Civpro Cases_rule 1 to 6

RULE 1CABRERA VS TIANO JULY 31, 1963FACTS:*An action for “Partition and Recovery of Real Estate, with Damages” was filed by Josefina and Cresencia against Tiano.

1. Ciriaco Potestas and Gregoria Blanco, were parents of five children, Isabelo, Lourdes, Clemente, Josefina, and Cresencia. Gregoria died before the second world war, together with Clemente, single. During their lifetime, the spouses acquired properties, among which was a parcel of agricultural land, of about seven (7) hectares, located at barrio Manga, municipality of Tangub, Misamis Occidental, planted to coconuts and fruit-bearing trees.

2. On July 2, 1947, Ciriaco, the surviving husband and three (3) children (Isabelo, Lourdes and Cresencia), purportedly sold the above mentioned parcel to herein defendant Mariano T. Tiano, for P3,500.00.

3. At the time of the sale, Cresencia was a minor, and the other child, Josefina, did not sign the deed of sale, and did not know about the transaction.

4. In the complaint, it was alleged that they were entitled to a portion of the land, since Josefina did not sign the sale and Crescencia was a minor.

5. That the plaintiffs commenced this case against the defendant on June 20, 1957 and the judicial summons was issued by the Clerk of Court on June 21, 1957, but defendant received the same on July 2, 1957.

ISSUES:WON THE FILING OF THE ACTION EFFECTIVELY STOP THE RUNNING OF THE PRESCRIPTIVE

PERIOD? YES

WON ACQUISITIVE PRESCRIPTION HAS SET IN BECAUSE OF THE ALMOST 10 YEARS POSSESSION OF TIANO OF THE PROPERTY? NOHELD/RATIO:

The 10 year period has not yet elapsed on the filing of the action, it was in fact short of one day only but still when the action was filed it effectively stop the running of the prescriptive period. It does not matter that the defendant only received the summons on July 2, 1957.

Defendant-apellant cannot now claime acquisitive prescrioption because he went directly to the Supreme Court on appeal and the same court generally only rules on questions of law and not of fact. Tiano should have filed with the Court of Appeals and shown proof that he was with just title, in good faith, in the concept of an owner, public, peaceful, adverse and uninterrupted (Arts. 1117 & 1118, N.C.C.). Good faith is a question of fact which must be proved (Art. 1127, N.C.C.). For the purposes of acquisitive prescription, just title must also be proved, it is never presumed (Art. 1131, N.C.C.).

MANCHESTER DEVELOPMENT CORPORATION, ET AL., petitioners, vs.COURT OF APPEALS, CITY LAND DEVELOPMENT CORPORATION, STEPHEN ROXAS, ANDREW LUISON, GRACE LUISON and JOSE DE MAISIP, respondents

FACTS:1. Petitioners action in this case involves action for damages and specific performance. In their

original complaint, they failed to indicate the total amount of damages they sought in their prayer although they’ve stated in the body of their complaint the amount of P78,750,000.00.

2. The docket fee they paid was only P410.003. This under-assessment of filing fee was brought to the attention of the Court and hence the

latter ordered an investigation.4. Meanwhile, Manchester (through another counsel) filed an amended complaint : i. for the

inclusion of Philips wire and Cable Corporation as co-palintiff ii. And eliminating any mention of damages in the body of the complaint. Iii. The prayer in their original complaint was maintained.

5. Upon order of the trial court to rectify their complaint by stating the amounts they are asking for, it was only then that Manchester indicated in the body of their complaint the reduced

amount of P10,000,000. (Still no amount of damages were specified in the prayer. Said amended complaint was admitted.)

6. The CA ruled that the filing fee should be levied by considering the amount of damages sought in the original complaint.

ISSUE: WoN the basis of the filing fee is the amended complaint

Petitioners contention: that the filing fee must be assessed on the basis of the amended complaint citing the case of Magaspi vs Ramolete

MAGASPI CASE PRESENT CASEAction: recovery of ownership and possession of parcel of land + damages

Action: torts and damages +specific performance + prayer for TRO

Prayer in the complaint: annulment of the title of defendant to the property, declaration of ownership etc., payment of actual, moral and exemplary damages specifying the amounts thereof.

Prayer: issuance of writ of preliminary injunction, to order defendants to execute contract of purchase of the subject property, to order defendants to pay actual, moral, compensatory and exemplary damages as well as 25% if said amounts without specifiying the amount of damages sought. (note: they only indicated the amount of 78M in the body of their complaint)

HELD: Assessment of docket fee should be the amount of damages sought in the original complaint. As reiterated in the Magaspi case, the rule is well-settled that a case is deemed filed only upon payment of the docket fees regardless of the actual date of fling in court. Neither the amended complaint thereby vest jurisdiction of the complaint, since no such original complaint that was duly filed which could be amended.

MAGASPI CASE PRESENT CASEIn Magaspi, there was an honest difference opinion as to the nature of the action. The damages stated were treated as merely ancillary to the main cause of action. Thus, the docket fee paid of is only P60.00 and P10 for the sheriff’s fee.

No such honest difference of opinion since the action in this case is BOTH for damages and specific performance. The docket fee paid upon is only P410.00 wherein they based they consider their action to be merely one for specific performance (hence, incapable of pecuniary estimation)

Court held that although the total amount of damages is not stated in the prayer. Petioners indicated in the body of their complaint the amount of P78M which should be the basis of the assessment of filing fee. Such elimination is a clear intention, that the petitioners purpose is to evade the payment of the correct filing fee.

Notes: All complaints, petitions, answers and other similar pleadings should specify the amount of damages being prayed gor and not only in the body of the complaint but also in the prayer thereof, and said damages shall be considered in the assessment of the filing fees in any case. Failure to comply with this requirement shall not be accepted nor admitted or shall otherwise be expunged form the record.

Charles’ Angels Digest Bank - BVTC| 1

SUN INSURANCE OFFICE, LTD., (SIOL), E.B. PHILIPPS and D.J. WARBY, petitioners, vs.HON. MAXIMIANO C. ASUNCION, Presiding Judge, Branch 104, Regional Trial Court, Quezon City and MANUEL CHUA UY PO TIONG, respondents.

FACTS:

Petitioner-Sun Insurance Office, Ltd. filed a complaint with the RTC Makati for the consignation of a premium refund on a fire insurance policy against private respondent Manuel Uy Po Tiong.

On the other hand, Private Respondent (UY) filed a complaint (Civil Case No. Q-141177) in the RTC Quezon City for the refund of premiums and the issuance of a writ of preliminary attachment against petitioner.

The complaint sought, among others, the payment of actual, compensatory, moral, exemplary and liquidated damages, attorney's fees, expenses of litigation and costs of the suit. It may be inferred from the body of the complaint that the amount of damages sought is about Fifty Million Pesos (P50,000,000.00).

Only the amount of P210.00 was paid by private respondent as docket fee which prompted petitioners' counsel to raise his objection.

Said objection was disregarded by respondent Judge Jose P. Castro who was then presiding over said case.

Court En Banc issued Resolution, directing judges to reassess the docket fees and that in case of deficiency, to order its payment.

On December 16, 1985, Judge Antonio P. Solano, to whose sala Civil Case No. Q-41177 was temporarily assigned, issued an order to the Clerk of Court instructing him to issue a certificate of assessment of the docket fee paid by private respondent and, in case of deficiency, to include the same in said certificate.

To forestall a default, a cautionary answer was filed by petitioners. On August 30,1984, an amended complaint was filed by private respondent including the two

additional defendants aforestated. Judge Maximiano C. Asuncion, issued a Supplemental Order requiring the parties in

the case to comment on the Clerk of Court's letter-report signifying her difficulty in complying with the Resolution of this Court of October 15, 1985 since the pleadings filed by private respondent did not indicate the exact amount sought to be recovered.

On January 23, 1986, private respondent filed a "Compliance" and a "Re-Amended Complaint" stating therein a claim of "not less than Pl0,000,000. 00 as actual compensatory damages" in the prayer.

In the body of the said second amended complaint however, private respondent alleges actual and compensatory damages and attorney's fees in the total amount of about P44,601,623.70.

Judge Asuncion issued another Order admitting the second amended complaint and stating therein that the same constituted proper compliance with the Resolution of this Court and that a copy thereof should be furnished the Clerk of Court for the reassessment of the docket fees.

The reassessment by the Clerk of Court based on private respondent's claim of "not less than P10,000,000.00 as actual and compensatory damages" amounted to P39,786.00 as docket fee. This was subsequently paid by private respondent.

Petitioners then filed a petition for certiorari with the Court of Appeals questioning the said order of Judge Asuncion.

Private respondent filed a supplemental complaint alleging an additional claim of P20,000,000.00 as damages so the total claim amounts to about P64,601,623.70. On October 16, 1986, or some seven months after filing the supplemental complaint, the private respondent paid the additional docket fee of P80,396.00. 1

CA: denied the petition filed by Petitioners Hence, the instant petition. PETITIONERS’ ARGUMENTS: Petitioners allege that while it may be true that private respondent had paid the amount of

P182,824.90 as docket fee as herein-above related, and considering that the total amount sought to be recovered in the amended and supplemental complaint is P64,601,623.70 the docket fee that should be paid by private respondent is P257,810.49, more or less.

Not having paid the same, petitioners contend that the complaint should be dismissed and all incidents arising therefrom should be annulled.

ISSUE: WON a court acquires jurisdiction over a case when the correct and proper docket fees has not been paid

HELD: No.

in Manchester Development Corporation vs. CA, 4 as follows:

The Court acquires jurisdiction over any case only upon the payment of the prescribed docket fee. An 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 amounts sought in the amended pleading. The ruling in the Magaspi Case in so far as it is inconsistent with this pronouncement is overturned and reversed.

On the other hand, private respondent claims that the ruling in Manchester cannot apply retroactively to Civil Case No. Q41177 for at the time said civil case was filed in court there was no such Manchester ruling as yet.

Further, private respondent avers that what is applicable is the ruling of this Court in Magaspi v. Ramolete, 5wherein this Court held that the trial court acquired jurisdiction over the case even if the docket fee paid was insufficient.

The contention that Manchester cannot apply retroactively to this case is untenable. Statutes regulating the procedure of the courts will be construed as applicable to actions pending and undetermined at the time of their passage. Procedural laws are retrospective in that sense and to that extent. 6

The principle in Manchester could very well be applied in the present case. The pattern and the intent to defraud the government of the docket fee due it is obvious not only in the filing of the original complaint but also in the filing of the second amended complaint.

However, in Manchester, petitioner did not pay any additional docket fee until] the case was decided by this Court on May 7, 1987.

Thus, in Manchester, due to the fraud committed on the government, this Court held that the court a quo did not acquire jurisdiction over the case and that the amended complaint could not have been admitted inasmuch as the original complaint was null and void.

In the present case, a more liberal interpretation of the rules is called for considering that, unlike Manchester, private respondent demonstrated his willingness to abide by the rules by paying the additional docket fees as required.

The promulgation of the decision in Manchester must have had that sobering influence on private respondent who thus paid the additional docket fee as ordered by the respondent court. It triggered his change of stance by manifesting his willingness to pay such additional docket fee as may be ordered.

Nevertheless, petitioners contend that the docket fee that was paid is still insufficient considering the total amount of the claim.

This is a matter which the clerk of court of the lower court and/or his duly authorized docket clerk or clerk in-charge should determine and, thereafter, if any amount is found due, he must require the private respondent to pay the same.


DISPOSITIVE: WHEREFORE, the petition is DISMISSED for lack of merit. The Clerk of Court of the court a quo is hereby instructed to reassess and determine the additional filing fee that should be paid by private respondent considering the total amount of the claim sought in the original complaint and the supplemental complaint as may be gleaned from the allegations and the prayer thereof and to require private respondent to pay the deficiency, if any, without pronouncement as to costs.

AYALA CORPORATION, LAS PIÑAS VENTURES, INC., and FILIPINAS LIFE ASSURANCE COMPANY, INC., petitioners vs. THE HONORABLE JOB B. MADAYAG, PRESIDING JUDGE, REGIONAL TRIAL COURT, NATIONAL CAPITAL JUDICIAL REGION, BRANCH 145 and THE SPOUSES CAMILO AND MA. MARLENE SABIO,

FACTS:

Sps. Sabio filed against Ayala Corp:WHAT: action for specific performance with damagesWHERE: Regional Trial Court of Makati

Petitioners filed a motion to dismiss on the ground that the lower court has not acquired jurisdiction over the case as private respondents failed to pay the prescribed docket fee and to specify the amount of exemplary damages both in the body and prayer of the amended and supplemental complaint.

