically alleged.
case
following
Petitioner compares the above-quoted provisions with the pertinent portion of the former
the "novel"
rule under the Judiciary Act of 1948 which reads as follows: “Where there are several
totality rule
claims or causes of action between the same parties embodied in the same complaint,
introduced
the amount of the demand shall be the totality of the demand in all the causes of action,
in BP 129.
irrespective of whether the causes of action arose out of the same or different
transactions; but where the claims or causes of action joined in a single complaint are
separately owned by or due to different parties, each separate claim shall furnish the
jurisdictional test…” and argues that with the deletion of the proviso in the former rule, the
totality rule was reduced to clarity and brevity and the jurisdictional test is the totality of the
claims in all, not in each, of the causes of action, irrespective of whether the causes of
action arose out of the same or

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 different transactions.

This argument is partly correct. There is no difference between the former and present
rules in cases where a plaintiff sues a defendant on two or more separate causes of
action. In such cases, the amount of the demand shall be the totality of the claims in all
the causes of action irrespective of whether the causes of action arose out of the same or
different transactions. If the total demand exceeds twenty thousand pesos, then the
regional trial court has jurisdiction. Needless to state, if the causes of action are separate
and independent, their joinder in one complaint is permissive and not mandatory, and any
cause of action where the amount of the demand is twenty thousand pesos or less may
be the subject of a separate complaint filed with a metropolitan or municipal trial court.

On the other hand, there is a difference between the former and present rules in cases
where two or more plaintiffs having separate causes of action against a defendant join in
a single complaint. Under the former rule, "where the claims or causes of action joined in
a single complaint are separately owned by or due to different parties, each separate
claim shall furnish the jurisdictional test." As worded, the former rule applied only to cases
of permissive joinder of parties plaintiff. However, it was also applicable to cases of
permissive joinder of parties defendant, as may be deduced from the ruling in a case
decided by the SC.

Under the present law, the totality rule is applied also to cases where two or more
plaintiffs having separate causes of action against a defendant join in a single complaint,
as well as to cases where a plaintiff has separate causes of action against two or more
defendants joined in a single complaint. However, the causes of action in favor of the two
or more plaintiffs or against the two or more defendants should arise out of the same
transaction or series of transactions and there should be a common question of law or
fact.

In other words, in cases of permissive joinder of parties, whether as plaintiffs or as

defendants, the total of all the claims shall now furnish the jurisdictional test. Needless to
state also, if instead of joining or being joined in one complaint separate actions are filed
by or against the parties, the amount demanded in each complaint shall furnish the
jurisdictional test.

In the case at bar, the lower court correctly held that the jurisdictional test is subject to the
rules on joinder of parties and that, after a careful scrutiny of the complaint, it appears that
there is a misjoinder of parties for the reason that the claims against respondents
Binongcal and Calion are separate and distinct and neither of which falls within its
jurisdiction.
Final Ruling: The order appealed from is affirmed.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
Case Title: Lourdes Suites v Binaro
Ticker: Hotel Damages
Facts

• Lourdes Suites is the owner and operator of a hotel located in Makati City. It executed two
contracts with Noemi Binarao for room accommodations for two groups of students.
• According to petitioner's records, respondent was able to pay the total contract price. However,
petitioner claimed that there was an unpaid balance representing the charges for damages to the
furniture, a lost key and excess guests.
• Thus, petitioner sent a demand letter to respondent for the unsettled amount. Respondent failed
to pay the amount, prompting petitioner to file a Statement of Claim for collection of sum of
money plus damages before the MeTC.
• The MeTC dismissed the complaint with prejudice for lack of cause of action.
• The RTC upheld the decision of the MeTC.
• Hence, this petition.

Issue

• Whether there was a cause of action [No]

Ruling

• The RTC correctly upheld the MTC Decision. Petitioner argues that even after the presentation of
evidence by both parties, a complaint cannot be dismissed with prejudice based on lack of cause
of action because: (1) this ground is not expressly provided for under the Rules on Small Claims
Cases; and (2) if there was a failure to prove a cause of action the only available remedy would
be a demurrer filed by the defendant.
• In a case, the Court said that failure to state a cause of action and lack of cause of action are
really different from each other. On the one hand, failure to state a cause of action refers to the
insufficiency of the pleading, and is a ground for dismissal under Rule 16 of the Rules of Court.
On the other hand, lack of cause [of] action refers to a situation where the evidence does not
prove the cause of action alleged in the pleading. Justice Regalado, a recognized commentator
on remedial law, has explained the distinction:

“What is contemplated, therefore, is a failure to state a cause of action. This is a matter of

insufficiency of the pleading. This is, therefore, a matter of insufficiency of evidence. Failure to
state a cause of action is different from failure to prove a cause of action. The remedy in the first
is to move for dismissal of the pleading, while the remedy in the second is to demur to the
evidence. The procedure would consequently be to require the pleading to state a cause of
action, by timely objection to its deficiency; or, at the trial, to file a demurrer to evidence, if such
motion is warranted.”
• The remedies discussed in the said case are those which are available to the defendant. The
courts are not precluded from dismissing a case for lack of cause of action (i.e. , insufficiency of
evidence). In civil cases, courts must determine if the plaintiff was able to prove his case by a
preponderance of evidence which is defined as ". . . the probability of the truth. It is evidence that
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 is more convincing to the court as worthy of belief than that which is offered in opposition thereto."
• As correctly stated by the RTC:

“The basis of [the] public respondent in dismissing the complaint for lack of cause of action is the
failure of petitioner to preponderantly establish its claim against the private respondent by clear
and convincing evidence. Hence, public respondent did not commit grave abuse of discretion
when it dismissed the Complaint for lack of cause of action, as he referred to the evidence
presented and not to the allegations in the Complaint. The dismissal of the complaint with
prejudice is likewise not an exercise of wanton or palpable discretion. It must be noted that this
case is an action for small claims where decisions are rendered final and unappealable, hence, a
[d]ecision dismissing the same is necessarily with prejudice.”

Final Ruling: The petition is denied.

RULE 3
PARTIES TO CIVIL ACTIONS

Section 1
Who may be parties; plaintiff and defendant. – Only natural or juridical persons, or entities authorized by
law may be parties in a civil action. The term “plaintiff” may refer to the claiming party, the counter-
claimant, the cross-claimant, or the third (fourth, etc.) – party plaintiff. The term “defendant” may refer to
the original defending party, the defendant in a counterclaim, the cross-defendant, or the third (fourth,
etc.)-party defendant.

Section 2
Parties in interest. – A real party in interest is the party who stands to be benefited or injured by the
judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or
these Rules, every action must be prosecuted or defendant in the name of the real party in interest.

Case Title: Pacaña-Contreras v Rovila Water Supply, Inc.

Ticker: Rovila Water Supply
Facts

• Petitioners Rebecca Pacaña-Contreras and Rosalie Pacaña, children of Lourdes Teves Pacaña
and Luciano Pacaña, filed the present case against Rovila Inc., Earl, Lilia, Dalla and Marisa for
accounting and damages. The petitioners claimed that their family has long been known in the
community to be engaged in the water supply business; they operated the "Rovila Water Supply"
from their family residence and were engaged in the distribution of water to customers in Cebu
City.
• The petitioners alleged that Lilia was a former trusted employee in the family business who hid
business records and burned and ransacked the family files. Lilia also allegedly posted security
guards and barred the members of the Pacaña family from operating their business. She then
claimed ownership over the family business through a corporation named "Rovila Water Supply,
Inc." Upon inquiry with the Securities and Exchange Commission, the petitioners claimed that
Rovila Inc. was surreptitiously formed with the respondents as the majority stockholders. The
respondents did so by conspiring with one another and forming the respondent corporation to
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 takeover and illegally usurp the family business' registered name.
• In forming the respondent corporation, the respondents allegedly used the name of Lourdes as
one of the incorporators and made it appear in the SEC documents that the family business was
operated in a place other than the Pacaña residence. Thereafter, the respondents used the
Pacaña family's receipts and the deliveries and sales were made to appear as those of the
respondent Rovila Inc. Using this scheme, the respondents fraudulently appropriated the
collections and payments.
• The petitioners filed the complaint in their own names although Rosalie was authorized by
Lourdes through a sworn declaration and special power of attorney.
• The respondents filed a first motion to dismiss. The RTC denied the motion.
• Lourdes died and the petitioners amended their complaint to reflect this development. They still
attached to their amended complaint the sworn declaration with SPA, but the caption of the
amended complaint remained the same.
• The CA granted the petition for certiorari filed by the respondents and ruled that the RTC
committed grave abuse of discretion as the petitioners filed the complaint and the amended
complaint as attorneys-in-fact of their parents. As such, they are not the real parties in interest
and cannot bring an action in their own names.
• Hence, the petition.

Issue

• Whether petitioners are the real parties in interest [Yes]

Ruling

• The Court finds the petition meritorious.

Other heirs of the spouses Pacaña to be impleaded in the case

• It should be emphasized that insofar as the petitioners are concerned, the respondents have
waived the dismissal of the complaint based on the ground of failure to state a cause of action
because the petitioners are not the real parties in interest.
• At this juncture, a distinction between a real party in interest and an indispensable party is in
order. A real party in interest is the party who stands to be benefited or injured by the judgment of
the suit, or the party entitled to the avails of the suit. On the other hand, an indispensable party is
a party in interest without whom no final determination can be had of an action, in contrast to a
necessary party, which is one who is not indispensable but who ought to be joined as a party if
complete relief is to be accorded as to those already parties, or for a complete determination or
settlement of the claim subject of the action. If a suit is not brought in the name of or against the
real party in interest, a motion to dismiss may be filed on the ground that the complaint states no
cause of action. However, the dismissal on this ground entails an examination of whether the
parties presently pleaded are interested in the outcome of the litigation, and not whether all
persons interested in such outcome are actually pleaded. The latter query is relevant in
discussions concerning indispensable and necessary parties, but not in discussions concerning
real parties in interest. Both indispensable and necessary parties are considered as real parties in
interest, since both classes of parties stand to be benefited or injured by the judgment of the suit."
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 • At the inception of the present case, both the spouses Pacaña were not impleaded as parties-
plaintiffs. The Court notes, however, that they are indispensable parties to the case as the alleged
owners of Rovila Water Supply. Without their inclusion as parties, there can be no final
determination of the present case. They possess such an interest in the controversy that a final
decree would necessarily affect their rights, so that the courts cannot proceed without their
presence. Their interest in the subject matter of the suit and in the relief sought is inextricably
intertwined with that of the other parties.
• Jurisprudence on the procedural consequence of the inclusion or non-inclusion of an
indispensable party is divided in our jurisdiction. Mindful of the differing views of the Court as
regards the legal effects of the non-inclusion of indispensable parties, the Court clarified in a case
that the failure to implead indispensable parties is a curable error and the foreign origin of our
present rules on indispensable parties permitted this corrective measure.
• With these discussions as premises, the Court is of the view that the proper remedy in the
present case is to implead the indispensable parties especially when their non-inclusion is merely
a technical defect. To do so would serve proper administration of justice and prevent further delay
and multiplicity of suits. Pursuant to the Rules of Court, parties may be added by order of the
court on motion of the party or on its own initiative at any stage of the action. If the plaintiff
refuses to implead an indispensable party despite the order of the court, then the court may
dismiss the complaint for the plaintiff's failure to comply with a lawful court order. The operative
act that would lead to the dismissal of the case would be the refusal to comply with the directive
of the court for the joinder of an indispensable party to the case.
• Obviously, in the present case, the deceased Pacañas can no longer be included in the complaint
as indispensable parties because of their death during the pendency of the case. Upon their
death, however, their ownership and rights over their properties were transmitted to their heirs,
including herein petitioners.
• Therefore, to obviate further delay in the proceedings of the present case and given the Court's
authority to order the inclusion of an indispensable party at any stage of the proceedings, the
heirs of the spouses Pacaña, except the petitioners who are already parties to the case and
Lagrimas Pacaña-Gonzalez who intervened in the case, are hereby ordered impleaded as
parties-plaintiffs.

Final Ruling: The petition is granted.

Case Title: Golangco v Fung

Ticker: From Libel to Civil
Facts

• The civil case was a special civil action for certiorari commenced by the petitioner to assail the
order issued by the Regional Trial Court in a criminal case entitled People v. Jone Fung, whereby
the RTC declared the Prosecution to have terminated the presentation of further evidence and
required the Prosecution to file a written offer of evidence within 20 days, furnishing a copy of the
offer to the accused who in turn had to comment on the offer within 15 days from receipt.
• The criminal case referred to is a prosecution for libel initiated by the petitioner as the
complainant against the respondent. Allegedly, the respondent had issued an office
memorandum maliciously imputing against the petitioner the commission of bribery and had sent
copies of the memorandum to the petitioner's superiors in the Philippine Overseas Employment
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Administration and to other public officers and personalities not connected with the POEA,
causing damage and prejudice to the petitioner.
• After almost 6 years, the Prosecution had presented only two witnesses in the criminal case. It
requested that a subpoena ad testificandum be issued to and served on Atty. Oscar Ramos,
Resident Ombudsman of the POEA, to compel him to testify in the criminal case. The hearing
was reset due to the unavailability of Atty. Ramos.
• The failed to present Atty. Ramos as its witness because no subpoena had been issued to and
served on him for the purpose. Consequently, the RTC judge issued an order terminating the
Prosecution's presentation of evidence.
• The petitioner, by his lonesome, assailed on certiorari in the Court of Appeals the order, claiming
that the RTC judge thereby committed grave abuse of discretion for not issuing the subpoena to
require Atty. Ramos to appear and testify in the hearing.
• The CA rebuffed the petitioner and dismissed the petition for certiorari.
• Hence, this appeal.

Issue

• Whether the People of the Philippines is an indispensable party [Yes]

Ruling

• The Court finds no reversible error on the part of the Court of Appeals.
• The petitioner did not join the People of the Philippines as a party in his action for certiorari in the
Court of Appeals. He thereby ignored that the People of the Philippines were indispensable
parties due to his objective being to set aside the trial court's order that concerned the public
aspect of the criminal case. The omission was fatal and already enough cause for the summary
rejection of his petition for certiorari.
• The petitioner did not also obtain the consent of the Office of the Solicitor General to his petition
for certiorari . At the very least, he should have furnished a copy of the petition for certiorari to the
OSG prior to the filing thereof, but even that he did not do. Thereby, he violated Executive Order
No. 292 (The Administrative Code of 1987), which mandates the OSG to represent "the
Government in the Supreme Court and the Court of Appeals in all criminal proceedings; represent
the Government and its officers in the Supreme Court, the Court of Appeals, and all other courts
or tribunals in all civil actions and special proceedings in which the Government or any officer
thereof in his official capacity is a party."
• Although the petition for certiorari bore the conformity of the public prosecutor (i.e. , Assistant City
Prosecutor Danilo Formoso of Manila), that conformity alone did not suffice. The authority of the
City Prosecutor or his assistant to appear for and represent the People of the Philippines was
confined only to the proceedings in the trial court.

Final Ruling: The decision of the CA is affirmed.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
Case Title: Equitable PCI Bank v Heirs of Antonio Chiu
Ticker: Matilde
Facts

• To secure loans in the aggregate amount of P7 Million obtained by one Gabriel Ching from herein
petitioner Equitable PCI Bank, Inc., Antonio Tiu, of which herein respondents allege to be heirs,
executed a Real Estate Mortgage in favor of petitioner covering a lot located in Tacloban City.
Before the words "With my Marital Consent" appearing in the REM is a signature attributed to
Antonio's wife Matilde.
• In 1998, Antonio executed an Amendment to the Real Estate Mortgage increasing the amount
secured by the mortgage, also bearing a signature attributed to his wife Matilde above the words
"With my Marital Consent."
• The property mortgaged was covered by a TCT of the Tacloban Register of Deeds which, the
AREM states, was "registered in the name of the Mortgagor."
• Antonio died in 1999.
• The loan obligation having remained unsettled, petitioner filed before the Regional Trial Court a
petition for sale, for the extrajudicial foreclosure of the AREM and the sale at public auction of the
lot covered thereby. Acting on the petition, the RTC Clerk of Court and Ex-Oficio Sheriff
scheduled the public auction.
• A day before the scheduled auction sale, the herein respondents, Heirs of Antonio Tiu, namely
Arlene Fu, Michael Tiu, Andrew Tiu, Edgar Tiu, and Erwin Tiu, filed a Complaint/Petition before
the RTC of Tacloban against petitioner and the Clerk of Court-Ex Oficio Sheriff for annulment of
the AREM, injunction with prayer for issuance of writ of preliminary injunction and/or temporary
restraining order and damages.
• The RTC issued a temporary restraining order, and subsequently, a writ of preliminary injunction.
• To the Complaint petitioner filed a Motion to Dismiss.
• The RTC denied the Motion to Dismiss.
• The CA affirmed the decision of the CA.
• Hence, the petition.

Issue

• Whether the complaint filed by respondents-children of Antonio, without impleading Matilde who
must also be Antonio's heir and who, along with Antonio, was principally obliged under the AREM
sought to be annulled, is dismissible for lack of cause of action [Yes]

Arguments
Ruling
Petitioner
Respondents are not The AREM was executed by Antonio, with the marital consent of Matilde.
the real parties in Since the mortgaged property is presumed conjugal, she is obliged principally
interest, their complaint under the AREM. It is thus she, following the Civil Code and the Rules of
states no cause of Court, who is the real party in interest, hence, the action must be prosecuted
action. Since the party in her name as she stands to be benefited or injured in the action.
in interest is
respondents' mother but Assuming that Matilde is indeed incapacitated, it is her legal guardian who
the complaint is not should file the action on her behalf. Not only is there no allegation in the
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
brought in her name, complaint, however, that respondents have been legally designated as
respondents' complaint guardians to file the action on her behalf. The name of Matilde, who is
states no cause of deemed the real party in interest, has not been included in the title of the
action. case, in violation of Sec. 3 of Rule 3 of the Rules of Court. aCASEH
Final Ruling: The petition is granted.

Case Title: White Light Corporation v City of Manila

Ticker: Anti Short-Time Admission
Facts

• In 1992, City Mayor Alfredo Lim signed into law the Ordinance prohibiting short time admission in
hotels, motels, lodging houses, pension houses and similar establishments in the City of Manila.
• The Malate Tourist and Development Corporation (MTDC) filed a complaint for declaratory relief
with prayer for a writ of preliminary injunction and/or temporary restraining order with the RTC
impleading as defendant, herein respondent City of Manila represented by Mayor Lim.
• Petitioners White Light Corporation (WLC), Titanium Corporation (TC) and Sta. Mesa Tourist and
Development Corporation (STDC) filed a motion to intervene and to admit attached complaint-in-
intervention on the ground that the Ordinance directly affects their business interests as operators
of drive-in hotels and motels in Manila. The three companies are components of the Anito Group
of Companies which owns and operates several hotels and motels in Metro Manila.
• The RTC granted the motion to intervene.
• MTDC moved to withdraw as plaintiff.
• The RTC granted MTDC's motion to withdraw.
• The RTC issued a TRO directing the City to cease and desist from enforcing the Ordinance.
• The RTC issued a writ of preliminary injunction ordering the city to desist from the enforcement of
the Ordinance.
• The RTC declared the ordinance null and void.
• The City later filed a petition for review on certiorari with the Supreme Court. The latter referred
the petition to the Court of Appeals.
• The Court of Appeals reversed the decision of the RTC and affirmed the constitutionality of the
Ordinance.

Issue

• Whether these establishments have the requisite standing to plead for protection of their patrons'
equal protection rights [Yes]

Arguments
Ruling
Petitioner
As owners of Standing or locus standi is the ability of a party to demonstrate to the court
establishments sufficient connection to and harm from the law or action challenged to support
offering "wash-up" that party's participation in the case. More importantly, the doctrine of standing is
rates, their business built on the principle of separation of powers, sparing as it does unnecessary
is being unlawfully interference or invalidation by the judicial branch of the actions rendered by its
interfered with by the co-equal branches of government.
Ordinance.
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 The requirement of standing is a core component of the judicial system derived
directly from the Constitution. The constitutional component of standing doctrine
incorporates concepts which concededly are not susceptible of precise
definition. In this jurisdiction, the extancy of "a direct and personal interest"
presents the most obvious cause, as well as the standard test for a petitioner's
standing. Nonetheless, the general rules on standing admit of several
exceptions such as the overbreadth doctrine, taxpayer suits, third party standing
and, especially in the Philippines, the doctrine of transcendental importance.

For this particular set of facts, the concept of third party standing as an
exception and the overbreadth doctrine are appropriate. In a case, the United
States Supreme Court wrote that: "We have recognized the right of litigants to
bring actions on behalf of third parties, provided three important criteria are
satisfied: the litigant must have suffered an 'injury-in-fact', thus giving him or her
a "sufficiently concrete interest" in the outcome of the issue in dispute; the
litigant must have a close relation to the third party; and there must exist some
hindrance to the third party's ability to protect his or her own interests". Herein, it
is clear that the business interests of the petitioners are likewise injured by the
Ordinance. They rely on the patronage of their customers for their continued
viability which appears to be threatened by the enforcement of the Ordinance.
The relative silence in constitutional litigation of such special interest groups in
our nation such as the American Civil Liberties Union in the United States may
also be construed as a hindrance for customers to bring suit.

American jurisprudence is replete with examples where parties-in-interest were

allowed standing to advocate or invoke the fundamental due process or equal
protection claims of other persons or classes of persons injured by state action.

The Court thus recognizes that the petitioners have a right to assert the
constitutional rights of their clients to patronize their establishments for a "wash-
rate" time frame.
Final Ruling: The petition is granted.

Case Title: Rayo v Metropolitan Bank and Trust Company

Ticker: Six Loans
Facts

• Midas Diversified Export Corp., thru its president, Mr. Samuel Lee, obtained six loans from private
respondent Metropolitan Bank and Trust Company as evidenced by promissory notes. To secure
the payment of a portion of a loan, Louisville Realty & Development Corporation, thru its
president, Mr. Samuel thru its president, Mr. Samuel Lee, executed in favor of Metrobank, a real
estate mortgage over three parcels of land situated in Quezon City, with all the buildings and
improvements thereon. The properties are covered by TCTs issued by the Registry of Deeds of
Quezon City.
• When the debtor-mortgagor failed to pay, Metrobank extra-judicially foreclosed the real estate
mortgage. Thereafter, in a public auction, Metrobank was the highest bidder.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 • A Certificate of Sale was duly registered with the Registry of Deeds of Quezon City. When
Louisville refused to turn over the real properties, Metrobank filed before the Regional Trial Court
an ex parte petition for the issuance of a writ of possession. The RTC granted the petition in an
Order.
• Metrobank posted the required bond. Metrobank posted the required bond. The writ was
implemented.
• Meanwhile, petitioner Eduardo Rayo filed a complaint against Metrobank for Nullification of Real
Estate Mortgage Contract(s) and Extrajudicial Foreclosure Sale, in the RTC.
• Petitioner Rayo filed with the Court of Appeals a Petition for Annulment of Judgment on the
ground of "absolute lack of due process."
• The CA denied the petition for lack of merit. The Court of Appeals ruled that petitioner is neither
the registered owner nor the successor-in-interest of the registered owner; hence, not a real
party-in-interest.
• Hence, the petition.

Issue

• Whether petitioner is a real party-in-interest [No]

Arguments
Ruling
Petitioner
Under Section 2, Rule 3 of the Rules of Court, every action must be prosecuted or
defended in the name of the real party-in-interest, or one "who stands to be benefited
or injured by the judgment in the suit." A real party-in-interest is one with "a present
substantial interest" which means such interest of a party in the subject matter of the
He has the legal
action as will entitle him, under the substantive law, to recover if the evidence is
personality to
sufficient, or that he has the legal title to demand.
institute the
annulment of
Initially, the Court recognized herein petitioner as the co-assignee of the subject real
judgment case
properties as shown in the deed of assignment. However, while petitioner would be
against
injured by the judgment in this suit, he has no present substantial interest to institute
Metrobank,
the annulment of judgment proceedings and nullify the order granting the writ of
considering that
possession.
the deed of
assignment he
First, there was no violation of petitioner's right to constitutional due process. The
entered into
issuance of a writ of possession in favor of the purchaser in a foreclosure sale of a
with Louisville
mortgaged property is a ministerial duty of the court. The purchaser of the foreclosed
and Winston
property, upon ex parte application and the posting of the required bond, has the right
Linwy makes
to acquire possession of the foreclosed property during the 12-month redemption
him a
period and with more reason, after the expiration of the redemption period.
coassignee
over the subject
An ex parte petition for the issuance of a writ of possession is not, strictly speaking, a
real properties.
"judicial process" as contemplated in the Civil Code. It is a judicial proceeding for the
enforcement of one's right of possession as purchaser in a foreclosure sale. It is not
an ordinary suit filed in court, by which one party "sues another for the enforcement of
a wrong or protection of a right, or the prevention or redress of a wrong." It is a non-

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 litigious proceeding authorized in an extrajudicial foreclosure of mortgage and is
brought for the benefit of one party only, and without notice to, or consent by any
person adversely interested. It is a proceeding where the relief is granted without
requiring an opportunity for the person against whom the relief is sought to be heard.
No notice is needed to be served upon persons interested in the subject property.

Second, in the deed of assignment, petitioner also acknowledged that the subject real
properties were already sold at various extrajudicial foreclosure sales and bought by
Metrobank. Clearly, petitioner recognized the prior existing right of Metrobank as the
mortgagee-purchaser over the subject real properties. Actual knowledge of a prior
mortgage with Metrobank is equivalent to notice of registration. Hence, a real right or
lien in favor of Metrobank had already been established, subsisting over the
properties until the discharge of the principal obligation, whoever the possessor(s) of
the land might be. As petitioner is not a party whose interest is adverse to that of
Louisville, there was no bar to the issuance of a writ of possession to Metrobank. It
does not matter that petitioner was not specifically named in the writ of possession
nor notified of such proceedings.
Final Ruling: The petition is denied for lack of merit.

Case Title: Oco v Limbaring

Ticker: Father for Daughters
Facts

• In 1996, Sabas Limbaring subdivided his Lot 2325-D, into two lots denominated as Lot Nos.
2325-D-1 and 2325-D-2. He then executed in favor of Jennifer Limbaring a Deed of Sale for Lot
2325-D-2; and, in favor of Sarah Jane Limbaring, another Deed for Lot 2325-D-1.
• Sensing some irregularities in the transaction, Percita Oco, the daughter of Sabas Limbaring, left
Puerto Princesa City and went to Ozamis City. She then filed a case of perjury and falsification of
documents against respondent, her uncle who was the father of Jennifer and Sarah Jane. During
the pre-litigation conference called by City Prosecutor Luzminda Uy, the parties agreed that the
two parcels of land should be reconveyed to Percita, who was to pay respondent all the expenses
that had been and would be incurred to transfer the titles to her name.
• Respondent demanded for the estimated expenses for documentation, capital gains, and
documentary stamp taxes; registration fees for the Register of Deeds; and other incidental
expenses for clearances from the Department of Agrarian Reform. Percita succeeded in lowering
the amount, for which she executed an undertaking.
• Pursuant to their agreement, respondent facilitated the transfer of the titles to her from the names
of his daughters. After the transfer had been effected, Percita left for Puerta Princesa without
paying the agreed amount. Several demands were made, but she refused to pay.
• In 1999, respondent filed against Spouses Anthony and Percita Oco a Complaint for the
rescission of the sales contracts, with recovery of possession and ownership of the two parcels of
land.
• Spouses Oco filed a Motion to Dismiss on the ground that the plaintiff (herein respondent) was
not the real party in interest.
• The RTC issued an Order denying the Motion to Dismiss.
• The RTC dismissed the complaint.
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 • The CA ruled that respondent was a real party-in-interest.
• Hence, the petition.

Issue

• Whether the respondent, who was the plaintiff in the trial court, was a real party in interest in the
suit to rescind the Deeds of Reconveyance [No]

Arguments
Ruling
Petitioner Respondent
The Petition is meritorious.

As applied to the present case, Section 2 of Rule 3 of

the Rules of Court has two requirements: 1) to
institute an action, the plaintiff must be the real party
in interest; and 2) the action must be prosecuted in
the name of the real party in interest. Necessarily, the
purposes of this provision are 1) to prevent the
prosecution of actions by persons without any right,
title or interest in the case; 2) to require that the actual
party entitled to legal relief be the one to prosecute
the action; 3) to avoid a multiplicity of suits; and 4) to
discourage litigation and keep it within certain
bounds, pursuant to sound public policy.
Respondent was not
Interest within the meaning of the Rules means
a trustor, and
material interest or an interest in issue to be affected
therefore not the
by the decree or judgment of the case, as
real party in interest
distinguished from mere curiosity about the question
and had no legal
involved. One having no material interest to protect
right to institute the
cannot invoke the jurisdiction of the court as the
suit.
plaintiff in an action. When the plaintiff is not the real
party in interest, the case is dismissible on the ground
of lack of cause of action.

The parties to a contract are the real parties in

interest in an action upon it, as consistently held by
the Court. Only the contracting parties are bound by
the stipulations in the contract; they are the ones who
would benefit from and could violate it. Thus, one who
is not a party to a contract, and for whose benefit it
was not expressly made, cannot maintain an action
on it. One cannot do so, even if the contract
performed by the contracting parties would
incidentally inure to one's benefit.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 As an exception, parties who have not taken part in a
contract may show that they have a real interest
affected by its performance or annulment. In other
words, those who are not principally or subsidiarily
obligated in a contract, in which they had no
intervention, may show their detriment that could
result from it. Contracts pour autrui are covered by
this exception. In this latter instance, the law requires
that the "contracting parties must have clearly and
deliberately conferred a favor upon a third person." A
"mere incidental benefit is not enough."

Respondent's Complaint, entitled "Rescission of

Contract & Recovery of Possession & Ownership of
Two Parcels of Land," is clearly an action on a
contract. The agreements sought to be rescinded
clearly show that the parties to the Deeds of Absolute
Sale were Jennifer and Sarah Jane Limbaring as
vendors and Percita Oco as vendee. Clearly then, the
action upon the contracts may — as a rule — be
instituted only by Jennifer and Sarah Jane against
Percita.

Respondent is not a real party in interest. He was not

a party to the contracts and has not demonstrated
any material interest in their fulfillment. Evidently, the
allegations in the Complaint do not show that the
properties would be conveyed to him, even if Percita
were to be proven to have committed a breach of the
subject agreements.
Respondent has presented only bare assertions that
a trust was created. Under the last sentence of Article
1448, respondent's alleged acts — paying the price of
A trust was created when
the subject properties and, in the titles, naming his
he purchased the
children as owners — raise the presumption that a gift
properties from Sabas
was effected in their favor. Respondent failed to rebut
Limbaring in favor of his
this presumption. Absent any clear proof that a trust
daughters. As trustor, he
was created, he cannot be deemed a real party in
allegedly stands to be
interest. That he should be deemed a trustor on the
benefited or injured by
basis merely of having paid the purchase price is
any decision in the case.
plainly contradicted by the presumption based on
Article 1448 of the Civil Code "that there is a gift in
favor of the child," not a trust in favor of the parent.
Final Ruling: The petition is granted.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
Case Title: Domingo v Carague
Ticker: COA Restructuring Plan
Facts

• Assailed in this petition for certiorari is the legality of a resolution of the Commission on Audit for
Organizational Restructuring Plan. The above-named petitioners basically alleged therein that
this Plan is intrinsically void for want of an enabling law authorizing COA to undertake the same
and providing for the necessary standards, conditions, restrictions, limitations, guidelines, and
parameters. Petitioners further alleged that in initiating such Organizational Restructuring Plan
without legal authority, COA committed grave abuse of discretion amounting to lack or excess of
jurisdiction.
• Petitioners Eufemio Domingo, Celso Gangan, Pascasio Banaria are retired Chairmen, while
Sofronio Ursal, and Alberto Cruz are retired Commissioners of COA. All claim “to maintain a
deep-seated abiding interest in the affairs of COA,” especially in its Organizational Restructuring
Plan, as concerned taxpayers.
• The other petitioners are incumbent officers or employees of COA. Maria Matib and Angelo
Sanchez are State Auditor III and State Auditor II, respectively, assigned to the Cordillera
Administrative Region (CAR). Prior to the implementation of the questioned COA Organizational
Restructuring Plan, they were Resident Auditors and later Audit Team Leaders. Petitioner Rachel
Pacpaco is a State Auditor III assigned to CAR and a Team Supervisor, while petitioner Sherwin
Sipi-an is a State Auditor I also assigned at the CAR. These petitioners claim that they were
unceremoniously divested of their designations/ranks as Unit Head, Team Supervisor, and Team
Leader upon implementation of the COA Organizational Restructuring Plan without just cause
and without due process, in violation of Civil Service Law. Moreover, they were deprived of their
respective Representation and Transportation Allowances (RATA), thus causing them undue
financial prejudice.

Issue

• Whether petitioners have the legal standing to institute the instant petition [No]

Arguments
Ruling
Petitioner
Here, petitioners have not shown any direct and personal interest in the COA
Where the
Organizational Restructuring Plan. There is no indication that they have sustained or
subject matter of
are in imminent danger of sustaining some direct injury as a result of its
a case is a
implementation. In fact, they admitted that “they do not seek any affirmative relief nor
matter of public
impute any improper or improvident act against the respondents” and "are not
concern and
motivated by any desire to seek affirmative relief from COA or from respondents that
imbued with
would redound to their personal benefit or gain." Clearly, they do not have any legal
public interest,
standing to file the instant suit.
then this fact
alone gives them
The Court is are well aware of the averments of petitioners Matib, Pacpaco,
legal standing to
Sanchez, and Sipi-An that they were demoted and unceremoniously divested of their
institute the
previous designations as Unit Head, Team Supervisor, or Team Leader; that they
instant petition.
were deprived of their RATA; that they were relegated to being mere Team

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Members, entitled to only a reimbursable transportation allowance; and that they
were denied due process.

Such averments lack merit. Actually, they were not demoted.

Thus, in the implementation of the COA Organizational Restructuring Plan, the Court
fails to see how petitioners could have sustained personal injury as they have not
shown to have a personal stake therein. Accordingly, they are wanting in legal
standing to institute the instant petition.
Final Ruling: The petition is dismissed.

Case Title: Hinog v Melicor

Ticker: Relative Rentals
Facts

• In 1991, private respondents Custodio, Rufo, Tomas and Honorio, all surnamed Balane, filed a
complaint for "Recovery of Ownership and Possession, Removal of Construction and Damages"
against Bertuldo Hinog. They alleged that they allowed Bertuldo to use a portion of the land they
own for a period of ten years and construct thereon a small house of light materials at a nominal
annual rental, considering the close relations of the parties; after the expiration of the ten-year
period, they demanded the return of the occupied portion and removal of the house constructed
thereon but Bertuldo refused and instead claimed ownership of the entire property.
• Accordingly, private respondents sought to oust Bertuldo from the premises of the subject
property and restore upon themselves the ownership and possession thereof, as well as the
payment of moral and exemplary damages, attorney's fees and litigation expenses "in amounts
justified by the evidence."
• Bertuldo died without completing his evidence.
• Atty. Petalcorin, substitute counsel for Bertuldo, filed a motion to expunge the complaint from the
record and nullify all court proceedings.
• The trial court, while ordering the complaint to be expunged from the records and the nullification
of all court proceedings taken for failure to pay the correct docket fees, nonetheless.
• Accordingly, upon payment of deficiency docket fee, private respondents filed a manifestation
with prayer to reinstate the case. The trial court issued the first assailed Order reinstating the
case
• The trial court issued the second assailed Order, essentially denying petitioners'
manifestation/rejoinder.
• Noting that there has been no substitution of parties following the death of Bertuldo, the trial court
directed Atty. Petalcorin to comply with the provisions of Section 16, Rule 3 of the Rules of Court.
Atty. Petalcorin complied with the directive of the trial court to submit the names and addresses of
the heirs of Bertuldo.
• Petitioners filed before the Court the present petition for certiorari and prohibition.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Issue

• Whether Atty. Petalcorin had legal standing [No]

Ruling

• Here, no formal substitution of the parties was effected within thirty days from date of death of
Bertuldo as required by the Rules of Court. Needless to stress, the purpose behind the rule on
substitution is the protection of the right of every party to due process. It is to ensure that the
deceased party would continue to be properly represented in the suit through the duly appointed
legal representative of his estate. Noncompliance with the rule on substitution would render the
proceedings and judgment of the trial court infirm because the court acquires no jurisdiction over
the persons of the legal representatives or of the heirs on whom the trial and the judgment would
be binding. Thus, proper substitution of heirs must be effected for the trial court to acquire
jurisdiction over their persons and to obviate any future claim by any heir that he was not
apprised of the litigation against Bertuldo or that he did not authorize Atty. Petalcorin to represent
him.
• The list of names and addresses of the heirs was submitted sixteen months after the death of
Bertuldo and only when the trial court directed Atty. Petalcorin to comply with the provisions of
Section 16, Rule 3 of the Rules of Court. Strictly speaking therefore, before said compliance, Atty.
Petalcorin had no standing in the court a quo when he filed his pleadings. Be that as it may, the
matter has been duly corrected by the Order of the trial court.

Final Ruling:

Case Title: Commissioner Domingo v Scheer

Ticker: Wanted: German
Facts

• Respondent Herbert Markus Emil Scheer, a native of Ochsenfurt, Germany, was a frequent
visitor of the Philippines. In 1986, his application for permanent resident status was granted. The
Bureau of Immigration and Deportation issued in favor of the respondent Alien Certificate of
Registration and Immigration Certificate of Residence. The Commissioner stated that the granting
of the petition would redound to the benefit of the Filipino people. During his sojourn in the
Philippines, the respondent married widowed Edith delos Reyes with whom he had two
daughters. They had a son, Herbert Scheer, Jr., but he passed away. They resided in Puerto
Princesa City, Palawan, where the respondent established and managed the Bavaria Restaurant.
In 1991, he was appointed Confidential Agent by then NBI Director Alfredo Lim.
• In 1995, Vice Consul Jutta Hippelein informed the Philippine Ambassador to Bonn, Germany, that
the respondent had police records and financial liabilities in Germany.
• The Department of Foreign Affairs received from the German Embassy in Manila Note Verbale,
1995, informing it that the respondent was wanted by the German Federal Police; that a warrant
of arrest had been issued against him; and that the respondent will be served with an official
document requesting him to turn over his German passport to the Embassy which was
invalidated. The Embassy requested the Department of Foreign Affairs to inform the competent
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Philippine authorities of the matter. The Board of Commissioners (BOC) thereafter issued a
Summary Deportation Order.
• In issuing the said order, the BOC relied on the correspondence from the German Vice Consul on
its speculation that it was unlikely that the German Embassy will issue a new passport to the
respondent; on the warrant of arrest issued by the District Court of Germany against the
respondent for insurance fraud; and on the alleged illegal activities of the respondent in Palawan.
The BOC concluded that the respondent was not only an undocumented but an undesirable alien
as well.
• When the respondent was apprised of the deportation order, he forthwith aired his side to then
BID Commissioner Leandro Verceles. The Commissioner allowed the respondent to remain in the
Philippines, giving the latter time to secure a clearance and a new passport from the German
Embassy.
• Nonetheless, the respondent, through counsel, an Urgent Motion for Reconsideration of the
Summary Deportation Order of the BOC.
• However, the BOC did not resolve the respondent's motion. The respondent was neither arrested
nor deported.
• The District Court of Straubing rendered a Decision dismissing the criminal case against the
respondent for physical injuries. The German Embassy in Manila, thereafter, issued a temporary
passport to the respondent.
• The respondent informed Commissioner Verceles that his passport had been renewed following
the dismissal of the said criminal case. He reiterated his request for the cancellation of the
Summary Deportation Order. The German Embassy issued to the respondent a regular passport.
• The BOC still failed to resolve the respondent's Urgent Motion for Reconsideration.
Commissioner Verceles did not respond to the respondent's Letter. The respondent remained in
the Philippines and maintained his business in Palawan. In 1997, the Department of Labor and
Employment approved his application for Alien Employment Registration Certificate as manager
of the Bavaria Restaurant in Puerto Princesa City.
• In the meantime, petitioner Immigration Commissioner Andrea Domingo assumed office. She
wrote the German Embassy and inquired if the respondent was wanted by the German police.
The German Embassy replied that the respondent was not so wanted. In 2002, Marine operatives
and BID agents apprehended the respondent in his residence on orders of the petitioner. He was
whisked to the BID Manila Office and there held in custody while awaiting his deportation. Despite
entreaties from the respondent's wife and his employees, the petitioner refused to release the
respondent.
• Shocked at the sudden turn of events, the respondent promptly communicated with his lawyer.
The latter filed with the BID a motion for bail to secure the respondent's temporary liberty. The
respondent's counsel filed with the Court of Appeals a petition for certiorari , prohibition and
mandamus with a prayer for temporary restraining order and writ of preliminary injunction, to
enjoin the petitioner from proceeding with the respondent's deportation.
• The BOC ruled that its Order had become final and executory after the lapse of one year.
• In a parallel development, the respondent procured a letter from the National Bureau of
Investigation in Puerto Princesa City certifying that he had no pending criminal record. The Puerto
Princesa City Philippine National Police also issued a certification that the respondent had no
pending criminal or derogatory records in the said office.
• The Court of Appeals issued a status quo order restraining the petitioner from deporting the
respondent. The BOC issued an Omnibus Resolution pendente lite denying the respondent's

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Urgent Motion for Reconsideration, Motion for Bail/Recognizance, and the Letter.
• The petitioner in his Memorandum prayed for the nullification of the BOC's Order, as well as its
Omnibus Resolution denying his Urgent Motion for Reconsideration considering that with the
issuance of a new passport, there was no more basis for his deportation.
• Surprisingly, the respondent's counsel received a Letter from the petitioner stating that, "the BOC
was in the course of reviewing the deportation case against Mr. Scheer, and that its findings
would be given in due time."
• The CA rendered a Decision in favor of the respondent granting his petition for certiorari and
prohibition and permanently enjoining the petitioner from deporting the respondent.
• Hence, the petition.

Issue

• Whether the BOC is an indispensable party [Yes]

Ruling

• The Court agrees with the petitioner's contention that the BOC was an indispensable party to the
respondent's petition for certiorari , prohibition and mandamus in the Court of Appeals. The
respondent was arrested and detained on the basis of the Summary Deportation Order of the
BOC. The petitioner caused the arrest of the respondent in obedience to the said Deportation
Order. The respondent, in his Memorandum, prayed that the CA annul not only the Summary
Deportation Order of the BOC but also the latter's Omnibus Resolution, and, thus, order the
respondent's immediate release. The respondent also prayed that the CA issue a writ of
mandamus for the immediate resolution of his Urgent Motion for Reconsideration. The said
motion had to be resolved by the BOC as the order sought to be resolved and reconsidered was
issued by it and not by the petitioner alone. The powers and duties of the BOC may not be
exercised by the individual members of the Commission.
• Section 7, Rule 3 of the Rules of Court, as amended, requires indispensable parties to be joined
as plaintiffs or defendants. The joinder of indispensable parties is mandatory. Without the
presence of indispensable parties to the suit, the judgment of the court cannot attain real finality.
Strangers to a case are not bound by the judgment rendered by the court. The absence of an
indispensable party renders all subsequent actions of the court null and void. Lack of authority to
act not only of the absent party but also as to those present. The responsibility of impleading all
the indispensable parties rests on the petitioner/plaintiff.
• However, the non-joinder of indispensable parties is not a ground for the dismissal of an action.
Parties may be added by order of the court on motion of the party or on its own initiative at any
stage of the action and/or such times as are just. If the petitioner/plaintiff refuses to implead an
indispensable party despite the order of the court, the latter may dismiss the complaint/petition for
the petitioner/plaintiffs failure to comply therefor. The remedy is to implead the non-party claimed
to be indispensable, which is erroneous.
• The Court may be curing the defect in this case by adding the BOC as party-petitioner. The
petition should not be dismissed because the second action would only be a repetition of the first.
In a case, it was held that the Court has full powers, apart from that power and authority which is
inherent, to amend the processes, pleadings, proceedings and decisions by substituting as party-

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 plaintiff the real party-in-interest. The Court has the power to avoid delay in the disposition of this
case, to order its amendment as to implead the BOC as party-respondent. Indeed, it may no
longer be necessary to do so taking into account the unique backdrop in this case, involving as it
does an issue of public interest After all, the Office of the Solicitor General has represented the
petitioner in the instant proceedings, as well as in the appellate court, and maintained the validity
of the deportation order and of the BOC's Omnibus Resolution. It cannot, thus, be claimed by the
State that the BOC was not afforded its day in court, simply because only the petitioner, the
Chairperson of the BOC, was the respondent in the CA, and the petitioner in the instant recourse.

• The CA had jurisdiction over the petition for certiorari, prohibition, and mandamus.
• The BOC committed a grave abuse of discretion amounting to lack or excess of jurisdiction in
issuing its summary deportation order and omnibus resolution ; the petitioner committed a grave
abuse of her discretion amounting to lack or excess of jurisdiction in causing the arrest and
detention of the private respondent.
• The respondent's arrest and detention was premature, unwarranted, and arbitrary.
• The issuance of a new and regular passport to the respondent rendered the summary deportation
order moot and academic, and the omnibus resolution of the BOC lacking in legal basis.

Final Ruling: The petition is denied. The decision of

the CA is affirmed.

Case Title: Iron and Steel Authority v Court of Appeals

Ticker: ISA’s Steel Mill
Facts

• Petitioner Iron and Steel Authority was created by Presidential Decree No. 272 in 1973 in order,
generally, to develop and promote the iron and steel industry in the Philippines.
• P.D. No. 272 initially created petitioner ISA for a term of five years. When ISA's original term
expired, its term was extended for another ten years.
• The National Steel Corporation ("NSC") then a wholly owned subsidiary of the National
Development Corporation which is itself an entity wholly owned by the National Government,
embarked on an expansion program embracing, among other things the construction of an
integrated steel mill in Iligan City. The construction of such a steel mill was considered a priority
and major industrial project of the Government. Pursuant to the expansion program of the NSC, a
PD was issued by the President of the Philippines withdrawing from sale or settlement a large
tract of public land located in Iligan City, and reserving that land for the use and immediate
occupancy of NSC.
• Since certain portions of the public land subject matter of the said PD were occupied by a non-
operational chemical fertilizer plant and related facilities owned by private respondent Maria
Cristina Fertilizer Corporation, a Letter of Instruction was issued directing the NSC to "negotiate
with the owners of MCFC, for and on behalf of the Government, for the compensation of MCFC's
present occupancy rights on the subject land." The said letter also directed that should NSC and
private respondent MCFC fail to reach an agreement within a period of sixty days, petitioner ISA
was to exercise its power of eminent domain and to initiate expropriation proceedings in respect
of occupancy rights of private respondent MCFC relating to the subject public land as well as the
plant itself and related facilities and to code the same.
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 • Negotiations between NSC and private respondent MCFC did fail. Accordingly, petitioner ISA
commenced eminent domain proceedings against private respondent MCFC in the Regional Trial
Court. The Philippine National Bank, as mortgagee of the plant facilities and improvements
involved in the expropriation proceedings, was also impleaded as party-defendant.
• A writ of possession was issued by the trial court in favor of ISA. ISA in turn placed NSC in
possession and control of the land occupied by MCFC's fertilizer plant installation.
• The case proceeded to trial. While the trial was on-going, however, the statutory existence of
petitioner ISA expired. MCFC then filed a motion to dismiss, contending that no valid judgment
could be rendered against ISA which had ceased to be a juridical person. Petitioner ISA filed its
opposition to this motion.
• The trial court granted MCFC's motion to dismiss and did dismiss the case.
• The CA affirmed the order of dismissal of the trial court.
• Hence, the petition.

Issue

• Whether the Republic of the Philippines is entitled to be substituted for ISA in view of the
expiration of ISA's term [Yes]

Ruling

• Rule 3, Section 1 of the Rules of Court, specifies who may be parties to a civil action.
• Examination of the statute which created petitioner ISA shows that ISA falls under category
“entities authorized by law to institute actions.” PD No. 272 contains express authorization to ISA
to commence expropriation proceedings like those here involved.
• It should also be noted that the enabling statute of ISA expressly authorized it to enter into certain
kinds of contracts "for and in behalf of the Government."
• Clearly, ISA was vested with some of the powers or attributes normally associated with juridical
personality. There is, however, no provision in P.D. No. 272 recognizing ISA as possessing
general or comprehensive juridical personality separate and distinct from that of the Government.
The ISA in fact appears to the Court to be a non-incorporated agency or instrumentality of the
Republic of the Philippines, or more precisely of the Government of the Republic of the
Philippines. It is common knowledge that other agencies or instrumentalities of the Government
of the Republic are cast in corporate form, that is to say, are incorporated agencies or
instrumentalities , sometimes with and at other times without capital stock, and accordingly
vested with a juridical personality distinct from the personality of the Republic.
• The Court considers that the ISA is properly regarded as an agent or delegate of the Republic of
the Philippines. The Republic itself is a body corporate and juridical person vested with the full
panoply of powers and attributes which are compendiously described as "legal personality."
• When the statutory term of a non-incorporated agency expires, the powers, duties and functions
as well as the assets and liabilities of that agency revert back to, and are re-assumed by, the
Republic of the Philippines, in the absence of special provisions of law specifying some other
disposition thereof such as, e.g., devolution or transmission of such powers, duties, functions, etc.
to some other identified successor agency or instrumentality of the Republic of the Philippines.
When the expiring agency is an incorporated one, the consequences of such expiry must be
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 looked for, in the first instance, in the charter of that agency and, by way of supplementation, in
the provisions of the Corporation Code. Since, in the instant case, ISA is a non-incorporated
agency or instrumentality of the Republic, its powers, duties, functions, assets and liabilities are
properly regarded as folded back into the Government of the Republic of the Philippines and
hence assumed once again by the Republic, no special statutory provision having been shown to
have mandated succession thereto by some other entity or agency of the Republic.
• The procedural implications of the relationship between an agent or delegate of the Republic of
the Philippines and the Republic itself are, at least in part, spelled out in the Rules of Court. The
general rule is, of course, that an action must be prosecuted and defended in the name of the real
party in interest. Petitioner ISA was, at the commencement of the expropriation proceedings, a
real party in interest, having been explicitly authorized by its enabling statute to institute
expropriation proceedings. The Rules of Court at the same time expressly recognize the role of
representative parties.
• In the instant case, ISA instituted the expropriation proceedings in its capacity as an agent or
delegate or representative of the Republic of the Philippines pursuant to its authority under P.D.
No. 272. The present expropriation suit was brought on behalf of and for the benefit of the
Republic as the principal of ISA.
• The principal or the real party in interest is thus the Republic of the Philippines and not the
National Steel Corporation, even though the latter may be an ultimate user of the properties
involved should the condemnation suit be eventually successful.
• From the foregoing premises, it follows that the Republic of the Philippines is entitled to be
substituted in the expropriation proceedings as party-plaintiff in lieu of ISA, the statutory term of
ISA having expired. Put a little differently, the expiration of ISA's statutory term did not by itself
require or justify the dismissal of the eminent domain proceedings.
• It is also relevant to note that the non-joinder of the Republic which occurred upon the expiration
of ISA's statutory term, was not a ground for dismissal of such proceedings since a party may be
dropped or added by order of the court, on motion of any party or on the court's own initiative at
any stage of the action and on such terms as are just. In the instant case, the Republic has
precisely moved to take over the proceedings as party-plaintiff.
• As noted earlier, the Court of Appeals declined to permit the substitution of the Republic of the
Philippines for the ISA upon the ground that the action for expropriation could not prosper
because the basis for the proceedings, the ISA's exercise of its delegated authority to
expropriate, had become legally ineffective by reason of the expiration of the statutory term of the
agent or delegate, i.e., ISA. Since, as we have held above, the powers and functions of ISA have
reverted to the Republic of the Philippines upon the termination of the statutory term of ISA, the
question should be addressed whether fresh legislative authority is necessary before the
Republic of the Philippines may continue the expropriation proceedings initiated by its own
delegate or agent.
• While the power of eminent domain is, in principle, vested primarily in the legislative department
of the government, we believe and so hold that no new legislative act is necessary should the
Republic decide, upon being substituted for ISA, in fact to continue to prosecute the expropriation
proceedings. For the legislative authority, a long time ago, enacted a continuing or standing
delegation of authority to the President of the Philippines to exercise, or cause the exercise of,
the power of eminent domain on behalf of the Government of the Republic of the Philippines.
Final Ruling: The decision of the CA is reversed and
set aside.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
Case Title: Air Transportation Office v Spouses Ramos
Ticker: Airport in Private Land
Facts

• Spouses David and Elisea Ramos discovered that a portion of their land registered under
Transfer Certificate of Title of the Baguio City land records, was being used as part of the runway
and running shoulder of the Loakan Airport being operated by petitioner Air Transportation Office.
In 1995, the respondents agreed after negotiations to convey the affected portion by deed of sale
to the ATO in consideration of an amount. However, the ATO failed to pay despite repeated
verbal and written demands.
• Thus, the respondents filed an action for collection against the ATO and some of its officials in the
RTC.
• In their answer, the ATO and its co-defendants invoked that the RTC had no jurisdiction to
entertain the action without the State's consent considering that the deed of sale had been
entered into in the performance of governmental functions.
• The denied the ATO's motion for a preliminary hearing. The RTC likewise denied the ATO's
motion for reconsideration.
• The ATO commenced a special civil action for certiorari in the CA to assail the RTC's orders. The
CA dismissed the petition for certiorari.
• The RTC ordered ATO to pay the Spouses Ramos.
• The CA affirmed the RTC’s decision.

Issue

• Whether ATO could be sued without the State's consent [Yes]

Ruling

• The petition for review has no merit.

• The immunity of the State from suit, known also as the doctrine of sovereign immunity or non-
suability of the State, is expressly provided in Article XVI of the 1987 Constitution.
• The immunity from suit is based on the political truism that the State, as a sovereign, can do no
wrong. Practical considerations dictate the establishment of an immunity from suit in favor of the
State. Otherwise, and the State is suable at the instance of every other individual, government
service may be severely obstructed and public safety endangered because of the number of suits
that the State has to defend against.
• An unincorporated government agency without any separate juridical personality of its own enjoys
immunity from suit because it is invested with an inherent power of sovereignty. Accordingly, a
claim for damages against the agency cannot prosper; otherwise, the doctrine of sovereign
immunity is violated. However, the need to distinguish between an unincorporated government
agency performing governmental function and one performing proprietary functions has arisen.
The immunity has been upheld in favor of the former because its function is governmental or
incidental to such function; it has not been upheld in favor of the latter whose function was not in
pursuit of a necessary function of government but was essentially a business.
• In the Court’s view, the CA thereby correctly appreciated the juridical character of the ATO as an
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 agency of the Government not performing a purely governmental or sovereign function, but was
instead involved in the management and maintenance of the Loakan Airport, an activity that was
not the exclusive prerogative of the State in its sovereign capacity. Hence, the ATO had no claim
to the State's immunity from suit.
• The Court further observes the doctrine of sovereign immunity cannot be successfully invoked to
defeat a valid claim for compensation arising from the taking without just compensation and
without the proper expropriation proceedings being first resorted to of the plaintiffs' property.
• Lastly, the issue of whether or not the ATO could be sued without the State's consent has been
rendered moot by the passage of Republic Act No. 9497, otherwise known as the Civil Aviation
Authority Act of 2008.
• Under its Transitory Provisions, R.A. No. 9497 established in place of the ATO the Civil Aviation
Authority of the Philippines which thereby assumed all of the ATO's powers, duties and rights,
assets, real and personal properties, funds, and revenues. Section 23 of R.A. No. 9497
enumerates the corporate powers vested in the CAAP, including the power to sue and be sued,
to enter into contracts of every class, kind and description, to construct, acquire, own, hold,
operate, maintain, administer and lease personal and real properties, and to settle, under such
terms and conditions most advantageous to it, any claim by or against it. With the CAAP having
legally succeeded the ATO pursuant to R.A. No. 9497, the obligations that the ATO had incurred
by virtue of the deed of sale with the Ramos spouses might now be enforced against the CAAP.

Final Ruling: The decision is affirmed.

Case Title: Department of Health v Phil. Pharmawealth, Inc.

Ticker: Pharma Accre
Facts

• In 1998, Administrative Order No. 27 series of 1998 was issued by then Department of Health
Secretary Alfredo Romualdez. AO 27 set the guidelines and procedure for accreditation of
government suppliers of pharmaceutical products for sale or distribution to the public, such
accreditation to be valid for three years but subject to annual review.
• In 2000, Secretary Romualdez issued AO 10 series of 2000 which amended AO 27. Under
Section VII of AO 10, the accreditation period for government suppliers of pharmaceutical
products was reduced to two years. Moreover, such accreditation may be recalled, suspended or
revoked after due deliberation and proper notice by the DOH Accreditation Committee, through its
Chairman.
• Section VII of AO 10 was later amended by AO 66 series of 2000, which provided that the two-
year accreditation period may be recalled, suspended or revoked only after due deliberation,
hearing and notice by the DOH Accreditation Committee, through its Chairman.
• The DOH issued Memorandum No. 171-C which provided for a list and category of sanctions to
be imposed on accredited government suppliers of pharmaceutical products in case of adverse
findings regarding their products (e.g., substandard, fake, or misbranded) or violations committed
by them during their accreditation.
• In line with Memorandum No. 171-C, the DOH, through former Undersecretary Ma. Margarita
Galon, issued Memorandum No. 209 series of 2000, inviting representatives of 24 accredited
drug companies, including herein respondent Phil Pharmawealth, Inc. to a meeting. During the
meeting, Undersecretary Galon handed them copies of a document entitled "Report on Violative

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Products" issued by the Bureau of Food and Drugs, which detailed violations or adverse findings
relative to these accredited drug companies' products. Specifically, the BFAD found that PPI's
products which were being sold to the public were unfit for human consumption.
• During the meeting, the 24 drug companies were directed to submit within 10 days, their
respective explanations on the adverse findings covering their respective products contained in
the Report on Violative Products.
• Instead of submitting its written explanation within the 10-day period as required, PPI belatedly
sent a letter, addressed to Undersecretary Galon, informing her that PPI has referred the Report
on Violative Products to its lawyers with instructions to prepare the corresponding reply. However,
PPI did not indicate when its reply would be submitted; nor did it seek an extension of the 10-day
period, which had previously expired much less offer any explanation for its failure to timely
submit its reply.
• In a letter-reply, Undersecretary Galon found "untenable" PPI's letter and therein informed PPI
that, effective immediately, its accreditation has been suspended for two years.
• In another letter addressed to Undersecretary Galon, PPI through counsel questioned the
suspension of its accreditation, saying that the same was made pursuant to Section VII of AO 10
which it claimed was patently illegal and null and void because it arrogated unto the DOH
Accreditation Committee powers and functions which were granted to the BFAD.
• PPI filed before the Regional Trial Court of Pasig City a Complaint eeking to declare null and void
certain DOH administrative issuances, with prayer for damages and injunction against the DOH,
former Secretary Romualdez and DOH Undersecretary Galon.
• The trial court dismissed the civil case, declaring the case to be one instituted against the State,
in which case the principle of state immunity from suit is applicable.
• The CA reversed the trial court ruling and ordered the remand of the case for the conduct of
further proceedings.
• Hence, the petition.

Issue

• Whether the civil case should be dismissed for being a suit against the state [Yes]

Ruling

• The petition is granted.

• The basic postulate enshrined in the constitution that '(t)he State may not be sued without its
consent,' reflects nothing less than a recognition of the sovereign character of the State and an
express affirmation of the unwritten rule effectively insulating it from the jurisdiction of courts. It is
based on the very essence of sovereignty. [A] sovereign is exempt from suit, not because of any
formal conception or obsolete theory, but on the logical and practical ground that there can be no
legal right as against the authority that makes the law on which the right depends. True, the
doctrine, not too infrequently, is derisively called 'the royal prerogative of dishonesty' because it
grants the state the prerogative to defeat any legitimate claim against it by simply invoking its
non-suability. We have had occasion to explain in its defense, however, that a continued
adherence to the doctrine of non-suability cannot be deplored, for the loss of governmental
efficiency and the obstacle to the performance of its multifarious functions would be far greater in
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 severity than the inconvenience that may be caused private parties, if such fundamental principle
is to be abandoned and the availability of judicial remedy is not to be accordingly restricted. The
rule, in any case, is not really absolute for it does not say that the state may not be sued under
any circumstance. On the contrary, as correctly phrased, the doctrine only conveys, 'the state
may not be sued without its consent;' its clear import then is that the State may at times be sued.
The State's consent may be given either expressly or impliedly. Express consent may be made
through a general law or a special law. Implied consent, on the other hand, is conceded when the
State itself commences litigation, thus opening itself to a counterclaim or when it enters into a
contract. In this situation, the government is deemed to have descended to the level of the other
contracting party and to have divested itself of its sovereign immunity. This rule, is not, however,
without qualification. Not all contracts entered into by the government operate as a waiver of its
non-suability; distinction must still be made between one which is executed in the exercise of its
sovereign function and another which is done in its proprietary capacity.
• As a general rule, a state may not be sued. However, if it consents, either expressly or impliedly,
then it may be the subject of a suit. There is express consent when a law, either special or
general, so provides. On the other hand, there is implied consent when the state "enters into a
contract or it itself commences litigation." it must be clarified that when a state enters into a
contract, it does not automatically mean that it has waived its non-suability. The State "will be
deemed to have impliedly waived its nonsuability [only] if it has entered into a contract in its
proprietary or private capacity. [However,] when the contract involves its sovereign or
governmental capacity[,] . . . no such waiver may be implied." "Statutory provisions waiving [s]tate
immunity are construed in strictissimi juris. For, waiver of immunity is in derogation of
sovereignty."

• The DOH can validly invoke state immunity.

1. DOH is an unincorporated agency which performs sovereign or governmental functions.

In this case, the DOH, being an "unincorporated agency of the government" can validly invoke the
defense of immunity from suit because it has not consented, either expressly or impliedly, to be
sued. Significantly, the DOH is an unincorporated agency which performs functions of
governmental character.

2. The Complaint seeks to hold the DOH solidarily and jointly liable with the other defendants for
damages which constitutes a charge or financial liability against the state.

Moreover, it is settled that if a Complaint seeks to "impose a charge or financial liability against
the state," the defense of non-suability may be properly invoked. In this case, PPI specifically
prayed, in its Complaint and Amended and Supplemental Complaint, for the DOH, together with
Secretaries Romualdez and Dayrit as well as Undersecretary Galon, to be held jointly and
severally liable for moral damages, exemplary damages, attorney's fees and costs of suit.
Undoubtedly, in the event that PPI succeeds in its suit, the government or the state through the
DOH would become vulnerable to an imposition or financial charge in the form of damages. This
would require an appropriation from the national treasury which is precisely the situation which
the doctrine of state immunity aims to protect the state from.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 The mantle of non-suability extends to complaints filed against public officials for acts done in the
performance of their official functions.
• As regards the other petitioners, to wit, Secretaries Romualdez and Dayrit, and Undersecretary
Galon, it must be stressed that the doctrine of state immunity extends its protective mantle also to
complaints filed against state officials for acts done in the discharge and performance of their
duties. "The suability of a government official depends on whether the official concerned was
acting within his official or jurisdictional capacity, and whether the acts done in the performance of
official functions will result in a charge or financial liability against the government." Otherwise
stated, "public officials can be held personally accountable for acts claimed to have been
performed in connection with official duties where they have acted ultra vires or where there is
showing of bad faith." Moreover, "[t]he rule is that if the judgment against such officials will require
the state itself to perform an affirmative act to satisfy the same, such as the appropriation of the
amount needed to pay the damages awarded against them, the suit must be regarded as against
the state . . . . In such a situation, the state may move to dismiss the [C]omplaint on the ground
that it has been filed without its consent."
• It is beyond doubt that the acts imputed against Secretaries Romualdez and Dayrit, as well as
Undersecretary Galon, were done while in the performance and discharge of their official
functions or in their official capacities, and not in their personal or individual capacities.
Secretaries Romualdez and Dayrit were being charged with the issuance of the assailed orders.
On the other hand, Undersecretary Galon was being charged with implementing the assailed
issuances. By no stretch of imagination could the same be categorized as ultra vires simply
because the said acts are well within the scope of their authority. As regards Undersecretary
Galon, she is authorized by law to supervise the offices under the DOH's authority, such as the
BFAD. Moreover, there was also no showing of bad faith on their part. The assailed issuances
were not directed only against PPI. The suspension of PPI's accreditation only came about after it
failed to submit its comment as directed by Undersecretary Galon. It is also beyond dispute that if
found wanting, a financial charge will be imposed upon them which will require an appropriation
from the state of the needed amount. Thus, based on the foregoing considerations, the Complaint
against them should likewise be dismissed for being a suit against the state which absolutely did
not give its consent to be sued.
• Based on the foregoing considerations, and regardless of the merits of PPI's case, this case
deserves a dismissal.

Final Ruling: The petition is granted.

Section 3
Representatives as parties. – Where the action is allowed to be prosecuted or defended by a
representative or someone acting in a fiduciary capacity, the beneficiary shall be included in the title of
the case and shall be deemed to be the real party in interest. A representative may be a trustee of an
express trust, a guardian, an executor or administrator, or a party authorized by law or these Rules. An
agent acting in his own name and for the benefit of an undisclosed principal may sue or be sued without
joining the principal except when the contract involves things belonging to the principal.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
Section 4
Spouses as parties. – Husband and wife shall sue or be sued jointly, except as provided by law.