Petitioner contends that: the action concerns real estate, the assessed value thereof should be considered in computing the fees pursuant to Section 5, Rule 141 of the Rules of Court.

Spouses paid only the total amount of P l,616.00 as docket fees instead of the amount of P13,061.35 based on the assessed value of the real properties involved as evidenced by its tax declaration.

RTC RULING: denied the motion to dismiss stating that the determination of the exemplary damages is within the sound discretion of the court and that it would be unwarrantedly presumptuous on the part of the private respondents to fix the amount of exemplary damages being prayed for. The trial court cited the subsequent case of Sun Insurance vs. Judge Asuncion 2 in support of its ruling.

ISSUE 1: WON the action concerns real estate, the assessed value thereof should be considered in computing the fees

HELD: NO. This is an action for specific performance with damages although it is in relation to a transaction involving real estate. Pursuant to Manchester, the amount of the docket fees to be paid should be computed on the basis of the amount of damages stated in the complaint

ISSUE 2: Re Failure to state amount of Exemplary Damages sought:

Apparently, the trial court misinterpreted paragraph 3 of the above ruling of this Court wherein it is stated that "where the judgment awards a claim not specified in the pleading, or if specified, the same has been left for the determination of the court, the additional filing fee therefor shall constitute a lien on the judgment" by considering it to mean that where in the body and prayer of the complaint there is a prayer, say for exemplary or corrective damages, the amount of which is left to the discretion of the Court, there is no need to specify the amount being sought, and that any award thereafter shall constitute a lien on the judgment.

In the latest case Tacay vs. Regional Trial Court of Tagum, 3 this Court had occasion to make the clarification that the phrase "awards of claims not specified in the pleading" refers only to "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." The amount of any claim for damages, therefore, arising on or before the filing of the complaint or any pleading, should be specified. While it is true that the determination of certain damages as exemplary or corrective damages is left to the sound discretion of the court, it is the duty of the parties claiming such damages to specify the amount sought on the basis of which the court may make a proper determination, and for the proper assessment of the appropriate docket fees. The exception contemplated as to claims not specified or to claims although specified are left for determination of the court is limited only to any damages that may arise after the filing of the complaint or similar pleading for then it will not be possible for the claimant to specify nor speculate as to the amount thereof.

The amended and supplemental complaint in the present case, therefore, suffers from the material defect in failing to state the amount of exemplary damages prayed for.

HENCE, the trial court may either order said claim to be expunged from the record as it did not acquire jurisdiction over the same or on motion, it may allow, within a reasonable time, the amendment of the amended and supplemental complaint so as to state the precise amount of the exemplary damages sought and require the payment of the requisite fees therefor within the relev

JOE HODGES, petitioner, vs. COURT OF APPEALS, HEIRS OF LEON P. GELLADA, ROMEO MEDIODIA, and HEIRS OF FERNANDO MIRASOL, plaintiff-appellee, respondents.FACTS:

Leon P. Gellada, a practicing lawyer, filed an action for damages against Joe Hodges in the Court of First Instance of Iloilo City, wherein plaintiff claimed damages against defendant for some alleged defamatory statements of defendant against plaintiff and his associates thus entitling him to moral damages of P400,000.00, damage to his law practice of P30,000.00, attorney's fees of P30,000.00, and exemplary damages as well as temperate damages.

A special appearance questioning the jurisdiction of the court on the subject matter and the mode of extrajudicial service of summons was filed by defendant.

The defendant pointed out that the court cannot acquire jurisdiction over the case unless the corresponding docket fee is paid.

The defendant maintained that considering the amount of damages claimed by the plaintiff, the docket fee to be paid should be no less than P770.00 which is way beyond the P32.00 docket fee paid by plaintiff.

Subsequently, 2 more similar action for damages were filed by Romeo Mendiola and Fernando Mirasol respectively against John Hodges for alleged defamatory statements.1

A special appearance questioning the jurisdiction over the subject matter and the mode of extrajudicial service of summons was filed by defendant in relation to the actions filed by Mendiola and Mirasol respectively.

He points out that that the court cannot acquire jurisdiction over the case when Mendiola claimed damages of P360,000.00 and he paid a docket fee of only P32.00 when it should not be less than P570.00. In the same way, the court cannot acquire jurisdiction over the case of claimed damages of P410,000.00 but he paid a docket fee of only P32.00 when it should not be less than P670.00.

The three cases were ordered consolidated by trial court. On the same date another order was issued directing the plaintiffs to pay the docket fee commensurate to their respective demands. This was reiterated in another order.

1 Romeo H. Mediodia, also a practicing lawyer, filed in the same court a similar action for damages against Joe Hodges for alleged

defamatory statements of defendant against plaintiff, wherein plaintiff claimed for moral damages of not less than P300,000.00, damage to his law practice of not less than P20,000.00, attorney's fee of P40,000.00 and exemplary damages as well as temperate damages.Another complaint for damages was filed by Fernando P. Mirasol, another practicing lawyer, against Joe Hodges, for alleged defamatory statements of defendant against plaintiff, wherein plaintiff claimed moral damages of not less than P350,000.00, damage to his law practice of not less than P25,000.00, attorney's fees of P35,000.00, and exemplary damages as well as temperate damages.


On March 16, 1982 plaintiff Gellada paid the amount of P168.00 bringing his total payment of docket fees to P200.00. On September 5, 1972 plaintiff Mediodia paid P168.00 so he had paid a total of P200.00 for docket fees. Plaintiff Mirasol failed to comply with the said orders.

CFI

Ordered Joe Hodges to pay the plaintiffs the following amounts:Gellada: P10,000.00 as moral and exemplary damages, respectively; P20,000.00 for and as attorney's fees and P10,000.00 as expenses of litigation, plus costs;Mendiola: P50,000.00 and P10,000 as moral and exemplary damages, respectively; P20,000.00 for and as attorney's fees and P10,000.00 as expenses of litigation, plus costs; andMirasol: P50,000.00 and P10,000.00 as moral and exemplary damages, respectively; P20,000.00 for and as attorney's fees and P10,000.00 as expenses of litigation, plus costs.

CA Affirmed the decision of the CFI.

ISSUE: WON the CFI acquired jurisdiction over the three cases despite the failure of the plaintiffs to pay in full the prescribed docket feeHELD: NO

The Supreme Court held in a number of rulings2 that the well settled rule was that: a case is deemed filed only upon payment of the docket fee regardless of the actual date of its filling in court.

At the time that the three (3) cases subject of the herein petition were filed, the rule was already clear that the court does not acquire jurisdiction over a case until after the prescribed docket is paid.

In Manchester, this rule was emphasized when this Court stated "The court acquires jurisdiction over any case only upon the payment of the prescribed docket fee. An 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 rule in Manchester was relaxed in Sun Insurance vs. Hon. Maximiano Asuncion, whereby this Court declared that the trial court may allow payment of the fee within a reasonable time but in no case beyond the applicable prescriptive or reglementary period. Nevertheless, in Sun Insurance, this Court reiterated the rule that it is the payment of the prescribed docket fee that vests the trial Court with jurisdiction over the subject matter or nature of the case.

In the present petition, it appears that in the case of Gellada vs. Hodges the total amount of the claim for damages is about P460,000.00, the estimated docket fee due is P770.00 but what was paid only was P32.00. Despite the order of the trial court on August 31, 1972 and another order ten years later, that is on March 11, 1982, requiring plaintiff to pay the correct docket fee, Gellada paid the amount of P168.00 only. Thus his total payment amounts to just P200.00, which is still much less than the amount of P770.00 due.

The Supreme Court referred to the case of Mirasol v Hodges, which is very similar to this present case. 3

2 Lazaro vs. Endencia, this Court held that an appeal is not deemed perfected if the appellate court docket fee is not fully paid.

Lee vs. Republic, this Court ruled that a declaration of intention to be a Filipino citizen produced no legal effect until the required filing fee is paid. Malimit vs. Degamo, We held that the date of payment of the docket fee must be considered the real date of filing of a petition for quo warranto and not the date it was mailed. Magaspi vs. Ramolete, the well-settled rule was reiterated that a case is deemed filed only upon payment of the docket fee regardless of the actual date of its filling in court. 3 Similarly, in Mediodia vs. Hodges where the claim is approximately P360,000.00 and the appropriate filing fee would be about P570.00,

the plaintiff paid only P32.00 upon filing the complaint. After the two aforesaid orders of the trial Court were issued, Mediodia paid on September 5, 1982 the amount of P168.00 bringing his payment to a total of P200.00 which is also much less than the amount of P570.00 due for docket fee.In the case of Mirasol vs. Hodges, the total claim is for P410,000.00 and the amount of filing fee due is P670.00. Mirasol paid only P32.00 upon filing the complaint. He did not pay any additional sum even after the two orders of the court had been issued.

No doubt, the trial court did not acquire jurisdiction over the subject matter in said three (3) cases due to the failure to pay in full the prescribed docket fee.

Thus, the entire proceedings undertaken in said cases are null and void. The plaintiffs in said cases are practicing lawyers who are expected to know this mandatory

requirement in the filing of any complaint or similar pleading. Their non-payment of the prescribed docket fee was deliberate and inexcusable.

The petition is GRANTED, dismissing the complaints in said three (3) cases.

[G.R. No. 85200. February 19, 1991.]

ARTURO Q. SALIENTES in his capacity as receiver of and representing the Heirs of the Registered Co-Owners of the Maysilo Estate vs. COURT OF APPEALS, HON. PACITA CANIZARES-NYE, as Presiding Judge of the Regional Trial Court of Quezon City, Branch 92; DESTILLERIA LIMTUACO & CO. and REGISTER OF DEEDS OF CALOOCAN CITY

NATURE: petition for review on certiorari

FACTS:

On September 29, 1987, petitioner Arturo Q. Salientes, in his capacity as receiver of and representing the heirs of the registered co-owners of Maysilo Estate, filed a complaint before the Rtc, seeking to recover possession of a portion of said estate allegedly occupied illegally by Destilleria Limtuaco & Co., Inc. to the extent of 6,885 square meters, more or less, valued at P500,000.00 and praying among others for an Order to said company to pay Salientes "actual or compensatory damages in the amount of not less than P500,000.00 and such other exemplary damages as the Honorable Court may allow . . ."

The company moved to dismiss or suspend the proceedings for failure to pay proper fees which motion was opposed by Salientes.

Clerk of Court of RTC Quezon City, filed a comment on the motion to dismiss saying that the "filing fee was assessed and collected based on the value of the land (P500,000.00) and the damages (P500,000.00) in the total amount of P1,000,000.00

RTC: DISMISSED for lack of jurisdiction

CA: DISMISSED

SC: REVERSED. Remanded to the RTC for further proceedings.

RTC: In line with the Manchester Devt Corp case, this court has not acquired jurisdiction. The failure of the complaint to specify the amount in the phrase “in the amount of not less than 500K” not being a fixed amount for purposes of computing the payment of the prescribed docket fee was not proper.

CA: "The doctrine in the Magaspi case relied upon by petitioner is no longer controlling. In the Manchester case, it was held that 'the ruling in the Magaspi case in so far as it is inconsistent with this pronouncement is overturned and reversed.

ISSUE: WON the court acquires jurisdiction over a case when there is an alleged failure to pay the proper and correct docket fees.

HELD: YES

RATIO:


Sun Insurance Office, Ltd. V. Asuncion, supra, read as follows:

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 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 for 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, . . . 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."

G.R. No. 89747 July 20, 1990

MAERSK-TABACALERA SHIPPING AGENCY (FILIPINAS), INC vs. COURT OF APPEALS, MONET'S EXPORT AND MANUFACTURING CORPORATION AND/OR VICENTE TAGLE

FACTS:

Petition for review on certiorari of the decision of the Court of Appeals affirming that of the Regional Trial Court of Legaspi City which awarded damages to Monet's Export and Manufacturing against the petitioner Maersk- Tabacalera Shipping Agency for breach of a contract of carriage.

Monet’s Export is engaged in the export of locally-made handicrafts and products, while Maersk Line is engaged in furnishing containerized services through which Monet's and New Asia normally ship their goods.

On May 1985, a complaint for damages was filed by Monet’s Export against Maersk and New Asia Enterprises alleging that on March 11, 1984, Monet’s Export loaded its goods in the Maersk’s container to be delivered on or before March 15 to Manila.

Without notice to Monet’s Export, Maersk unloaded the goods at New Asia’s factory site in Daraga, Albay, to give way to the export shipment of New Asia.

Monet’s shipment was returned to its warehouse and it had to secure another shipper. Monet’s allege that it incurred unnecessary expenses and suffered mental anguish. Monet’s asked for actual, moral, and exemplary damages.