Section 5
Minor or incompetent persons. – A minor or a person alleged to be incompetent, may sue or be sued,
with the assistance of his father, mother, guardian, or if he has none, a guardian ad litem.

Section 6
Permissive joinder of parties. – All persons in whom or against whom any right to relief in respect to or
arising out of the same transaction or series of transactions is alleged to exist, whether jointly, severally,
or in the alternative, may, except as otherwise provided in these Rules, join as plaintiffs or be joined as
defendants in one complaint, where any question of law or fact common to all such plaintiffs or to all
such defendants may arise in the action; but the court may make such orders as may be just to prevent
any plaintiff or defendant from being embarrassed or put to expense in connection with any proceedings
in which he may have no interest.

Section 7
Compulsory joinder of indispensable parties. – Parties in interest without whom no final determination
can be had of an action shall be joined either as plaintiffs or defendants.

Section 8
Necessary party. – A necessary party is one not indispensable but who ought to be joined as a party if
complete relief is to be accorded as to those already parties, or for a complete determination or
settlement of the claim subject of the action.

Section 9
Non-joinder of necessary parties to be pleaded. – Whenever in any pleading in which a claim is asserted
a necessary party is not joined, the pleader shall set forth his name, if known, and shall state why he is
omitted. Should the court find the reason for the omission unmeritorious, it may order the inclusion of the
omitted necessary party if jurisdiction over his person may be obtained.

The failure to comply with the order for his inclusion, without justifiable cause, shall be deemed a waiver
of the claim against such party.

The non-inclusion of a necessary party does not prevent the court from proceeding in the action, and the
judgment rendered therein shall be without prejudice to the rights of such necessary party.

Section 10
Unwilling co-plaintiff. – If the consent of any party who should be joined as plaintiff cannot be obtained,
he may be made a defendant and the reason therefor shall be stated in the complaint.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
Section 11
Misjoinder and non-joinder of parties. – Neither misjoinder nor non-joinder of parties is a ground for
dismissal of an action. Parties may be dropped or added by order of the court on motion of any party or
on its own initiative at any stage of the action and on such terms as are just. Any claim against a
misjoined party may be severed and proceeded with separately.

Section 12
Class suit. – When the subject matter of the controversy is one of common or general interest to many
persons so numerous that it is impracticable to join all as parties, a number of them which the court finds
to be sufficiently numerous and representative as to fully protect the interests of all concerned may sue
or defend for the benefit of all. Any party in interest shall have the right to intervene to protect his
individual interest.

Case Title: Gochan v Young

Ticker: Family Corporation
Facts

• Felix Gochan and Sons Realty Corporation was registered with the SEC, with Felix Gochan, Sr.,
Maria Pan Nuy Go Tiong, Pedro Gochan, Tomasa Gochan, Esteban Gochan and Crispo Gochan
as its incorporators.
• Felix Gochan Sr.'s daughter, Alice, mother of respondents, inherited 50 shares of stock in
Gochan Realty from the former. Alice died in 1955, leaving the 50 shares to her husband, John
Young, Sr.
• In 1962, the Regional Trial Court of Cebu adjudicated 6/14 of these shares to her children, herein
[respondents] Richard Young, David Young, Jane Young Llaban, John Young Jr., Mary Young
Hsu and Alexander Thomas Young. Having earned dividends, these stocks numbered 179 in
1979.
• At a time when all the children had reached the age of majority, their father John Sr., requested
Gochan Realty to partition the shares of his late wife by cancelling the stock certificates in his
name and issuing in lieu thereof, new stock certificates in the names of [herein respondents].
• In 1979, respondent Gochan Realty refused, citing as reason, the right of first refusal granted to
the remaining stockholders by the Articles of Incorporation.
• John, Sr. died, leaving the shares to the [respondents].
• In 1994, [respondents] Cecilia Gochan Uy and Miguel Uy filed a complaint with the SEC for
issuance of shares of stock to the rightful owners, nullification of shares of stock, reconveyance of
property impressed with trust, accounting, removal of officers and directors and damages against
respondents.
• Petitioners moved to dismiss the complaint.
• The SEC granted the motion to dismiss.
• Aggrieved, herein respondents then filed a Petition for Review with the Court of Appeals.
• The Court of Appeals ruled that the SEC had no jurisdiction over the case as far as the heirs of
Alice Gochan were concerned, because they were not yet stockholders of the corporation. On the
other hand, it upheld the capacity of Respondents Cecilia Gochan Uy and her spouse Miguel Uy.
It also held that the Intestate Estate of John Young Sr. was an indispensable party.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Issue

• Whether the Spouses Uy have the personality to file an action before the SEC against Gochan
Realty Corporation [Yes]
• Whether the Spouses Uy could properly bring a derivative suit in the name of Gochan Realty to
redress wrongs allegedly committed against it for which the directors refused to sue [Yes]
• Whether the intestate estate of John Young Sr. is an indispensable party in the SEC case
considering that the individual heirs' shares are still in the decedent stockholder's name [Yes]

Ruling

• As a general rule, the jurisdiction of a court or tribunal over the subject matter is determined by
the allegations in the complaint. For purposes of resolving a motion to dismiss, Cecilia Uy's
averment in the Complaint — that the purchase of her stocks by the corporation was null and void
ab initio — is deemed admitted. It is elementary that a void contract produces no effect either
against or in favor of anyone; it cannot create, modify or extinguish the juridical relation to which it
refers. Thus, Cecilia remains a stockholder of the corporation in view of the nullity of the Contract
of Sale. Although she was no longer registered as a stockholder in the corporate records as of
the filing of the case before the SEC, the admitted allegations in the Complaint made her still a
bona fide stockholder of Felix Gochan & Sons Realty Corporation, as between said parties.
• In any event, the present controversy, whether intra-corporate or not, is no longer cognizable by
the SEC, in view of RA 8799, which transferred to regional trial courts the former's jurisdiction
over cases involving intra-corporate disputes.

• Petitioners also contend that the action filled by the Spouses Uy was not a derivative suit,
because the spouses and not the corporation were the injured parties. The Court is not
convinced. The complaint readily shows allegations of injury to the corporation itself.
• As early as 1911, this Court has recognized the right of a single stockholder to file derivative
suits. [W]here corporate directors have committed a breach of trust either by their frauds, ultra
vires acts, or negligence, and the corporation is unable or unwilling to institute suit to remedy the
wrong, a single stockholder may institute that suit, suing on behalf of himself and other
stockholders and for the benefit of the corporation, to bring about a redress of the wrong done
directly to the corporation and indirectly to the stockholders.
• In the present case, the Complaint alleges all the components of a derivative suit. The allegations
of injury to the Spouses Uy can coexist with those pertaining to the corporation. The personal
injury suffered by the spouses cannot disqualify them from filing a derivative suit on behalf of the
corporation. It merely gives rise to an additional cause of action for damages against the erring
directors. This cause of action is also included in the Complaint filed before the SEC.
• The Spouses Uy have the capacity to file a derivative suit in behalf of and for the benefit of the
corporation. The reason is that the allegations of the Complaint make them out as stockholders at
the time the questioned transaction occurred, as well as at the time the action was filed and
during the pendency of the action.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 • Petitioners contend that the Intestate Estate of John Young Sr. is not an indispensable party, as
there is no showing that it stands to be benefited or injured by any court judgment.
• It would be useful to point out at this juncture that one of the causes of action stated in the
Complaint filed with the SEC refers to the registration, in the name of the other heirs of Alice
Gochan Young, of 6/14th of the shares still registered under the name of John D. Young Sr.
Since all the shares that belonged to Alice are still in his name, no final determination can be had
without his estate being impleaded in the suit. His estate is thus an indispensable party with
respect to the cause of action dealing with the registration of the shares in the names of the heirs
of Alice.
• Petitioners further claim that the Estate of John Young Sr. was not properly represented. They
claim that "when the estate is under administration, suits for the recovery or protection of the
property or rights of the deceased may be brought only by the administrator or executor as
approved by the court." The rules relative to this matter do not, however, make any such
categorical and confining statement.
• Section 3 of Rule 3 of the Rules of Court, while permitting an executor or administrator to
represent or to bring suits on behalf of the deceased, do not prohibit the heirs from representing
the deceased. These rules are easily applicable to cases in which an administrator has already
been appointed. But no rule categorically addresses the situation in which special proceedings for
the settlement of an estate have already been instituted, yet no administrator has been
appointed. In such instances, the heirs cannot be expected to wait for the appointment of an
administrator; then wait further to see if the administrator appointed would care enough to file a
suit to protect the rights and the interests of the deceased; and in the meantime do nothing while
the rights and the properties of the decedent are violated or dissipated.
• The Rules are to be interpreted liberally in order to promote their objective of securing a just,
speedy and inexpensive disposition of every action and proceeding. They cannot be interpreted
in such a way as to unnecessarily put undue hardships on litigants. For the protection of the
interests of the decedent, this Court has in previous instances recognized the heirs as proper
representatives of the decedent, even when there is already an administrator appointed by the
court. When no administrator has been appointed, as in this case, there is all the more reason to
recognize the heirs as the proper representatives of the deceased. Since the Rules do not
specifically prohibit them from representing the deceased, and since no administrator had as yet
been appointed at the time of the institution of the Complaint with the SEC, we see nothing wrong
with the fact that it was the heirs of John D. Young Sr. who represented his estate in the case
filed before the SEC.

Final Ruling:

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
Case Title: Chua v Torres
Ticker: My Brother’s Check
Facts

• In 2001, a complaint for damages was lodged before the Regional Trial Court. The complaint was
filed by Christine Chua, herein petitioner, impleading her brother Jonathan Chua as a necessary
co-plaintiff. Named as defendants in the suit were herein respondents Jorge Torres and Antonio
Beltran. Torres was the owner of the 9th Avenue Caltex Service Center, while Beltran was an
employee of the said establishment as the head of its Sales and Collection Division.
• The complaint alleged that Jonathan Chua issued in favor of the Caltex Service Center his
personal Rizal Commercial Banking Corporation Check in payment for purchases of diesel oil.
However, the check was dishonored by the drawee bank when presented for payment on the
ground that the account was closed. Beltran then sent petitioner a demand letter informing her of
the dishonor of the check and demanding the payment thereof. Petitioner ignored the demand
letter on the ground that she was not the one who issued the said check.
• Without bothering to ascertain who had actually issued the check, Beltran instituted against
petitioner a criminal action for violation of Batas Pambansa Bilang 22. Subsequently, a criminal
information was filed against petitioner with the Metropolitan Trial Court. The MTC then issued a
warrant of arrest against petitioner. The police officers tasked with serving the warrant looked for
her in her residence, in the auto repair shop of her brother, and even at the Manila Central
University were she was enrolled as a medical student, all to the alleged embarrassment and
"social humiliation" of petitioner.
• On the other hand, Torres, as employer of Beltran, was alleged to have failed to observe the
diligence of a good father of the family to prevent the damage suffered by petitioner.
• Significantly, while Jonathan Chua was named as a plaintiff to the suit, it was explicitly qualified in
the second paragraph of the complaint that he was being "impleaded here-in as a necessary
party-plaintiff". There was no allegation in the complaint of any damage or injury sustained by
Jonathan, and the prayer therein expressly named petitioner as the only party to whom
respondents were sought to recompense. Neither did Jonathan Chua sign any verification or
certification against forum-shopping, although petitioner did sign an attestation, wherein she
identified herself as "the principal plaintiff."
• Upon motion of respondents, the RTC ordered the dismissal of the Complaint on the ground that
Jonathan Chua had not executed a certification against forum-shopping.
• After the RTC denied the motion for reconsideration lodged by petitioner, the matter was elevated
directly to the SC.

Issue

• Whether the case was properly dismissed [No]

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Ruling

• Preliminarily, it bears noting that Jonathan Chua did not sign as well any verification to the
complaint. The verification requirement is significant, as it is intended to secure an assurance that
the allegations in the pleading are true and correct and not the product of the imagination or a
matter of speculation, and that the pleading is filed in good faith. The absence of a proper
verification is cause to treat the pleading as unsigned and dismissible. It would be as well that the
Court discuss whether under the circumstances, Jonathan Chua is also required to execute a
verification in respect to petitioner's complaint.
• The Court finds that the petition has merit. The decision proceeds from the fundamental premise
that Jonathan Chua was misjoined as a party plaintiff in this case.
• It is elementary that it is only in the name of a real party in interest that a civil suit may be
prosecuted. Under Section 2, Rule 3 of the Rules of Civil Procedure, a real party in interest is the
party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the
avails of the suit. "Interest" within the meaning of the rule means material interest, an interest in
issue and to be affected by the decree, as distinguished from mere interest in the question
involved, or a mere incidental interest. One having no right or interest to protect cannot invoke the
jurisdiction of the court as a party plaintiff in an action. To qualify a person to be a real party in
interest in whose name an action must be prosecuted, he must appear to be the present real
owner of the right sought to enforced.
• The subject complaint does not allege any rights of Jonathan Chua violated by respondents,
present any rights of his to be enforced, or seek in his behalf any rights to the avails of suit. In
short, Jonathan claims nothing, and for nothing, in the subject complaint. If he alone filed the
complaint, it would have been dismissed on the ground that the complaint states no cause of
action, instituted as it was by a person who was not a real party in interest.
• Section 8, Rule 7 of the Rules of Civil Procedure defines a necessary party as "one who is not
indispensable but who ought to be joined as a party if complete relief is to be accorded as to
those already parties, or for a complete determination or settlement of the claim subject of the
action." Necessary parties are those whose presence is necessary to adjudicate the whole
controversy, but whose interests are so far separable that a final decree can be made in their
absence without affecting them.
• Jonathan Chua does not stand to be affected should the RTC rule either favorably or unfavorably
of the complaint. This is due to the nature of the cause of action of the complaint, which alleges
an injury personal to petitioner, and the relief prayed for, which is to be adjudicated solely to
petitioner. There is no allegation in the complaint alleging any violation or omission of any right of
Jonathan, either arising from contract or from law.
• It may be so that Jonathan may be called to testify by his sister, in order to prove the essential
allegation that she did not issue the check in question, and perhaps such testimony would be vital
to petitioner's cause of action. But this does not mean that Jonathan should be deemed a
necessary party, as such circumstance would merely place him in the same class as those
witnesses whose testimony would be necessary to prove the allegations of the complaint. But the
fact remains that Jonathan would stand unaffected by the final ruling on the complaint. The
judicial confirmation or rejection of the allegations therein, or grant or denial of the reliefs prayed
for will not infringe on or augment any of his rights under the law. If there would be any effect to
Jonathan of the RTC's ultimate decision on the complaint, it would be merely emotional, arising

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 from whatever ties of kinship he may retain towards his sister, and no different from whatever
effects that may be similarly sustained on petitioner's immediate family.
• Since, the Court is unconvinced by petitioner's basic premise that Jonathan was a necessary
party, it is unnecessary to directly settle the issue as couched by petitioner of "whether or not a
co-plaintiff impleaded only as a necessary party, who however has no claim for relief or is not
asserting any claim for relief in the complaint, should also make a certification against forum
shopping." The Court notes that the 1997 Rules of Civil Procedure makes no distinctions that
would expressly exempt a necessary party from executing the certification against forum
shopping. Nonetheless, there are dimensions to the matter, heretofore unraised, that may
unsettle a strict application of the rule, such as if the necessary party is impleaded as a plaintiff or
counterclaimant without his knowledge or against his will. But these circumstances relevant to a
necessary party are not present in this case.

• Instead, what the Court may rule upon is whether the absence of the signature of the person
misjoined as a party-plaintiff in either the verification page or certification against forum-shopping
is ground for the dismissal of the action. The Court rules that it is not so, and that the RTC erred
in dismissing the instant complaint. There is no judicial precedent affirming or rejecting such a
view, but we are comfortable with making such a pronouncement. A misjoined party plaintiff has
no business participating in the case as a plaintiff in the first place, and it would make little sense
to require the misjoined party in complying with all the requirements expected of plaintiffs.
• Clearly, misjoinder of parties is not fatal to the complaint. Section 11, Rule 3 of the 1997 Rules of
Civil Procedure prohibits dismissal of a suit on the ground of non-joinder or misjoinder of parties.
Moreover, the dropping of misjoined parties from the complaint may be done motu proprio by the
court, at any stage, without need for a motion to such effect from the adverse party. Section 11,
Rule 3 indicates that the misjoinder of parties, while erroneous, may be corrected with ease
through amendment, without further hindrance to the prosecution of the suit.
• It should then follow that any act or omission committed by a misjoined party plaintiff should not
be cause for impediment to the prosecution of the case, much less for the dismissal of the suit.
After all, such party should not have been included in the first place, and no efficacy should be
accorded to whatever act or omission of the party. Since the misjoined party plaintiff receives no
recognition from the court as either an indispensable or necessary party-plaintiff, it then follows
that whatever action or inaction the misjoined party may take on the verification or certification
against forum-shopping is inconsequential. Hence, it should not have mattered to the RTC that
Jonathan Chua had failed to sign the certification against forum-shopping, since he was misjoined
as a plaintiff in the first place. The fact that Jonathan was misjoined is clear on the face of the
complaint itself, and the error of the RTC in dismissing the complaint is not obviated by the fact
that the adverse party failed to raise this point. After all, the RTC could have motu proprio
dropped Jonathan as a plaintiff, for the reasons above-stated which should have been evident to
it upon examination of the complaint.

Final Ruling: The petition is granted.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
Case Title: Lotte Phil. Co., Inc., v Dela Cruz
Ticker: Labor-Only 7J
Facts

• Lotte Phils., Inc. is a domestic corporation. Respondents are among those who were hired and
assigned to the confectionery facility operated by Lotte.
• In 1995, — and yearly thereafter until the year 2000 — 7J Maintenance and Janitorial Services
entered into a contract with Lotte to provide manpower for needed maintenance, utility, janitorial
and other services to the latter. In compliance with the terms and conditions of the service
contract, and to accommodate the needs of Lotte for personnel/workers to do and perform "piece
works," respondents, among others, were hired and assigned to private respondent as repackers
or sealers.
• However, Lotte dispensed with their services allegedly due to the expiration/termination of the
service contract by Lotte with 7J. Unfortunately, respondents were never called back to work
again.
• Respondents lodged a labor complaint against both private respondent Lotte and 7J, for illegal
dismissal, regularization, payment of corresponding backwages and related employment benefits,
13th month pay, service incentive leave, moral and exemplary damages and attorney's fees
based on total judgment award.
• In 2001, Labor Arbiter Cresencio Ramos, Jr., rendered judgment declaring 7J as employer of
respondents and guilty of illegal dismissal.
• The NLRC affirmed the decision of the labor arbiter.
• The CA reversed and set aside the rulings of the Labor Arbiter and the NLRC. In its decision, the
Court of Appeals declared Lotte as the real employer of respondents and that 7J who engaged in
labor-only contracting was merely the agent of Lotte.
• Hence, the petition.

Issue

• Whether 7J is an indispensable party [Yes]

Arguments
Ruling
Petitioner
7J is an Petitioner's contention is tenable.
indispensable
party and An indispensable party is a party in interest without whom no final determination can
should have be had of an action, and who shall be joined either as plaintiffs or defendants. The
been impleaded joinder of indispensable parties is mandatory. The presence of indispensable parties
in respondents' is necessary to vest the court with jurisdiction, which is "the authority to hear and
petition in the determine a cause, the right to act in a case.” Thus, without the presence of
Court of indispensable parties to a suit or proceeding, judgment of a court cannot attain real
Appeals. It finality. The absence of an indispensable party renders all subsequent actions of the
claims that the court null and void for want of authority to act, not only as to the absent parties but
petition before even as to those present.
the Court of
Appeals was In the case at bar, 7J is an indispensable party. It is a party in interest because it will
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
dismissible for be affected by the outcome of the case. The Labor Arbiter and the NLRC found 7J to
failure to be solely liable as the employer of respondents. The Court of Appeals however
comply with the rendered Lotte jointly and severally liable with 7J who was not impleaded by holding
Revised Rules that the former is the real employer of respondents. Plainly, its decision directly
of Civil affected 7J.
Procedure.
In a case, the Court held that the non-joinder of indispensable parties is not a ground
for the dismissal of an action and the remedy is to implead the non-party claimed to
be indispensable. Parties may be added by order of the court on motion of the party
or on its own initiative at any stage of the action and/or such times as are just. If the
petitioner refuses to implead an indispensable party despite the order of the court, the
latter may dismiss the complaint/petition for the petitioner/plaintiff's failure to comply
therefor.

Although 7J was a co-party in the case before the Labor Arbiter and the NLRC,
respondents failed to include it in their petition for certiorari in the Court of Appeals.
Hence, the Court of Appeals did not acquire jurisdiction over 7J. No final ruling on this
matter can be had without impleading 7J, whose inclusion is necessary for the
effective and complete resolution of the case and in order to accord all parties with
due process and fair play.
Final Ruling: The petition is granted.

Case Title: National Power Corporation v Provincial Government of Bataan

Ticker: Local Franchise Tax
Facts

• In 2003, petitioner National Power Corporation received a notice of franchise tax delinquency
from the respondent Provincial Government of Bataan. The Province based its assessment on
the NPC's sale of electricity that it generated from two power plants in Bataan. Rather than pay
the tax or reject it, the NPC chose to reserve its right to contest the computation pending the
decision of the Supreme Court in a current case in which it is a petitioner, a case where the issue
of the NPC's exemption from the payment of local franchise tax was then pending.
• The Province again sent notices of tax due to the NPC, calling its attention to the Court's Decision
in the aforementioned case which held the NPC liable for the payment of local franchise tax. The
NPC replied, however, that it had ceased to be liable for the payment of that tax after Congress
enacted Republic Act 9136, also known as the Electric Power Industry Reform Act. The new law
relieved the NPC of the function of generating and supplying electricity beginning that year.
Consequently, the Province has no right to further assess it for the 2001, 2002, and 2003 local
franchise tax.
• The Province issued a "Warrant of Levy" on real properties that it used to own in Limay, Bataan.
The Province caused their sale at public auction with itself as the winning bidder. Shortly after,
the NPC received a copy of the Certificate of Sale of Real Property covering the auctioned
properties for the amount of its franchise tax delinquency.
• The NPC filed with the Regional Trial Court a petition for declaration of nullity of the foreclosure
sale with prayer for preliminary mandatory injunction against the Province, the provincial
treasurer, and the Sangguniang Panlalawigan.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 • The RTC dismissed the NPC's petition, stating that the franchise tax was not based on ownership
of property but on the NPC's exercise of the privilege of doing business within Bataan.
• The NPC appealed the RTC Decision to the Court of Appeals but the Province moved to dismiss
the same for lack of jurisdiction of that court over the subject matter of the case.
• The CA granted the Province's motion and dismissed the petition on the ground cited.

Issue

• Whether TRANSCO and PSALM Corp. are indispensable parties [Yes]

Ruling

• The RTC found that the NPC failed to present evidence that it no longer owned or operated the
business subject to local franchise tax and that the properties the Province levied on did not
belong to it. But proving these things did not require the presentation of evidence in this case
since these events took place by operation of law, particularly the EPIRA.
• The EPIRA law created the National Transmission Company (TRANSCO) and transferred to it
the NPC's electrical transmission function. The NPC, therefore, ceased to operate that business
in Bataan by operation of law. Since the local franchise tax is imposed on the privilege of
operating a franchise, not a tax on the ownership of the transmission facilities, it is clear that such
tax is not a liability of the NPC.
• Nor could the Province levy on the transmission facilities to satisfy the tax assessment against
the NPC since the latter ceased to own those facilities six months from the effectivity of the
EPIRA. Those facilities have since belonged to TRANSCO.
• The legislative emasculation of the NPC also covered its former power generation function, which
was the target of the Province's effort to collect the local franchise tax for 2001, 2002, and 2003.
The EPIRA also created the Power Sector Assets and Liabilities Management Corporation
(PSALM Corp.) and transferred to it all of the NPC's "generation assets" which would include the
Bataan Thermal Plant. Clearly, the NPC had ceased running its former power transmission and
distribution business in Bataan by operation of law. It is, therefore, not the proper party subject to
the local franchise tax for operating that business. Parenthetically, the EPIRA also transferred "all
existing . . . liabilities" of the NPC to PSALM Corp., presumably including its unpaid liability for
local franchise tax. Consequently, such tax is collectible solely from PSALM Corp.
• An indispensable party is one who has an interest in the controversy or subject matter and in
whose absence there cannot be a determination between the parties already before the court
which is effective, complete or equitable. Here, since the subject properties belong to PSALM
Corp. and TRANSCO, they are certainly indispensable parties to the case that must be
necessarily included before it may properly go forward. For this reason, the proceedings below
that held the NPC liable for the local franchise tax is a nullity. It did not matter where the RTC
Decision was appealed, whether before the CA or the CTA.

Final Ruling: The petition is granted and the case is

remanded.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
Case Title: Bulawan v Aquende
Ticker: Not My Land!
Facts

• In 1995, Bulawan filed a complaint for annulment of title, reconveyance and damages against
Lourdes Yap and the Register of Deeds before the trial court. Bulawan claimed that she is the
owner of the parcel of land covered by a TCT having bought the property from its owners,
brothers Santos and Francisco Yaptengco who claimed to have inherited the property from Yap
Chin Cun. Bulawan alleged that Yap claimed ownership of the same property and caused the
issuance of a TCT in Yap's name.
• Yap clarified that she asserts ownership of the lot and said that the trial court already declared
that the TCT presented by Bulawan was simulated by the Yaptengco brothers and that their claim
on the lot was void. The trial court likewise adjudged Yap Chin Cun as the rightful owner of the
lot. Yap also stated that the lot was sold by Yap Chin Cun to the Aquende family.
• The trial court ruled in favor of Bulawan.
• Yap appealed. The Court of Appeals dismissed Yap's appeal.
• The trial court’s decision became final and executory and the trial court issued a writ of execution.
• The Register of Deeds informed Aquende of the trial court's writ of execution and required
Aquende to produce the TCT so that a memorandum of the lien may be annotated on the title.
Aquende wrote a letter to the Register of Deeds questioning the trial court's writ of execution
against his property. Aquende alleged that he was unaware of any litigation involving his property
having received no summons or notice thereof, nor was he aware of any adverse claim as no
notice of lis pendens was inscribed on the title.
• Aquende filed a Third Party Claim against the writ of execution because it affected his property
and, not being a party the civil case, he argued that he is not bound by the trial court's decision.
The Clerk of Court said that a Third Party Claim was not the proper remedy because the sheriff
did not levy upon or seize Aquende's property. Moreover, the property was not in the sheriff's
possession and it was not about to be sold by virtue of the writ of execution.
• Aquende then filed a Notice of Appearance with Third Party Motion and prayed for the partial
annulment of the trial court's decision, specifically the portion which ordered the cancellation his
TCT. Aquende also filed a Supplemental Motion where he reiterated that he was not a party in
the civil case and that since the action was in personam or quasi in rem, only the parties in the
case are bound by the decision.
• The trial court denied Aquende's motions. According to the trial court, it had lost jurisdiction to
modify said decision when the Court of Appeals affirmed said decision.
• Thereafter, Aquende filed a petition for annulment of judgment before the Court of Appeals on the
grounds of extrinsic fraud and lack of jurisdiction.
• The Court of Appeals ruled in favor of Aquende.
• Bulawan filed a motion for reconsideration, which the CA denied.
• Hence, this petition.

Issue

• Whether Aquende was an indispensable party [Yes]

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Ruling

• Bulawan argues that Aquende was not an indispensable party in the civil case because the lot
Aquende claims ownership of is different from the subject matter of the case.
• Contrary to Bulawan's argument, it appears that Aquende's and Bulawan's lot actually refer to the
same lot originally owned by Yap Chin Cun. Both Aquende and Bulawan trace their ownership of
the property to Yap Chin Cun.
• Section 7, Rule 3 of the Rules of Court defines indispensable parties as parties in interest without
whom no final determination can be had of an action. An indispensable party is one whose
interest will be affected by the court's action in the litigation. As such, they must be joined either
as plaintiffs or as defendants.
• During the proceedings before the trial court, the answers of Yap and the Register of Deeds
should have prompted the trial court to inquire further whether there were other indispensable
parties who were not impleaded. The trial court should have taken the initiative to implead
Aquende as defendant or to order Bulawan to do so as mandated under Section 11, Rule 3 of the
Rules of Court. The burden to implead or to order the impleading of indispensable parties is
placed on Bulawan and on the trial court, respectively.
• However, even if Aquende were not an indispensable party, he could still file a petition for
annulment of judgment. The Court has consistently held that a person need not be a party to the
judgment sought to be annulled. What is essential is that he can prove his allegation that the
judgment was obtained by the use of fraud and collusion and that he would be adversely affected
thereby.
• The Court agrees that Bulawan obtained a favorable judgment from the trial court by the use of
fraud. Bulawan prevented Aquende from presenting his case before the trial court and from
protecting his title over his property. The Court further agrees that the Decision adversely affected
Aquende as he was deprived of his property without due process.
• Moreover, a person who was not impleaded in the complaint cannot be bound by the decision
rendered therein, for no man shall be affected by a proceeding in which he is a stranger.

Final Ruling: The petition is denied.

Case Title: Office of the City Mayor of Parañaque v Ebio

Ticker: Cut-cut Creek
Facts

• Respondents claim that they are the absolute owners of a parcel of land in Barangay Vitalez,
Parañaque City in the name of respondent Mario Ebio. Said land was an accretion of Cut-cut
creek. Respondents assert that the original occupant and possessor of the said parcel of land
was their great grandfather, Jose Vitalez. Sometime in 1930, Jose gave the land to his son,
Pedro Vitalez. From then on, Pedro continuously and exclusively occupied and possessed the
said lot. In 1966, after executing an affidavit declaring possession and occupancy, Pedro was
able to obtain a tax declaration over the said property in his name. Since then, respondents have
been religiously paying real property taxes for the said property.
• In 1961, respondent Mario Ebio married Pedro's daughter, Zenaida. Upon Pedro's advice, the
couple established their home on the said Lot. Mario Ebio secured building permits from the
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Parañaque municipal office for the construction of their house within the said compound. Pedro
executed a notarized Transfer of Rights ceding his claim over the entire parcel of land in favor of
Mario Ebio. Subsequently, the tax declarations under Pedro's name were cancelled and new
ones were issued in Mario Ebio's name.
• In 1999, the Office of the Sangguniang Barangay of Vitalez passed a resolution seeking
assistance from the City Government of Parañaque for the construction of an access road along
Cutcut Creek located in the said barangay. When the city government advised all the affected
residents to vacate the said area, respondents immediately registered their opposition hereto. As
a result, the road project was temporarily suspended.
• In 2003, however, respondents were surprised when several officials from the barangay and the
city planning office proceeded to cut eight (8) coconut trees planted on the said lot. Respondents
filed letter-complaints before the Regional Director of the Bureau of Lands, the Department of
Interior and Local Government and the Office of the Vice Mayor. The Sangguniang Barangay of
Vitalez held a meeting to discuss the construction of the proposed road. In the said meeting,
respondents asserted their opposition to the proposed project and their claim of ownership over
the affected property.
• City Administrator Noli Aldip sent a letter to the respondents ordering them to vacate the area
within the next thirty days, or be physically evicted from the said property.
• Threatened of being evicted, respondents went to the RTC of Parañaque City and applied for a
writ of preliminary injunction against petitioners. In the course of the proceedings, respondents
admitted before the trial court that they have a pending application for the issuance of a sales
patent before the Department of Environment and Natural Resources.
• The RTC issued an Order denying the petition for lack of merit.
• The CA issued its Decision in favor of the respondents.
• Hence, the petition.

Issue

• Whether the State is an indispensable party to respondents' action for prohibitory injunction [No]

Ruling

• The petition is without merit.

• An action for injunction is brought specifically to restrain or command the performance of an act.
It is distinct from the ancillary remedy of preliminary injunction, which cannot exist except only as
part or as an incident to an independent action or proceeding. Moreover, in an action for
injunction, the auxiliary remedy of a preliminary prohibitory or mandatory injunction may issue.
• In the case at bar, respondents filed an action for injunction to prevent the local government of
Parañaque City from proceeding with the construction of an access road that will traverse through
a parcel of land which they claim is owned by them by virtue of acquisitive prescription.
• The Court does not agree with the petitioner’s assertion that the State is an indispensable party to
this action.
• An indispensable party is one whose interest in the controversy is such that a final decree would
necessarily affect his/her right, so that the court cannot proceed without their presence. In
contrast, a necessary party is one whose presence in the proceedings is necessary to adjudicate
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 the whole controversy but whose interest is separable such that a final decree can be made in
their absence without affecting them.
• In the instant case, the action for prohibition seeks to enjoin the city government of Parañaque
from proceeding with its implementation of the road construction project. The State is neither a
necessary nor an indispensable party to an action where no positive act shall be required from it
or where no obligation shall be imposed upon it, such as in the case at bar. Neither would it be an
indispensable party if none of its properties shall be divested nor any of its rights infringed.

Final Ruling: The petition is denied for lack of merit.

Case Title: Oposa v Factoran

Ticker: Atty. Loanzon!!
Facts

• The controversy has its genesis in a civil case filed before the RTC. The principal plaintiffs
therein, now the principal petitioners, are all minors duly represented and joined by their
respective parents.
• The original defendant was the Honorable Fulgencio S. Factoran, Jr., then Secretary of the
Department of Environment and Natural Resources. His substitution in this petition by the new
Secretary, the Honorable Angel C. Alcala, was subsequently ordered upon proper motion by the
petitioners.
• The complaint was instituted as a taxpayers' class suit and alleges that the plaintiffs "are all
citizens of the Republic of the Philippines, taxpayers, and entitled to the full benefit, use and
enjoyment of the natural resource treasure that is the country's virgin tropical rainforests." The
same was filed for themselves and others who are equally concerned about the preservation of
said resource but are "so numerous that it is impracticable to bring them all before the Court." The
minors further asseverate that they "represent their generation as well as generations yet
unborn."
• Consequently, it is prayed for that judgment be rendered: ". . . ordering defendant, his agents,
representatives and other persons acting in his behalf to —
(1) Cancel all existing timber license agreements in the country;
(2) Cease and desist from receiving, accepting, processing, renewing or approving new timber
license agreements."
• In 1990, the original defendant, Secretary Factoran, Jr., filed a Motion to Dismiss the complaint
based on two (2) grounds, namely: (1) the plaintiffs have no cause of action against him and (2)
the issue raised by the plaintiffs is a political question which properly pertains to the legislative or
executive branches of Government.
• In 1991, respondent Judge issued an order granting the aforementioned motion to dismiss. In the
said order, the defendant's claim — that the complaint states no cause of action against him and
that it raises a political question — was sustained.

Issue

• Whether the petition is a class suit [Yes]

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Ruling

• Petitioners instituted the civil case as a class suit. The original defendant and the present
respondents did not take issue with this matter. Nevertheless, the Court hereby rules that the said
civil case is indeed a class suit. The subject matter of the complaint is of common and general
interest not just to several, but to all citizens of the Philippines. Consequently, since the parties
are so numerous, it becomes impracticable, if not totally impossible, to bring all of them before
the court. The Court likewise declares that the plaintiffs therein are numerous and representative
enough to ensure the full protection of all concerned interests. Hence, all the requisites for the
filing of a valid class suit under Section 12, Rule 3 of the Revised Rules of Court are present both
in the said civil case and in the instant petition, the latter being but an incident to the former.
• This case, however, has a special and novel element. Petitioners minors assert that they
represent their generation as well as generations yet unborn. The Court finds no difficulty in ruling
that they can, for themselves, for others of their generation and for the succeeding generations,
file a class suit. Their personality to sue in behalf of the succeeding generations can only be
based on the concept of intergenerational responsibility insofar as the right to a balanced and
healthful ecology is concerned. Such a right, as hereinafter expounded, considers the "rhythm
and harmony of nature." Nature means the created world in its entirety. Such rhythm and
harmony indispensably include, inter alia, the judicious disposition, utilization, management,
renewal and conservation of the country's forest, mineral, land, waters, fisheries, wildlife, off-
shore areas and other natural resources to the end that their exploration, development and
utilization be equitably accessible to the present as well as future generations. Needless to say,
every generation has a responsibility to the next to preserve that rhythm and harmony for the full
enjoyment of a balanced and healthful ecology. Put a little differently, the minors' assertion of
their right to a sound environment constitutes, at the same time, the performance of their
obligation to ensure the protection of that right for the generations to come.

Final Ruling: The petition is granted.

Case Title: Newsweek Inc v Intermediate Appellate Court

Ticker: An Island of Fear
Facts

• Petitioner, Newsweek, Inc., a foreign corporation licensed to do business in the Philippines, in this
special action for certiorari, prohibition with preliminary injunction, seeks to annul the decision of
the Intermediate Appellate Court sustaining the Order of the then Court of First Instance which
denied petitioner's Motion to Dismiss the complaint for libel filed by private respondents.
• It appears that in 1981, private respondents, incorporated associations of sugarcane planters in
Negros Occidental claiming to have 8,500 members and several individual sugar planters, filed a
civil case in their own behalf and/or as a class suit in behalf of all sugarcane planters in the
province of Negros Occidental, against petitioner and two of petitioners' non-resident
correspondents/reporters Fred Bruning and Barry Came. The complaint alleged that petitioner
and the other defendants committed libel against them by the publication of the article "An Island
of Fear" in the issue of petitioner's weekly news magazine Newsweek . The article supposedly
portrayed the island province of Negros Occidental as a place dominated by big landowners or

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 sugarcane planters who not only exploited the impoverished and underpaid sugarcane
workers/laborers, but also brutalized and killed them with impunity. Complainants therein alleged
that said article, taken as a whole, showed a deliberate and malicious use of falsehood, slanted
presentation and/or misrepresentation of facts intended to put them (sugarcane planters) in bad
light, expose them to public ridicule, discredit and humiliation here in the Philippines and abroad,
and make them objects of hatred, contempt and hostility of their agricultural workers and of the
public in general. They prayed that defendants be ordered to pay them actual and compensatory
damages, and such amounts for moral, exemplary and corrective damages as the court may
determine, plus expenses of litigation, attorney's fees and costs of suit.
• Petitioner filed a motion to dismiss, which the trial court denied.
• The IAC affirmed the trial court's Orders.
• Hence, the petition.

Issue

• Whether the case at bar is a class suit [No]

Arguments
Ruling
Petitioner
The Court notes that private respondents filed a "class suit" in representation of all the
8,500 sugarcane planters of Negros Occidental.

The petitioner’s contention is meritorious.

The absence of
The case at bar is not a class suit. It is not a case where one or more may sue for the
any actionable
benefit of all or where the representation of class interest affected by the judgment or
basis in the
decree is indispensable to make each member of the class an actual party. The Court
complaint
has here a case where each of the plaintiffs has a separate and distinct reputation in
cannot be cured
the community. They do not have a common or general interest in the subject matter
by the filing of a
of the controversy.
class suit on
behalf of the
The disputed portion of the article which refers to plaintiff Sola and which was claimed
aforesaid sugar
to be libelous never singled out plaintiff Sola as a sugar planter. The news report
planters.
merely stated that the victim had been arrested by members of a special police unit
brought into the area by Pablo Sola, the mayor of Kabankalan. Hence, the report,
referring as it does to an official act performed by an elective public official, is within
the realm of privilege and protected by the constitutional guarantees of free speech
and press.
Final Ruling: Due to other reasons, the decision of the IAC is reversed.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
Case Title: Mathay v The Consolidated Bank and Trust Company
Ticker: Stockholders
Facts

• The complaint in this case, filed as a class suit, under Section 12, Rule 3, of the Rules of Court,
contained six causes of action. Under the first cause of action, plaintiffs-appellants alleged that
they were stockholders in the Consolidated Mines, Inc., a corporation duly organized and existing
under Philippine laws; that the stockholders of the CMI, including the plaintiffs-appellants, passed,
at a regular stockholders' meeting, a Resolution providing: (a) that the Consolidated Bank & Trust
Co. he organized with an authorized capital; (b) that the organization be undertaken by a Board of
Organizers composed of the President and Members of the Board of Directors of the CMI; (c) that
all stockholders of the CMI, who were legally qualified to become stockholders, would be entitled
to subscribe to the capital stock of the proposed Bank "at par value to the same extent and in the
same amount as said stockholders' respective shareholdings in the CMI," as shown in its stock
books on a date to be fixed by the Board of Directors, provided that the right to subscribe should
be exercised within thirty days from the date so fixed, and "that if such right to subscription be not
so exercised then the stockholders concerned shall be deemed to have thereby waived and
released ipso-facto their right to such subscription in favor of the Interim Board of Organizers of
the Defendant Bank or their assignees;" and (d) that the Board of Directors of the CMI be
authorized to declare a "special dividend" in an amount it would fix, which the subscribing
stockholders might authorize to be paid directly to the treasurer of the proposed Bank in payment
of the subscriptions; that the President and members of the Board of Directors of the CMI, who
are the individuals-defendants-appellees in the instant case, constituted themselves as the
Interim Board of Organizers; that said Board sent out, to the CMI stockholders, including the
plaintiffs-appellants, circular letters with "Pre-Incorporation Agreement to Subscribe" forms that
provided that the payment of the subscription should be made in cash from time to time or by the
application of the special dividend declared by the CMI, and that the subscription must be made
within the period, "otherwise such subscription right shall be deemed to have been thereby ipso
facto waived and released in favor of the Board of Organizers of the Defendant Bank and their
assignees"; that the plaintiffs-appellants accomplished and filed their respective "Pre-
Incorporation Agreement to Subscribe" and paid in full their subscriptions; that plaintiffs-
appellants and the other CMI subscribing stockholders in whose behalf the action was brought
also subscribed to a very substantial amount of shares; that the Board of Organizers caused the
execution of the Articles or Incorporation of the proposed Bank, subscribed and paid only by six
of the individuals-defendants-appellees, namely, Antonio P. Madrigal, Jose P. Madrigal, Simon R.
Paterno, Fermin Z. Caram, Jr., Claudio Teehankee, and Wilfredo C. Tecson, thereby excluding
the plaintiffs-appellants and the other CMI subscribing stockholders who had already subscribed;
that the execution of said Articles of Incorporation was "in violation of law and in breach of trust
and contractual agreement as a means to gain control of Defendant Bank by Defendant
Individuals and persons or entities chosen by them and for their personal profit or gain in
disregard of the rights of Plaintiffs and other CMI Subscribing Stockholders;" that the paid-in
capital stock was raised, as required by the Monetary Board, which were again subscribed and
paid for entirely by individuals-defendants appellees or entities chosen by them "to the exclusion
of Plaintiffs and other CMI subscribing stockholders" "in violation of law and breach of trust and of
the contractual agreement embodied in the contractual agreement; that the Articles were filed
with the Securities and Exchange Commission which issued the Certificate of Incorporation; that
as of the date of the Complaint, the plaintiffs-appellants and other CMI subscribing stockholders
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 had been denied, through the unlawful acts and manipulation of the defendant Bank and
Individuals-defendants-appellees, the right to subscribe at par value, in proportion to their equities
established under their respective "Pre-Incorporation Agreements to Subscribe" to the capital
stock; that the individuals-defendants-appellees and the persons chosen by them had unlawfully
acquired stockholdings in the defendant-appellee Bank in excess of what they were lawfully
entitled and held such shares "in trust" for the plaintiffs-appellants and the other CMI
stockholders; that it would have been vain and futile to resort to intra-corporate remedies under
the facts and circumstances alleged above. As relief on the first cause of action, plaintiffs-
appellants prayed that the subscriptions and shareholdings acquired by the individuals-
defendants-appellees and the persons chosen by them, to the extent that plaintiffs-appellants and
the other CMI stockholders had been deprived of their right to subscribe, be annulled and
transferred to plaintiffs-appellants and other CMI subscribing stockholders.
• Defendants-appellees, except Fermin Caram, Jr., filed a motion to dismiss on the grounds that
plaintiffs-appellants had no legal standing or capacity to institute the alleged class suit.
• Appellants, plaintiffs and intervenors, filed a verified petition for a writ of preliminary injunction to
enjoin defendants-appellees from considering or ratifying by resolution, at the meeting of the
stockholders of defendant-appellee Bank to be held the following day, the unlawful apportionment
of the shares of the defendant-appellee Bank and the illegal amendment to its Articles of
Incorporation increasing the number of Directors. The Court, after hearing, granted the writ, but
subsequently set it aside upon the appellees' filing a counterbond.
• Some subscribers to the capital stock of the Bank like Concepcion Zuluaga, et al., and Carlos
Moran Sison, et al., filed separate manifestations that they were opposing and disauthorizing the
suit of plaintiffs-appellants.
• The trial court granted the motion to dismiss, holding, among other things, that the class suit
could not be maintained because of the absence of a showing in the complaint that the plaintiffs-
appellants were sufficiently numerous and representative, and that the complaint failed to state a
cause of action.
• From said order, appellants, plaintiffs and intervenors, interposed this appeal to the SC.

Issue

• Whether the instant action could be maintained as a class suit [No]

Ruling

• The governing statutory provision for the maintenance of a class suit is Section 12 of Rule 3 of
the Rules of Court.
• The necessary elements for the maintenance of a class suit are accordingly: (1) that the subject
matter of the controversy be one of common or general interest to many persons, and (2) that
such persons be so numerous as to make it impracticable to bring them all to the court. An action
does not become a class suit merely because it is designated as such in the pleadings. Whether
the suit is or is not a class suit depends upon the attending facts, and the complaint, or other
pleading initiating the class action should allege the existence of the necessary facts, to wit, the
existence of a subject matter of common interest, and the existence of a class and the number of
persons in the alleged class, 3 in order that the court might be enabled to determine whether the

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 members of the class are so numerous as to make it impracticable to bring them all before the
court, to contrast the number appearing on the record with the number in the class and to
determine whether claimants on record adequately represent the class and the subject matter of
general or common interest.
• The complaint in the instant case explicitly declared that the plaintiffs-appellants instituted the
"present class suit under Section 12, Rule 3, of the Rules of Court in behalf of CMI subscribing
stockholders" but did not state the number of said CMI subscribing stockholders so that the trial
court could not infer, much less make sure as explicitly required by the statutory provision, that
the parties actually before it were sufficiently numerous and representative in order that all
interests concerned might be fully protected, and that it was impracticable to bring such a large
number of parties before the court.
• The statute also requires, as a prerequisite to a class suit, that the subject-matter of the
controversy be of common or general interest to numerous persons. Although it has been
remarked that the "innocent 'common or general interest' requirement is not very helpful in
determining whether or not the suit is proper", the decided cases in our jurisdiction have more
incisively certified the matter when there is such common or general interest in the subject matter
of the controversy. By the phrase "subject matter of the action" is meant "the physical facts, the
things real or personal, the money, lands, chattels, and the like, in relation to which the suit is
prosecuted, and not the delict or wrong committed by the defendant."
• This Court has ruled that a class suit did not lie in an action for recovery of real property where
separate portions of the same parcel were occupied and claimed individually by different parties
to the exclusion of each other, such that the different parties had determinable, though undivided
interests, in the property in question. It has likewise held that a class suit would not lie against
319 defendants individually occupying different portions of a big parcel of land, where each
defendant had an interest only in the particular portion he was occupying, which portion was
completely different from the other portions individually occupied by other defendants, for the
applicable Section 118 of the Code of Civil Procedure relates to a common and general interest in
single specific things and not to distinct ones. In an action for the recovery of amounts that
represented surcharges allegedly collected by the city from some 30,000 customers of four movie
houses, it was held that a class suit did not lie, as no one plaintiff had any right to, or any share in
the amounts individually claimed by the others, as each of them was entitled, if at all, only to the
return of what he had personally paid.
• The interest, subject matter of the class suits in the above-cited cases, is analogous to the
interest claimed by appellants in the instant case. The interest that appellants, plaintiffs and
intervenors, and the CMI stockholders had in the subject matter of this suit — the portion of
stocks offering of the Bank left unsubscribed by CMI stockholders who failed to exercise their
right to subscribe - was several, not common or general in the sense required by the statute.
Each one of the appellants and the CMI stockholders had determinable interest; each one had a
right, if any, only to his respective portion of the stocks. No one of them had any right to, or any
interest in, the stock to which another was entitled.
• Even if it be assumed, for the sake of argument, that the appellants and the CMI stockholders
suffered wrongs that had been committed by similar means and even pursuant to a single plan of
the Interim Board of Organizers of the Bank, the wrong suffered by each of them would constitute
a wrong separate from those suffered by the other stockholders, and those wrongs alone would
not create that common or general interest in the subject matter of the controversy as would
entitle any one of them to bring a class suit on behalf of the others.
• Appellants, however, insisted, citing American authorities, that a class suit might be brought even
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 if the interests of plaintiffs-appellants might be several as long as there was a common question
of law or fact affecting them and a common relief was sought. We have no conflict with the
authorities cited; those were rulings under the Federal Rules of Civil Procedure, pursuant to Rule
23 of which, there were three types of class suits, namely: the true, the hybrid, and the spurious,
and these three had only one feature in common, that is, in each the persons constituting the
class must be so numerous as to make it impracticable to bring them all before the court. The
authorities cited by plaintiffs-appellants refer to the spurious class action (Rule 23 (a) (3) which
involves a right sought to be enforced, which is several, and there is a common question of law or
fact affecting the several rights and a common relief is sought. The spurious class action is
merely a permissive joinder device; between the members of the class there is no jural
relationship, and the right or liability of each is distinct, the class being formed solely by the
presence of a common question of law or fact. This permissive joinder is provided in Section 6 of
Rule 3, of our Rules of Court. Such joinder is not and cannot be regarded as a class suit, which
this action purported and was intended to be as per averment of the complaint.
• It may be granted that the claims of all the appellants involved the same question of law. But this
alone, as said above, did not constitute the common interest over the subject matter
indispensable in a class suit. The right to purchase or subscribe to the shares of the proposed
Bank, claimed by appellants herein, is analogous to the right of preemption that stockholders
have when their corporation increases its capital. The right of preemption, it has been said, is
personal to each stockholder, and while a stockholder may maintain a suit to compel the issuance
of his proportionate share of stock, it has been ruled, nevertheless, that he may not maintain a
representative action on behalf of other stockholders who are similarly situated. By analogy, the
right of each of the appellants to subscribe to the waived stocks was personal, and no one of
them could maintain on behalf of others similarly situated a representative suit.
• Straining to make it appear that appellants and the CMI subscribing stockholders had a common
or general interest in the subject matter of the suit, appellants stressed in their brief that one of
the reliefs sought in the instant action was "to divest defendant individuals and the persons or
entities chosen by them of control of the defendant bank. " This relief allegedly sought by
appellants did not, however, appear either in the text or in the prayer of the complaint.
• Appellants, furthermore, insisted that insufficiency of number in a class suit was not a ground for
dismissal of one action. This Court has, however, said that where it appeared that no sufficient
representative parties had been joined, the dismissal by the trial court of the action, despite the
contention by plaintiffs that it was a class suit, was correct. Moreover, insofar as the instant case
is concerned, even if it be granted for the sake of argument, that the suit could not be dismissed
on that ground, it could have been dismissed, nevertheless, on the ground of lack of cause of
action which will be presently discussed.

Final Ruling: The appeal is dismissed.

Section 13
Alternative defendants. – Where the plaintiff is uncertain against who of several persons he is entitled to
relief, he may join any or all of them as defendants in the alternative, although a right to relief against
one may be inconsistent with a right to relief against the other.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
Section 14
Unknown identity or name of defendant. – Whenever the identity or name of a defendant is unknown, he
may be sued as the unknown owner, heir, devisee, or by such other designation as the case may
require; when his identity or true name is discovered, the pleading must be amended accordingly.

Section 15
Entity without juridical personality as defendant. – When two or more persons not organized as an entity
with juridical personality enter into a transaction, they may be sued under the name by which they are
generally or commonly known.

In the answer of such defendant, the names and addresses of the persons composing said entity must
all be revealed.

Section 16
Death of a party; duty of counsel. – Whenever a party to a pending action dies, and the claim is not
thereby extinguished, it shall be the duty of his counsel to inform the court within thirty (30) days after
such death of the fact thereof, and to give the name and address of his legal representative or
representatives. Failure of counsel to comply with this duty shall be a ground of disciplinary action.

The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the
appointment of an executor or administrator and the court may appoint a guardian ad litem for the minor
heirs.

The court shall forthwith order said legal representative or representatives to appear and be substituted
within a period of thirty (30) days from notice.

If no legal representative is named by the counsel for the deceased party, or if the one so named shall
fail to appear within the specified period, the court may order the opposing party, within a specified time,
to procure the appointment of an executor or administrator for the estate of the deceased and the latter
shall immediately appear for an on behalf of the deceased. The court charges in procuring such
appointment, if defrayed by the opposing party, may be recovered as costs.

Section 17
Death or separation of a party who is a public officer. – When a public officer is a party in an action in his
official capacity and during its pendency dies, resigns, or otherwise ceases to hold office, the action may
be continued and maintained by or against his successor if, within thirty (30) days after the successor
takes office or such time as may be granted by the court, it is satisfactorily shown to the court by any
party that there is a substantial need for continuing or maintaining it and that the successor adopts or
continues or threatens to adopt or continue the action of his predecessor. Before a substitution is made,
the party or officer to be affected, unless expressly assenting thereto, shall be given reasonable notice
of the application therefor and accorded an opportunity to be heard.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
Case Title: Chiang Kai Shek School v Court of Appeals
Ticker: Ms. Oh
Facts

• An unpleasant surprise awaited Fausta Oh when she reported for work at the Chiang Kai Shek
School in Sorsogon on the first week of July, 1968. She was told she had no assignment for the
next semester. She had been teaching in the school since 1932 for a continuous period of almost
33 years. And now, out of the blue, and for no apparent or given reason, this abrupt dismissal.
• Oh sued. She demanded separation pay, social security benefits, salary differentials, maternity
benefits and moral and exemplary damages. The original defendant was the Chiang Kai Shek
School but when it filed a motion to dismiss on the ground that it could not be sued, the complaint
was amended. Certain officials of the school were also impleaded to make them solidarily liable
with the school.
• The Court of First Instance of Sorsogon dismissed the complaint. On appeal, its decision was set
aside by the respondent court, which held the school suable and liable while absolving the other
defendants. The motion for reconsideration having been denied, the school then came to the
Court for this petition for review on certiorari.

Issue

• Whether a school that has not been incorporated may be sued by reason alone of its long
continued existence and recognition by the government [Yes]
• Whether a complaint filed against persons associated under a common name will justify a
judgment against the association itself and not its individual members [Yes]

Ruling

• The Court held against the petitioner on the first question. It is true that Rule 3, Section 1, of the
Rules of Court clearly provides that "only natural or juridical persons may be parties in a civil
action." It is also not denied that the school has not been incorporated. However, this omission
should not prejudice the private respondent in the assertion of her claims against the school.
• As a school the petitioner was governed by Act No. 2706 as amended by C.A. No. 180. Having
been recognized by the government, it was under obligation to incorporate under the Corporation
Law within 90 days from such recognition. It appears that it had not done so at the time the
complaint was filed notwithstanding that it had been in existence even earlier than 1932. The
petitioner cannot now invoke its own non-compliance with the law to immunize it from the private
respondent's complaint.
• There should also be no question that having contracted with the private respondent every year
for thirty two years and thus represented itself as possessed of juridical personality to do so, the
petitioner is now estopped from denying such personality to defeat her claim against it.
• As the school itself may be sued in its own name, there is no need to apply Rule 3, Section 15,
under which the persons joined in an association without any juridical personality may be sued
with such association. Besides, it has been shown that the individual members of the board of
trustees are not liable, having been appointed only after the private respondent's dismissal.

Final Ruling: The petition is denied.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
Case Title: Sarsaba v Fe vda. De Te
Ticker: Fuso Truck
Facts

• In 1995, a Decision was rendered in an NLRC Case finding Patricio Sereno to have been illegally
dismissed and ordering Gasing to pay him his monetary claims. After the Writ of Execution was
returned unsatisfied, Labor Arbiter Newton Sancho issued an Alias Writ of Execution directing
Fulgencio Lavarez, Sheriff II of the National Labor Relations Commission (NLRC), to satisfy the
judgment award. Lavarez, accompanied by Sereno and his counsel, petitioner Atty. Rogelio E.
Sarsaba, levied a Fuso Truck which at that time was in the possession of Gasing. The truck was
sold at public auction, with Sereno appearing as the highest bidder.
• Meanwhile, respondent Fe Vda. de Te, represented by her attorney-infact, Faustino Castañeda,
filed with the RTC for recovery of motor vehicle, damages with prayer for the delivery of the truck
pendente lite against petitioner, Sereno, Lavarez and the NLRC.
• Respondent alleged that: (1) she is the wife of the late Pedro Te, the registered owner of the
truck, as evidenced by the Official Receipt and Certificate of Registration; (2) Gasing merely
rented the truck from her; (3) Lavarez erroneously assumed that Gasing owned the truck because
he was, at the time of the "taking,” in possession of the same; and (4) since neither she nor her
husband were parties to the labor case between Sereno and Gasing, she should not be made to
answer for the judgment award, much less be deprived of the truck as a consequence of the levy
in execution.
• NLRC and the petitioner filed a Motion to Dismiss. Meanwhile, Lavarez filed an Answer with
Compulsory Counterclaim and Third-Party Complaint.
• The RTC issued an order denying petitioner’s motion to dismiss.
• Petitioner filed an Omnibus Motion to Dismiss the case.
• It appeared that the respondent, Fe VdDa. de Te, died in 2005.
• The motion to dismiss the case was denied.
• Hence, petitioner directly sought recourse from the Court via the present petition.

Issue

• Whether the case shall be dismissed as regards the other defendants due to the failure of the
court to serve summons on Sereno, on account of the latter’s death [No]

Ruling

• Petitioner argues that, since Sereno died before summons was served on him, the RTC should
have dismissed the complaint against all the defendants and that the same should be filed
against his estate.
• The Sheriff's Return of Service states that Sereno could not be served with copy of the summons,
together with a copy of the complaint, because he was already dead.
• In view of Sereno's death, petitioner asks that the complaint should be dismissed, not only
against Sereno, but as to all the defendants, considering that the RTC did not acquire jurisdiction
over the person of Sereno.
• Jurisdiction over a party is acquired by service of summons by the sheriff, his deputy or other
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 proper court officer, either personally by handing a copy thereof to the defendant or by substituted
service. On the other hand, summons is a writ by which the defendant is notified of the action
brought against him. Service of such writ is the means by which the court may acquire jurisdiction
over his person.
• Significantly, a motion to dismiss may be filed within the time for but before the filing of an answer
to the complaint or pleading asserting a claim. Among the grounds mentioned is the court's lack
of jurisdiction over the person of the defending party.
• As a rule, all defenses and objections not pleaded, either in a motion to dismiss or in an answer,
are deemed waived. In the case before the Court, petitioner raises the issue of lack of jurisdiction
over the person of Sereno, not in his Motion to Dismiss or in his Answer but only in his Omnibus
Motion to Dismiss. Having failed to invoke this ground at the proper time, that is, in a motion to
dismiss, petitioner cannot raise it now for the first time on appeal.
• The Court cannot countenance petitioner's argument that the complaint against the other
defendants should have been dismissed, considering that the RTC never acquired jurisdiction
over the person of Sereno. The court's failure to acquire jurisdiction over one's person is a
defense which is personal to the person claiming it. Obviously, it is now impossible for Sereno to
invoke the same in view of his death. Neither can petitioner invoke such ground, on behalf of
Sereno, so as to reap the benefit of having the case dismissed against all of the defendants.
Failure to serve summons on Sereno's person will not be a cause for the dismissal of the
complaint against the other defendants, considering that they have been served with copies of
the summons and complaints and have long submitted their respective responsive pleadings. In
fact, the other defendants in the complaint were given the chance to raise all possible defenses
and objections personal to them in their respective motions to dismiss and their subsequent
answers.

Final Ruling: The petition is denied.

Case Title: Sumaljag v Spouses Diosdidit

Ticker: Two Civil Cases; Josefa Died
Facts

• In 1993, Josefa Maglasang filed with the RTC a complaint for the nullity of the deed of sale of real
property purportedly executed between her as vendor and the spouses Diosdidit and Menendez
Literato as vendees. The complaint alleged that this deed of sale of Lot 1220-D is spurious.
Josefa was the sister of Menendez Maglasang Literato. They were two (2) of the six (6) heirs who
inherited equal parts of the property on to them by their parents Cristito and Inecita Diano
Maglasang. Lot 1220-D was partitioned to Josefa, while Lot 1220-E was given to Menendez.
• The respondent spouses' response to the complaint was an amended answer with counterclaim
denying that the deed of sale was falsified. They impleaded the petitioner with Josefa as
counterclaim defendant on the allegation that the petitioner, at the instance of Josefa, occupied
Lot 1220-D and Lot 1220-E without their (the respondent spouses') authority; Lot 1220-E is theirs
by inheritance while 1220-D had been sold to them by Josefa. They also alleged that the
petitioner acted in bad faith in acquiring the two (2) lots because he prepared and notarized the
contract of lease over the whole of Lot 1220 between all the Maglasang heirs (but excluding
Josefa) and Vicente Tolo, with the lease running from 1986 to 1991; thus, the petitioner then
knew that Josefa no longer owned Lot 1220-D.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 • Menendez filed another civil case with the RTC for the declaration of the inexistence of lease
contract, recovery of possession of land, and damages against the petitioner and Josefa after the
RTC dismissed the respondent spouses' counterclaim in the original civil case. The complaint
alleged that Josefa, who had previously sold Lot 1220-D to Menendez, leased it, together with Lot
1220-E, to thepetitioner. Menendez further averred that the petitioner and Josefa were in bad
faith in entering their contract of lease as they both knew that Josefa did not own the leased lots.
Menendez prayed, among others, that this lease contract between Josefa and the petitioner be
declared null and void.
• Josefa died on May 3, 1999, during the pendency of both civil cases.
• On August 13, 1999, Atty. Zenen Puray – the petitioner's and Josefa's common counsel — asked
the RTC in the first civil case that he be given an extended period within which to file a formal
notice of death and substitution of party.
• The RTC granted the motion in an order. Atty. Puray filed with the RTC a notice of death and
substitution of party, praying that Josefa — in his capacity as plaintiff and third party counterclaim
defendant — be substituted by the petitioner. The submission alleged that prior to Josefa's death,
she executed a Quitclaim Deed over Lot 1220-D in favor of Remismundo Maglasang who in turn
sold this property to the petitioner.
• Menendez, through counsel, objected to the proposed substitution, alleging that Atty. Puray filed
the notice of death and substitution of party beyond the thirty-day period provided under Section
16, Rule 3 of the 1997 Rules of Civil Procedure, as amended.
• The RTC denied Atty. Puray's motion for substitution and instead ordered the appearance of
Michaeles as representative of the deceased Josefa.
• The CA dismissed the petitioner's appeal.
• Hence, this petition.

Issue

• Whether there has been proper substitution [No]

Ruling

• The Court resolves to deny the petition for lack of merit.

• The rule on substitution in case of death of a party is governed by Section 16, Rule 3 of the 1997
Rules of Civil Procedure. The purpose behind this rule is the protection of the right to due process
of every party to the litigation who may be affected by the intervening death. The deceased
litigant is herself or himself protected as he/she continues to be properly represented in the suit
through the duly appointed legal representative of his estate.
• A question preliminary to the application of the above provision is whether the two civil cases are
actions that survive the death of Josefa. In a case, the Court said that the question as to whether
an action survives or not depends on the nature of the action and the damage sued for. In the
causes of action which survive, the wrong complained [of] affects primarily and principally
property and property rights, the injuries to the person being merely incidental, while in the
causes of action which do not survive, the injury complained of is to the person, the property and
rights of property affected being incidental.
• Since the question involved in these cases relate to property and property rights, then we are
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 dealing with actions that survive so that Section 16, Rule 3 must necessarily apply.
• The duty of counsel under the aforecited provision is to inform the court within thirty (30) days
after the death of his client of the fact of death, and to give the name and address of the
deceased's legal representative or representatives. Incidentally, this is the only representation
that counsel can undertake after the death of a client as the fact of death terminated any further
lawyer-client relationship.
• In the present case, it is undisputed that the counsel for Josefa did in fact notify the lower court,
although belatedly, of the fact of her death.
• However, he did as well inform the lower court that a quitclaim deed has been executed in favor
of the petitioner. Further, counsel asked that "the deceased Josefa Maglasang in her capacity as
plaintiff and as Third Party Counterclaim Defendant be substituted in the case at bar by Judge
Sumaljag."
• This notification, although filed late, effectively informed the lower court of the death of litigant
Josefa Maglasang so as to free her counsel of any liability for failure to make a report of death
under Section 16, Rule 3 of the Rules of Court. In our view, counsel satisfactorily explained to the
lower court the circumstances of the late reporting, and the latter in fact granted counsel an
extended period. The timeliness of the report is therefore a nonissue.
• The reporting issue that goes into the core of this case is whether counsel properly gave the court
the name and address of the legal representative of the deceased that Section 16, Rule 3
specifies. The Court rules that he did not. The "legal representatives" that the provision speaks of,
refer to those authorized by law — the administrator, executor or guardian who, under the rule on
settlement of estate of deceased persons, is constituted to take over the estate of the deceased.
Section 16, Rule 3 likewise expressly provides that "the heirs of the deceased may be allowed to
be substituted for the deceased, without requiring the appointment of an executor or administrator
. . .". Significantly, the person — now the present petitioner — that counsel gave as substitute
was not one of those mentioned under Section 16, Rule 3. Rather, he is a counterclaim co-
defendant of the deceased whose proferred * justification for the requested substitution is the
transfer to him of the interests of the deceased in the litigation prior to her death.
• Under the circumstances, both the lower court and the CA were legally correct in not giving effect
to counsel's suggested substitute.
• First, the petitioner is not one of those allowed by the Rules to be a substitute. Section 16, Rule 3
speaks for itself in this respect.
• Second, as already mentioned above, the reason for the Rule is to protect all concerned who may
be affected by the intervening death, particularly the deceased and her estate. We note in this
respect that the Notice that counsel filed in fact reflects a claim against the interest of the
deceased through the transfer of her remaining interest in the litigation to another party.
Interestingly, the transfer is in favor of the very same person who is suggested to the court as the
substitute. To state the obvious, the suggested substitution effectively brings to naught the
protection that the Rules intend; plain common sense tells us that the transferee who has his own
interest to protect, cannot at the same time represent and fully protect the interest of the
deceased transferor.
• The CA correctly harked back to the plain terms of Section 16, Rule 3 in determining who the
appropriate legal representative/s should be in the absence of an executor or administrator. The
second paragraph of the Section 16, Rule 3 of the 1997 Rules of Court, as amended, is clear —
the heirs of the deceased may be allowed to be substituted for the deceased, without requiring
the appointment of an executor or administrator.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 • Josefa's death certificate shows that she was single at the time of her death. The records do not
show that she left a will. Therefore, as correctly held by the CA, in applying Section 16, Rule 3,
her heirs are her surviving sisters (Michaelis, Maria, Zosima, and Consolacion) and the children
of her deceased sister, Lourdes (Manuel, Cesar, Huros and Regulo) who should be her legal
representatives. Menendez, although also a sister, should be excluded for being one of the
adverse parties in the cases before the RTC.