MAERSK’s CONTENTION

Monet’s shipment was loaded on March 10 and not on the 11th. Maersk also said that Monet’s knew that the shipment would not be brought to Manila without submitting all the necessary export papers.

NEW ASIA’S CONTENTION

They are not liable to Monet’s as the latter has no cause of action against them. New Asia is not being a party to the contract of carriage between Monet and Maersk

Subsequently, Maersk and New Asia were declared in default for their failure to attend to the pre-trial conference. The same was lifted, hence, it allowed Maersk to cross-examine all the witnesses of Monet’s Export.

RTC OF LEGASPI CITY

On March 1988, the court rendered judgment in favor of Monet’s. Maersk was required to pay the plaintiff, Monet’s damages. New Asia was exonerated from any liability.

CA (acting on an appeal)

CA affirmed the TC’s decision. Hence, this petition by Maersk raising among others the issue of affirming the TC’s decision despite the obvious fact that TC never acquired jurisdiction over the subject matter of the action because Monet’s did not specify their claims for damages and correct filing fees was not paid.

ISSUE: WON the payment of correct filing fee can be applied in this case.

HELD: NO. Petition filed by Maersk was denied.

Where the lack of jurisdiction because of non-payment of filing fees was after the adverse decision of the CA, the payment of filing fees shall constitute a lien on the final judgment. If no payment of proper docket fee and there was failure to file a motion to dismiss, payment of docket fees constitute a lien on the judgment.

Unlike Manchester, however, where the jurisdictional issue arising from insufficiency of the docket fee paid, was seasonably raised in the answer of the defendant in the trial court, in this case the issue is being raised for the first time in this Court.

Petitioner submitted to the jurisdiction of the trial court without question. It filed a counterclaim seeking affirmative reliefs, and actively took part in the trial. A party who voluntarily participates in the trial cannot later on raise the issue of the court's lack of jurisdiction.

Maersk should have raised its objection to the trial court’s jurisdiction when the case was still in that court. It should not have waited for an adverse decision by the Court of Appeals before waking up to raise the question of jurisdiction. This is in line with the ruling of the Court in Tijam v. Sibonghanoy.

Since this is a case where some of the claims (for moral and exemplary damages) were not specified in the plaintiff s pleading and were left for determination by the court, the applicable rule is the third rule set out in the decision of this Court in Sun Insurance Office Ltd., et al. vs. Hon. Maximiano Asuncion, et al., 170 SCRA 274, to wit:

3. Where the trial court acquires jurisdiction over a claim by the filing of the appropriate pleading and payment of the prescribed filing fee but, subsequently, the judgment awards a claim not specified in the pleading, or if specified the same has been left for determination by the court, the additional filing fee therefore shall constitute a lien on the judgment. It shall be the responsibility


of the Clerk of Court or his duly authorized deputy to enforce said lien and assess and collect the additional fee.

The Clerk of Court of the trial court shall assess and collect the proper additional fees on the totality of the judgment for the private respondent.

Monet's counsel in the trial court, Attorney Jesus Salazar, is hereby reprimanded for his unethical practice of not specifying the amount of damages sought in the body and prayer of his complaint in order to defraud the Government of the proper fee for docketing said complaint. He is warned that a repetition of that malpractice will be dealt with more severely.

ORIGINAL DEVELOPMENT AND CONSTRUCTION CORPORATION, petitioner, vs. HON. COURT OF APPEALS and HOME INSURANCE AND GUARANTY CORPORATION

FACTS:

On December 19, 1988, herein petitioner Original Development and Construction Corporation (ODECOR for brevity) filed a complaint for breach of contract and damages against private respondent Home Insurance and Guaranty Corporation (HIGC), National Home Mortgage Finance Corporation (NHMFC) and Caloocan City Public School Teachers Association (CCPSTA) before Regional Trial Court in Valenzuela.

ODECOR accused the HIGC and NHMFC of divesting its customers which resulted to massive losses for the corporation.

In ODECOR’s claim for damages it asserted its claim for actual, consequential, exemplary and moral damages, “the amount of which will be proved at the trial”.

That for actual damages it’s claiming P2,272,193.10 but the rest appears to be unspecified amount of damages which the trial court could not assess.

ODECOR paid the docket fee for the claim for the actual damages specified as well as the docket fees for the unspecified damages.

RTC:The trial court did not order the dismissal of the case but rather directed the Clerk of Court to issue a certificate of reassessment of the proper docket fee and if there is a deficiency ODECOR should pay the same. In the assessment, the Clerk of Court determined that the claim for attorney’s fee which was stated in the body of the complaint was not reiterated in the PRAYER of the complaint hence; the docket fees paid by ODECOR could not have included payment for the fees for the claim of attorney’s fee. ODECOR was then ordered to amend its complaint.

In its amended complaint, ODECOR restated substantially all its allegations in the first complaint except that it specified its claim for attorney’s fees as equivalent to 25% of the total monthly liability and other expenses of litigation and costs of the suit.

HIGC then moved for the dismissal of the complaint on the ground that the trial court did not acquire jurisdiction over it because of non-payment of the proper docket fees.

HIGC then filed a petition for certiorari before the Court of Appeals questioning the jurisdiction of the trial court.

ODECOR then filed a petition for certiorari before the Supreme Court.

ISSUE:

Whether or not the trial court acquired jurisdiction over the case even if the complaint does not specify the amount of damages.

HELD:

No. The petition is devoid of merit.

The claims for the other damages (other than actual) are vague. The terms used by ODECOR in its claims i.e. “the amount of which will be proved at the trial” and the demand for attorney’s fees as “equivalent to 25% of the total monetary liability and other expenses of litigation and costs of this suit” are not definite enough to be the basis of the computation of the proper docket fees.

While it is not required that the exact amounts be stated, the plaintiff must ascertain, in his estimation, the sums he wants and the sums required to determine the amount of such docket and other fees.

Thus, it is evident that the complaint did not state enough facts and sums to enable the Clerk of Court of the lower court to compute the docket fees payable and left to the judge “mere guesswork” as to these amounts, which is fatal.

NOTES:

The court may allow amendment of a pleading (in complaints purely for money and damages) if such does not specify the amount of claims.

o When amended, the pleader shall pay the appropriate docket fees.o Where the amount of claim is specified but the docket fees paid were not sufficient,

the pleader is allowed to cure the defect by paying the deficiency. PROVIDED, that in both cases prescription has not set.

If the action involves real property and a related claim for damages and the prescribed fees for an action involving real property have been paid but the amounts of the unrelated damages are unspecified, the court undeniably has jurisdiction over the action on the real property but may not have acquired jurisdiction over the accompanying claim for damages.

Accordingly, the court may expunge the claims for damages or allow the amendment of the complaint so as to allege the precise amount of each item of damages within the prescriptive period.

INTERNATIONAL CONTAINER TERMINAL SERVICES, INC., Petitioner, v. THE HON. COURT OF APPEALS, HON. EDILBERTO G. SANDOVAL, Presiding Judge of Branch IX, Regional Trial Court, National Capital Judicial Region, C.F. SHARP, INC. and FIRST INTEGRATED BONDING & INSURANCE CO., INC., Respondents.FACTS:

Sharp, Inc., the herein private respondent filed a complaint for prohibition with prayer for preliminary injunction against the Secretary of Transportation and Communications, the Philippine Ports Authority (PPA), E. Razon, Inc., and the International Container Terminal Services Inc. (CCTSI), the herein petitioner in the Regional Trial Court of Manila

The trial court issued a writ of preliminary injunction upon the posting by Sharp of a bond issued by the Integrated Bonding and Insurance Co. in the sum of P10,000,000.00.

On that same day, the petitioner filed an answer with a compulsory counterclaim against Sharp for its "unfounded and frivolous action." The petitioner claimed that as a consequence of the complaint and the writ of preliminary injunction, it had suffered injuries which "if monetized (would) amount to more than P100,000,000.00."


CA:The CA ruled in favor HIGC and enjoined the trial court from hearing the case.

The writ of preliminary injunction was nullified by the SC and held that Sharp was not a proper party to stop the negotiation and awarding of the contract for the development, management and operation of the Container Terminal at the Port of Manila. Moreover, the petition was premature because Sharp had not exhausted the administrative remedies open to it from "the PPA, the Bidding Committee, and the Office of the President."

the PPA filed a motion to dismiss Sharp’s complaint on the above-stated grounds.

RTC Dismissed the complaint as well as the counterclaim.

CCTSI filed a motion for reconsideration of the order insofar as it dismissed its counterclaim.

Meanwhile, it gave notice to the First Integrated Bonding and Insurance Co., Inc. that it was claiming damages against Sharp for the revoked injunction.

CFI (acting on the MR)

Denied the MR ruling:

indeed a compulsory counterclaim by the nature of its nomenclature arises out of or is so intertwined with the transaction or occurrence that is the subject matter of the complaint so that by the dismissal of the latter, the same has to be discarded, specially since the complaint was dismissed without any trial.

The dismissal of the counterclaim was appealed to the respondent court,

CA

Affirmed the RTC ruling:

Petitioner’s manifestation adopting Philippine Ports Authority’s motion to dismiss did not contain any reservation. Hence, Sec. 2, Rule 17 of the Rules of Court will not apply. The counterclaim for damages being compulsory in nature, for which no filing fee has been paid, was correctly dismissed.

CCTSI has filed the present petition for review alleging that the order of the trial court dismissing the counterclaim was issued with grave abuse of discretion.

CCTSI CONTENTIONS:

1. Dismissal of the complaint upon defendant’s motion did not necessarily entail dismissal of defendant’s compulsory counterclaim.

2. A claim for damages arising from a wrongfully obtained injunction may be made in a counterclaim.

3. There is no rule requiring a particular form of notice to the surety of petitioner’s claim against the injunction bond.

For its part, the private respondent argues that the dismissal of the compulsory counterclaim should be sustained

ISSUE: WON the dismissal of the complaint will result to dismissal of counterclaimHELD: YES

A counterclaim is compulsory where: 1. it arises out of, or is necessarily connected with, the transaction or occurrence that is

the subject matter of the opposing party’s claim; 2. it does not require for its adjudication the presence of third parties of whom the court

cannot acquire jurisdiction; 3. the court has jurisdiction to entertain the claim.

The Court notes that, to begin with, the petitioner itself joined the PPA in moving for the dismissal of the complaint; or put passively, it did not object to the dismissal of the private respondent’s complaint.

Secondly, the compulsory counterclaim was so interwined with the complaint that it could not remain pending for independent adjudication by the court after the dismissal of the complaint which had provoked the counterclaim in the first place.

As a consequence, the dismissal of the complaint (on the petitioner’s own motion) operated to also dismiss the counterclaim questioning that complaint.

The petitioner is correct in contending that the claim for damages caused by the wrongful issuance of a preliminary injunction can be made in the form of a counterclaim.

However, there is no glossing away the fact that it was the petitioner itself that caused the dismissal of its counterclaim when it not only did not object to, but actually moved for, the dismissal of the complaint.

The petitioner cannot undo that act. If it wanted the counterclaim to subsist, it should have objected to the dismissal of the complaint or at least reserved its right to prosecute it, assuming this would still be possible. It did neither of these.

The petitioner now claims that there is no law requiring that reservation, but there is no law presuming it either.

The petitioner cannot simply say now that it intended all the time to preserve its counterclaim when it knew that under Rule 17, Sec. 2 "if a counterclaim has been pleaded by a defendant prior to the service upon him of a motion to dismiss, the action shall not be dismissed against the defendant’s objection unless the counterclaim can remain pending for independent adjudication by the Court."

A counterclaim is permissive if it does not arise out of nor is it necessarily connected with the subject matter of the opposing party’s claim. It is not barred even if not set up in the action. The petitioner’s counterclaim was within the jurisdiction of the trial court. Most importantly, it had no independent existence, being merely ancillary to the main action.

The rules governing the application for damages against the surety bond posted in support of the application for a writ of preliminary attachment are also applicable by analogy to preliminary injunction. (Sec. 20 of Rule 57 of the Rules of Court.)

A long line of cases has held that these rules are mandatory and failure to observe them deprives the aggrieved party of the right to proceed against the surety bond.

Due notice to the adverse party and its surety setting forth the facts supporting the applicant’s right to damages and the amount thereof under the bond is indispensable. No judgment for damages may be entered and executed against the surety without giving it an opportunity to be heard as to the reality or reasonableness of the damages resulting from the wrongful issuance of the writ.

WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so ordered.

[G.R. No. 35453. September 15, 1989.]

INDUSTRIAL FINANCE CORPORATION, petitioner, vs. HON. SERGIO A. F. APOSTOL, Judge of the Court of First Instance of Rizal, Branch XVI, Quezon City, JUAN DELMENDO and HONORATA DELMENDO and JOAQUIN PADILLA and SOCORRO PADILLA, respondents.