Final Ruling: The petition is denied.

Case Title: Dela Cruz v Joaquin

Ticker: Automatic Substitution
Facts

• The case originated from a Complaint for the recovery of possession and ownership, the
cancellation of title, and damages, filed by Pedro Joaquin against petitioners in the Regional Trial
Court. Respondent alleged that he had obtained a loan from them; that to secure the payment of
the obligation, he supposedly executed a Deed of Sale in favor of petitioners. The Deed was for a
parcel of land in Nueva Ecija. The parties also executed another document entitled "Kasunduan.”
• Respondent claimed that the Kasunduan showed the Deed of Sale to be actually an equitable
mortgage. Spouses De la Cruz contended that this document was merely an accommodation to
allow the repurchase of the Property, a right that he failed to exercise.
• The RTC issued a Decision in his favor. The trial court declared that the parties had entered into
a sale with a right of repurchase.
• The CA sustained the decision of the trial court.
• In a resolution, the CA ordered a substitution by legal representatives, in view of respondent's
death in 1998.
• Hence, the petition.

Issue

• Whether there has been proper substitution [Yes]

Ruling

• Petitioners assert that the RTC's Decision was invalid for lack of jurisdiction. They claim that
respondent died during the pendency of the case. There being no substitution by the heirs, the
trial court allegedly lacked jurisdiction over the litigation.
• The Petition has no merit.
• When a party to a pending action dies and the claim is not extinguished, the Rules of Court
require a substitution of the deceased. The procedure is specifically governed by Section 16 of
Rule 3.
• The rule on the substitution of parties was crafted to protect every party's right to due process.
The estate of the deceased party will continue to be properly represented in the suit through the
duly appointed legal representative. Moreover, no adjudication can be made against the
successor of the deceased if the fundamental right to a day in court is denied.
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 • The Court has nullified not only trial proceedings conducted without the appearance of the legal • The appeal filed by Alfredo Tan was dismissed by the CA, but the appeal filed by herein private
representatives of the deceased, but also the resulting judgments. In those instances, the courts respondent Adelina Tan proceeded in due course.
acquired no jurisdiction over the persons of the legal representatives or the heirs upon whom no • The CA granted the petition partially and deleted the awards of exemplary damages and
judgment was binding. attorney’s fees.
• This general rule notwithstanding, a formal substitution by heirs is not necessary when they • None of the parties filed any motion for reconsideration or appeal from the CA Decision, thus, the
themselves voluntarily appear, participate in the case, and present evidence in defense of the same became final and executory.
deceased. These actions negate any claim that the right to due process was violated. • Private respondent Adelina Tan then filed with the trial court a Motion for Execution, praying that
• Strictly speaking, the rule on the substitution by heirs is not a matter of jurisdiction, but a the excess of the amounts she previously paid as exemplary damages, attorney's fees and
requirement of due process. Thus, when due process is not violated, as when the right of the liquidated damages be refunded to her, in accordance with the judgment of the CA. The petitioner
representative or heir is recognized and protected, noncompliance or belated formal compliance filed with the CA an Omnibus Motion (with entry of appearance), praying that the entry of
with the Rules cannot affect the validity of a promulgated decision. Mere failure to substitute for a judgment be recalled, lifted and set aside and that the appeal of Adelina Tan be dismissed or the
deceased plaintiff is not a sufficient ground to nullify a trial court's decision. The alleging party appeal be reopened to allow petitioner to file an appeal brief. Petitioner argued that its counsel,
must prove that there was an undeniable violation of due process. Atty. Liberato Bauto died, hence, any notice sent to him must be deemed ineffective; that the
• The records of the present case contain a "Motion for Substitution of Party Plaintiff" filed before parties have arrived at a settlement of the case, as shown by the fact that private respondent
the CA. already paid as complete and full satisfaction of the adjudged obligations of the defendants to
• Evidently, the heirs of Pedro Joaquin voluntary appeared and participated in the case. We stress petitioner, and thus, the appeal should have been deemed mooted.
that the appellate court had ordered his legal representatives to appear and substitute for him. • The RTC granted the motion for execution.
The substitution even on appeal had been ordered correctly. In all proceedings, the legal • Petitioner filed with the RTC a Very Urgent Motion (for recall and reconsideration of order and
representatives must appear to protect the interests of the deceased. After the rendition of quashal of alias writ of execution, levy, and notice of sheriff's sale, etc.), but this motion was
judgment, further proceedings may be held, such as a motion for reconsideration or a new trial, denied in an Order. Petitioner then filed a petition for certiorari with the CA to assail the trial
an apeal, or an execution. court's denial of the Very Urgent Motion, but as admitted by petitioner in the present petition, said
• Considering the foregoing circumstances, the Motion for Substitution may be deemed to have action for certiorari was denied due course and dismissed by the CA.
been granted; and the heirs, to have substituted for the deceased, Pedro Joaquin. There being no • As to petitioner's Omnibus Motion (with entry of appearance) filed with the CA, the appellate court
violation of due process, the issue of substitution cannot be upheld as a ground to nullify the trial issued a Resolution, merely noting petitioner's motion because its Decision has long become final
court's Decision. and executory.
• Hence, the present petition.
Final Ruling: The petition is denied.
Issue
Case Title: O. Ventilla Enterprises Corporation v Tan
Ticker: Counsel Died • Whether the death of the counsel prevented the decision from attaining finality [No]
Facts
Ruling
• Petitioner leased out two of its properties in Cabanatuan City to Alfredo Tan and herein private
respondent Adelina Tan. Due to the failure of the Tans to comply with the terms of the lease,
petitioner filed a complaint against the Tans for cancellation and termination of contract of lease • Although the petition is an appeal from the Resolution of the CA, refusing to recall its entry of
with the Regional Trial Court. judgment, and its Resolution, denying reconsideration of the earlier resolution, petitioner is
• The RTC rendered judgment in favor of Oscar Ventanilla Enterprises Corporation. actually making a vain attempt to reopen a case that has long been final and executory. The
• Both Alfredo Tan and private respondent Adelina Tan appealed from said Decision. However, Court frowns upon such conduct of litigants and their lawyers.
herein petitioner filed a motion for execution pending appeal and the same was granted by the • The Court strikes down the argument that the CA did not attain finality because petitioner's
trial court. Several properties and bank accounts of private respondent and Alfredo Tan were counsel, who died while the case was pending before the CA, was unable to receive a copy
levied upon. The Tans decided to pay the amounts as ordered in the RTC Decision. The trial thereof. The CA was correct in ruling that there is no extraordinary circumstance in this case that
court issued Orders lifting and cancelling the Notice of Levy on private respondent Adelina Tan's would merit a recall of the entry of judgment to reopen the case. The reason given by petitioner,
properties and also on several bank accounts in the name of the Tans. Both orders stated that that its former counsel had died before the CA Decision was promulgated, hence, it was not
after the court allowed the writ of execution pending appeal, defendant tendered payment in favor properly notified of the judgment, is too tenuous to be given serious consideration.
of herein petitioner, who through Mr. Moises Ventanilla, acknowledged receipt of said amount as • In a case, the Court explained that it is the party's duty to inform the court of its counsel's demise,
complete and full satisfaction of the adjudged obligations of the Tans to petitioner in this case. and failure to apprise the court of such fact shall be considered negligence on the part of said
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 party.
• Thus, for failure of petitioner to notify the CA of the death of its counsel of record and have said
counsel substituted, then service of the CA Decision at the place or law office designated by its
counsel of record as his address, is sufficient notice. The case then became final and executory
when no motion for reconsideration or appeal was filed within the reglementary period therefor.

Final Ruling: The petition is denied.

Case Title: Torres v Rodellas

Ticker: MSAs
Facts

• Respondent Balligi Rodellas and her family began occupying the subject property sometime in
1967. They built thereon a residential house, initially made of light materials, but eventually
renovated and replaced using stronger materials.
• In 1986, Balligi filed a Miscellaneous Sales Application (MSA) for the subject property with the
Department of Environment and Natural Resources.
• In 1989, Balligi and her family left Occidental Mindoro for Manila in order to find work. Balligi left
the country to join her husband in Saudi Arabia as an Overseas Filipino Worker. In the meantime,
the house built by Balligi and her family on the subject property was left in the care and
possession of her relatives, namely, her half-brother, Aster Vallejos; her sister, Bituin Vallejos; her
cousin-in-law, Sonia Jaravata; her sister and brother-in-law, spouses Inanama Vallejos (Inanama)
and Oscar Gallardo; Milagros Olarte; and Ildefonso Ruiz and family.
• Petitioner Edwino Torres and his spouse moved into the house on the subject property,
occupying the portion vacated by Aster Vallejos. Edwino claimed that Balligi already sold him the
subject property and the house built thereon, as evidenced by an Affidavit of Relinquishment/Sale
of Right supposedly signed by the parties thereto and notarized. From that time on, Edwino
collected monthly rental October 1989. From that time on, Edwino collected monthly rental from
the other occupants of the house.
• On the basis of the Affidavit of Relinquishment/Sale of Right, Edwino filed with the DENR an MSA
in his own name for the subject property.
• After conducting an investigation and ocular inspection, Wilfredo Paguia, Land Investigator,
DENR, issued a Report recommending that Edwino's MSA be given due course. The Provincial
Environment and Natural Resources Officer (PENRO) issued an order rejecting Balligi's MSA and
giving due course to Edwino's MSA.
• In 1992, respondent Balligi's son, Eugenio Rodellas, Jr. returned to Occidental Mindoro. While
there, he came to learn that Edwino claimed ownership of the subject property and the house
thereon by virtue of the Affidavit of Relinquishment/Sale of Right.
• Eugenio, alleging to act on behalf of his mother, Balligi, but without presenting any written
authority from the latter, filed before the Community Environment and Natural Resources Office a
protest against Edwino's MSA.
• Antonio Principe, Regional Executive Director, Regional Office No. IV, DENR, dismissed the
protests against Edwino's MSA.
• Balligi, still through her son, Eugenio, filed a Request for Extension of Time to file a motion for
reconsideration, which DENR denied.
• Determined, respondent Balligi, who had arrived back in the Philippines, herself filed, another
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Opposition/Protest against petitioner Edwino's MSA.
• Another Order was issued by the DENR-RO No. IV directing the conduct of an investigation of the
matters alleged in Balligi's
• Opposition/Protest; and holding the processing of Edwino's MSA in abeyance.
• After an evaluation of the record of the case, DENR-RO No. IV dismissed respondent Balligi's
Opposition/Protest in an Order.
• Undaunted, Balligi filed an appeal with the Office of the President, which set aside and reversed
the assailed orders of the DENR.
• Atty. Alexander Restor, counsel, received a copy of the Decision of the Office of the President.
Atty. Restor filed a Motion for Reconsideration of said Decision, and at the same time, manifested
that his client, Edwino, had since passed away, but without actually intimating the exact date of
the latter's death.
• In an Order, the Office of the President ruled that the Motion for Reconsideration filed by Atty.
Restor was dismissed.
• The Court of Appeals affirmed the finding of the Office of the President.
• Hence, the petition.

Issue

• Whether Atty. Restor had no legal personality to file the motion for reconsideration in the Office of
the President, in view of Edwino’s death [Yes]

Ruling

• The Court agrees with petitioners that the Office of the President misapplied the rule on
substitution upon the death of a party litigant.
• Note that the rules and regulations governing appeals to the Office of the President of the
Philippines are embodied in Administrative Order No. 18, Series of 1987, entitled "Prescribing
Rules and Regulations Governing Appeals to the Office of the President of the Philippines".
Though nothing therein provides for substitution of a party in case of death, the same states in its
Section 9 that the Rules of Court shall apply in a suppletory character whenever practicable.
• Sec. 16, Rule 3 of the Revised Rules of Court, thus, finds application herein, in that it covers the
situation in case of the death of a party.
• Clear from the aforequoted provision that a deceased party may be substituted by his heirs, but it
must be emphasized that substitution may only be allowed in actions that survive the death of a
party thereto. In a case, the Court discussed that the determination of whether an action survives
the death of a party depends on the nature of the action and the damage sued for. In the causes
of action which survive the wrong complained of affects primarily and principally property and
property rights, the injuries to the person being merely incidental, while in the causes of action
which do not survive the injury complained of is to the person the property and rights of property
affected being incidental.
• In the case at bar, both parties accuse the other of unlawfully depriving them of their respective
rights to acquire the subject property, together with the house built thereon, by means of an MSA
grant from the State. Evidently, what are primarily and principally affected herein are the property
and property rights of the parties, and any injuries to their persons (i.e. , damages) are only
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 incidental. Such property and property rights survived Edwino's death and may pass on by
succession to his heirs. Therefore, the heirs must be allowed to continue any litigation to protect
said property or property rights and to substitute themselves for the deceased party in
accordance with appropriate rules.
• According to Section 16, Rule 3 of the Revised Rules of Court, a counsel, within 30 days from his
client's death, is duty-bound to inform the court of such fact, and to submit the name/s and
address/es of the deceased client's legal representative/s. Thereafter, the court shall order,
forthwith, the appearance of and substitution by the deceased party's legal representative/s within
another period of 30 days from notice.
• Nowhere is it mentioned in the instant case when exactly Edwino died. Atty. Restor just informed
the Office of the President of the fact of Edwino's death in the Motion for Reconsideration which
he filed on behalf of his deceased client. With no exact date of Edwino's death, we have no basis
for determining whether Atty. Restor was able to inform the Office of the President of such fact
within the requisite period of 30 days. Nevertheless, even assuming that Atty. Restor belatedly
notified the Office of the President of Edwino's death, Section 16, Rule 3 of the Revised Rules of
Court only provided that, in case of failure of the counsel to comply with his duty as stated in the
first paragraph thereof, it would be a ground for disciplinary action against said counsel, not that
he/she would already be without personality to appear as counsel in the proceedings for the
benefit of his/her client or the latter's heirs.
• In this case, though incomplete, the mention by Atty. Restor of Edwino's death in the Motion for
Reconsideration effectively informed the Office of the President of the same. Having been
apprised of the fact of Edwino's death, it was incumbent upon the Office of the President, even
without Atty. Restor's motion to such effect, to order the legal representative/s of the deceased
party to appear and be substituted; or, at the very least, to direct the counsel to furnish the court
with the names and addresses of such representative/s.
• Since Atty. Restor filed the Motion for Reconsideration within the reglementary period and no
longer requested for suspension/extension of time to do so, the Office of the President need not
suspend the running of said reglementary period, but it could have deferred any action on said
Motion until a substitution had been effected and it had ascertained that the substituted heirs
chose to retain Atty. Restor's services as legal counsel. Conspicuously, the Office of the
President completely failed to act on the information that Edwino had died so as to effect proper
substitution by the latter's heirs, as set forth in Section 16, Rule 3 of the Revised Rules of Court.
The only action the Office of the President took as regards said information was to deny the
Motion for Reconsideration filed by Atty. Restor for his lack of personality, given his client's death.
This we find totally contrary to equity and fair play since Edwino's heirs were, in effect, deprived of
their right to seek reconsideration or appeal of the adverse decision of the Office of the President
which was itself partly responsible for their non-substitution.
• The Court emphasizes that the purpose behind Section 16, Rule 3 of the Revised Rules of
Procedure is the protection of the right to due process of every party to a litigation who may be
affected by the intervening death. The deceased litigant is himself or herself protected, as he/she
continues to be properly represented in the suit through the duly appointed legal representative of
his estate. The spirit behind the general rule requiring a formal substitution of heirs is "not really
because substitution of heirs is a jurisdictional requirement, but because non-compliance
therewith results in the undeniable violation of the right to due process of those who, though not
duly notified of the proceedings, are substantially affected by the decision rendered therein."
• It must also be remembered that, unless properly relieved, the counsel is responsible for the
conduct of the case; he is obligated by his client and the court to do what the interest of his client
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 requires until the end of litigation or his representation is terminated formally and there is a
termination of record. And the only way the Office of the President could have ascertained
whether Atty. Restor still had the authority to file the Motion for Reconsideration on behalf of
Edwino's heirs, or otherwise had been relieved or his representation terminated, was by having
Edwino's heirs come forth as the rules required. In fact, in the Letter of Appointment, which was
presented before the Court of Appeals, Alfonso and Fatima, as Edwino's legal representatives
and heirs, explicitly retained the services of Atty. Restor. Even though belatedly executed, such
Letter of Appointment demonstrates that if they were just given the opportunity by the Office of
the President, Alfonso and Fatima could have easily confirmed the authority of Atty. Restor to
continue acting as their counsel in the proceedings and to submit the Motion for Reconsideration.
• Given the foregoing, the Decision of the Office of the President could not have attained finality. It
being partly responsible for the non-substitution of the heirs for the deceased Edwino, the Office
of the President could not dismiss the Motion for Reconsideration filed by Atty. Restor, to the
prejudice of said heirs. Justice and equity demand that Edwino's heirs be given the opportunity to
contest the adverse judgment that affects the property and property rights to which they
succeeded. A rule intended to protect due process cannot be invoked to defeat the same.

Final Ruling: The case is remanded to the CA.

Case Title: Dagadag v Tongnawa

Ticker: Mayor Rhustom
Facts

• Petitioner Rhustom Dagadag was formerly the mayor of the municipality of Tanudan, Province of
Kalinga. Michael Tongnawa and Antonio Gammod, respondents, are the municipal engineer and
municipal planning and development coordinator, respectively, of the said municipality.
• Petitioner, while then the mayor of Tanudan, sent respondents a memorandum ordering them to
explain within 72 hours why they should not be administratively sanctioned for acts unbecoming
of public servants and failure to perform their duties. Respondents submitted to petitioner their
respective explanations.
• Petitioner issued an Executive Order creating a Municipal Grievance Committee to investigate the
charges against respondents. Guilbert Dangpason, then the vice-mayor of Tanudan, was
designated Chairman.
• After investigation, the Committee found respondents liable for insubordination, non-performance
of duties and absences without official leaves.
• Petitioner issued an order suspending respondents from their respective positions for two
months.
• Respondents then appealed to the Civil Service Commission (CSC) contending that their right to
due process has been violated. During the pendency of respondents' appeal, petitioner issued an
order dropping them from the roll of employees by reason of their unauthorized absences. Again,
they appealed to the CSC.
• The CSC affirmed petitioner's order suspending respondents from the service for two months.
They moved for a reconsideration but was denied by the CSC, prompting them to file with the
Court of Appeals a petition for review.
• The CSC issued Resolution affirming petitioner's order dropping respondents from the roll. When
their motion for reconsideration was denied by the CSC, respondents filed with the Court of

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Appeals a petition for review.
• The CA granted respondents' petitions for review, reversing the CSC challenged Resolutions and
reinstating them to their respective positions and ordering the payment of their corresponding
backwages.
• Hence, the instant petition.

Issue

• Whether the petitioner still has legal personality in the case [No]>

Ruling

• In resolving the issue, the concept of "real party in interest" becomes relevant. The established
rule is that a real party in interest is one who would be benefited or injured by the judgment, or
one entitled to the avails of the suit. The word "interest," as contemplated by the Rules, means
material interest or an interest in issue and to be affected by the judgment, as distinguished from
mere interest in the question involved or a mere incidental interest. Stated differently, the rule
refers to a real or present substantial interest as distinguished from a mere expectancy, or a
future, contingent, subordinate, or consequential interest. As a general rule, one who has no right
or interest to protect cannot invoke the jurisdiction of the court as party-plaintiff in an action.
• The Court rules that the CSC and the mayor of Tanudan are real parties in interest in this case
and, therefore, can contest the assailed joint Decision of the Court of Appeals before it.
• The CSC is the party adversely affected by the questioned Decision of the Court of Appeals
because it has been mandated by the Constitution to preserve and safeguard the integrity of our
civil service system. Thus, any transgression by herein respondents of the CSC rules and
regulations will adversely affect its integrity. Significantly, it has not challenged the assailed
Decision.
• As regards the mayor of Tanudan, there are two (2) reasons why he may interpose such appeal.
The first is rooted in his power to appoint officials and employees of his municipality. Both
respondents were appointed by petitioner during his incumbency.
• Similarly, where a municipal mayor orders the suspension or dismissal of a municipal employee
on grounds he believes to be proper, but his order is reversed or nullified by the CSC or the Court
of Appeals (as in this case), he has the right to contest such adverse ruling. His right to appeal
flows from the fact that his power to appoint carries with it the power to remove. Being chief
executive of the municipality, he possesses this disciplinary power over appointive municipal
officials and employees. To be sure, whenever his order imposing administrative sanctions upon
erring municipal personnel is challenged, he should be allowed to defend his action considering
that he is the appointing authority.
• The second reason why the municipal mayor of Tanudan has legal personality to challenge the
Decision of the Court of Appeals is because the salaries of the respondents, being municipal
officials, are drawn from the municipal funds. Obviously, the mayor has real and substantial
interest in the outcome of the administrative cases against respondents.
• Admittedly, however, petitioner, at the time he filed with this Court the instant petition assailing
the Appellate Court Decision, was no longer the mayor of Tanudan.
• Section 17, Rule 3 of the 1997 Rules of Civil Procedure, as amended, is relevant.
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 • Interpreting the above rule, the Court in several cases held that where the petitioner (a public
officer) ceases to be mayor, the appeal and/or action he initiated may be continued and
maintained by his successor if there is substantial need to do so. If the successor failed to pursue
the appeal and/or action, the same should be dismissed.
• Records show that upon petitioner's cessation from public office, his successor did not file any
manifestation to the effect that he is continuing and maintaining this appeal.
• Hence, the Court agrees with the respondents that petitioner has lost his legal personality to
interpose the instant petition.

Final Ruling: The petition is denied.

Section 18
Incompetency or incapacity. – If a party becomes incompetent or incapacitated, the court, upon motion
with notice, may allow the action to be continued by or against the incompetent or incapacitated person
assisted by his legal guardian or guardian ad litem.

Section 19
Transfer of interest. – In case of any transfer of interest, the action may be continued by or against the
original party, unless the court upon motion directs the person to whom the interest is transferred to be
substituted in the action or joined with the original party.

Section 20
Action on contractual money claims. – When the action is for recovery of money arising from contract,
express or implied, and the defendant dies before entry of final judgment in the court in which the action
was pending at the time of such death, it shall not be dismissed but shall instead be allowed to continue
until entry of final judgment. A favorable judgment obtained by the plaintiff therein shall be enforced in
the manner especially provided in these Rules for prosecuting claims against the estate of a deceased
person.

Section 21
Indigent party. – A party may be authorized to litigate his action, claim or defense as an indigent if the
court, upon an ex parte application and hearing, is satisfied that the party is one who has no money or
property sufficient and available for food, shelter and basic necessities for himself and his property.

Such authority shall include an exemption from payment of docket and other lawful fees, and of
transcripts of stenographic notes which the court may order to be furnished him. The amount of the
docket and other lawful which the indigent was exempted from paying shall be a lien on any judgment
rendered in the case favorable to the indigent, unless the court otherwise provides.

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

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
Section 22
Notice to the Solicitor General. – In any action involving the validity of any treaty, law, ordinance,
executive order, presidential decree, rules or regulations, the court, in its discretion, may require the
appearance of the Solicitor General who may be heard in person or through a representative duly
designated by him.

RE: Query of Mr. Roger C. Prioreschi Re Exemption from Legal and Filing Fees of the Good
Shepherd Foundation, Inc.
Facts

• In his letter addressed to the Chief Justice, Mr. Roger Prioreschi, administrator of the Good
Shepherd Foundation, Inc., requesting exemption from payment of court fees.

Ruling

• To answer the query of Mr. Prioreschi, the Courts cannot grant to foundations like the Good
Shepherd Foundation, Inc. the same exemption from payment of legal fees granted to indigent
litigants even if the foundations are working for indigent and underprivileged people.
• The basis for the exemption from legal and filing fees is the free access clause, embodied in Sec.
11, Art. III of the 1987 Constitution, thus: Sec. 11. Free access to the courts and quasi judicial
bodies and adequate legal assistance shall not be denied to any person by reason of poverty.
• The importance of the right to free access to the courts and quasi judicial bodies and to adequate
legal assistance cannot be denied. A move to remove the provision on free access from the
Constitution on the ground that it was already covered by the equal protection clause was
defeated by the desire to give constitutional stature to such specific protection of the poor.
• In implementation of the right of free access under the Constitution, the Supreme Court
promulgated rules, specifically, Sec. 21, Rule 3, Rules of Court:

Sec. 21. Indigent party. — A party may be authorized to litigate his action, claim or defense as an
indigent if the court, upon an ex parte application and hearing, is satisfied that the party is one
who has no money or property sufficient and available for food, shelter and basic necessities for
himself and his family.

Such authority shall include an exemption from payment of docket and other lawful fees, and of
transcripts of stenographic notes which the court may order to be furnished him. The amount of
the docket and other lawful fees which the indigent was exempted from paying shall be a lien on
any judgment rendered in the case favorable to the indigent, unless the court otherwise provides.

Any adverse party may contest the grant of such authority at any time before judgment is
rendered by the trial court. If the court should determine after hearing that the party declared as
an indigent is in fact a person with sufficient income or property, the proper docket and other
lawful fees shall be assessed and collected by the clerk of court. If payment is not made within
the time fixed by the court, execution shall issue for the payment thereof, without prejudice to
such other sanctions as the court may impose.
• The same is embodied in Section 19 Rule 141:
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Sec. 19. Indigent litigants exempt from payment of legal fees.– Indigent litigants (a) whose gross
income and that of their immediate family do not exceed an amount double the monthly minimum
wage of an employee and (b) who do not own real property with a fair market value as stated in
the current tax declaration of more than three hundred thousand (P300,000.00) pesos shall be
exempt from payment of legal fees.

The legal fees shall be a lien on any judgment rendered in the case favorable to the indigent
litigant unless the court otherwise provides.

To be entitled to the exemption herein provided, the litigant shall execute an affidavit that he and
his immediate family do not earn a gross income abovementioned, and they do not own any real
property with the fair value aforementioned, supported by an affidavit of a disinterested person
attesting to the truth of the litigant’s affidavit. The current tax declaration, if any, shall be attached
to the litigant’s affidavit.

Any falsity in the affidavit of litigant or disinterested person shall be sufficient cause to dismiss the
complaint or action or to strike out the pleading of that party, without prejudice to whatever
criminal liability may have been incurred.
• The clear intent and precise language of the aforequoted provisions of the Rules of Court indicate
that only a natural party litigant may be regarded as an indigent litigant. The Good Shepherd
Foundation, Inc., being a corporation invested by the State with a juridical personality separate
and distinct from that of its members, is a juridical person. Among others, it has the power to
acquire and possess property of all kinds as well as incur obligations and bring civil or criminal
actions, in conformity with the laws and regulations of their organization. As a juridical person,
therefore, it cannot be accorded the exemption from legal and filing fees granted to indigent
litigants.
• That the Good Shepherd Foundation, Inc. is working for indigent and underprivileged people is of
no moment. Clearly, the Constitution has explicitly premised the free access clause on a person’s
poverty, a condition that only a natural person can suffer.
• There are other reasons that warrant the rejection of the request for exemption in favor of a
juridical person. For one, extending the exemption to a juridical person on the ground that it works
for indigent and underprivileged people may be prone to abuse (even with the imposition of rigid
documentation requirements), particularly by corporations and entities bent on circumventing the
rule on payment of the fees. Also, the scrutiny of compliance with the documentation
requirements may prove too time-consuming and wasteful for the courts.
• In view of the foregoing, the Good Shepherd Foundation, Inc. cannot be extended the exemption
from legal and filing fees despite its working for indigent and underprivileged people.

Final Ruling:

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
Case Title: Algura v City of Naga
Ticker: Boarding House
Facts

• In 1999, spouses Antonio Algura and Lorencita Algura filed a Verified Complaint for damages
against the Naga City Government and its officers, arising from the alleged illegal demolition of
their residence and boarding house and for payment of lost income derived from fees paid by
their boarders.
• Simultaneously, petitioners filed an Ex-Parte Motion to Litigate as Indigent Litigants to which
petitioner Antonio Algura's Pay Slip was appended, showing a gross monthly income of Ten
Thousand Four Hundred Seventy Four Pesos and a net pay of Three Thousand Six Hundred
Sixteen Pesos and Ninety Nine Centavos.
• Also attached was a certification issued by the Office of the City Assessor of Naga City, which
stated that petitioners had no property declared in their name for taxation purposes.
• Finding that petitioners' motion to litigate as indigent litigants was meritorious, Executive Judge
Jose Atienza of the Naga City RTC, petitioners' plea for exemption from filing fees.
• Meanwhile, as a result of respondent Naga City Government's demolition of a portion of
petitioners' house, the Alguras allegedly lost a monthly income from their boarders' rentals. With
the loss of the rentals, the meager income from Lorencita Algura's sari-sari store and Antonio
Algura's small take home pay became insufficient for the expenses of the Algura spouses and
their six (6) children for their basic needs including food, bills, clothes, and schooling, among
others.
• Respondents filed an Answer with Counterclaim.
• Respondents filed a Motion to Disqualify the Plaintiffs for Non-Payment of Filing Fees.
• Petitioners subsequently interposed their Opposition to the Motion to respondents' motion to
disqualify them for non-payment of filing fees.
• The Naga City RTC issued an Order disqualifying petitioners as indigent litigants on the ground
that they failed to substantiate their claim for exemption from payment of legal fees and to comply
with the Revised Rules of Court — directing them to pay the requisite filing fees.
• Petitioners filed a Motion for Reconsideration of the order.
• The trial court issued an Order giving petitioners the opportunity to comply with the requisites laid
down in the Rules of Court, for them to qualify as indigent litigants.
• Petitioners submitted their compliance attaching the affidavits of petitioner Lorencita Algura and
Erlinda Bangate.
• Thereafter, Naga City RTC Acting Presiding Judge Andres Barsaga, Jr. issued the order the
petitioners' Motion for Reconsideration.

Issue

• Whether petitioners should be considered as indigent litigants who qualify for exemption from
paying filing fees [Yes]

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Ruling

• The petition is meritorious.

• A review of the history of the Rules of Court on suits in forma pauperis (pauper litigant) is
necessary before the Court rules on the issue of the Algura spouses' claim to exemption from
paying filing fees.
• While the Rules of Court took effect in 1964, the rule on pauper litigants was found in Rule 3,
Section 22 which provided that Any court may authorize a litigant to prosecute his action or
defense as a pauper upon a proper showing that he has no means to that effect by affidavits,
certificate of the corresponding provincial, city or municipal treasurer, or otherwise. Such
authority[,] once given[,] shall include an exemption from payment of legal fees and from filing
appeal bond, printed record and printed brief. The legal fees shall be a lien to any judgment
rendered in the case [favorable] to the pauper, unless the court otherwise provides.
• From the same Rules of Court, Rule 141 on Legal Fees, on the other hand, did not contain any
provision on pauper litigants.
• In 1984, the Court, in Administrative Matter, pproved the recommendation of the Committee on
the Revision of Rates and Charges of Court Fees, through its Chairman, to revise the fees in
Rule 141 of the Rules of Court to generate funds to effectively cover administrative costs for
services rendered by the courts. A provision on pauper litigants was inserted.
• When the Rules of Court on Civil Procedure were amended by the 1997 Rules of Civil Procedure
(inclusive of Rules 1 to 71) in Supreme Court Resolution, Rule 3, Section 22 of the Revised Rules
of Court was superseded by Rule 3, Section 21 of said 1997 Rules of Civil Procedure, as follows:

“Section 21. Indigent party. — A party may be authorized to litigate his action, claim or defense as
an indigent if the court, upon an ex parte application and hearing, is satisfied that the party is one
who has no money or property sufficient and available for food, shelter and basic necessities for
himself and his family.