NATURE: direct appeal from the summary judgment

FACTS:

In 1968, spouses Joaquin Padilla and Socorro Padilla bought on credit three units of Isuzu trucks from the Industrial Transport and Equipment, Inc.

They executed a promissory note for P159,600, the balance of the purchase price, securing payment thereof by a chattel mortgage of said trucks and, as additional collateral, a real estate mortgage on their property in favor of the seller.

Subsequently, Industrial Transport and Equipment, Inc. indorsed the note and assigned the real estate mortgage to petitioner Industrial Finance Corporation (IFC), which assignment was duly registered in the Registry of Deeds of Quezon City and annotated on the title of the mortgaged realty.

Padillas failed to pay several installments on the note


IFC sued Joaquin Padilla in the CFI of Rizal (Quezon City) for the recovery of the unpaid balance on the note including attorney's fees.

CFI: Granted in favor of IFC.

CA: Affirmed

Meanwhile, on September 9, 1971, private respondents Juan Delmendo and Honorata Delmendo filed a complaint against petitioner IFC, as principal party, and the Padilla spouses, as formal parties, in the CFI alleging that they were the transferees of the real property covered by the subject real property which was mortgaged earlier by the Padillas to the Industrial Transport and Equipment, Inc. to secure the payment of a promissory note in the sum of P159,600 and then assigned to petitioner IFC.

The Delmendos prayed for the cancellation of the mortgage lien and the delivery to them by petitioner of the owner's copy of said title with damages and attorney's fees, considering that petitioner IFC had waived its rights over the mortgage when it instituted a personal action against the Padillas in a suit for collection of a sum of money.

IFC moved for the dismissal of the complaint, contending that it had not waived its right over the mortgage lien. Delmendos filed a motion for summary judgment

CFI: Granted.

SC: Affirmed in toto.

ISSUE: WON by filing a personal action for the recovery of a debt secured by a real estate mortgage, petitioner is deemed to have abandoned, ipso jure, its mortgage lien on the property in question.

HELD: YES

RATIO:

Manila Trading and Supply Co. v. Co Kim and So Tek,

"The rule is now settled that a mortgage creditor may elect to waive his security and bring, instead, an ordinary action to recover the indebtedness with the right to execute a judgment thereon on all the properties of the debtor, including the subject-matter of the mortgage, subject to the qualification that if he fails in the remedy by him elected, he cannot pursue further the remedy he has waived."

Bachrach Motor Co., Inc. v. Icarangal and Oriental Commercial Co., Inc

"For non-payment of a note secured by mortgage, the creditor has a single cause of action against the debtor. This single cause of action consists in the recovery of the credit with execution of the security. In other words, the creditor in his action may make two demands, the payment of the debt and the foreclosure of his mortgage. But both demands arise from the same cause, the non-payment of the debt, and, for that reason, they constitute a single cause of action. Though the debt and the mortgage constitute separate agreements, the latter is subsidiary to the former, and both refer to one and the same obligation. Consequently, there exists only one cause of action for a single breach of that obligation. Plaintiff, then, by applying the rule above stated, cannot split up his single cause of action by filing a complaint for foreclosure of the mortgage. If he does so, the filing of the first complaint will bar the subsequent complaint. By allowing the creditor to file two separate complaints simultaneously or successively, one to recover his credit and another to foreclose his mortgage, we will, in effect, be

authorizing him plural redress for a single breach of contract at so much cost to the courts and with so much vexation and oppression to the debtor.

"We hold, therefore, that, in the absence of express statutory provisions, a mortgage creditor may institute against the mortgage debtor either a personal action for debt or a real action to foreclose the mortgage. In other words, he may pursue either of the two remedies, but not both. By such election, his cause of action can by no means be impaired, for each of the two remedies is complete in itself. Thus, an election to bring a personal action will leave open to him all the properties of the debtor for attachment and execution, even including the mortgaged property itself. And, if he waives such personal action and pursues his remedy against the mortgaged property, an unsatisfied judgment thereon would still give him the right to sue for a deficiency judgment, in which case, all the properties of the defendant, other than the mortgaged property, are again open to him for the satisfaction of the deficiency. In either case, his remedy is complete, his cause of action undiminished, and any advantages attendant to the pursuit of one or the other remedy are purely accidental and are all under his right of election."

Movido v. RFC and the Provincial Sheriff of SamaR -that "a mortgagee who sues and obtains a personal judgment against a mortgagor upon his credit waives thereby his right to enforce the mortgage securing it."

Therefore, by instituting the Civil Case to recover the unpaid balance on the promissory note from the Padilla spouses and by subsequently obtaining a judgment in its favor, petitioner IFC is considered to have abandoned its mortgage lien on the subject property.

The end result is the discharge of the real estate mortgage and the Delmendos, having purchased the mortgaged property, automatically step into the shoes of the original mortgagors with every right to have the title delivered to them free from said encumbrance.

ALFREDO CHING and ENCARNACION CHING, petitioners vs.THE HON. COURT OF APPEALS and ALLIED BANKING CORPORATION, respondents.

FACTS: 1. The disputed property was acquired by Ching Leng, a resident of #44 Libertad St., Pasay City

by virtue of sale. (PROPERTY: area of 51,852 sq meters situated in Municpality of Pranaque,Rizal; History: On 1960 the property was owned by Sps Lumandan by virtue of Decre # N-78716 5/6 portion of it was reconveyed by the spouses to Nofuentes transferred to Ching Leng by virtue of sale and he was an innocent purchaser)

2. On 1965, Ching Leng died and an intestate proceedings was filed by Petioner Alfredo Ching, son of Cing Leng before CFI Pasay City.

3. The disputed property was included in the intestate proceedings.4. Meanwhile, 13 years after the death of Ching Leng, on Dec 1978, Repsondent Pedro Asedillo

filed a reconveyance of the disputed property and cancellation of its title based on possession before the CFI Rizal.

5. An amended complaint was filed against Ching Leng/Estate of Chign Leng and it was alleged that since Ching was residing abroad, it is not known whether he is still alive or dead, he or his may be served by summons and processes by puiblication.

6. It must be noted that Ching Leng’s last known address is #44 Libertad St. Pasay City as indicated in the TCT and not #441 Libertad St., Pasay city as alleged by respondent’s complaint.

7. An ex parte decision by CFI Rizal was rendered in favour of respondent and the title registered under the name Ching Leng was cancelled.

8. Petitioner upon learning the mentioned decision filed e petition to set it aside as null and void for lack of jurisdiction.

TC & CA: denied petitioner hence, the instant case.

Respondent’s contention: that an action for cancellation of title is quasi in rem, hence service of summons may be allowed by publication.


Petitioner’s contention: that an action for reconveyance and cancellation of title is in personam and the lower court never acquired jurisdiction over the deceased Chign leng/his estate by means of service of summons.

ISSUE: WoN an action for reconveyance of property and cancellation of title is in personam

HELD: YES. An action to recover a parcel of land is a real action BUT it is an action in personal for it binds a particular individual only although it concerns the right to a tangible thing.

An action to redeem, or to recover title to or possession of, real property is not an action in rem or an action against the whole world, like a land registration proceeding or the probate of a will ; it is an action in personam, so much so that a judgment therein is binding only upon the parties properly impleaded and duly heard or given an opportunity to be heard. Actions in personam and actions in rem differ in that the former are directed against specific persons and seek personal judgments, while the latter are directed against the thing or property or status of a person and seek judgments with respect thereto as against the whole world. An action to recover a parcel of land is a real action but it is an action in personam, for it binds a particular individual only although it concerns the right to a tangible thing (Ang Lam v. Rosillosa, supra).

Respondent’s action for the cancellation of title being in personam, the judgment in question is null and void for lack of jurisdiction over the person of the deceased defendant Ching Leng. Verily, the action was commenced thirteen (13) years after the latter's death. The decision of the lower court insofar as the deceased is concerned, is void for lack of jurisdiction over his person. He was not, and he could not have been validly served with summons. The same conclusion would still inevitably be reached notwithstanding joinder of Ching Leng's estate as co-defendant. Contrary to private respondent's claims, deceased Ching Leng is a resident of 44 Libertad Street, Pasay City as shown in his death certificate and T. C. T. No. 91137 and there is an on-going intestate proceedings in the same court, Branch III commenced in 1965, and notice of hearing thereof duly published in the same year. Such misleading and misstatement of facts demonstrate lack of candor on the part of private respondent and his counsel, which is censurable.

JORGE C. PADERANGA, petitioner, vs.Hon. DIMALANES B. BUISSAN, Presiding Judge, Court of First Instance of Zamboanga del Norte, Branch III and ELUMBA INDUSTRIES COMPANY, represented by its General Manager, JOSE J. ELUMBA,respondents.

FACTS:

Sometime in 1973, petitioner JORGE C. PADERANGA and private respondent ELUMBA INDUSTRIES COMPANY, a partnership represented by its General Manager JOSE J. ELUMBA, entered into an oral contract of lease for the use of a commercial space within a building owned by petition in Ozamiz City. 1

The lease was for an indefinite period although the rent of P150.00 per month was paid on a month-to-month basis.

ELUMBA INDUSTRIES COMPANY utilized the area under lease as the Sales Office of Allied Air Freight in Ozamiz City.

On 4 April 1977, PADERANGA subdivided the leased premises into two (2) by constructing a partition wall in between. He then took possession of the other half, which repossession was said to have been undertaken with the acquiescence of the local manager of ELUMBA.

On 18 July 1977, private respondent instituted an action for damages before the then court of First Instance of Zamboanga del Norte based in Dipolog City.5

Petitioner, a resident of Ozamiz City, moved for its dismissal contending that the action was a real action which should have been filed with the Court of First Instance of Misamis Occidental stationed in Ozamiz City where the property in question was situated.

RTC RULING:

RTC JUDGE BUISSAN denied the Motion to Dismiss and held that Civil Case No. 2901 merely involved the enforcement of the contract of lease, and while affecting a portion of real property, there was no question of ownership raised. 6 Hence, venue was properly laid.

Petitioner filed an MR of the order denying his Motion to Dismiss. He contended that while the action did not involve a question of ownership, it was

nevertheless seeking recovery of possession; thus, it was a real action which, consequently, must be filed in Ozamiz City.

Respondent Judge denied reconsideration. Hence, this present case.

CONTENTIONS OF PARTIES:PADERANGA ELUMBA

PADERANGA argues that inasmuch as ELUMBA seeks to recover possession of the portion surrendered to him by the local manager of private respondent, as well as to fix the period of lease at five (5) years, Dipolog City could not be the proper venue of the action. it being a real action, venue is laid in the court having jurisdiction over the territory in which the property lies

ELUMBA counters that the present action is chiefly for damages arising from an alleged breach in the lease contract; hence, the issue of recovery of possession is merely incidental. ELUMBA further argues that the action is one in personam and not in rem. Therefore venue may be laid in the place where plaintiff or defendant resides at the option of plaintiff.

SC: ruled in favor of Paderanga

In the case before us, it is indubitable that the action instituted by private respondent against petitioner affects the parties alone, not the whole world.

Hence, it is an action in personam, i.e., any judgment therein is binding only upon the parties properly impleaded. 9

However, this does not automatically mean that the action for damages and to fix the period of the lease contract is also a personal action. For, a personal action may not at the same time be an action in rem.

Consequently, the distinction between an action in personam and an action in rem for purposes of determining venue is irrelevant. Instead, it is imperative to find out if the action filed is a personal action or real action.

After all, personal actions may be instituted in the Regional Trial Court (then Court of First Instance) 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. 11 On the other hand, real actions should be brought before the Regional Trial Court having jurisdiction over the territory in which the subject property or part thereof lies. 12

While it may be that the instant complaint does not explicitly pray for recovery of possession, such is the necessary consequence thereof. 13 The instant action therefore does not operate to efface the fundamental and prime objective of the nature of the case which is to recover the one-half portion repossessed by the lessor, herein petitioner. 14

Indeed, where the ultimate purpose of an action involves title to or seeks recovery of possession, partition or condemnation of, or foreclosure of mortgage on, real property, 15 such an action must be deemed a real action and must perforce be commenced and tried in the province where the property or any part thereof lies.

Respondent judge, therefore, in denying petitioner's Motion to Dismiss gravely abused his discretion amounting to lack or excess of jurisdiction.


PRISCILLA C. MIJARES, LORETTA ANN P. ROSALES, HILDA B. NARCISO, SR. MARIANI DIMARANAN, SFIC, and JOEL C. LAMANGAN in their behalf and on behalf of the Class Plaintiffs in Class Action No. MDL 840, United States District Court of Hawaii, petitioners, vs. HON. SANTIAGO JAVIER RANADA, in his capacity as Presiding Judge of Branch 137, Regional Trial Court, Makati City, and the ESTATE OF FERDINAND E. MARCOS, through its court appointed legal representatives in Class Action MDL 840, United States District Court of Hawaii, namely: Imelda R. Marcos and Ferdinand Marcos, Jr., respondents.

FACTS:

Invoking the Alien Tort Act, petitioners Mijares, et al.*, all of whom suffered human rights violations during the Marcos era, obtained a Final Judgment in their favor against the Estate of the late Ferdinand Marcos amounting to roughly $1.9B in compensatory and exemplary damages for tortuous violations of international law in the US District Court of Hawaii.

o This Final Judgment was affirmed by the US Court of Appeals. As a consequence, Petitioners filed a Complaint with the Regional Trial Court of Makati for the

enforcement of the Final Judgment, paying P410 as docket and filing fees based on Rule 141, Section 7(b) where the value of the subject matter is incapable of pecuniary estimation.

They argued that since the Marcos Estate failed to file a petition for certiorari with the US Supreme Court after the Ninth Circuit Court of Appeals had affirmed the Final Judgment, the decision of the US District Court had become final and executory, and hence should be recognized and enforced in the Philippines, pursuant to Section 50, Rule 39 of the Rules of Court then in force.

The Estate of Marcos however, filed a Motion to Dismiss alleging the non-payment of the correct filing fees.

It alleged that petitioners had only paid Four Hundred Ten Pesos (P410.00) as docket and filing fees, notwithstanding the fact that they sought to enforce a monetary amount of damages in the amount of over Two and a Quarter Billion US Dollars (US$2.25 Billion).

The Marcos Estate cited Supreme Court Circular No. 7, pertaining to the proper computation and payment of docket fees.

In response, the petitioners claimed that an action for the enforcement of a foreign judgment is not capable of pecuniary estimation; hence, a filing fee of only Four Hundred Ten Pesos (P410.00) was proper, pursuant to Section 7(c) of Rule 141

Not surprisingly, petitioners filed a Motion for Reconsideration, which Judge Ranada denied in an Order dated 28 July 1999.

From this denial, petitioners filed a Petition for Certiorari under Rule 65 assailing the twin orders of respondent judge.

Issue:

Whether or not the amount paid by the Petitioners is the proper filing fee.

HELD:

Yes, but on a different basis—amount merely corresponds to the same amount required for

“other actions not involving property”.

RTC Makati erred in concluding that the filing fee should be computed on the basis of the total sum claimed or the stated value of the property in litigation.

The Petitioner’s Complaint was lodged against the Estate of Marcos but it is clearly based on a judgment, the Final Judgment of the US District Court.

However, the Petitioners err in stating that the Final Judgment is incapable of pecuniary estimation because it is so capable.

On this point, Petitioners state that this might lead to an instance wherein a first level court would have jurisdiction to enforce a foreign judgment.

Under the B.P.129, such courts are not vested with such jurisdiction. Section 33 of B.P.129 refers to instances wherein the cause of action or subject matter

pertains to an assertion of rights over property or a sum of money. Section 16 of B.P.129 reveals that the complaint for enforcement of judgment

even if capable of pecuniary estimation would fall under the jurisdiction of the RTCs.

Thus, the Complaint to enforce the US District Court judgment is one capable of pecuniary estimations but at the same time, it is also an action based on judgment against an estate, thus placing it beyond the ambit of Section 7(a) of Rule 141.

Hence, what governs the proper computation of the filing fees over Complaints for the enforcement of foreign judgments is Section 7(b)(3) of Rule 141, involving “other actions not involving property.”

A MUST NOTE: Docket fees should not be based on the amount of the award in the foreign judgment because such can no longer be litigated.

RULE 2

NICANOR G. DE GUZMAN, JR., Petitioner, vs. HON. COURT OF APPEALS, Former Fifth Division, HON. REGIONAL TRIAL COURT, National Capital Judicial Region, Br. 48, Manila, and ENRIQUE KP. TAN, Respondents.

FACTS:

Plaintiff and defendant have been friends and in the course of this relationship, they have exchanged mutual favors and accommodations, including discounting of check for cash.

Around 1981, several checks were issued by plaintiff to defendant in exchange for cash which probably amounted to P280,900.00. In due time, these checks were either fully paid, settled, extinguished or condoned by agreement of the parties, and for which reason, plaintiff did not anymore redeem the checks precisely because they have been close and mutual friends.

Then suddenly, plaintiff received from defendant's lawyer a demand letter dated 1988 supposedly detailing out therein the former's obligation

Principal Amount — P280,900.00

(Value of 66 dishonored checks)

Legal Interest at — 235,956.00

1% per Month (For 84 months or 7 years)

Attorney's Collection — 51,685.00


RTC Makati:

- It dismissed the Complaint stating that the subject matter was capable of pecuniary estimation as it involved a judgment rendered by a foreign court ordering the payment of a definite sum of money allowing for the easy determination of the value of the foreign judgment.

- As such, the proper filing fee was P472M, which Petitioners had not paid.

TOTAL Amount Due — P568,541.00

Defendant threatened to "institute the proper action and hold (plaintiff liable for the consequence

On September 15, 1988, petitioner filed a complaint for damages and other equitable reliefs in the trial court

Petitioner alleges in his complaint that defendant fully knows that there is no sum due. That he is reluctant to file but was gravely agitated to do so because of a clearly perceived and palpable injury to him as unequivocally expressed in defendant's letter. That in writing the letter, and demanding therein an obligation from plaintiff which is not due and owing from the latter, defendant failed to act with justice, observe honesty and good faith.

Defendant has kept possession of the alleged checks amounting to P280,900.00 at the expense of plaintiff and since the obligation thereunder has either been fully or wholly paid, settled, extinguished, or condoned by agreement of the parties, defendant holds them without just or legal ground and is bound to return them to plaintiff.

Petitioner prayed for:Actual expenses of 15,000Exemplary damages of 200,000Attorney’s fees of 75,000Nominal damages

On October 8, 1988, private respondent filed a motion to dismiss the complaint for lack of cause of action and prescription.

TC Denied complaint for failure to state a cause of action

CA Affirmed TC

ISSUE: WON the complaint states a sufficient cause of action

HELD: YES.

It must be remembered that when a party files a motion to dismiss the complaint for lack of cause of action he is deemed to hypothetically admit the allegations thereof.

From the allegation of the complaint in this case it appears that,

(1) petitioner has a primary right, because of having paid his obligation to private respondent, to have the checks he issued to cover the amount returned to him or otherwise cancelled by private respondent; and

(2) the primary right of was violated when private respondent demanded payment of a settled obligation relying on the very checks of petitioner he had not returned. Consequently, on account of such demand for payment for an obligation duly settled, the petitioner thereby suffered damages and should be afforded such relief as prayed for in the complaint.

Re CAUSE OF ACTION vs RIGHT OF ACTION

A cause of action is the fact or combination of facts which affords a party a right to judicial interference in his behalf. An action means an ordinary suit in a court of justice, by which one party prosecutes another for the enforcement or protection of a right, or the prosecution or redress of a wrong. 2

Two Elements of Cause of Action:

(1) the plaintiff's primary right and the defendant's corresponding primary duty, whatever may be the subject to which they relate — person, character, property or contract; and

(2) the delict or wrongful act or omission of the defendant, by which the primary right and duty have been violated. 3 The cause of action is determined not by the prayer of the complaint but by the facts alleged. 4

The term right of action is the right to commence and maintain an action.

Cause of Action Right of Action

formal statement of the operative facts that give rise to such remedial right

remedial right belonging to some persons

a matter of statement and is governed by the law of procedure

A matter of right and depends on the substantive law,

The right of action springs from the cause of action, but does not accrue until all the facts which constitute the cause of action have occurred. When there is an invasion of primary rights, then and not until then does the adjective or remedial law become operative, and under it arise rights of action. There can be no right of action until there has been a wrong — a violation of a legal right — and it is then given by the adjective law.

Re Prescription:

Contrary to the observation made by the appellate court, the cause of action had not prescribed. The cause of action accrued only on August 20, 1988 when in a demand letter for payment private respondent thereby committed a wrongful act against petitioner. The complaint was filed promptly on September 15, 1988, well within the four (4) year prescriptive period of an action of this nature.

BACHRACH MOTOR CO., INC., plaintiff-appellant, vs. ESTEBAN ICARAÑGAL and ORIENTAL COMMERCIAL CO., INC., defendants-appelleesFACTS:

Esteban Icarañgal, with one Jacinto Figueroa, executed in favor of the plaintiff, Bachrach Motor Co., Inc., a promissory note for one thousand six hundred fourteen pesos (P1,614) for value received. Icarañgal executed a real estate mortgage on a parcel of land in Pañgil, Laguna as a security for his loan.

Thereafter, promissors defaulted in the payment of the agreed monthly installments. Bachrach Motor Co. Inc. instituted in the Court of First Instance of Manila an action

for the collection of the amount due on the note.

CFI

Ruled in favor of Bachrach.A writ of execution was subsequently issued and, in pursuance thereof, the provincial sheriff of Laguna, at the indication of the plaintiff, levied on the properties of the defendants, including that which has been mortgaged by Esteban Icarañgal in favor of the plaintiff.

The other defendant herein Oriental Commercial Co., Inc., interposed a third-party claim, alleging that by virtue of a writ of execution issued by the municipal court of the City of Manila, the property which was the subject of the mortgage and which has been levied upon by the sheriff, had already been acquired by it at the public auction on May 12, 1933.

By reason of this third-party claim, the sheriff desisted from the sale of the property. As a result, the judgment rendered in favor of the plaintiff remained unsatisfied.


Then, the plaintiff instituted an action to foreclose the mortgage.

CFI Dismissed the action to foreclose mortgage filed by Bachrach.

Bachrach appealed.

ISSUE: WON Bachrach can file an action to foreclose mortgage after it filed an action for the collection of the amount due on the noteHELD: NO

Most of the provisions of the Code of Civil Procedure are taken from that of California, and In that jurisdiction the rule has always been, and still is, that a party who sues and obtains a personal judgment against a defendant upon a note, waives thereby his right to foreclose the mortgage securing it.

This rule is founded on express statutory provisions to that effect. In this jurisdiction, section 708 of the Code of Civil Procedure provides that a creditor holding a claim against the deceased, secured by a mortgage or other collateral security, has to elect between enforcing such security or abandoning it by presenting his claim before the committee and share in the general assets of the estate. Under this provision, it has been uniformly held by this court that, if the plaintiff elects one of the two remedies thus provided, he waives the other, and if he fails, he fails utterly.

There is indeed no valid reason for not following the same principle of procedure in ordinary civil actions. With the substitution of the administrator or executor in place of the deceased, or of the assignee or receiver in place of the insolvent debtor, the position of the parties plaintiff and' defendant in the litigation is exactly the same in special or insolvency proceedings as in ordinary civil actions.

Even if section 708 of the Code of Civil Procedure, or section 59 of the Insolvency Law were not in the attitude books, there is still the rule against splitting a single cause of action. This rule, though not contained in duly statutory provision, has been applied by this court in all appropriate cases.

The rule against splitting a single cause of action is intended "to prevent repeated litigation between the same parties in regard to the same subject of controversy; to protect defendant from unnecessary vexation; and to avoid the costs and expenses incident to numerous suits." It comes from that old maximum nemo debet bis vexare pro una et eadem causa (no man shall be twice vexed for one and the same cause). And it developed, certainly not as an original legal right of the defendant, but as an interposition of courts upon principles of public policy to prevent inconvenience and hardship incident to repeated and unnecessary litigations.

For non-payment of a note secured by mortgage, the creditor has a single cause of action against the debtor. This single cause of action consists in the recovery of the credit with execution of the security. In other words, the creditor in his action may make two demands, the payment of the debt and the foreclosure of his mortgage. But both demands arise from the same cause, the non-payment of the debt, and, for that reason, they constitute a single cause of action.

Though the debt and the mortgage constitute separate agreements, the latter is subsidiary to the former, and both refer to one and the same obligation.

Consequently, there exists only one cause of action for a single breach of that obligation. Plaintiff, then, by applying the rule above stated, cannot split up his single cause of action by filing a complaint for payment of the debt, and thereafter another complaint for foreclosure of the mortgage. If he does so, the filing of the first complaint will bar the subsequent complaint.

BY allowing the creditor to file two separate complaints simultaneously or successively, one to recover his credit and another to foreclose his mortgage, the court would in effect, be authorizing him plural redress for a single breach of contract at so much cost to the courts and with so much vexation and oppression to the debtor.