Such authority shall include an exemption from payment of docket and other lawful fees, and of
transcripts of stenographic notes which the court may order to be furnished him. The amount of
the docket and other lawful fees which the indigent was exempted from paying shall be a lien on
any judgment rendered in the case favorable to the indigent, unless the court otherwise provides.

Any adverse party may contest the grant of such authority at any time before judgment is
rendered by the trial court. If the court should determine after hearing that the party declared as
an indigent is in fact a person with sufficient income or property, the proper docket and other
lawful fees shall be assessed and collected by the clerk of court. If payment is not made within
the time fixed by the court, execution shall issue for the payment thereof, without prejudice to
such other sanctions the court may impose.”
• At the time the Rules on Civil Procedure were amended by the Court in Bar Matter No. 803,
however, there was no amendment made on Rule 141, Section 16 on pauper litigants.
• In 2000, Rule 141 on Legal Fees was amended by the Court, whereby certain fees were
increased or adjusted. In this Resolution, the Court amended Section 16 of Rule 141, making it
Section 18.
• It can be readily seen that the rule on pauper litigants was inserted in Rule 141 without revoking

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 or amending Section 21 of Rule 3, which provides for the exemption of pauper litigants from
payment of filing fees. Thus, in 2000, there were two existing rules on pauper litigants; namely,
Rule 3, Section 21 and Rule 141, Section 18.
• In 2004, Section 18 of Rule 141 was further amended which became effective on the same date.
It then became Section 19 of Rule 141.
• Amendments to Rule 141 (including the amendment to Rule 141, Section 18) were made to
implement RA 9227 which brought about new increases in filing fees. Specifically, in the August
16, 2004 amendment, the ceiling for the gross income of litigants applying for exemption and that
of their immediate family was increased from PhP 4,000.00 a month in Metro Manila and PhP
3,000.00 a month outside Metro Manila, to double the monthly minimum wage of an employee;
and the maximum value of the property owned by the applicant was increased from an assessed
value of PhP 50,000.00 to a maximum market value of PhP 300,000.00, to be able to
accommodate more indigent litigants and promote easier access to justice by the poor and the
marginalized in the wake of these new increases in filing fees.
• It is undisputed that the Complaint was filed in 1999. However, the Naga City RTC, in its orders.
incorrectly applied Rule 141, Section 18 on Legal Fees when the applicable rules at that time
were Rule 3, Section 21 on Indigent Party and Rule 141, Section 16 on Pauper Litigants.
• The old Section 16, Rule 141 requires applicants to file an ex-parte motion to litigate as a pauper
litigant by submitting an affidavit that they do not have a gross income of PhP 2,000.00 a month
or PhP 24,000.00 a year for those residing in Metro Manila and PhP 1,500.00 a month or PhP
18,000.00 a year for those residing outside Metro Manila or those who do not own real property
with an assessed value of not more than PhP 24,000.00 or not more than PhP 18,000.00 as the
case may be. Thus, there are two requirements: a) income requirement — the applicants should
not have a gross monthly income of more than PhP 1,500.00, and b) property requirement ––
they should not own property with an assessed value of not more than PhP 18,000.00.
• In the case at bar, petitioners Alguras submitted the Affidavits of petitioner Lorencita Algura and
neighbor Erlinda Bangate, the pay slip of petitioner Antonio F. Algura showing a gross monthly
income of PhP 10,474.00, and a Certification of the Naga City assessor stating that petitioners do
not have property declared in their names for taxation. Undoubtedly, petitioners do not own real
property as shown by the Certification of the Naga City assessor and so the property requirement
is met. However with respect to the income requirement, it is clear that the gross monthly income
of PhP 10,474.00 of petitioner Antonio F. Algura and the PhP 3,000.00 income of Lorencita
Algura when combined, were above the PhP 1,500.00 monthly income threshold prescribed by
then Rule 141, Section 16 and therefore, the income requirement was not satisfied. The trial court
was therefore correct in disqualifying petitioners Alguras as indigent litigants although the court
should have applied Rule 141, Section 16 which was in effect at the time of the filing of the
application on September 1, 1999. Even if Rule 141, Section 18 (which superseded Rule 141,
Section 16 on March 1, 2000) were applied, still the application could not have been granted as
the combined PhP 13,474.00 income of petitioners was beyond the PhP 3,000.00 monthly
income threshold.
• Unrelenting, petitioners however argue in their Motion for Reconsideration Order disqualifying
them as indigent litigants that the rules have been relaxed by relying on Rule 3, Section 21 of the
1997 Rules of Civil procedure which authorizes parties to litigate their action as indigents if the
court is satisfied that the party is "one who has no money or property sufficient and available for
food, shelter and basic necessities for himself and his family." The trial court did not give
credence to this view of petitioners and simply applied Rule 141 but ignored Rule 3, Section 21
on Indigent Party.
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 • The position of petitioners on the need to use Rule 3, Section 21 on their application to litigate as
indigent litigants brings to the fore the issue on whether a trial court has to apply both Rule 141,
Section 16 and Rule 3, Section 21 on such applications or should the court apply only Rule 141,
Section 16 and discard Rule 3, Section 21 as having been superseded by Rule 141, Section 16
on Legal Fees.
• The Court rules that Rule 3, Section 21 and Rule 141, Section 16 (later amended as Rule 141,
Section 18 and subsequently amended by Rule 141, Section 19 which is now the present rule)
are still valid and enforceable rules on indigent litigants.
• For one, the history of the two seemingly conflicting rules readily reveals that it was not the intent
of the Court to consider the old Section 22 of Rule 3, to have been amended and superseded by
Rule 141, Section 16. If that is the case, then the Supreme Court, upon the recommendation of
the Committee on the Revision on Rules, could have already deleted Section 22 from Rule 3
when it amended Rules 1 to 71 and approved the 1997 Rules of Civil Procedure. The fact that
Section 22 which became Rule 3, Section 21 on indigent litigant was retained in the rules of
procedure, even elaborating on the meaning of an indigent party, and was also strengthened by
the addition of a third paragraph on the right to contest the grant of authority to litigate only goes
to show that there was no intent at all to consider said rule as expunged from the 1997 Rules of
Civil Procedure.
• Furthermore, Rule 141 on indigent litigants was amended twice and yet, despite these two
amendments, there was no attempt to delete Section 21 from said Rule 3. This clearly evinces
the desire of the Court to maintain the two (2) rules on indigent litigants to cover applications to
litigate as an indigent litigant.
• It may be argued that Rule 3, Section 21 has been impliedly repealed by the recent 2000 and
2004 amendments to Rule 141 on legal fees. This position is bereft of merit.
• Instead of declaring that Rule 3, Section 21 has been superseded and impliedly amended by
Section 18 and later Section 19 of Rule 141, the Court finds that the two rules can and should be
harmonized.
• In the light of the foregoing considerations, therefore, the two (2) rules can stand together and are
compatible with each other. When an application to litigate as an indigent litigant is filed, the court
shall scrutinize the affidavits and supporting documents submitted by the applicant to determine if
the applicant complies with the income and property standards prescribed in the present Section
19 of Rule 141 — that is, the applicant's gross income and that of the applicant's immediate
family do not exceed an amount double the monthly minimum wage of an employee; and the
applicant does not own real property with a fair market value of more than Three Hundred
Thousand Pesos (PhP 300,000.00). If the trial court finds that the applicant meets the income and
property requirements, the authority to litigate as indigent litigant is automatically granted and the
grant is a matter of right.
• However, if the trial court finds that one or both requirements have not been met, then it would set
a hearing to enable the applicant to prove that the applicant has "no money or property sufficient
and available for food, shelter and basic necessities for himself and his family." In that hearing,
the adverse party may adduce countervailing evidence to disprove the evidence presented by the
applicant; after which the trial court will rule on the application depending on the evidence
adduced. In addition, Section 21 of Rule 3 also provides that the adverse party may later still
contest the grant of such authority at any time before judgment is rendered by the trial court,
possibly based on newly discovered evidence not obtained at the time the application was heard.
If the court determines after hearing, that the party declared as an indigent is in fact a person with

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 sufficient income or property, the proper docket and other lawful fees shall be assessed and
collected by the clerk of court. If payment is not made within the time fixed by the court, execution
shall issue or the payment of prescribed fees shall be made, without prejudice to such other
sanctions as the court may impose.
• The Court concedes that Rule 141, Section 19 provides specific standards while Rule 3, Section
21 does not clearly draw the limits of the entitlement to the exemption. Knowing that the litigants
may abuse the grant of authority, the trial court must use sound discretion and scrutinize
evidence strictly in granting exemptions, aware that the applicant has not hurdled the precise
standards under Rule 141. The trial court must also guard against abuse and misuse of the
privilege to litigate as an indigent litigant to prevent the filing of exorbitant claims which would
otherwise be regulated by a legal fee requirement.
• Thus, the trial court should have applied Rule 3, Section 21 to the application of the Alguras after
their affidavits and supporting documents showed that petitioners did not satisfy the twin
requirements on gross monthly income and ownership of real property under Rule 141. Instead of
disqualifying the Alguras as indigent litigants, the trial court should have called a hearing as
required by Rule 3, Section 21 to enable the petitioners to adduce evidence to show that they
didn't have property and money sufficient and available for food, shelter, and basic necessities for
them and their family. In that hearing, the respondents would have had the right to also present
evidence to refute the allegations and evidence in support of the application of the petitioners to
litigate as indigent litigants. Since this Court is not a trier of facts, it will have to remand the case
to the trial court to determine whether petitioners can be considered as indigent litigants using the
standards set in Rule 3, Section 21.
• Recapitulating the rules on indigent litigants, therefore, if the applicant for exemption meets the
salary and property requirements under Section 19 of Rule 141, then the grant of the application
is mandatory. On the other hand, when the application does not satisfy one or both requirements,
then the application should not be denied outright; instead, the court should apply the "indigency
test" under Section 21 of Rule 3 and use its sound discretion in determining the merits of the
prayer for exemption.

Final Ruling: The petition is granted.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 RULE 4
VENUE OF ACTIONS

Section 1
Venue of real actions. – Actions affecting title to or possession of real property, or interest therein, shall
be commenced and tried in the proper court which has jurisdiction over the area wherein the real
property involved, or a portion thereof, is situated.

Forcible entry and detainer actions shall be commenced and tried in the municipal trial court of the
municipality or city wherein the real property involved, or a portion thereof, is situated.

Section 2
Venue of personal actions. – All other actions may be commenced and tried where the plaintiff or any of
the principal plaintiffs resides, or where the defendant or any of the principal defendant resides, or in the
case of a non-resident defendant where he may be found, at the election of the plaintiff.

Section 3
Venue of actions against nonresidents. – If any of the defendants does not reside and is not found in the
Philippines, and the action affects the personal status of the plaintiff, or the property of said defendant
located in the Philippines, the action may be commenced and tried in the court of the place where the
plaintiff resides, or where the property or any portion thereof is situated or found.

Section 4
When Rule not applicable. – This Rule shall not apply –

(a) In those cases where a specific rule or law provides otherwise; or

(b) Where the parties have validly agreed in writing before the filing of the action on the exclusive
venue thereof.

Case Title: Ang v Ang

Ticker: California x Bacolod
Facts

• In 1992, spouses Alan and Em Ang (respondents) obtained a loan from Theodore and Nancy Ang
(petitioners). On even date, the respondents executed a promissory note in favor of the
petitioners wherein they promised to pay the latter the said amount, with interest, per annum ,
upon demand. However, despite repeated demands, the respondents failed to pay the
petitioners.
• In 2006, the petitioners sent the respondents a demand letter asking them to pay their
outstanding debt, inclusive of the ten percent (10%) annual interest that had accumulated over
the years. Notwithstanding the receipt of the said demand letter, the respondents still failed to
settle their loan obligation.
• The petitioners, who were then residing in Los Angeles, California, executed their respective
Special Powers of Attorney in favor of Attorney Eldrige Marvin Aceron for the purpose of filing an
action in court against the respondents. Atty. Aceron, in behalf of the petitioners, filed a Complaint
for collection of sum of money with the RTC of Quezon City against the respondents.
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 • The respondents moved for the dismissal of the complaint filed by the petitioners on the grounds
of improper venue.
• The RTC of Quezon City issued an Order which denied the respondents' motion to dismiss.
• The respondents then filed with the CA a petition for certiorari. The CA annulled and set aside the
Orders of the RTC of Quezon City and, accordingly, directed the dismissal of the complaint filed
by the petitioners.
• Hence, the petition.

Issue

• Whether the case must be dismissed on the ground of improper venue [Yes]

Ruling

• The petition is denied. The petitioners' complaint should have been filed in the RTC of Bacolod
City, the court of the place where the respondents reside, and not in RTC of Quezon City.
• It is a legal truism that the rules on the venue of personal actions are fixed for the convenience of
the plaintiffs and their witnesses. Equally settled, however, is the principle that choosing the
venue of an action is not left to a plaintiff's caprice; the matter is regulated by the Rules of Court.
• The petitioners' complaint for collection of sum of money against the respondents is a personal
action as it primarily seeks the enforcement of a contract. The Rules give the plaintiff the option of
choosing where to file his complaint. He can file it in the place (1) where he himself or any of
them resides, or (2) where the defendant or any of the defendants resides or may be found. The
plaintiff or the defendant must be residents of the place where the action has been instituted at
the time the action is commenced.
• However, if the plaintiff does not reside in the Philippines, the complaint in such case may only be
filed in the court of the place where the defendant resides. In a case, the Court said that there can
be no election as to the venue of the filing of a complaint when the plaintiff has no residence in
the Philippines. In such case, the complaint may only be filed in the court of the place where the
defendant resides.
• Here, the petitioners are residents of Los Angeles, California, USA while the respondents reside
in Bacolod City. Applying the foregoing principles, the petitioners' complaint against the
respondents may only be filed in the RTC of Bacolod City — the court of the place where the
respondents reside. The petitioners, being residents of Los Angeles, California, USA, are not
given the choice as to the venue of the filing of their complaint.
• Thus, the CA did not commit any reversible error when it annulled and set aside the orders of the
RTC of Quezon City and consequently dismissed the petitioners' complaint against the
respondents on the ground of improper venue. In this regard, it bears stressing that the situs for
bringing real and personal civil actions is fixed by the Rules of Court to attain the greatest
convenience possible to the litigants and their witnesses by affording them maximum accessibility
to the courts. And even as the regulation of venue is primarily for the convenience of the plaintiff,
as attested by the fact that the choice of venue is given to him, it should not be construed to
unduly deprive a resident defendant of the rights conferred upon him by the Rules of Court.

Final Ruling: The petition is denied.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
Case Title: Marcos-Araneta v Court of Appeals
Ticker: Irene Marcos
Facts

• Sometime in 1968 and 1972, Ambassador Roberto Benedicto, now deceased, and his business
associates (Benedicto Group) organized Far East Managers and Investors, Inc. (FEMII) and
Universal Equity Corporation (UEC), respectively. As petitioner Irene Marcos-Araneta would later
allege, both corporations were organized pursuant to a contract or arrangement whereby
Benedicto, as trustor, placed in his name and in the name of his associates, as trustees, the
shares of stocks of FEMII and UEC with the obligation to hold those shares and their fruits in trust
and for the benefit of Irene to the extent of 65% of such shares. Several years after, Irene,
through her trustee-husband, Gregorio Ma. Araneta III, demanded the reconveyance of said 65%
stockholdings, but the Benedicto Group refused to oblige. I
• In March 2000, Irene thereupon instituted before the RTC two similar complaints for conveyance
of shares of stock, accounting and receivership against the Benedicto Group with prayer for the
issuance of a temporary restraining order. The first covered the UEC shares and named
Benedicto, his daughter, and at least 20 other individuals as defendants. The second sought the
recovery to the extent of 65% of FEMII shares held by Benedicto and the other defendants
named therein.
• Respondent Francisca Benedicto-Paulino, Benedicto's daughter, filed a Motion to Dismiss the
first civil case. Benedicto, on the other hand, moved to dismiss the second case, on the ground of
improper venue, among others.
• Upon Benedicto's motion, both cases were consolidated.
• During the preliminary proceedings on their motions to dismiss, Benedicto and Francisca, by way
of bolstering their contentions on improper venue, presented the Joint Affidavit of witnesses who
all attested being employed as household staff at the Marcos' Mansion in Ilocos Norte and that
Irene did not maintain residence in said place as she in fact only visited the mansion twice in
1999; that she did not vote in Batac in the 1998 national elections; and that she was staying at
her husband's house in Makati City.
• In the meantime, Benedicto died and was substituted by his wife, Julita Benedicto, and Francisca.
• The RTC dismissed both complaints.
• Pending resolution of her motion for reconsideration, Irene filed a Motion (to Admit Amended
Complaint), attaching therewith a copy of the Amended Complaint in which the names. Of
additional persons appeared.
• In 2000, the RTC dictated in open court an order denying Irene's motion for reconsideration
aforementioned, but deferred action on her motion to admit amended complaint and the
opposition thereto.
• The RTC issued an Order entertaining the amended complaint.
• In time, Julita and Francisca moved to dismiss the amended complaint, but the RTC, by Order,
denied the motion.
• Following the denial of their motion for the RTC to reconsider, ulita and Francisca, in a bid to
evade being declared in default, filed their Answer to the amended complaint. But on the same
day, they went to the CA via a petition for certiorari.
• The CA rendered a Decision, setting aside the assailed RTC orders and dismissing the amended
complaints.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Issue

• Whether the case should be dismissed due to improper venue [Yes]

Arguments
Ruling
Petitioner
This contention is without basis and, at best, tenuous. Venue essentially concerns a rule
of procedure which, in personal actions, is fixed for the greatest convenience possible of
the plaintiff and his witnesses. The ground of improperly laid venue must be raised
seasonably, else it is deemed waived. Where the defendant failed to either file a motion
to dismiss on the ground of improper venue or include the same as an affirmative
defense, he is deemed to have waived his right to object to improper venue. In the case
at bench, Benedicto and Francisca raised at the earliest time possible, meaning "within
the time for but before filing the answer to the complaint", the matter of improper venue.
Julita and
They would thereafter reiterate and pursue their objection on venue, first, in their answer
Francisca
to the amended complaints and then in their petition for certiorari before the CA. Any
were
suggestion, therefore, that Francisca and Benedicto or his substitutes abandoned along
effectively
the way improper venue as ground to defeat Irene's claim before the RTC has to be
precluded
rejected.
from raising
the matter of
It is the posture of Julita and Francisca that the venue was in this case improperly laid
improper
since the suit in question partakes of a real action involving real properties located
venue by
outside the territorial jurisdiction of the RTC in Batac.
their
subsequent
This contention is not well-taken. In a personal action, the plaintiff seeks the recovery of
acts of filing
personal property, the enforcement of a contract, or the recovery of damages. Real
numerous
actions, on the other hand, are those affecting title to or possession of real property, or
pleadings.
interest therein. In accordance with the wordings of Sec. 1 of Rule 4, the venue of real
These
actions shall be the proper court which has territorial jurisdiction over the area wherein
pleadings,
the real property involved, or a portion thereof, is situated. The venue of personal actions
taken
is the court where the plaintiff or any of the principal plaintiffs resides, or where the
together,
defendant or any of the principal defendants resides, or in the case of a non-resident
signify a
defendant where he may be found, at the election of the plaintiff.
waiver of
private
In the instant case, petitioners are basically asking Benedicto and his Group, as
respondents'
defendants a quo, to acknowledge holding in trust Irene's purported 65% stockownership
initial
of UEC and FEMII, inclusive of the fruits of the trust, and to execute in Irene's favor the
objection to
necessary conveying deed over the said 65% shareholdings. In other words, Irene seeks
improper
to compel recognition of the trust arrangement she has with the Benedicto Group. The
venue.
fact that FEMII's assets include real properties does not materially change the nature of
the action, for the ownership interest of a stockholder over corporate assets is only
inchoate as the corporation, as a juridical person, solely owns such assets. It is only upon
the liquidation of the corporation that the stockholders, depending on the type and nature
of their stockownership, may have a real inchoate right over the corporate assets, but
then only to the extent of their stockownership.

The amended complaint is an action in personam, it being a suit against Francisca and
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 the late Benedicto (now represented by Julita and Francisca), on the basis of their
alleged personal liability to Irene upon an alleged trust constituted in 1968 and/or 1972.
They are not actions in rem where the actions are against the real properties instead of
against persons. The Court particularly notes that possession or title to the real properties
of FEMII and UEC is not being disputed, albeit part of the assets of the corporation
happens to be real properties.

The Court points out at the outset that Irene, as categorically and peremptorily found by
the RTC after a hearing, is not a resident of Batac, Ilocos Norte, as she claimed. The
Court perceives no compelling reason to disturb, in the confines of this case, the factual
determination of the trial court and the premises holding it together. Accordingly, Irene
cannot, in a personal action, contextually opt for Batac as venue of her reconveyance
complaint. As to her, Batac, Ilocos Norte is not what Sec. 2, Rule 4 of the Rules of Court
adverts to as the place "where the plaintiff or any of the principal plaintiffs resides" at the
time she filed her amended complaint. That Irene holds a CTC issued sometime in 2000
in Batac, Ilocos Norte and in which she indicated her address as Brgy. Lacub, Batac,
Ilocos is really of no moment. Let alone the fact that one can easily secure a basic
residence certificate practically anytime in any Bureau of Internal Revenue or treasurer's
office and dictate whatever relevant data one desires entered, Irene procured CTC and
appended the same to her motion for reconsideration following the RTC's pronouncement
against her being a resident of Batac.

Petitioners, in an attempt to establish that the RTC in Batac, Ilocos Norte is the proper
court venue, asseverate that Batac, Ilocos Norte is where the principal parties reside.

Pivotal to the resolution of the venue issue is a determination of the status of Irene's co-
plaintiffs.
There can be no serious dispute that the real party-in-interest plaintiff is Irene. As self-
styled beneficiary of the disputed trust, she stands to be benefited or entitled to the avails
of the present suit. It is undisputed too that petitioners all from Ilocos Norte, were included
as co-plaintiffs in the amended complaint as Irene's new designated trustees. As
trustees, they can only serve as mere representatives of Irene.

Upon the foregoing consideration, the resolution of the crucial issue of whether or not
venue had properly been laid should not be difficult.

Sec. 2 of Rule 4 indicates quite clearly that when there is more than one plaintiff in a
personal action case, the residences of the principal parties should be the basis for
determining proper venue. According to the late Justice Jose Feria, "the word 'principal'
has been added [in the uniform procedure rule] in order to prevent the plaintiff from
choosing the residence of a minor plaintiff or defendant as the venue". Eliminate the
qualifying term "principal" and the purpose of the Rule would, to borrow from Justice
Regalado, "be defeated where a nominal or formal party is impleaded in the action since
the latter would not have the degree of interest in the subject of the action which would
warrant and entail the desirably active participation expected of litigants in a case.”

Before the RTC in Batac, in the two civil cases, Irene

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 stands undisputedly as the principal plaintiff, the real party-in-interest. Following Sec. 2 of
Rule 4, the subject civil cases ought to be commenced and prosecuted at the place
where Irene resides.

As earlier stated, no less than the RTC in Batac declared Irene as not a resident of Batac,
Ilocos Norte. Withal, that court was an improper venue for her conveyance action.
Final Ruling: The petition is dismissed.

Case Title: Universal Robina Corporation v Lim

Ticker: Grocery Products
Facts

• The present controversy stemmed from a contract of sale between Universal Robina Corporation,
petitioner, and Albert Lim, respondent. Pursuant to the contract, petitioner sold to respondent
grocery products for a specified amount. After tendering partial payments, respondent refused to
settle his obligation despite petitioner's repeated demands.
• Thus, petitioner filed with the Regional Trial Court, Quezon City, a complaint against respondent
for a sum of money.
• The trial court issued an Order dismissing the complaint motu proprio on grounds of lack of
jurisdiction and improper venue.
• Accordingly, petitioner filed a motion for reconsideration. The trial court granted the motion and
admitted petitioner's amended complaint.
• Summons was served upon respondent. For his failure to file an answer seasonably and upon
motion of petitioner, the trial court issued an Order declaring him in default and allowing petitioner
to present its evidence ex parte.
• However, the trial court, still unsure whether venue was properly laid, issued an Order directing
petitioner to file a memorandum of authorities on whether it can file a complaint in Quezon City.
• The trial court again issued an Order dismissing the complaint on the ground of improper venue.
• Petitioner filed a motion for reconsideration but it was denied by the trial court.
• Petitioner then filed with the Court of Appeals a petition for review. But it was dismissed.
Petitioner filed a motion for reconsideration but it was likewise denied by the appellate court.
• Hence, this petition.

Issue

• Whether the trial court should dismiss motu proprio petitioner's complaint on the ground of
improper venue [No]

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Ruling

• Clearly, in personal actions, the plaintiff may commence an action either in the place of his or her
residence or the place where the defendant resides. However, the parties may agree to a specific
venue which could be in a place where neither of them resides.
• Corollarily, Section 1, Rule 9 of the same Rules provides for the instances when the trial court
may motu proprio dismiss a claim, thus: Defenses and objections not pleaded either in a motion
to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or
the evidence on record that the court has no jurisdiction over the subject matter, that there is
another action pending between the same parties for the same cause, or that the action is barred
by a prior judgment or by statute of limitations, the court shall dismiss the claim.
• Implicit from the above provision is that improper venue not impleaded in the motion to dismiss or
in the answer is deemed waived. Thus, a court may not dismiss an action motu proprio on the
ground of improper venue as it is not one of the grounds wherein the court may dismiss an action
motu proprio on the basis of the pleadings.
• In a case, the Court held that a trial court may not motu proprio dismiss a complaint on the
ground of improper venue.
• In the instant case, respondent, despite proper service of summons, failed to file an answer and
was thus declared in default by the trial court. Verily, having been declared in default, he lost his
standing in court and his right to adduce evidence and present his defense, including his right to
question the propriety of the venue of the action.

Final Ruling: The petition for review is granted.

Case Title: United Overseas Bank Phils. V Rosemoor Mining & Development Corp.
Ticker: Manila x Malolos
Facts

• Respondent Rosemoor Mining and Development Corporation, a Philippine mining corporation

with offices at Quezon City, applied for and was granted by petitioner Westmont Bank a credit
facility consisting of a long term loan and a revolving credit line.
• To secure the credit facility, a lone real estate mortgage agreement was executed by Rosemoor
and Dr. Lourdes Pascual, Rosemoor's president, as mortgagors in favor of the Bank as
mortgagee in the City of Manila. The agreement, however, covered six parcels of land located in
San Miguel, Bulacan, all registered under the name of Rosemoor, and two parcels of land
situated in Gapan, Nueva Ecija (Nueva Ecija properties), owned and registered under the name
of Dr. Pascual.
• Rosemoor subsequently opened with the Bank four irrevocable Letters of Credit. To cover
payments by the Bank under the LCs, Rosemoor proceeded to draw against its credit facility and
revolving credit line and thereafter executed promissory notes.
• Rosemoor defaulted in the payment of its various drawings under the LCs and promissory notes.
In view of the default, the Bank caused the extrajudicial foreclosure of the Nueva Ecija properties
and the Bulacan properties. The Bank was the highest bidder on both occasions.
• The Bank caused the annotation of the Notarial Certificate of Sale covering the properties on the
certificates of title concerned.
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 • The foregoing facts led to Rosemoor's filing of separate complaints against the Bank, one before
the Regional Trial Court of Manila and the other before the Regional Trial Court of Malolos,
Bulacan.
• In the Manila case, the Manila RTC denied the motion to dismiss. It also denied the Bank's
motion for reconsideration of the order of denial. The Bank challenged the Manila RTC's denial of
the Bank's second motion to dismiss before the Court of Appeals, through a petition for certiorari.
The appellate court dismissed the petition. The Bank filed a motion for reconsideration which,
however, was denied through a Resolution.
• As it did before the Manila RTC, the Bank filed a motion to dismiss the complaint filed in the
Malolos RTC. The Malolos RTC denied the motion to dismiss. the same Order, the Malolos RTC
directed the Bank to file its answer to the petition within five (5) days from notice. Despite receipt
of the, the Bank opted not to file its answer as it filed instead a motion for reconsideration.
Meanwhile, Rosemoor and Dr. Pascual moved to declare the Bank in default for its failure to
timely file its answer. The Malolos RTC issued an order denying the Bank's motion for
reconsideration for lack of merit and at the same time declaring the Bank in default for failure to
file its answer. Hence, the Bank filed a second petition for certiorari before the Court of Appeals,
where it assailed the Orders of the Malolos RTC. During the pendency of this petition for certiorari
, the Malolos RTC decided the Malolos case on the merits in favor of Rosemoor. The decision in
the Malolos case was also appealed to the Court of Appeals. The appellate court dismissed the
petition. Undaunted, the Bank filed the petition before the Court.
• The two petitions before the Court have been consolidated.

Issue

• Whether the Malolos RTC properly took cognizance of the case [Yes]

Ruling

• The Bank challenges the Malolos RTC's jurisdiction over the action to nullify the foreclosure sale
of the Nueva Ecija properties along with the Bulacan properties. This question is actually a
question of venue and not of jurisdiction, which, if improperly laid, could lead to the dismissal of
the case.
• The rule on venue of real actions is provided in Section 1, Rule 4 of the 1997 Rules of Civil
Procedure. The venue of the action for the nullification of the foreclosure sale is properly laid with
the Malolos RTC although two of the properties together with the Bulacan properties are situated
in Nueva Ecija. Following the abovequoted provision of the Rules of Court, the venue of real
actions affecting properties found in different provinces is determined by the singularity or plurality
of the transactions involving said parcels of land. Where said parcels are the object of one and
the same transaction, the venue is in the court of any of the provinces wherein a parcel of land is
situated.
• Ironically, the Bank itself correctly summarized the applicable jurisprudential rule in one of the
pleadings before the Court. Yet the Bank itself has provided the noose on which it would be hung.
Resorting to deliberate misrepresentation, the Bank stated in the same pleading that "the Bulacan
and Nueva Ecija [p]roperties were not the subject of one single real estate mortgage contract."
• In the present case, there is only one proceeding sought to be nullified and that is the extra-

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 judicial mortgage foreclosure sale. And there is only one initial transaction which served as the
basis of the foreclosure sale and that is the mortgage contract. Indeed, Rosemoor, through Dr.
Pascual, executed a lone mortgage contract where it undertook to "mortgage the land/real
property situated in Bulacan and Nueva Ecija," with the list of mortgaged properties annexed
thereto revealing six (6) properties in Bulacan and two (2) properties in Nueva Ecija subject of the
mortgage.

Final Ruling: The ruling of the CA is affirmed.