In the absence of express statutory provisions, a mortgage creditor may institute against the mortgage debtor either a personal action for debt or a real action to foreclose the mortgage.

A rule that would authorize the plaintiff to bring a personal action against the debtor and simultaneously or successively another action against the mortgaged property, would result not only in multiplicity of suits so offensive to justice, but also in subjecting the defendant to the vexation of being sued in the place of his residence or of the residence of the plaintiff, and then again in the place where the property lies.

The creditor's cause of action is not only single but indivisible, although the agreements of the parties, evidenced by the note and the deed of mortgage, may give rise to different remedies.

The cause of action should not be confused with the remedy created for its enforcement. And considering, that one of the two remedies available to the creditor is as complete as the other, he cannot be allowed to pursue both in violation of those principles of procedure intended to secure simple, speedy, and inexpensive administration of justice.

Wherefore, Bachrach’s appeal is denied. SC affirmed the decision of the CFI, dimissing the action to foreclose mortgage.

INTERNATIONAL INDUSTRIAL MANAGEMENT AND DEVELOPMENT CORPORATION, petitioner, vs. HON. COURT OF APPEALS, HON. SALVADOR TENSUAN and FILIPINAS CARBON AND MINING CORPORATION, respondents.

FACTS: On July 10, 1985, private respondent Filipinas Carbon and Mining Corporation filed against herein

petitioner and Central Mining Consultants (CMC)WHAT: action for rescission or annulment of contract with damagesWHERE: Regional Trial Court of Manila, Branch 146

FCMC prayed among others:b. On the first and second alternative causes of action, rescinding and/or declaring rescinded, cancelled or terminated plaintiff's agreement or in the alternative ordering the defendants to comply with their obligations under the aforesaid agreement, Annex "A" and in either case, ordering the defendants to deliver and surrender the Mining Area together with all the infrastructure, facilities, and equipments found thereon to plaintiff and restore plaintiff in its possession, operation and administration of these properties without any obligation on the part of plaintiff to defendants;c. actual damages in the amount of at least P3,000,000.00;d. moral damages in the amount of at least P100,000.00;e. exemplary damages in the amount of at least P200,000.00;f. attorney's fees in the amount of at least P100,000.00 and other expenses of litigation in the amount of at least P50,000.00;

petitioner filed a motion to dismiss on the ground that the trial court did not acquire jurisdiction over the case since the complaint does not specifically state the amount of damages sought therein by private respondent, thereby rendering the docket fee corresponding thereto undeterminable and, as a matter of course, unpaid.

RTC Denied the motion to dismissCA Denied motion to dismiss. trial court acquired

jurisdiction over the case since the claims for damages of private respondent as qualified by the phrase "at least," which is equivalent to "not less than," are definite enough

Petitioner brings the action to SC praying for: issuance of an order requiring the clerk of court of the court below to reassess and collect in full the prescribed docket fee in the original case. Petitioner avers that the aggregate of private respondent's claims amounts to P29,600,000.00, hence the docket fee due is P118,000.00, allegedly pursuant to Section 5, subsections 7 and 8, Rule 141 of the Rules of Court, as amended on September 18, 1984. Since only P2,626.00 was paid by herein private respondent, the former contends that the latter still has to pay the balance of P115,374.00.


private respondent contends that considering that its main action is for specific performance and/or rescission which is not capable of pecuniary estimation and, therefore, the money claim is purely incidental to or a consequence of the particular relief sought, the docket fee it has paid is reasonably sufficient.

ISSUE: WON claim of damages must be included in the computation of docket fees although the same is not the principal relief sought

HELD: YES. The fact that the main action or principal relief sought in the complaint is for specific performance and/or rescission is only determinative of jurisdiction in the sense that, regardless of the amount of incidental or additional claims for damages, the case is within the exclusive original jurisdiction of the Regional Trial Court. This does not mean, however, that the separate claims for damages therein are exempt from the payment of docket fees. The prayer in private respondent's second amended complaint 8reveals that, in addition to the principal relief of specific performance and/or rescission, it categorically and unconditionally seeks the payment of actual, moral and exemplary damages, with attorney's fees and expenses of litigation.Under paragraph 2(c) to (d) of the petitory portion of said second amended complaint, the amount of damages being claimed as additional relief by private respondent is P3,450,000.00, as set out in the third to the sixth causes of action. Pursuant to the provisions of Rule 141 then in force, the docket fee for such additional claims by themselves would be P13,400.00, and it is admitted that only P2,626.00 has been paid by private respondent.

G.R. No. L-3564 February 27, 1987 JUAN BAYANG vs. COURT OF APPEALS and BENIGNO BIONG

FACTS:

Sometime in November 1969, Juan Bayang filed a complaint for quieting of title with damages against Benigno Biong in the CFI of Surigao del Norte, Branch I.

In 1970, while the case was pending, Biong succeeded in dispossessing the plaintiff of the land in question and remained there until January 25, 1978.

CFI OF SURIGAO DEL NORTE (Branch I)

February 21, 1972 - decided in favor of Biong

COURT OF APPEALS

Reversed the trial court, declaring Bayang the owner of the property. It ordered Biong to pay P56.40 as his share in the proceeds of the sale of the copra derived from the land and P1,000 as attorney’s fees and costs.

Decision became FINAL.

Bayang filed a second case with the CFI of Surigao del Norte, Branch II, seeking to recover from Biong the incomes earned from the same land from 1970 until the said land was delivered to the plaintiff.

At the pre-trial conference, the counsel for Bayang admitted that as of January 25, 1978, Biong had already surrendered possession of the land in question to Bayang.

On August 16, 1978, Biong filed a motion for summary judgment, raising the affirmative defense of res judicata in his answer insofar as it related to the incidents concerning the first case. Bayang opposed.

TRIAL COURT (CFI)

Granted the motion and rendered a summary judgment.

COURT OF APPEALS

Affirmed TC.

Bayang is now before us in this petition for review by certiorari under Rule 45. He contends: (a) summary judgment was improper, (b) judgment in the first case did not constitute res judicata as to bar the second case.

ISSUE: WON the second case filed by Bayang constitute res judicata

HELD: YES. SC ruled in favor of Biong.

Claim for ownership of land and claim for income thereon arise from a single cause of action which cannot be split.

A long line of decisions has consistently held that for res judicata to apply: a) the former judgment must be final; b) it must have been rendered by a court having jurisdiction over the subject matter and the parties; c) it must be a judgment on the merits; and d) there must be between the first case and the second case identity of parties, identity of subject matter and Identity of cause of action

The decision in the first case became final and executory on February 2, 1978. The trial court which rendered that decision had jurisdiction over the subject-matter and the parties to the proceeding. Said case was tried on the merits. The parties to the first and the subsequent case are the same petitioner and private respondent now before the SC.

The petitioner says the land in dispute (first case) and the income from that land being claimed (second case) are different from each other. SC views such as splitting hairs to split a cause of action.

SC says the subject-matter is essentially the same in both cases as the income is only a consequence or accessory of the disputed property. There are no two causes of action calling for two separate cases. The claim for the income from the land was incidental to, and should have been raised by Bayang in his earlier claim for, ownership of the land.

AS TO THE VALIDITY OF SUMMARY JUDGMENT: Summary judgment is one of the methods sanctioned in the present Rules of Court for a prompt disposition of civil actions wherein there exists no serious controversy.

A motion for summary judgment assumes that scrutinizing of the facts will disclose that the issues presented by the pleadings need not be tried because they are so patently unsubstantial as not to be genuine issues, or that there is no genuine issue as to any material facts or where the facts appear undisputed and certain from the pleadings, depositions,

admissions and affidavits.

The first case was commenced in November 1969 and was finally decided only on February 2, 1978. Biong entered the disputed property in 1970 and left it only in 1978. For about seven years, petitioner made no move at all to amend his complaint to include a claim for the income supposedly received by Biong during that period.

Clearly, the second case is barred by the judgment in the first case. TC Judge committed no grave abuse of discretion in deciding the latter case by summary judgment.

SC is not unmindful of the argument that affirmance of the challenged decision of the respondent court will result in the unjust enrichment of Biong at the expense of Bayang. This assumes, of course, that the petitioner could have proved his right to the income he now claims belatedly. The point is that he did not make the proper claim at the proper time and in the proper proceedings, and he cannot do it now. Whatever right he might have had is now deemed waived because of his neglect.


ELEANOR ERICA STRONG, ET AL., plaintiffs-appellees, vs. FRANCISCO GUTIERREZ REPIDE, defendant-appellant.

The plaintiff, Eleanor Erica Strong, was the owner of 800 shares of the capital stock of the Philippine Sugar Estates Development Company, Limited of the par value of P100 each,

On the said 10th day of October, 1903, the defendant, Francisco Gutierrez Repide, by means subsequently found and adjudged to have been fraudulent, obtained possession of said shares and thereafter alleged to be the owner thereof.

The plaintiff commenced an action against the defendant in the Court of First Instance of the city of Manila asking that the fraudulent sale by means of which the defendant obtained possession of the said shares be declared null and void and that they be returned to her.

CFI:

The court, therefore, declares that the purchase of these shares of stock by the defendant is fraudulent and void.

SC:

This judgment was, on appeal to the Supreme Court of the Philippine Islands, reversed, and plaintiff's complaint dismissed on the merits.

SC reversed upon appeal:

Thereupon plaintiff prosecuted an appeal to the Supreme Court of the United States, which court, on the 3d of May, 1909, rendered its judgment, reversing the decision of the Supreme Court of the Philippine Islands and affirming the judgment of the trial court.

The said judgment was satisfied by defendant's returning to the plaintiff 800 shares of stock of said company.

From the 10th day of October, 1903, the date of the said fraudulent purchase by the defendant, until the 27th day of July, 1909, the defendant retained said shares in his possession or under his control and after the rendition of said judgment of April 29, 1904, collected the dividends earned by said shares for the years 1905, 1906, 1907, and 1908.

After demand upon and refusal by the defendant, the plaintiff began this action for the recovery of said sum.

On the 24th of March, 1911, the Court of First Instance of the city of Manila rendered judgment in favor of the plaintiff

He asserts that that judgment is for a sum of money and not for the rescission of a contract and the return of shares of stock.

Both parties excepted to this judgment and filed motions for a new trial, and the court upon the hearings modified its judgment by allowing defendant to offset against plaintiff's judgment

From said judgment as modified the defendant prosecutes this appeal.

o He maintains that the payment of the sum named in the judgment, whether by money or by shares of stock, was a complete satisfaction of the judgment in that case.

o The mere fact that it was paid in shares of stock did not indicate that the judgment of the trial court was for shares of stock but said judgment was, on the contrary, in reality and in legal effect for a sum of money which could be paid in shares of stock as well as in coin of the realm.

o Basing himself upon this contention appellant asserts that that judgment having been satisfied by the payment of the sum adjudged to be due, a subsequent action for dividends on said stock is in effect an action for interest on the said sum found to be due, that it affects the subject matter of a judgment already paid and discharged.

ISSUE:

Whether or not an action for recovery for possession of shares of stock should include claim for dividends to avoid multiplicity of actions.

HELD:

YES. But in the case at bar, the defendant failed to raise the aforementioned issue on appeal.

Generally speaking, it is not permitted that a plaintiff sue for the recovery of property which is illegally detained by another, and, after recovering that property, sue in a separate action for the damages sustained by that illegal detention.

The law seeks to prevent multiplicity of actions, and it is the duty of every person suing to join in one action every cause of action which he has against the defendant, to the end that all questions between the parties be litigated in one suit and multiplicity of actions and resulting expenses prevented.

This is a question, however, which could have been raised in the court below by the defendant. He did not do so. Neither has he raised the question in this court directly. We, therefore, do not pass upon it or base any finding upon it.

While the dividends might, in part, have been included in the cause of action set forth in the complaint in that action and, as far as possible, should have been incorporated therein, nevertheless they were not so made and, therefore, formed no part of the judgment in which that action terminated.

When, therefore, after the satisfaction of that judgment, plaintiff began a separate action to recover the dividends, the only defense available to the defendant was


the plea of multiplicity. That plea not having been made, no question relating thereto is presented on this appeal.

It is true that plaintiff could have included in her action and recovered at the most only those dividends which were due at the time judgment in her favor was entered.

It happens in this case that most of the dividends became payable after the plaintiff had secured her judgment.

o That being so, they could not have been included by her in the original complaint, nor could they have been incorporated within the judgment in that action.

o This, then, furnishes another reason why the contention of the appellant in this regard cannot be sustained. Under such circumstances a plea of multiplicity, even if made, would not have been available as to those dividends which became payable after the judgment was entered in that action.