Case Title: San Luis v San Luis

Ticker: Three Marriages
Facts

• The instant case involves the settlement of the estate of Felicisimo San Luis (Felicisimo), who
was the former governor of the Province of Laguna. During his lifetime, Felicisimo contracted
three marriages. His first marriage was with Virginia Sulit in 1942, out of which were born six
children, namely: Rodolfo, Mila, Edgar, Linda, Emilita and Manuel. In 1963, Virginia predeceased
Felicisimo.
• Five years later, Felicisimo married Merry Lee Corwin, with whom he had a son, Tobias.
However, Merry Lee, an American citizen, filed a Complaint for Divorce before the Family Court
which issued a Decree Granting Absolute Divorce and Awarding Child Custody.
• In 1974, Felicisimo married respondent Felicidad San Luis, then surnamed Sagalongos, before
Rev. Fr. William Meyer, Minister of the United Presbyterian at Wilshire Boulevard, Los Angeles,
California. He had no children with respondent but lived with her for 18 years from the time of
their marriage up to his death.
• Thereafter, respondent sought the dissolution of their conjugal partnership assets and the
settlement of Felicisimo's estate. She filed a petition for letters of administration before the
Regional Trial Court of Makati City.
• In 1994, petitioner Rodolfo San Luis, one of the children of Felicisimo by his first marriage, filed a
motion to dismiss on the grounds of improper venue.
• Linda invoked the same grounds and joined her brother Rodolfo in seeking the dismissal of the
petition. The trial court issued an Order denying the two motions to dismiss.
• Unaware of the denial of the motions to dismiss, respondent filed her opposition thereto.
Thereafter, Linda, Rodolfo and herein petitioner Edgar San Luis, separately filed motions for
reconsideration from the Order denying their motions to dismiss.
• Mila, another daughter of Felicisimo from his first marriage, filed a motion to disqualify Acting
Presiding Judge Anthony Santos from hearing the case.
• The trial court issued an Order denying the motions for reconsideration. Acting Presiding Judge
Santos was substituted by Judge Salvador Tensuan pending the resolution of said motion.
• Mila filed a motion for inhibition against Judge Tensuan. On even date, Edgar also filed a motion
for reconsideration from the Order denying their motion for reconsideration.
• Judge Tensuan issued an Order granting the motion for inhibition. The case was re-raffled.
• The trial court dismissed the petition for letters of administration.
• Respondent appealed to the Court of Appeals which reversed and set aside the orders of the trial
court in its assailed Decision.
• Hence, the petition.
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Issue

• Whether venue was properly laid [Yes]

Ruling

• Under Section 1, Rule 73 of the Rules of Court, the petition for letters of administration of the estate of
Felicisimo should be filed in the Regional Trial Court of the province "in which he resides at the time of
his death." In a case, the Court laid down the doctrinal rule for determining the residence — as
contradistinguished from domicile — of the decedent for purposes of fixing the venue of the
settlement of his estate. In other words, "resides" should be viewed or understood in its popular
sense, meaning, the personal, actual or physical habitation of a person, actual residence or place of
abode. It signifies physical presence in a place and actual stay thereat. In this popular sense, the term
means merely residence, that is, personal residence, not legal residence or domicile. Residence
simply requires bodily presence as an inhabitant in a given place, while domicile requires bodily
presence in that place and also an intention to make it one's domicile. No particular length of time of
residence is required though; however, the residence must be more than temporary. It is incorrect for
petitioners to argue that "residence," for purposes of fixing the venue of the settlement of the estate of
Felicisimo, is synonymous with "domicile." Needless to say, there is a distinction between "residence"
for purposes of election laws and "residence" for purposes of fixing the venue of actions. In election
cases, "residence" and "domicile" are treated as synonymous terms, that is, the fixed permanent
residence to which when absent, one has the intention of returning. However, for purposes of fixing
venue under the Rules of Court, the "residence" of a person is his personal, actual or physical
habitation, or actual residence or place of abode, which may not necessarily be his legal residence or
domicile provided he resides therein with continuity and consistency. Hence, it is possible that a
person may have his residence in one place and domicile in another.
• In the instant case, while petitioners established that Felicisimo was domiciled in Sta. Cruz, Laguna,
respondent proved that he also maintained a residence in Alabang, Muntinlupa from 1982 up to the
time of his death. Respondent submitted in evidence the Deed of Absolute showing that the deceased
purchased the aforesaid property. She also presented billing statements from the Philippine Heart
Center and Chinese General Hospital indicating the address of Felicisimo at "100 San Juanico, Ayala
Alabang, Muntinlupa." Respondent also presented proof of membership of the deceased in the Ayala
Alabang Village Association and Ayala Country Club, Inc., letter-envelopes sent by the deceased's
children to him at his Alabang address, and the deceased's calling cards stating that his home/city
address is at "100 San Juanico, Ayala Alabang Village, Muntinlupa" while his office/provincial address
is in "Provincial Capitol, Sta. Cruz, Laguna." From the foregoing, the Court finds that Felicisimo was a
resident of Alabang, Muntinlupa for purposes of fixing the venue of the settlement of his estate.
Consequently, the subject petition for letters of administration was validly filed in the Regional Trial
Court which has territorial jurisdiction over Alabang, Muntinlupa. The subject petition was filed in
1993. At that time, Muntinlupa was still a municipality and the branches of the Regional Trial Court of
the National Capital Judicial Region which had territorial jurisdiction over Muntinlupa were then seated
in Makati City. Thus, the subject petition was validly filed before the Regional Trial Court of Makati
City.

Final Ruling: The petition is denied.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
Case Title: Lantin v Lantion
Ticker: Venue Agreement
Facts

• Petitioners Renato and Angelina Lantin took several peso and dollar loans from respondent
Planters Development Bank and executed several real estate mortgages and promissory notes to
cover the loans. They defaulted on the payments so respondent bank foreclosed the mortgaged
lots. The foreclosed properties, in partial satisfaction of petitioners' debt, were sold at a public
auction where the respondent bank was the winning bidder. Petitioners filed against Planters
Development Bank and its officers Elizabeth Umali, Alice Perce and Jelen Mosca (private
respondents), a Complaint for Declaration of Nullity and/or Annulment of Sale and/or Mortgage,
Reconveyance, Discharge of Mortgage, Accounting, Permanent Injunction, and Damages with
the RTC of Lipa City, Batangas.
• Private respondents moved to dismiss the complaint on the ground of improper venue since the
loan agreements restricted the venue of any suit in Metro Manila.
• The judge dismissed the case for improper venue.
• Petitioners sought reconsideration. The motion for reconsideration was denied.
• Hence, the petition.

Issue

• Whether venue was properly laid [No]

Ruling

• At the outset, we must make clear that under Section 4 (b) of Rule 4 of the 1997 Rules of Civil
Procedure, the general rules on venue of actions shall not apply where the parties, before the
filing of the action, have validly agreed in writing on an exclusive venue. The mere stipulation on
the venue of an action, however, is not enough to preclude parties from bringing a case in other
venues. The parties must be able to show that such stipulation is exclusive. In the absence of
qualifying or restrictive words, the stipulation should be deemed as merely an agreement on an
additional forum, not as limiting venue to the specified place.
• The pertinent provisions of the several real estate mortgages and promissory notes executed by
the petitioner respectively read as follows: In the event of suit arising out of or in connection with
this mortgage and/or the promissory note/s secured by this mortgage, the parties hereto agree to
bring their causes of auction exclusively in the proper court of Makati, Metro Manila or at such
other venue chosen by the Mortgagee, the Mortgagor waiving for this purpose any other venue.
I/We further submit that the venue of any legal action arising out of this note shall exclusively be
at the proper court of Metropolitan Manila, Philippines or any other venue chosen by the BANK,
waiving for this purpose any other venue provided by the Rules of Court.
• Clearly, the words "exclusively" and "waiving for this purpose any other venue" are restrictive and
used advisedly to meet the requirements.

Final Ruling: The petition is dismissed.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
Case Title: Saludo v American Express International Inc.
Ticker: AMEX
Facts

• Aniceto Saludo, Jr. filed a complaint for damages against the American Express International,
Inc. (AMEX) and/or its officers Ian Fish, Vice-President and Country Manager, and Dominic
Mascrinas, Head of Operations, with the RTC of Maasin City, Southern Leyte.
• The complaint alleged that plaintiff "is a Filipino citizen, of legal age, and a member of the House
of Representatives and a resident of Ichon, Macrohon, Southern Leyte, Philippines." On the other
hand, defendant "is a corporation doing business in the Philippines and engaged in providing
credit and other credit facilities and allied services with office address at 4th floor, ACE Building,
Rada Street, Legaspi Village, Makati City." The other defendants (herein respondents Fish and
Mascrinas) are officers of respondent AMEX, and may be served with summons and other court
processes at their office address.
• The complaint's cause of action stemmed from the alleged wrongful dishonor of petitioner
Saludo's AMEX credit card and the supplementary card issued to his daughter. The first dishonor
happened when petitioner Saludo's daughter used her supplementary credit card to pay her
purchases in the United States some time in April 2000. The second dishonor occurred when
petitioner Saludo used his principal credit card to pay his account at the Hotel Okawa in Tokyo,
Japan while he was there with other delegates from the Philippines to attend the Congressional
Recognition in honor of Mr. Hiroshi Tanaka.
• The dishonor of these AMEX credit cards were allegedly unjustified as they resulted from
respondents' unilateral act of suspending petitioner Saludo's account for his failure to pay its
balance covering the period of March 2000. Petitioner Saludo denied having received the
corresponding statement of account. Further, he was allegedly wrongfully charged for late
payment in June 2000. Subsequently, his credit card and its supplementary cards were canceled
by respondents.
• Respondents prayed for the dismissal of the complaint.
• Thereafter, respondents filed an Opposition to Ex-Parte Motion and Motion for Preliminary
Hearing to which petitioner Saludo filed his Comments and/or Objections to the Affirmative
Defense of Improper Venue.
• The court a quo denied the affirmative defenses interposed by respondents. The court a quo
likewise denied respondents' affirmative defense that venue was improperly laid. Respondents
sought the reconsideration thereof but the court a quo denied the same.
• They then filed with the appellate court a petition for certiorari. The appellate court rendered the
assailed decision granting respondents' petition for certiorari as it found that venue was
improperly laid.
• Petitioner Saludo sought the reconsideration of the said decision but the appellate court denied
his motion for reconsideration.

Issue

• Whether venue was improperly laid [No]

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Ruling

• The petition is meritorious.

• Petitioner Saludo's complaint for damages against respondents before the court a quo is a
personal action. As such, it is governed by Section 2, Rule 4 of the Rules of Courts which reads:
Venue of personal actions. — All other actions may be commenced and tried where the plaintiff
or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants
resides, or in the case of a non-resident defendant where he may be found, at the election of the
plaintiff.
• The choice of venue for personal actions cognizable by the RTC is given to plaintiff but not to
plaintiff's caprice because the matter is regulated by the Rules of Court. The rule on venue, like
other procedural rules, is designed to insure a just and orderly administration of justice, or the
impartial and evenhanded determination of every action and proceeding. The option of plaintiff in
personal actions cognizable by the RTC is either the place where defendant resides or may be
found, or the place where plaintiff resides. If plaintiff opts for the latter, he is limited to that place.
• Following this rule, petitioner Saludo, as plaintiff, had opted to file his complaint with the court a
quo which is in Maasin City, Southern Leyte. He alleged in his complaint that he was a member of
the House of Representatives and a resident of Ichon, Macrohon, Southern Leyte to comply with
the residency requirement of the rule.
• The appellate court committed reversible error in finding that petitioner Saludo was not a resident
of Southern Leyte at the time of the filing of his complaint, and consequently holding that venue
was improperly laid in the court a quo. In a case, the Court said that the term "resides" as
employed in the rule on venue on personal actions filed with the courts of first instance means the
place of abode, whether permanent or temporary, of the plaintiff or the defendant, as
distinguished from "domicile" which denotes a fixed permanent residence to which, when absent,
one has the intention of returning. It is fundamental in the law governing venue of actions (Rule 4
of the Rules of Court) that the situs for bringing real and personal civil actions are fixed by the
rules to attain the greatest convenience possible to the parties-litigants by taking into
consideration the maximum accessibility to them of the courts of justice. It is, likewise, undeniable
that the term domicile is not exactly synonymous in legal contemplation with the term residence ,
for it is an established principle in Conflict of Laws that domicile refers to the relatively more
permanent abode of a person while residence applies to a temporary stay of a person in a given
place.
• There is no dispute that petitioner Saludo was the congressman or the representative of the lone
district of Southern Leyte at the time of filing of his complaint with the court a quo. Even the
appellate court admits this fact as it states that "it may be conceded that private respondent ever
so often travels to Maasin City, Southern Leyte, because he is its representative in the lower
house."
• As a member of the House of Representatives, petitioner Saludo was correctly deemed by the
court a quo as possessing the requirements for the said position, including that he was then a
resident of the district which he was representing, i.e ., Southern Leyte. Significantly, for purposes
of election law, the term "residence" is synonymous with "domicile.”
• It can be readily gleaned that the definition of "residence" for purposes of election law is more
stringent in that it is equated with the term "domicile." Hence, for the said purpose, the term
"residence" imports "not only an intention to reside in a fixed place but also personal presence in

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 that place, coupled with conduct indicative of such intention." When parsed, therefore, the term
"residence" requires two elements: (1) intention to reside in the particular place; and (2) personal
or physical presence in that place, coupled with conduct indicative of such intention. As the Court
elucidated, "the place where a party actually or constructively has a permanent home, where he,
no matter where he may be found at any given time, eventually intends to return and remain, i.e .,
his domicile, is that to which the Constitution refers when it speaks of residence for the purposes
of election law."
• On the other hand, for purposes of venue, the less technical definition of "residence" is adopted.
Thus, it is understood to mean as "the personal, actual or physical habitation of a person, actual
residence or place of abode. It signifies physical presence in a place and actual stay thereat. In
this popular sense, the term means merely residence, that is, personal residence, not legal
residence or domicile. Residence simply requires bodily presence as an inhabitant in a given
place, while domicile requires bodily presence in that place and also an intention to make it one's
domicile."
• Since petitioner Saludo, as congressman or the lone representative of the district of Southern
Leyte, had his residence (or domicile) therein as the term is construed in relation to election laws,
necessarily, he is also deemed to have had his residence therein for purposes of venue for filing
personal actions. Put in another manner, Southern Leyte, as the domicile of petitioner Saludo,
was also his residence, as the term is understood in its popular sense. This is because
"residence is not domicile, but domicile is residence coupled with the intention to remain for an
unlimited time."
• The fact then that petitioner Saludo's community tax certificate was issued at Pasay City is of no
moment because granting arguendo that he could be considered a resident therein, the same
does not preclude his having a residence in Southern Leyte for purposes of venue. A man can
have but one domicile for one and the same purpose at any time, but he may have numerous
places of residence.

Final Ruling: The petition is granted.

Case Title: Hyatt Elevators and Escalators Corporation v Goldstar Elevators, Phils. Inc.
Ticker: Makati Elevator Companies
Facts

• Goldstar Elevator Philippines, Inc. is a domestic corporation primarily engaged in the business of
marketing, distributing, selling, importing, installing, and maintaining elevators and escalators,
with address at Makati City.
• On the other hand, Hyatt Elevators and Escalators Company is a domestic ncorporation similarly
engaged in the business of selling, installing and maintaining/servicing elevators, escalators and
parking equipment, with address at Legaspi Village, Makati, as stated in its Articles of
Incorporation.
• HYATT filed a Complaint for unfair trade practices and damages against LG Industrial Systems
Co. Ltd. (LGISC) and LG International Corporation (LGIC), alleging among others, that: in 1988, it
was appointed by LGIC and LGISC as the exclusive distributor of LG elevators and escalators in
the Philippines under a 'Distributorship Agreement'; . . . LGISC, in the latter part of 1996, made a
proposal to change the exclusive distributorship agency to that of a joint venture partnership;
while it looked forward to a healthy and fruitful negotiation for a joint venture, however, the

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 various meetings it had with LGISC and LGIC, through the latter's representatives, were
conducted in utmost bad faith and with malevolent intentions; in the middle of the negotiations, in
order to put pressures upon it, LGISC and LGIC terminated the Exclusive Distributorship
Agreement; as a consequence, Hyatt suffered actual damages, representing loss of earnings and
business opportunities, damages for its reputation and goodwill, among others.
• GISC and LGIC filed a Motion to Dismiss for improper venue.
• LGISC and LGIC filed an Answer with Compulsory Counterclaim ex abundante cautela.
Thereafter, they filed a 'Motion for Reconsideration and to Expunge Complaint' which was denied.
• Hyatt filed a motion for leave of court to amend the complaint, alleging that subsequent to the
filing of the complaint, it learned that LGISC transferred all its organization, assets and goodwill,
as a consequence of a joint venture agreement with Otis Elevator Company of the USA, to LG
Otis Elevator Company. LG OTIS (LGISC) and LGIC filed their opposition to HYATT's motion to
amend the complaint.
• The trial court admitted the Amended Complaint. LG OTIS (LGISC) and LGIC filed a motion for
reconsideration thereto but was similarly rebuffed.
• Goldstar filed a Motion to Dismiss the amended complaint, raising that the venue was improperly
laid.
• The trial court denied the motion to dismiss.
• The CA held that the venue was clearly improper.

Issue

• Whether the venue was properly laid [No]

Ruling

• The Petition has no merit.

• The resolution of this case rests upon a proper understanding of Section 2 of Rule 4 of the 1997
Revised Rules of Court: Venue of personal actions . — All other actions may be commenced and
tried where the plaintiff or any of the principal plaintiff resides, or where the defendant or any of
the principal defendant resides, or in the case of a non-resident defendant where he may be
found, at the election of the plaintiff.
• Since both parties to this case are corporations, there is a need to clarify the meaning of
"residence." The law recognizes two types of persons: (1) natural and (2) juridical. Corporations
come under the latter in accordance with the Civil Code.
• Residence is the permanent home — the place to which, whenever absent for business or
pleasure, one intends to return. Residence is vital when dealing with venue. A corporation,
however, has no residence in the same sense in which this term is applied to a natural person.
This is precisely the reason why, in a case, ruled that "for practical purposes, a corporation is in a
metaphysical sense a resident of the place where its principal office is located as stated in the
articles of incorporation." Even before this ruling, it has already been established that the
residence of a corporation is the place where its principal office is established.
• This Court has also definitively ruled that for purposes of venue, the term "residence" is
synonymous with "domicile."
• It now becomes apparent that the residence or domicile of a juridical person is fixed by "the law
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 creating or recognizing" it. Under the Corporation Code, the place where the principal office of the
corporation is to be located is one of the required contents of the articles of incorporation, which
shall be filed with the Securities and Exchange Commission.
• In the present case, there is no question as to the residence of respondent. What needs to be
examined is that of petitioner. Admittedly, the atter's principal place of business is Makati, as
indicated in its Articles of Incorporation. Since the principal place of business of a corporation
determines its residence or domicile, then the place indicated in petitioner's articles of
incorporation becomes controlling in determining the venue for this case.
• Petitioner argues that the Rules of Court do not provide that when the plaintiff is a corporation,
the complaint should be filed in the location of its principal office as indicated in its articles of
incorporation. Jurisprudence has, however, settled that the place where the principal office of a
corporation is located, as stated in the articles, indeed establishes its residence. This ruling is
important in determining the venue of an action by or against a corporation, as in the present
case.
• Without merit is the argument of petitioner that the locality stated in its Articles of Incorporation
does not conclusively indicate that its principal office is still in the same place. The Court agrees
with the appellate court in its observation that the requirement to state in the articles the place
where the principal office of the corporation is to be located "is not a meaningless requirement.
That proviso would be rendered nugatory if corporations were to be allowed to simply disregard
what is expressly stated in their Articles of Incorporation."
• Indeed, it is a legal truism that the rules on the venue of personal actions are fixed for the
convenience of the plaintiffs and their witnesses. Equally settled, however, is the principle that
choosing the venue of an action is not left to a plaintiff's caprice; the matter is regulated by the
Rules of Court.
• The rules on venue, like the other procedural rules, are designed to insure a just and orderly
administration of justice or the impartial and evenhanded determination of every action and
proceeding. Obviously, this objective will not be attained if the plaintiff is given unrestricted
freedom to choose the court where he may file his complaint or petition. The choice of venue
should not be left to the plaintiff's whim or caprice. He may be impelled by some ulterior
motivation in choosing to file a case in a particular court even if not allowed by the rules on
venue.

Final Ruling: The petition is denied.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
Case Title: Diaz v Adiong
Ticker: News in DENR
Facts

• In 1991, the Mindanao Kris , a newspaper of general circulation in Cotabato City, published in its
front page the news article captioned "6-Point Complaint Filed vs. Macumbal," and in its
Publisher's Notes the editorial, "Toll of Corruption," which exposed alleged anomalies by key
officials in the Regional Office of the Department of Environment and Natural Resources.
• The public officers alluded to, namely, private respondents Sultan Macorro Macumbal, Sultan
Linog Indol, Atty. Macabangkit Lanto and Atty. Mohamadali Abedin, instituted separate criminal
and civil complaints arising from the libel before the City Prosecutor's Office and the Regional
Trial Court in Marawi City. The publisher-editor of the Mindanao Kris , petitioner Patricio Diaz, and
Mamala Pagandaman, who executed a sworn statement attesting to the alleged corruption, were
named respondents in both complaints.
• The City Prosecutor's Office dismissed the criminal case.
• Petitioner Diaz moved for the dismissal of the action for damages on the ground that the trial
court did not have jurisdiction over the subject matter. He vehemently argued that the complaint
should have been filed in Cotabato City and not in Marawi City.
• The respondent judge denied petitioner's Motion to Dismiss for lack of merit. Diaz thereafter
moved for reconsideration of the order of denial. The motion was also denied.

Issue

• Whether venue is improperly laid [No]

Arguments
Ruling
Petitioner
The civil action The petitioner is correct. Not one of the respondents then held office in Marawi City:
for damages respondent Macumbal was the Regional Director for Region XII of the DENR and held
could not be office in Cotabato City; respondent Indol was the Provincial Environment and Natural
rightfully filed in Resources Officer of Lanao del Norte and held office in that province; respondent
Marawi City as Lanto was a consultant of the Secretary of the DENR and, as averred in the
none of the complaint, was temporarily residing in Quezon City; and, respondent Abedin was the
private Chief of the Legal Division of the DENR Regional Office in Cotabato City. Indeed,
respondents, private respondents do not deny that their main place of work was not in Marawi City,
who are all although they had sub-offices therein.
public officers,
held office in Apparently, the claim of private respondents that they maintained suboffices in
Marawi City; Marawi City is a mere afterthought, considering that it was made following the
neither were the dismissal of their criminal complaint by the City Prosecutor of Marawi City.
alleged libelous Significantly, in their complaint, respondents simply alleged that they were residents
news items of Marawi City, except for respondent Lanto who was then temporarily residing in
published in Quezon City, and that they were public officers, nothing more. This averment is not
that city. enough to vest jurisdiction upon the Regional Trial Court of Marawi City and may be
Consequently, it properly assailed in a motion to dismiss.
is petitioner's Moreover, it is admitted that the libelous articles were published and printed in

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
view that the Cotabato City. Thus, respondents were limited in their choice of venue for their action
Regional Trial for damages only to Cotabato City where Macumbal, Lanto and Abedin had their
Court in Marawi office and Lanao del Norte where Indol worked. Marawi City is not among those
City has no where venue can be laid.
jurisdiction to
entertain the The third paragraph of Art. 360 of the Revised Penal Code, as amended by R.A. No.
civil action for 4363, specifically requires that the criminal and civil action for damages in cases of
damages. written defamations, shall be filed simultaneously or separately with the Court of First
Instance of the province or city where the libelous article is printed and first published
or where any of the offended parties actually resides at the time of the commission of
the offense: Provided, however, that where one of the offended parties is a public
officer . . . (who) does not hold office in the City of Manila, the action shall be filed in
the Court of First Instance (Regional Trial Court) of the province or city where he held
office at the time of the commission of the offense or where the libelous article is
printed and first published and in case one of the the offended parties is a private
individual, the action shall be filed in the Court of First Instance of the province or city
where he actually resides at the time of the commission of the offense or where the
libelous matter is printed and first published.

From the foregoing provision, it is clear that an offended party who is at the same time
a public official can only institute an action arising from libel in two (2) venues: the
place where he holds office, and the place where the alleged libelous articles were
printed and first published.

Private respondents thus appear to have misread the provisions of Art. 360 of the
Revised Penal Code, as amended, when they filed their criminal and civil complaints
in Marawi City. They deemed as sufficient to vest jurisdiction upon the Regional Trial
Court of Marawi City the allegation that "plaintiffs are all of legal age, all married,
Government officials by occupation and residents of Marawi City." But they are wrong.

Consequently, it is indubitable that venue was improperly laid. However, unless and
until the defendant objects to the venue in a motion to dismiss prior to a responsive
pleading, the venue cannot truly be said to have been improperly laid since, for all
practical intents and purposes, the venue though technically wrong may yet be
considered acceptable to the parties for whose convenience the rules on venue had
been devised.

Petitioner Diaz then, as defendant in the court below, should have timely challenged
the venue laid in Marawi City in a motion to dismiss, pursuant to Sec. 4, Rule 4, of the
Rules of Court. Unfortunately, petitioner had already submitted himself to the
jurisdiction of the trial court when he filed his Answer to the Complaint with
Counterclaim.

His motion to dismiss was therefore belatedly filed and could no longer deprive the
trial court of jurisdiction to hear and decide the instant civil action for damages. Well-
settled is the rule that improper venue may be waived and such waiver may occur by
laches.
[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Withal, objections to venue in civil actions arising from libel may be waived; it does
not, after all, involve a question of jurisdiction. Indeed, the laying of venue is
procedural rather than substantive, relating as it does to jurisdiction of the court over
the person rather than the subject matter. Venue relates to trial and not to jurisdiction.

Finally, Sec. 1 of Rule 16 provides that objections to improper venue must be made in
a motion to dismiss before any responsive pleading is filed. Responsive pleadings are
those which seek affirmative relief and set up defenses. Consequently, having already
submitted his person to the jurisdiction of the trial court, petitioner may no longer
object to the venue which, although mandatory in the instant case, is nevertheless
waivable. As such, improper venue must be seasonably raised, otherwise, it may be
deemed waived.
Final Ruling: The petition is denied.

Case Title: Nocum v Tan

Ticker: Lucio Tan
Facts

• In 1998, Lucio Tan filed a complaint against reporter Armand Nocum, Capt. Florendo Umali,
ALPAP and Inquirer with the Regional Trial Court of Makati, seeking moral and exemplary
damages for the alleged malicious and defamatory imputations contained in a news article.
• INQUIRER and NOCUM filed their joint answer. ALPAP and UMALI likewise filed their joint
answer.
• Thus, the Regional Trial Court of Makati issued an Order dismissing the complaint without
prejudice on the ground of improper venue.
• Aggrieved by the dismissal of the complaint, respondent Lucio Tan filed an Omnibus Motion
seeking reconsideration of the dismissal and admission of the amended complaint.
• The lower court, after having the case dismissed for improper venue, admitted the amended
complaint and deemed set aside the previous order of dismissal.
• Dissatisfied, petitioners, together with defendants Capt. Florendo Umali and the Airline Pilots
Association of the Philippines, Inc. (ALPAP), appealed the RTC decision to the Court of Appeals.
Two petitions for certiorari were filed. The two petitions were consolidated.
• The Court of Appeals rendered its decision dismissing the petitions and affirming the decision of
the RTC.
• Both petitioners and defendants Umali and ALPAP appealed to the SC Court. Under
consideration is the petition for review filed by petitioners.

Issue

• Whether the lower court acquired jurisdiction over the civil case upon the filing of the original
complaint for damages [Yes]

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Ruling

• The Court rules in the affirmative.

• It is settled that jurisdiction is conferred by law based on the facts alleged in the complaint since
the latter comprises a concise statement of the ultimate facts constituting the plaintiff's causes of
action. In the case at bar, after examining the original complaint, the Court finds that the RTC
acquired jurisdiction over the case when the case was filed before it. From the allegations thereof,
respondent's cause of action is for damages arising from libel, the jurisdiction of which is vested
with the RTC. Article 360 of the Revised Penal Code provides that it is a Court of First Instance
that is specifically designated to try a libel case.
• Petitioners are confusing jurisdiction with venue. The following is a differentiation of jurisdiction
and venue as follows: (a) Jurisdiction is the authority to hear and determine a case; venue is the
place where the case is to be heard or tried; (b) Jurisdiction is a matter of substantive law; venue,
of procedural law; (c) Jurisdiction establishes a relation between the court and the subject matter;
venue, a relation between plaintiff and defendant, or petitioner and respondent; and, (d)
Jurisdiction is fixed by law and cannot be conferred by the parties; venue may be conferred by
the act or agreement of the parties.
• In the case at bar, the additional allegations in the Amended Complaint that the article and the
caricature were printed and first published in the City of Makati referred only to the question of
venue and not jurisdiction. These additional allegations would neither confer jurisdiction on the
RTC nor would respondent's failure to include the same in the original complaint divest the lower
court of its jurisdiction over the case. Respondent's failure to allege these allegations gave the
lower court the power, upon motion by a party, to dismiss the complaint on the ground that venue
was not properly laid.
• In a case, the Court construed the term "jurisdiction" in Article 360 of the Revised Penal Code as
referring to the place where actions for libel shall be filed or "venue."
• The prevailing rules on venue in Article 360 is as follows:

1. Whether the offended party is a public official or a private person, the criminal action may be
filed in the Court of First Instance of the province or city where the libelous article is printed
and first published.
2. If the offended party is a private individual, the criminal action may also be filed in the Court of
First Instance of the province where he actually resided at the time of the commission of the
offense.
3. If the offended party is a public officer whose office is in Manila at the time of the commission
of the offense, the action may be filed in the Court of First Instance of Manila.
4. If the offended party is a public officer holding office outside of Manila, the action may be filed
in the Court of First Instance of the province or city where he held office at the time of the
commission of the offense.
• It is elementary that objections to venue in civil actions arising from libel may be waived since
they do not involve a question of jurisdiction. The laying of venue is procedural rather than
substantive, relating as it does to jurisdiction of the court over the person rather than the subject
matter. Venue relates to trial and not to jurisdiction. It is a procedural, not a jurisdictional, matter.
It relates to the place of trial or geographical location in which an action or proceeding should be
brought and not to the jurisdiction of the court. It is meant to provide convenience to the parties,

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 rather than restrict their access to the courts as it relates to the place of trial. In contrast, in
criminal actions, it is fundamental that venue is jurisdictional it being an essential element of
jurisdiction.
• Petitioners' argument that the lower court has no jurisdiction over the case because respondent
failed to allege the place where the libelous articles were printed and first published would have
been tenable if the case filed were a criminal case. The failure of the original complaint to contain
such information would be fatal because this fact involves the issue of venue which goes into the
territorial jurisdiction of the court. This is not to be because the case before the Court is a civil
action where venue is not jurisdictional.

Final Ruling: The decision is affirmed.

Case Title: Philippine Banking Corporation v Tensuan

Ticker: Circle Loans
Facts

• Petitioner Philippine Banking Corporation is a commercial banking corporation with principal

office at Makati, Metro Manila. Petitioner Bank instituted a complaint for collection of a sum of
money, with a prayer for preliminary attachment, at the Regional Trial Court of Makati. It appears
from the allegations of the Bank's complaint that respondent Circle Financial Co. through its
representatives, obtained several loans from petitioner. Respondent Circle, for value received,
delivered to petitioner Bank four (4) promissory notes, each of which contained the stipulation
that: "I/We hereby expressly submit to the jurisdiction of the courts of Valenzuela any legal action
which may arise out of this promissory note."
• As security for the re-payment by respondent Circle of the sums loaned by petitioner Bank, eight
(8) individuals, who were impleaded as defendants in the complaint — namely, Avelino Deato,
Miguel Violago, Benjamin Santiago, Socorro Gomez, Nerissa Gloria, Filemon Marquez, Domingo
Santiago and Hilario Lopez — executed a Continuing Surety Agreement and undertook to pay
jointly and severally respondent Circle's obligations.
• On their due dates, Circle failed to pay its obligations under the promissory notes. Thereupon,
petitioner Bank demanded payment from the eight (8) individual sureties conformably with their
promises contained in the Continuing Surety Agreement; the individual obligors, however, also
failed to pay.
• Petitioner moved for issuance of a writ of preliminary attachment. The trial judge granted the
motion and issued a writ of preliminary attachment. The sheriff's return indicated, however, that
no properties belonging to the respondent Circle and the individual obligors could be found.
• A motion to dismiss was filed by the respondents (Circle and the five [5] individual sureties served
with summons) and averred that the venue of the action was improperly laid since an agreement
had fixed the venue of actions arising from the promissory notes in Valenzuela, Metro Manila,
only.
• Judge Tensuan granted the motion to dismiss.
• Hence, this petition.

Issue

• Whether the venue of litigation is limited to Valenzuela City only [No]

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Ruling

• The Petition is meritorious.