REMEDIO V. FLORES, petitioner, vs. HON. JUDGE HEILIA S. MALLARE-PHILLIPPS, IGNACIO BINONGCAL & FERNANDO CALION, respondents.FACTS: first cause of action alleged in the complaint was against respondent Ignacio Binongcal for

refusing to pay the amount of P11,643.00 representing cost of truck tires which he purchased on credit from petitioner on various occasions from August to October, 1981;

and the second cause of action was against respondent Fernando Calion for allegedly refusing to pay the amount of P10,212.00 representing cost of truck tires which he purchased on credit from petitioner on several occasions from March, 1981 to January, 1982.

On December 15, 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 only P11,643.00, and under Section 19(8) of BP129 the regional trial court shall exercise exclusive original jurisdiction if the amount of the demand is more than twenty thousand pesos (P20,000.00). It was further averred in said motion that although another person, Fernando Calion, was allegedly indebted to petitioner in the amount of P10,212.00, his obligation was separate and distinct from that of the other respondent.

Regional Trial Court of Baguio City and Benguet Province dismissed petitioner’s complaint for lack of jurisdiction.

Petitioner’s contention: Petitioner maintains that the lower court has jurisdiction over the case following the "novel" totality rule introduced in Section 33(l) of BP129 and Section 11 of the Interim Rules.

Section 33(l) of BP129 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. ...

Section 11 of the Interim Rules provides thus:Application of the totality rule.-In actions where the jurisdiction of the court is dependent on the amount involved, the test of jurisdiction shall be the aggregate sum of all the money demands, exclusive only of interest and costs, irrespective of whether or not the separate claims are owned by or due to different parties. If any demand is for damages in a civil action, the amount thereof must be specifically alleged.

Petitioner compares the above-quoted provisions with the pertinent portion of the former rule under Section 88 of the Judiciary Act of 1948 as amended which reads as follows:

... Where there are several claims or causes of action between the same parties embodied in the same complaint, the amount of the demand shall be the totality of the demand in all the causes of action, 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 different transactions.

ISSUE: Whether or not the claims of petitioner may be joined and thus fall within the jurisdiction of RTC.

HELD: NO.If plaintiff sues a defendant on two or more separate causes of action

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 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.

where two or more plaintiffs having separate causes of action against a defendant (or an action against two or more defendants) join in a single complaint.

Apply totality rule: 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.

Sine qua non:

a. 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

b. there should be a common question of law or fact, as provided in Section 6 of Rule

In cases of permissive joinder of parties, whether as plaintiffs or as defendants, under Section 6 of Rule 3, 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 pursuant to Section 5 of Rule 2 and Section 6 of Rule 3 of the Rules of Court 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.

INSURANCE COMPANY OF NORTH AMERICA, plaintiff-appellant, vs.WARNER, BARNES and CO., LTD., REPUBLIC OF THE PHILIPPINES and/or BUREAU OF CUSTOMS and/or CUSTOMS ARRASTRE SERVICE, defendants-appelleesFACTS:

1. For Motor Co. shipped a quantity of merchandise, on board the SS “Saikyo Maru” consigned to the order of Security Bank and Trust Co., with arrival notice to Manila Trading and Supply Manila.


2. Shipment consisted of auto parts and other parts of trucks.3. The vessel arrived at the port of Manila and allegedly discharged the shipment into the

custody of Bureau of Customs as arrastre operator.4. The good were then delivered to the consignee in damaged condition.5. Petitioner Insurance Company of North America as subrogee of the rights of the consignee

sued as alternative defendants, Warner Barnes & Co., (operator of SS Saikyo Maru) and/or Republic of the Phils and/or Bureau of Cusoms.

6. The defendants other than Warner Barnes moved for the dismissal of the complaint on the ground lack of jurisdiction. Contention: That Bureau of Customs as an agency of the government cannot be sued without its consent (immunity)CFI : dismissed the complaint for lack of jurisdiction over defendants RP and BD and over the subject matter of the suit.

ISSUE: WoN lower court has jurisdiction over the caseYES. Only in so far with defendant Warner Barnes and neither over RP nor Bureau of Customs.The cause of action against Warner, Barnes & Co., Ltd. as operator of the carrying vessel is one of admiralty and hence is within the jurisdiction of the Court of First Instance. Although the claim against the Bureau of Customs as arrastre operator is an ordinary civil suit which would be outside such jurisdiction by virtue of the amount involved, the two may be joined in one action alone. In Rizal Surety and Insurance Company vs. Manila Railroad Company, the court held:

At the time the complaint was filed, plaintiff did not know at what precise stage of the series of transactions the loss complained of occurred. Hence, the joinder of causes of action and parties defendants in the alternative

"Sec. 5. Joinder of causes of action. — Subject to rules regarding jurisdiction, venue and joinder of parties, a party may in one pleading state, in the alternative or otherwise, as many causes of action as he may have against an opposing party (a) if the said causes of action arise out of the same contract, transaction or relation between the parties, or (b) if the causes of action are for demands for money, or are of the same nature and character.""In the cases falling under clause (b) the jurisdiction shall be determined by the aggregate amount of the demands, if for money, or by their nature and character, if otherwise."

And, since one of the causes of action is cognizable by the Court of First Instance the suit should be filed, as was correctly done by the plaintiff, in said court, notwithstanding that the other cause of action — if standing alone — would fall within the jurisdiction of the municipal court, by reason of the amount of the demand.

RULE 3

HANG LUNG BANK, LTD., petitioner, vs.HON. FELINTRIYE G. SAULOG, Presiding Judge, Regional Trial Court, National Capital Judicial Region, Branch CXLII, Makati, Metro Manila, and CORDOVA CHIN SAN, respondents.

FACTS:

Petitioner Hang Lung Bank, Ltd.,(not doing business in the Philippines), entered into two (2) continuing guarantee agreements with Cordova Chin San in Hongkong.

Cordova agreed to pay on demand all sums of money which may be due the bank from Worlder Enterprises to the extent of the total amount of two hundred fifty thousand Hongkong dollars (HK $250,000).

Worlder Enterprises having defaulted in its payment, petitioner filed in the Supreme Court of Hongkong a collection suit against Worlder Enterprises and Chin San. Despite serving summonses, defendants failed to respond thereto.

Supreme Court of Hongkong issued Judgment in favor of Hung Lung Bank and ordered the defendants to pay the plaintiff.

Thereafter, petitioner through counsel sent a demand letter to Chin San at his Philippine address but again, no response was made thereto.

Hence, petitioner instituted in the court below (RTC Br. 142 Makati City) an action seeking "the enforcement of its just and valid claims against private respondent, who is a local resident, for a sum of money based on a transaction which was perfected, executed and consummated abroad." 2

In his answer to the complaint, Respondent Chin San raised as affirmative defenses: lack of cause of action, incapacity to sue and improper venue. 3

A day before the scheduled Pre-Trial, Chin San filed a motion to dismiss the case based on the grounds that petitioner had no legal capacity to sue and that venue was improperly laid.

RTC issued an order granting the motion to dismiss filed by Chin San.

RTC RULING: Since petitioner is a bank, its capacity to file an action in this jurisdiction is governed by the Sec. 14, General Banking Law (RA 337) which prohibits foreign bank or corporation from transacting business in the Phils or maintaining suit for recovery of any debt, claims or demand until it have obtained a license for that purpose.

Petitioner filed an MR of said order but the same was denied. Hence, the present Petition for Certiorari seeking the reversal of the said order.

SC: Petitioner has the right to file an action in our courts.

In construing the provision of GB Law, the court adhere to the interpretation to the almost identical Sec. 69 of Old Corporation Law, which the court has interpreted as not altogether prohibiting a foreign corporation not licensed to do business in the Philippines from suing or maintaining an action in Philippine courts.9 What it seeks to prevent is a foreign corporation doing business in the Philippines without a license from gaining access to Philippine courts.

We even went further to say that a foreign corporation not licensed to do business in the Philippines may not be denied the right to file an action in our courts for an isolated transaction in this country. 15

Since petitioner foreign banking corporation was not doing business in the Philippines, it may not be denied the privilege of pursuing its claims against private respondent for a contract which was entered into and consummated outside the Philippines.

Otherwise we will be hampering the growth and development of business relations between Filipino citizens and foreign nationals. Worse, we will be allowing the law to serve as a protective shield for unscrupulous Filipino citizens who have business relationships abroad.

DISPOSITIVE: WHEREFORE, the questioned orders of the lower court are hereby set aside. Civil Case No. 8762 is reinstated and the lower court is directed to proceed with dispatch in the disposition of said case. This decision is immediately executory. No costs.

CONVERSE RUBBER CORPORATION, petitioner, vs. UNIVERSAL RUBBER PRODUCTS, INC. and TIBURCIO S. EVALLE, DIRECTOR OF PATENTS, respondents.

Rule 3

FACTS:

Respondent Universal Rubber Products, Inc. filed an application with the Philippine Patent office for registration of the trademark "UNIVERSAL CONVERSE AND DEVICE" used on rubber shoes and rubber slippers.

Petitioner Converse Rubber Corp. filed its opposition on the following grounds:a) Trademark isconfusingly similar to the word”CONVERSE” which is a part of

Petitioner’s corporate name which would likely deceive purshasers and that aid


products may be mistaken by the unwary public to be manufactured by the petitioner

b) The registration of respondent's trademark will cause great and irreparable injury to the business reputation and goodwill of petitioner in the Philippines

Respondents filed its answer, among which it averred:Petitioner is not licensed to do business in the Philippines and it is not doing business on its own in the Philippines

At trial, titioner's lone witness, Mrs. Carmen B. Pacquing, a duly licensed private merchant with stores at the Sta. Mesa Market and in Davao City, testified that she had been selling CONVERSE rubber shoes in the local market since 1956 and that sales of petitioner's rubber shoes in her stores averaged twelve to twenty pairs a month; She also affirmed that she had no business connection with the petitioner.

Director of Patents

Denied the opposition. Approved the Trademark Application, decision:

Petitioner failed to prove that the single word COnvese has become so identified with the Corporation. Moreover,

“Opposer's proof of its corporate personality cannot establish the use of the word "CONVERSE" in any sense, as it is already stipulated that it is not licensed to do business in the Philippines, and is not doing business of its own in the Philippines. If so, it will be futile for it to establish that "CONVERSE" as part of its corporate name Identifies its rubber shoes.”

ISSUE 1: whether or not the respondent's partial appropriation of petitioner's corporate name is of such character that it is calculated to deceive or confuse the public to the injury of the petitioner to which the name belongs

HELD: YES

Boundless choice of words, phrases and symbols is available to one who wishes a trademark sufficient unto itself to distinguish his product from those of others. When, however, there is no reasonable explanation for the defendant's choice of such a mark though the field for his selection was so broad, the inference is inevitable that it was chosen deliberately to deceive.

Re Basis Reputation to protect:

Actual sale of goods in the local market establishes trademark use which serves as the basis for any action aimed at trademark pre- exemption. It is a corollary logical deduction that while Converse Rubber Corporation is not licensed to do business in the country and is not actually doing business here, it does not mean that its goods are not being sold here or that it has not earned a reputation or goodwill as regards its products.

ISSUE 2: Re lack of corporate personality to sue:

Contention of Director of Patents: “Since the petitioner is not licensed to do business in the country and is actually not doing business on its own in the Philippines, it has no name to protect iN the forum and thus, it is futile for it to establish that "CONVERSE" as part of its corporate name identifies its rubber shoes.”

HELD: Foreign corporation has a right to maintain an action in the forum even if it is not licensed to do business and is not actually doing business on its own therein

a foreign corporation which has never done any business in the Philippines and which is unlicensed and unregistered to do business here, but is widely and favorably known in the Philippines through the use therein of its products bearing its corporate and tradename, has a legal right to maintain an action in the Philippines to restrain the residents and inhabitants thereof from organizing a corporation therein bearing the same name as the foreign corporation, when it appears that they have personal knowledge of the existence of such a foreign corporation, and it is apparent that the purpose of the proposed domestic corporation is to deal and trade in the same goods as those of the foreign corporation.

Re Purpose of the Action:

Sole Purpose of Action is NOT to enforce any legal or control rights arising from or growing out of, any business which it has transacted in the Philippine Islands.

It is to protect its reputation, its corporate name, its goodwill whenever that reputation, corporate name or goodwill have, through the natural development of its trade, established themselves.'

Its rights to the use of its corporate and trade name is a property right, a right in rem which it may assert and protect against all the world, in any of the courts of the world even in jurisdictions where it does not transact business-just the same as it may protect its tangible property, real or personal against trespass, or conversion. C

Since it is the trade and not the mark that is to be protected, a trademark acknowledges no territorial boundaries of municipalities or states or nations, but extends to every market where the trader's goods have become known and Identified by the use of the mark.