• It is settled in this jurisdiction that the parties, by written agreement, may change or transfer the
venue of an action from one province to another. The Court has many times sustained the validity
and enforceability of contractual stipulations relating to venue. In the enforcement of the parties'
stipulations concerning venue, it is, of course, the tenor of their agreement which is of critical
relevance. The relevant task, in other words, is determining the intent of the parties as manifested
in the words employed by them and, where such words are less than clear, in other recognized
indicators of the will of the contracting parties.
• A careful reading of the terms of the stipulation — "I/We hereby expressly submit to the
jurisdiction of the courts of Valenzuela any legal action which may arise out of this promissory
note" — shows that the stipulation does not require the laying of venue in Valenzuela exclusively
or mandatorily. The plain or ordinary import of the stipulation is the authorizing of, or permission
to bring, suit in Valenzuela; there is not the slightest indication of an intent to bar suit in other
competent courts.
• Permissive stipulations like the one here considered have invariably received judicial approval
and we have declared that either of the parties is authorized to lay venue of an action in the court
named in the stipulation. The stipulation here does not purport to deprive either party of its right to
elect, or option to have resort to, another competent court as expressly permitted by Section 2(b)
of Rule 4 of the Rules of Court, should such party choose to initiate a suit. The stipulation here
merely operated to confer or confirm a right upon a party to elect recourse to the courts of
Valenzuela or, alternatively, to go before any of the tribunals envisaged by the rules on venue,
i.e., the courts of Makati, Quezon City and Bulacan.
• In principle, the stipulation on venue here involved must be distinguished from stipulations which
purport to require or compel the parties to lay venue of an action in a specified place, and in that
particular place only. The latter type of venue stipulation must clearly indicate, through qualifying
and restrictive words, that the parties deliberately intended to exclude causes or actions from the
operation of the ordinary permissive rules on venue, and that they intended contractually to
designate a specific venue to the exclusion of any other court also competent and accessible to
the parties under the ordinary rules on the venue of actions. Stipulations of this exclusionary
nature may, under certain circumstances, be characterized as unreasonable or as contrary to
public policy and, accordingly, not judicially enforceable.
• In practice, the task, as noted earlier, of this Court when confronted with issues of this kind is
always basically that of contract interpretation. In the case at bar, neither qualifying nor restrictive
words (e.g., "must," "only" or "exclusively") were employed which could yield an intent on the part
of the parties mandatorily to restrict the venue of actions arising out of the promissory notes to the
courts of Valenzuela only . Private respondents suggest that the use of the words "any legal
action" expressed a supposed agreement to bar actions before any court other than a Valenzuela
court. We do not agree, for we see no necessary or customary connection between the words
"any legal action" and an intent strictly to limit permissible venue to the Valenzuela courts. Intent
so to establish an inflexible restriction of otherwise permissible venue to one single place is not
lightly to be presumed or inferred from stipulations which, like that here before us, include no
qualifying or exclusionary terms. Express reservation of the right to elect venue under the
ordinary rules was, accordingly, necessary in the case at bar.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 • We note, finally, that no one of the private respondents has claimed to have been put to undue
hardship or inconvenience as a result of the institution of the action in Makati. Venue relates to
the trial and touches more upon the convenience of the parties rather than upon the substance or
merits of the case.

Final Ruling: The petition is granted.

Case Title: Mangila v Court of Appeals

Ticker: Seafood Shipment
Facts

• Petitioner Anita Mangila is an exporter of sea foods and doing business under the name and style
of Seafoods Products. Private respondent Loreta Guina is the President and General Manager of
Air Swift International, a single registered proprietorship engaged in the freight forwarding
business.
• Sometime in January 1988, petitioner contracted the freight forwarding services of private
respondent for shipment of petitioner's products, such as crabs, prawns and assorted fishes, to
Guam where petitioner maintains an outlet. Petitioner agreed to pay private respondent cash on
delivery. Private respondent's invoice stipulates a charge of 18 percent interest per annum on all
overdue accounts. In case of suit, the same invoice stipulates attorney's fees equivalent to 25
percent of the amount due plus costs of suit.
• On the first shipment, petitioner requested for seven days within which to pay private respondent.
However, for the next three shipments, petitioner failed to pay private respondent shipping
charges.
• Despite several demands, petitioner never paid private respondent. Thus, private respondent filed
a civil case before the Regional Trial Court of Pasay City for collection of sum of money.
• The sheriff filed his Sheriff's Return showing that summons was not served on petitioner.
• Thus, construing petitioner's departure from the Philippines as done with intent to defraud her
creditors, private respondent filed a Motion for Preliminary Attachment. The trial court issued an
Order of Preliminary Attachment against petitioner. The following day, the trial court issued a Writ
of Preliminary Attachment.
• The trial court granted the request of its sheriff for assistance from their counterparts in RTC,
Pampanga. Thus, Sheriff Alfredo San Miguel of RTC Pampanga served on petitioner's household
help in San Fernando, Pampanga, the Notice of Levy with the Order, Affidavit and Bond.
• Petitioner filed an Urgent Motion to Discharge Attachment.
• The trial court granted the Motion to Discharge Attachment.
• The private respondent applied for an alias summons, which the trial court issued.
• Petitioner filed a Motion to Dismiss the Complaint on the ground of improper venue.
• The lower court, finding credence in private respondent's assertion, denied the Motion to Dismiss.
• The RTC rendered a decision ordering petitioner to pay respondent.
• The CA affirmed the decision of the trial court.
• Hence, the petition.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Issue

• Whether the venue was properly laid [No]

Ruling

• Petitioner assails the filing of this case in the RTC of Pasay and points to a provision in private
respondent's invoice which contains the following: “If court litigation becomes necessary to
enforce collection, an additional equivalent to 25% of the principal amount will be charged. The
agreed venue for such action is Makati, Metro Manila, Philippines."
• Based on this provision, petitioner contends that the action should have been instituted in the
RTC of Makati and to do otherwise would be a ground for the dismissal of the case.
• The Court resolves to dismiss the case on the ground of improper venue but not for the reason
stated by petitioner.
• The Rules of Court provide that parties to an action may agree in writing on the venue on which
an action should be brought. However, a mere stipulation on the venue of an action is not enough
to preclude parties from bringing a case in other venues. The parties must be able to show that
such stipulation is exclusive. Thus, absent words that show the parties' intention to restrict the
filing of a suit in a particular place, courts will allow the filing of a case in any venue, as long as
jurisdictional requirements are followed. Venue stipulations in a contract, while considered valid
and enforceable, do not as a rule supersede the general rule set forth in Rule 4 of the Revised
Rules of Court. In the absence of qualifying or restrictive words, they should be considered
merely as an agreement on additional forum, not as limiting venue to the specified place.
• In the instant case, the stipulation does not limit the venue exclusively to Makati. There are no
qualifying or restrictive words in the invoice that would evince the intention of the parties that
Makati is the "only or exclusive" venue where the action could be instituted. The Court agrees
with private respondent that Makati is not the only venue where this case could be filed.
• Nevertheless, the Court holds that Pasay is not the proper venue for this case.
• Under the 1997 Rules of Civil Procedure, the general rule is venue in personal actions is "where
the defendant or any of the defendants resides or may be found, or where the plaintiff or any of
the plaintiffs resides, at the election of the plaintiff." The exception to this rule is when the parties
agree on an exclusive venue other than the places mentioned in the rules. But, as we have
discussed, this exception is not applicable in this case. Hence, following the general rule, the
instant case may be brought in the place of residence of the plaintiff or defendant, at the election
of the plaintiff (private respondent herein).
• In the instant case, the residence of private respondent (plaintiff in the lower court) was not
alleged in the complaint. Rather, what was alleged was the postal address of her sole
proprietorship, Air Swift International. It was only when private respondent testified in court, after
petitioner was declared in default, that she mentioned her residence to be in Better Living
Subdivision, Parañaque City.
• In the instant case, it was established in the lower court that petitioner resides in San Fernando,
Pampanga while private respondent resides in Parañaque City. However, this case was brought
in Pasay City, where the business of private respondent is found. This would have been
permissible had private respondent's business been a corporation. However, as admitted by
private respondent in her Complaint in the lower court, her business is a sole proprietorship, and

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 as such, does not have a separate juridical personality that could enable it to file a suit in court. In
fact, there is no law authorizing sole proprietorships to file a suit in court.
• A sole proprietorship does not possess a juridical personality separate and distinct from the
personality of the owner of the enterprise. The law merely recognizes the existence of a sole
proprietorship as a form of business organization conducted for profit by a single individual and
requires its proprietor or owner to secure licenses and permits, register its business name, and
pay taxes to the national government. The law does not vest a separate legal personality on the
sole proprietorship or empower it to file or defend an action in court.
• Thus, not being vested with legal personality to file this case, the sole proprietorship is not the
plaintiff in this case but rather Loreta Guina in her personal capacity. In fact, the complaint in the
lower court acknowledges in its caption that the plaintiff and defendant are Loreta Guina and
Anita Mangila, respectively. Logically then, it is the residence of private respondent Guina, the
proprietor with the juridical personality, which should be considered as one of the proper venues
for this case.
• All these considered, private respondent should have filed this case either in San Fernando,
Pampanga (petitioner's residence) or Parañaque (private respondent's residence). Since private
respondent (complainant below) filed this case in Pasay, we hold that the case should be
dismissed on the ground of improper venue.
• Although petitioner filed an Urgent Motion to Discharge Attachment in the lower court, petitioner
expressly stated that she was filing the motion without submitting to the jurisdiction of the court.
At that time, petitioner had not been served the summons and a copy of the complaint.
Thereafter, petitioner timely filed a Motion to Dismiss on the ground of improper venue. Rule 16,
Section 1 of the Rules of Court provides that a motion to dismiss may be filed " [W]ithin the time
for but before filing the answer to the complaint or pleading asserting a claim." Petitioner even
raised the issue of improper venue in his Answer as a special and affirmative defense. Petitioner
also continued to raise the issue of improper venue in her Petition for Review before this Court.
We thus hold that the dismissal of this case on the ground of improper venue is warranted.
• The rules on venue, like other procedural rules, are designed to insure a just and orderly
administration of justice or the impartial and evenhanded determination of every action and
proceeding. Obviously, this objective will not be attained if the plaintiff is given unrestricted
freedom to choose where to file the complaint or petition.

Final Ruling: The petition is granted.

Case Title: Unimasters Conglomeration, Inc. v Court of Appeals

Ticker: Dealership Agreement
Facts

• In 1988, Kubota Agri-Machinery Philippines, Inc. and Unimasters Conglomeration, Inc. entered
into a "Dealership Agreement for Sales and Services" of the former's products in Samar and
Leyte Provinces. contract contained, among others: a stipulation reading: " . . . All suits arising out
of this Agreement shall be filed with / in the proper Courts of Quezon City.”
• Some five years later, UNIMASTERS filed an action in the Regional Trial Court of Tacloban City
against KUBOTA, a certain Reynaldo Go, and Metropolitan Bank and Trust Company-Tacloban
Branch for damages for breach of contract, and injunction with prayer for temporary restraining
order.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 • Kubota filed two motions. One prayed for dismissal of the case on the ground of improper venue.
• The trial court promulgated an Order denying KUBOTA's motion to dismiss.
• The CA reversed the decision of the RTC.
• Hence, this petition.

Issue

• Whether venue was improperly laid [No]

Ruling

• Rule 4 of the Rules of Court sets forth the principles generally governing the venue of actions,
whether real or personal, or involving persons who neither reside nor are found in the Philippines
or otherwise. Agreements on venue are explicitly allowed. "By written agreement of the parties
the venue of an action may be changed or transferred from one province to another." Parties may
by stipulation waive the legal venue and such waiver is valid and effective being merely a
personal privilege, which is not contrary to public policy or prejudicial to third persons. It is a
general principle that a person may renounce any right which the law gives unless such
renunciation would be against public policy.
• Written stipulations as to venue may be restrictive in the sense that the suit may be filed only in
the place agreed upon, or merely permissive in that the parties may file their suit not only in the
place agreed upon but also in the places fixed by law (Rule 4, specifically). As in any other
agreement, what is essential is the ascertainment of the intention of the parties respecting the
matter. Since convenience is the raison d'etre of the rules of venue, it is easy to accept the
proposition that normally, venue stipulations should be deemed permissive merely, and that
interpretation should be adopted which most serves the parties' convenience. In other words,
stipulations designating venues other than those assigned by Rule 4 should be interpreted as
designed to make it more convenient for the parties to institute actions arising from or in relation
to their agreements; that is to say, as simply adding to or expanding the venues indicated in said
Rule 4.
• On the other hand, because restrictive stipulations are in derogation of this general policy, the
language of the parties must be so clear and categorical as to leave no doubt of their intention to
limit the place or places, or to fix places other than those indicated in Rule 4, for their actions.
This is easier said than done, however, as an examination of precedents involving venue
covenants will immediately disclose.
• In at least thirteen (13) cases, this Court construed the venue stipulations involved as merely
permissive. On the other hand, in some cases, stipulations on venue were held to be restrictive,
or mandatory. An analysis of these precedents reaffirms and emphasizes the soundness of the
Polytrade principle. Of the essence is the ascertainment of the parties' intention in their
agreement governing the venue of actions between them. That ascertainment must be done
keeping in mind that convenience is the foundation of venue regulations, and that that
construction should be adopted which most conduces thereto. Hence, the invariable construction
placed on venue stipulations is that they do not negate but merely complement or add to the
codal standards of Rule 4 of the Rules of Court. In other words, unless the parties make very
clear, by employing categorical and suitably limiting language, that they wish the venue of actions

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 between them to be laid only and exclusively at a definite place, and to disregard the
prescriptions of Rule 4, agreements on venue are not to be regarded as mandatory or restrictive,
but merely permissive, or complementary of said rule. The fact that in their agreement the parties
specify only one of the venues mentioned in Rule 4, or fix a place for their actions different from
those specified by said rule, does not, without more, suffice to characterize the agreement as a
restrictive one. There must, to repeat, be accompanying language clearly and categorically
expressing their purpose and design that actions between them be litigated only at the place
named by them, regardless of the general precepts of Rule 4; and any doubt or uncertainty as to
the parties' intentions must be resolved against giving their agreement a restrictive or mandatory
aspect. Any other rule would permit of individual, subjective judicial interpretations without stable
standards, which could well result in precedents in hopeless inconsistency.
• The record of the case at bar discloses that UNIMASTERS has its principal place of business in
Tacloban City, and KUBOTA, in Quezon City. Under Rule 4, the venue of any personal action
between them is "where the defendant or any of the defendants resides or may be found, or
where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff." In other words,
Rule 4 gives UNIMASTERS the option to sue KUBOTA for breach of contract in the Regional
Trial Court of either Tacloban City or Quezon City.
• But the contract between them provides that " . . . All suits arising out of this Agreement shall be
filed with/in the proper Courts of Quezon City, " without mention of Tacloban City. The question is
whether this stipulation had the effect of effectively eliminating the latter as an optional venue and
limiting litigation between UNIMASTERS and KUBOTA only and exclusively to Quezon City.
• In light of all the cases above surveyed, and the general postulates distilled therefrom, the
question should receive a negative answer. Absent additional words and expressions definitely
and unmistakably denoting the parties' desire and intention that actions between them should be
ventilated only at the place selected by them, Quezon City — or other contractual provisions
clearly evincing the same desire and intention — the stipulation should be construed, not as
confining suits between the parties only to that one place, Quezon City, but as allowing suits
either in Quezon City or Tacloban City, at the option of the plaintiff (UNIMASTERS in this case).
• One last word, respecting KUBOTA's theory that the Regional Trial Court had "no jurisdiction to
take cognizance of . . . (UNIMASTERS') action considering that venue was improperly laid." This
is not an accurate statement of legal principle. It equates venue with jurisdiction; but venue has
nothing to do with jurisdiction, except in criminal actions. This is fundamental. The action at bar,
for the recovery of damages in an amount considerably in excess of P20,000.00, is assuredly
within the jurisdiction of a Regional Trial Court. Assuming that venue were improperly laid in the
Court where the action was instituted, the Tacloban City RTC, that would be a procedural, not a
jurisdictional impediment — precluding ventilation of the case before that Court of wrong venue
notwithstanding that the subject matter is within its jurisdiction . However, if the objection to venue
is waived by the failure to set it up in a motion to dismiss, the RTC would proceed in perfectly
regular fashion if it then tried and decided the action.
• This is true also of real actions. Thus, even if a case "affecting title to, or for recovery of
possession, or for partition or condemnation of, or foreclosure of mortgage on, real property" were
commenced in a province or city other than that "where the property or any part thereof lies," if no
objection is seasonably made in a motion to dismiss, the objection is deemed waived, and the
Regional Trial Court would be acting entirely within its competence and authority in proceeding to
try and decide the suit.

Final Ruling: The appealed judgment is reversed.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 RULE 5
UNIFORM PROCEDURE IN TRIAL COURTS

Section 1
Uniform procedure. – The procedure in the Municipal Trial Courts shall be the same as in the Regional
Trial Courts, except (a) where a particular provision expressly or impliedly applies only to either of said
courts, or (b) in civil cases governed by the Rule on Summary Procedure.

Section 2
Meaning of terms. – The term “Municipal Trial Courts” as used in these Rules shall include Metropolitan
Trial Courts, Municipal Trial Courts in Cities, Municipal Trial Courts, and Municipal Circuit Trial Courts.

Case Title: De Lima v Gatdula

Ticker: Amparo
Facts

• In 2012, respondent Magtanggol Gatdula filed aPetition for the Issuance of a Writ of Amparo in
the Regional Trial Court of Manila. The Amparo was directed against petitioners Justice Secretary
Leila De Lima, Director Nonnatus Rojas and Deputy Director Reynaldo Esmeralda of the National
Bureau of Investigation. Gatdula wanted De Lima, et al. "to cease and desist from framing up
Petitioner [Gatdula] for the fake ambush incident by filing bogus charges of Frustrated Murder
against Petitioner [Gatdula] in relation to the alleged ambush incident."
• Instead of deciding on whether to issue a Writ of Amparo, the judge issued summons and
ordered De Lima, et al. to file an Answer. It also set the case for hearing. The hearing was held
allegedly for determining whether a temporary protection order may be issued. During that
hearing, counsel for De Lima, et al. manifested that a Return, not an Answer, is appropriate for
Amparo cases.
• In an order, Judge Pampilo insisted that "[s]ince no writ has been issued, return is not the
required pleading but answer". judge noted that the Rules of Court apply suppletorily in Amparo
cases. He opined that the Revised Rules of Summary Procedure applied and thus required an
Answer.
• Judge Pampilo proceeded to conduct a hearing on the main case. Even without a Return nor an
Answer, he ordered the parties to file their respective memoranda within five (5) working days
after that hearing. Since the period to file an Answer had not yet lapsed by then, the judge also
decided that the memorandum of De Lima, et al. would be filed in lieu of their Answer.
• The RTC rendered a "Decision" granting the issuance of the Writ of Amparo.
• The RTC denied the Motion for Reconsideration.
• Petitioners Sec. De Lima, et al. thus came to the SC assailing the RTC decision

Issue

• Whether Judge Pampilo erred in his procedures [Yes]

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Ruling

• The remedy of the Writ of Amparo is an equitable and extraordinary remedy to safeguard the right
of the people to life, liberty and security as enshrined in the 1987 Constitution. The Rule on the
Writ of Amparo was issued as an exercise of the Supreme Court's power to promulgate rules
concerning the protection and enforcement of constitutional rights. It aims to address concerns
such as, among others, extrajudicial killings and enforced disappearances.
• Due to the delicate and urgent nature of these controversies, the procedure was devised to afford
swift but decisive relief. It is initiated through a petition to be filed in a Regional Trial Court,
Sandiganbayan, the Court of Appeals, or the Supreme Court. The judge or justice then makes an
"immediate" evaluation of the facts as alleged in the petition and the affidavits submitted "with the
attendant circumstances detailed". After evaluation, the judge has the option to issue the Writ of
Amparo or immediately dismiss the case. Dismissal is proper if the petition and the supporting
affidavits do not show that the petitioner's right to life, liberty or security is under threat or the acts
complained of are not unlawful. On the other hand, the issuance of the writ itself sets in motion
presumptive judicial protection for the petitioner. The court compels the respondents to appear
before a court of law to show whether the grounds for more permanent protection and interim
reliefs are necessary.
• The respondents are required to file a Return after the issuance of the writ through the clerk of
court. The Return serves as the responsive pleading to the petition. Unlike an Answer, the Return
has other purposes aside from identifying the issues in the case. Respondents are also required
to detail the actions they had taken to determine the fate or whereabouts of the aggrieved party.
• If the respondents are public officials or employees, they are also required to state the actions
they had taken to: (i) verify the identity of the aggrieved party; (ii) recover and preserve evidence
related to the death or disappearance of the person identified in the petition; (iii) identify
witnesses and obtain statements concerning the death or disappearance; (iv) determine the
cause, manner, location, and time of death or disappearance as well as any pattern or practice
that may have brought about the death or disappearance; and (vi) bring the suspected offenders
before a competent court Clearly these matters are important to the judge so that s/he can
calibrate the means and methods that will be required to further the protections, if any, that will be
due to the petitioner.
• There will be a summary hearing only after the Return is filed to determine the merits of the
petition and whether interim reliefs are warranted. If the Return is not filed, the hearing will be
done ex parte. After the hearing, the court will render the judgment within ten (10) days from the
time the petition is submitted for decision.
• If the allegations are proven with substantial evidence, the court shall grant the privilege of the
writ and such reliefs as may be proper and Appropriate. The judgment should contain measures
which the judge views as essential for the continued protection of the petitioner in the Amparo
case. These measures must be detailed enough so that the judge may be able to verify and
monitor the actions taken by the respondents. It is this judgment that could be subject to appeal
to the Supreme Court via Rule 45. After the measures have served their purpose, the judgment
will be satisfied. In Amparo cases, this is when the threats to the petitioner's life, liberty and
security cease to exist as evaluated by the court that renders the judgment. Parenthetically, the
case may also be terminated through consolidation should a subsequent case be filed — either
criminal or civil. Until the full satisfaction of the judgment, the extraordinary remedy of Amparo

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 allows vigilant judicial monitoring to ensure the protection of constitutional rights.
• The "Decision" assailed by the petitioners could not be the judgment or final order that is
appealable under the Rule on the Writ of Amparo. This is clear from the tenor of the dispositive
portion of the "Decision.” This "Decision" pertained to the issuance of the writ under Section 6 of
the Rule on the Writ of Amparo, not the judgment under Section 18. The "Decision" is thus an
interlocutory order, as suggested by the fact that temporary protection, production and inspection
orders were given together with the decision. The temporary protection, production and
inspection orders are interim reliefs that may be granted by the court upon filing of the petition but
before final judgment is rendered.
• The confusion of the parties arose due to the procedural irregularities in the RTC.
• First, the insistence on filing of an Answer was inappropriate. It is the Return that serves as the
responsive pleading for petitions for the issuance of Writs of Amparo. The requirement to file an
Answer is contrary to the intention of the Court to provide a speedy remedy to those whose right
to life, liberty and security are violated or are threatened to be violated. In utter disregard of the
Rule on the Writ of Amparo, Judge Pampilo insisted on issuing summons and requiring an
Answer.
• Judge Pampilo's basis for requiring an Answer was the 1991 Revised Rules of Summary
Procedure. The 1991 Revised Rules of Summary Procedure is a special rule that the Court has
devised for specified circumstances. It is clear from this rule that this type of summary procedure
only applies to MTC/MTCC/MCTCs. It is mind-boggling how this rule could possibly apply to
proceedings in an RTC. Aside from that, this Court limited the application of summary procedure
to certain civil and criminal cases. A writ of Amparo is a special proceeding. It is a remedy by
which a party seeks to establish a status, a right or particular fact. It is not a civil nor a criminal
action, hence, the application of the Revised Rule on Summary Procedure is seriously misplaced.
• The second irregularity was the holding of a hearing on the main case prior to the issuance of the
writ and the filing of a Return. Without a Return, the issues could not have been properly joined.
• Worse, is the trial court's third irregularity: it required a memorandum in lieu of a responsive
pleading (Answer) of De Lima, et al.
• The Return in Amparo cases allows the respondents to frame the issues subject to a hearing.
Hence, it should be done prior to the hearing, not after. A memorandum, on the other hand, is a
synthesis of the claims of the party litigants and is a final pleading usually required before the
case is submitted for decision. One cannot substitute for the other since these submissions have
different functions in facilitating the suit.
• More importantly, a memorandum is a prohibited pleading under the Rule on the Writ of Amparo.
The fourth irregularity was in the "Decision" which gives the impression that the decision was the
judgment since the phraseology is similar to Section 18 of the Rule on the Writ of Amparo. The
privilege of the Writ of Amparo should be distinguished from the actual order called the Writ of
Amparo.
• The procedural irregularities in the RTC affected the mode of appeal that petitioners used in
elevating the matter to this Court.
• It is the responsibility of counsels for the parties to raise issues using the proper procedure at the
right time. Procedural rules are meant to assist the parties and courts efficiently deal with the
substantive issues pertaining to a case. When it is the judge himself who disregards the rules of
procedure, delay and confusion result.
• In many instances, the Court adopted a policy of liberally construing its rules in order to promote
a just, speedy and inexpensive disposition of every action and proceeding. The rules can be

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 suspended on the following grounds: (1) matters of life, liberty, honor or property, (2) the
existence of special or compelling circumstances, (3) the merits of the case, (4) a cause not
entirely attributable to the fault or negligence of the party favored by the suspension of the rules,
(5) a lack of any showing that the review sought is merely frivolous and dilatory, and (6) the other
party will not be unjustly prejudiced thereby.

Final Ruling: The issuances of the judge are

nullified.

Case Title: Pascual v Jovellanos

Ticker: Kupad Judge
Facts

• Complainant alleges that she filed a complaint for forcible entry gainst a certain Lorenzo Manaois.
The complaint was dismissed without prejudice for being insufficient in some material allegations.
She filed a corrected complaint.
• Instead of filing an answer, defendant filed a Motion to Strike Out arguing that the new allegations
in the complaint are false. After the period to answer lapsed and no answer was submitted,
complainant filed a Motion for Summary Judgment. Defendant opposed the motion.
• Defendant’s motion to strike out was granted by respondent Judge. Complainant filed a motion
for reconsideration of the aforesaid order.
• Based on the foregoing, complainant accuse[d] respondent Judge of Neglect of Duty. Meanwhile,
defendant, taking advantage of the lull in the proceedings, started the construction of a one-
storey building on the subject land. To protect her interest, complainant filed an Application for
Preliminary Injunction. Acting thereon, respondent Judge issued a Temporary Restraining Order
and set the hearing on the Injunction. On said date, complainant was able to present evidence in
support of her application while defendant chose not to present controverting evidence and to just
submit a memorandum.
• On the last day of the effectivity of the TRO, complainant filed an Extremely Urgent Ex-Parte
Motion to grant her application for injunction. Defendant filed his memorandum. However, until
the present, respondent Judge has not ruled on her application on preliminary injunction. Instead
of obeying the TRO, defendant continued with the construction of the building and even started
with a new one. Hence, a contempt charge was filed by herein complainant. Defendant moved to
dismiss the contempt charge on the ground that it was filed in the same proceedings and the filing
fee was not paid. The court, however, motu propio docketed the complaint for contempt while the
required docket and other fees were paid by defendant. On same date, the court issued an Order
furnishing anew the defendants/respondents with a copy of the contempt charge. These,
complainant claims, cured the defect cited by defendants/respondents in their motion to dismiss.
However, respondent Judge still has not resolved the aforesaid motion to the prejudice of herein
complainant.
• Hence, Francisca Pascual, charged Judge Eduardo Jovellanos of the Municipal Circuit Trial Court
of Alcala, Pangasinan with gross ignorance of the law, bias and partiality, abuse of discretion and
neglect of duty. After investigation of this case, the OCA found that respondent failed to apply the
Rule on Summary Procedure, which he ought to have been very conversant with, because it was
a common procedure in municipal courts. Accordingly, it recommended that respondent be fined
and warned that the commission of a similar infraction will be dealt with more severely."

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Issue

• Whether the judge is guilty [Yes]

Ruling

• The Court agrees with the findings of the OCA, but increase the penalty, taking note that this is
respondent's second infraction.
• Judges are the visible representations of law and justice. They ought to be embodiments of
competence, integrity and independence. In particular, municipal judges are frontline officers in
the administration of justice. It is therefore essential that they live up to the high standards
demanded by the Code of Judicial Conduct. To be able to render substantial justice and to
maintain public confidence in the legal system, they are expected to exhibit more than just a
cursory acquaintance with statutes and procedural rules. They are likewise expected to keep
abreast of all laws and prevailing jurisprudence. Judicial competence requires no less.
• Moreover, judges are bound to dispose of the court's business promptly and to decide cases
within the required period. For it cannot be gainsaid that justice delayed is justice denied.
Procrastination among members of the judiciary in rendering decisions and in acting upon cases
before them not only causes great injustice to the parties involved, but also invites suspicion of
ulterior motives on their part.
• It must be emphasized that rules of procedure have been formulated and promulgated by this
Court to ensure the speedy and efficient administration of justice. Failure to abide by these rules
undermines the wisdom behind them and diminishes respect for the of law. The Rule on
Summary Procedure was promulgated precisely to achieve an expeditious and inexpensive
determination of cases. Failure to observe the period within which to render a judgment subjects
the defaulting judge to administrative sanctions. For this reason, the Rule frowns upon delays and
expressly prohibits, altogether, the filing of motions for extension.
• In this case, it is very clear that respondent lacks awareness of the relevant provisions on
ejectment. He has evidently been remiss in resolving the forcible entry case, pursuant to the
Revised Rules on Summary Procedure. Verily, judgment should have been rendered based on
the allegations of the Complaint and the evidence presented therein, inasmuch as the defendant
failed to file his answer after the lapse of ten (10) days from the service of the summons. Section
6 of the Rule allows the trial court to render judgment, even motu proprio, upon failure of the
defendant to file an answer within the reglementary period. Moreover, under Section 10 of the
Rule, respondent was duty-bound to render his decision within thirty (30) days from receipt of the
last affidavits and position papers, or the expiration of the period for filing them. This
notwithstanding, he has not yet ruled on the Motion for Summary Judgment filed in accordance
with Section 6 of the Rule on Summary Procedure.
• Furthermore, respondent failed to apply these very basic rules when he granted the defendant's
Motion to Strike Out which was in reality a motion to dismiss, a prohibited pleading. In his order,
he ruled that the Complaint was a mere rehash of the dismissed Complaint. He cited Section 12
of Rule 8 of the 1997 Rules on Civil Procedure as basis for this ruling. In doing so, he committed
an obvious mistake showing gross ignorance of the law. This is because the civil case assigned
to him is for forcible entry, which is governed by the Rule on Summary Procedure. In fact, all
cases of forcible entry and unlawful detainer are governed by this Rule.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 • It must likewise be underscored that respondent dismissed the case without prejudice, on the
theory that the date of the dispossession had not been initially indicated in the Complaint. Thus,
would reasonably be expected that the allegations in that civil case would be reiterated in the
second case. Needless to state, what also contributed to the delay in the resolution of the main
case was the grant of the Motion to Strike Out based on misplaced reasoning.
• Lack of knowledge of the Rules on Summary Procedure reflects a serious degree of
incompetence. When the law is so elementary, as in this case, not to be aware of it constitutes
gross ignorance of the law. A member of the bench must be constantly abreast of legal and
jurisprudential developments, bearing in mind that this learning process never ceases. It is
indispensable to the correct dispensation of justice.

Final Ruling: Judge Jovellanos is found guilty of

gross ignorance of the law.

Case Title: Lucas v Fabros

Ticker: Ejectment
Facts

• In a verified complaint, complainant Gloria Lucas charged respondent, Judge Amelia Fabros of
the Metropolitan Trial Court, with Gross Ignorance of the Law and Grave Abuse of Discretion
relative to Civil Case entitled "Editha F. Gacad, represented by Elenita F. Castelo vs. Gloria
Lucas, for Ejectment."
• Complainant, who was the defendant in the aforecited case, alleged that Judge Amelia Fabros
issued an Order granting the plaintiff's motion for reconsideration of the Order, which dismissed
the case for failure of plaintiff and her counsel to appear at the Preliminary Conference.
• Complainant averred that it is elementary, under Section 19 (c) of the Rules of Summary
Procedure, that a motion for reconsideration is prohibited, but respondent judge, in violation of the
rule, granted the motion for reconsideration. She added that, notwithstanding the fact that the
respondent herself had pointed out in open court that the case is governed by the Rules on
Summary Procedure, the judge ordered the revival of the case out of malice, partiality and with
intent to cause an injury to complainant. Further, complainant alleged that the actuations of the
respondent is in blatant disregard of the established rules on procedure.
• The complaint and the Comment were referred to the Office of the Court Administrator for
evaluation, report and recommendation after the case was docketed as an administrative matter.
The OCA found that respondent Judge Fabros abused her discretion in granting the Motion for
Reconsideration.
• The Office of the Court Administrator recommended that respondent judge be fined for grave
abuse of discretion. The Court, however, finds this recommendation without factual and legal
basis.

Issue

• Whether Judge Fabros is guilty of grave abuse of discretion [No]

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.
 Ruling

• As a rule, a motion for reconsideration is a prohibited pleading under Section 19 of the Revised
Rule on Summary Procedure. This rule, however, applies only where the judgment sought to be
reconsidered is one rendered on the merits. As held by the Court in an earlier case: "The motion
prohibited by this Section is that which seeks reconsideration of the judgment rendered by the
court after trial on the merits of the case." Here, the order of dismissal issued by respondent
judge due to failure of a party to appear during the preliminary conference is obviously not a
judgment on the merits after trial of the case. Hence, a motion for the reconsideration of such
order is not the prohibited pleading contemplated under Section 19 (c) of the present Rule on
Summary Procedure. Thus, respondent judge committed no grave abuse of discretion, nor is she
guilty of ignorance of the law, in giving due course to the motion for reconsideration subject of the
present complaint.

Final Ruling: The complaint is dismissed.

[Drafted by J. Rementilla] – While all attempts to ensure the accuracy of the reviewer are made, errors (typographical
or not) may have been possibly made. As such, discretion in the use of the reviewer is advised.