Moreover, legal basis: Convention of the Union of Paris for the Protection of Industrial Property to which the Philippines became a party; Sec. 37 of RA No. 166, otherwise known as the Trademark Law

THE COMMISSIONER OF CUSTOMS, petitioner, vs. K.M.K. GANI, INDRAPAL & CO., and the HONORABLE COURT OF TAX APPEALS, respondents.

FACTS:

Two containers loaded with 103 cartons of merchandise covered by eleven (11) airway bills of several supposedly Singapore-based consignees arrived at the Manila International Airport on board Philippine Air Lines from Hongkong.

The cargoes were consigned to these different entities all purportedly based in Singapore. (1 and 2 are the respondents in this case):1. K.M.K Gani (K.M.K.) 2. Indrapal and Company (INDRAPAL), 3. Sin Hong Lee Trading Co., Ltd., AAR TEE Enterprises, and 4. C. Ratilal

A "reliable source" tipped off the Bureau of Customs that the said cargoes were going to be unloaded in Manila. Forthwith, the Bureau's agency on such matters, the Suspected Cargo and Anti-Narcotics (SCAN), dispatched an agent to verify the information.

The SCAN agent sequestered the unloaded cargoes after the driver of the van unloading the cargoes from the plane drove away upon interrogation.


The seized cargoes consisted of 103 cartons "containing Mogadon and Mandrax tablets, Sony T.V. sets 1 546R/176R kw, Sony Betamax SL5800, and SL5000, Cassette Stereos with Headphone (ala walkman), Casio Calculators, Pioneer Car Stereos, Yamaha Watches, Eyeglass Frames, Sunglasses, Plastic Utility Bags, Perfumes, etc."

These goods were transferred to the International Cargo Terminal under Warrant of Seizure and Detention

Thereafter, the goods were subjected to Seizure and Forfeiture proceedings for "technical smuggling."

At the hearing, Atty. Armando S. Padilla entered his appearance for the consignees K.M.K. and INDRAPAL. The records of the case do not show any appearance of the consignees in person.

Atty. Padilla moved for the transshipment of the cargoes consigned to his clients. On the other hand, the Solicitor General avers that K.M.K. and INDRAPAL did not present any

testimonial or documentary evidence.

Collector of Customs

Ruled for the forfeiture of all the cargoes in the said containers

Atty. Padilla ostensibly on behalf of his two clients, K.M.K. and INDRAPAL appealed the order to the Commissioner of Customs.

Commissioner of Customs

Affirmed the Collector of Customs.

Commissioner concluded that there was an "intent to unload" in Manila, thus, an attempt to smuggle goods into the country.

Commissioner of Customs found the following facts. 4

Atty. Armando S. Padilla, again as counsel of the consignees K.M.K and Indrapal, appealed to the respondent Court of Tax Appeals (CTA).

ATTY. PADILLA (RESPONDENT’S REP)’S CONTENTIONS:1. K.M.K. and INDRAPAL were "entitled to the release of their cargoes for transshipment to

Singapore so manifested and covered by the Airway bills as in transit, . . . contending that the goods were never intended importations into the Philippines and the same suffer none of any affiliating breaches allegedly found attributable to the other shipments under the Customs and related laws."

CTA

Reversed the decision of the Commissioner.

The subject ten (10) cartons of Articles are hereby released to the carrying airline for immediate transshipment to the country of destination under the terms of the contract of carriage.

Hence this petition. COMMISSIONER OF CUSTOMS’ CONTENTIONS:

1. CA erred in entertaining the petition for review because respondents failed to establish their personality to sue in a representative capacity

4

1. There is a direct flight from Hongkong to Singapore, thus making the transit through Manila more expensive, tedious, and circuitous.

2. The articles were grossly misdeclared, considering that Singapore is a free port.3. The television sets and betamax units seized were of the American standard which is popularly used in Manila, and not of

the European standard which is used in Singapore.4. One of the shippers is a Filipino national with no business connection with her alleged consignee in Singapore.5. The alleged consignee of the prohibited drugs confiscated has no authority to import Mogadon or Mandrax.

2. CA erred in ruling that the goods were importations not intended for the Philippines but for Singapore, thus, not violation the law on technical smuggling under the Tariff and Customs Code.

ISSUE: WON the private respondents failed to establish their personality to sue in a representative capacity, hence making their action dismissable, HELD: YES

"No foreign corporation transacting business in the Philippines without a license, or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or proceeding in any court or administrative agency of the Philippines; but such corporation may be sued or proceeded against before Philippine courts or administrative tribunals on any valid cause of action recognized under Philippine laws."

A foreign corporation not engaged in business in the Philippines may not be denied the right to file an action in the Philippine courts for an isolated transaction.

Therefore, the issue on whether or not a foreign corporation which does not have a license to engage in business in this country can seek redress in Philippine courts boils down as to whether it is doing business or merely entered into an isolated transaction in the Philippines.

The fact that a foreign corporation is not doing business in the Philippines must be disclosed if it desires to sue in Philippine courts under the "isolated transaction rule." Without this disclosure, the court may choose to deny it the right to sue.

In the case at bar, the private respondents K.M.K. and INDRAPAL aver that they are "suing upon a singular and isolated transaction." But they failed to prove their legal existence or juridical personality as foreign corporations.

Their unverified petition before the respondent Court of Tax Appeals merely stated: 1. That petitioner "K.M.K. Gani" is a single proprietorship doing business in accordance with the laws of Singapore. 2. That the Petitioner's (sic) are suing (sic) upon a singular and isolated transaction.

Under the "isolated transaction rule," only foreign corporations and not just any business organization or entity can avail themselves of the privilege of suing before Philippine courts even without a license.

Counsel Armando S. Padilla stated before the respondent Court of Tax Appeals that his clients are "suing upon a singular and isolated transaction." But there is no proof to show that K.M.K. and INDRAPAL are indeed what they are represented to be.

It has been simply stated by Attorney Padilla that K.M.K. Gani is "a single proprietorship," while INDRAPAL is "a firm," and both are "doing business in accordance with the laws of Singapore . . .," with specified addresses in Singapore.

In cases of this nature, these allegations are not sufficient to clothe a claimant of suspected smuggled goods of juridical personality and existence.

The "isolated transaction rule" refers only to foreign corporations. Here the petitioners are not foreign corporations. They do not even pretend to be so.

The first paragraph of their petition before the Court, containing the allegation of their identities, does not even aver their corporate character. On the contrary, K.M.K. alleges that it is a "single proprietorship" while INDRAPAL hides under the vague identification as a "firm," although both describe themselves with the phrase "doing business in accordance with the laws of Singapore."

Absent such proof that the private respondents are corporations (foreign or not), the respondent Court of Tax Appeals should have barred their invocation of the right to sue within Philippine jurisdiction under the "isolated transaction rule" since they do not qualify for the availment of such right.

RE: ATTY PADILLA HAS NO AUTHORITY TO REPRSENT THE RESPONDENTS (SIDE ISSUE)

In this connection, we note also a fatal defect in the pleadings of the private respondents. There is no allegation as to who is the duly authorized representative or resident

agent in our jurisdiction. All we have on record are the pleadings filed by Attorney


Armando S. Padilla who represents himself as the counsel for the private respondents.

The appearance of Atty. Armando S. Padilla as counsel for the two claimants would not suffice.

Generally, a "lawyer is presumed to be properly authorized to represent any cause in which he appears, and no written power of attorney is required to authorize him to appear in court for his client." 13 Nevertheless, although the authority of an attorney to appear for and on behalf of a party may be assumed, it can still be questioned or challenged by the adverse party concerned. 14

The requirement for the production of authority is essential because the client will be bound by his acquiescence resulting from his knowledge that he was being represented by said attorney. 16

The Solicitor General, representing the petitioner-appellant, not only questions the authority of Atty. Armando S. Padilla to represent the private respondents but also the latter's capacity to sue.

In the case at bar, apart from merely alleging that private respondents are foreign corporation (sic) and that summons may be served to their counsel, their petition in the Court of Tax Appeals is bereft of any other factual allegation to show their capacity to sue or be sued in a representative capacity in his jurisdiction.

The representation and the extent of the authority of Atty. Padilla have thus been expressly challenged. But he ignored such challenge which leads us to the only conclusion that he has no authority to appear for such clients if they exist, which we even doubt.

In cases like this, it is the duty of the government officials concerned to require competent proof of the representation and authority of any claimant of any goods coming from abroad and seized by our customs authorities or otherwise appearing to be illegally imported. This desired meticulousness, strictness if you may, should extend to their representatives and counsel. Our government has lost considerable sums of money due to such dubious claims or claimants.

WHEREFORE, the petition is GRANTED; the decision of the Court of Tax Appeals is SET ASIDE,

[G.R. No. 97816. July 24, 1992.]

MERRILL LYNCH FUTURES, INC., vs. HON. COURT OF APPEALS, and the SPOUSES PEDRO M. LARA and ELISA G. LARA,

NATURE: certiorari

The capacity of a foreign corporation to maintain an action in the Philippines against residents thereof, is the principal question in the appellate proceedings at bar. The issue arises from the undisputed facts now to be briefly narrated.

FACTS:

Merrill Lynch Futures, Inc. filed a complaint with the RTC of Quezon City against the Spouses Pedro M. Lara and Elisa G. Lara for the recovery of a debt and interest thereon, damages, and attorney's fees.

ML FUTURES described itself as: a foreign corporation, not doing business in the Philippines, duly organized the laws of the state of Delaware, U.S.A.;" as well as a 'futures commission merchant' duly licensed to act as such in the futures markets and exchanges in the United States, . . . essentially functioning as a broker . . . (executing) orders to buy and sell futures contracts received from its customers on U.S. futures exchanges."

It also defined a "futures contract" as a "contractual commitment to buy and sell a standardized quantity of a particular item at a specified future settlement date and at a price agreed upon, with the purchase or sale being executed on a regulated futures exchange."

ML FUTURES alleged that it entered into a Futures Customer Agreement with the Lara spouses, in which it agreed to act as the latter's broker for the purchase and sale of futures contracts in the U.S.; that orders to buy and sell futures contracts were transmitted to ML FUTURES by the Lara Spouses "through the facilities of Merrill Lynch Philippines, Inc., a Philippine corporation and a company servicing plaintiff's customers;"

because of a loss amounting to US $160,749.69 and after setting this off against an amount of US $75,913.42 then owing by ML FUTURES to the Lara Spouses, said spouses became indebted to ML FUTURES for the ensuing balance of US $84,836.27, which the latter asked them to pay;

Lara Spouses however refused to pay this balance, "alleging that the transactions were null and void because Merrill Lynch Philippines, Inc., the Philippine company servicing accounts of plaintiff, . . . had no license to operate as a 'commodity and/or financial futures broker.'"

ML FUTURES prayed (1) for a preliminary attachment against defendant spouses' properties "up to the value of at least P2,267,139.50," and (2) for judgment, after trial, sentencing the spouses to pay ML FUTURES: the Philippine peso equivalent of $84,836.27;

Laras then filed a motion to dismiss dated December 18, 1987 on the grounds that ML FUTURES had "no legal capacity to sue"

In that motion to dismiss, the defendant spouses averred that ML FUTURES is prohibited by law "to maintain or intervene in any action, suit or proceeding in any court or administrative agency of the Philippines;" and they had never been informed that Merrill Lynch Philippines, Inc. was not licensed to do business in this country;

ML FUTURES filed an OPPOSITION to the defendant spouses' motion to dismiss saying that the latter "have been actively trading in futures contracts . . . in U.S. futures exchanges from 1983 to 1987," and ask, "If the trading . . . (was) made in U.S., how could plaintiff be doing business in the Philippines?": that when they opened an account with ML FUTURES, in order to supply information about themselves, including their bank's name in which appears "Account introduced by Merrill Lynch International, Inc.," and the following statements, to wit:

"This Commodity Trading Advisor (Merrill Lynch, Pierce, Fenner & Smith Philippines, Inc.) is prohibited by the Philippine Securities and Exchange Commission from accepting funds in the trading advisor's name from a client of Merrill Lynch Futures, Inc. for trading commodity interest. All funds in this trading program must be placed with Merrill Lynch Futures, Inc.;"

Therefore, it is a lie for the defendant spouses to assert that they were never informed that Merrill Lynch Philippines, Inc. had not been licensed to do business in the Philippines; and

RTC: Dismissed

CA: Affirmed

SC: Reversed.

It declared that the Trial Court had seen "through the charade in the representation of MLPI and the plaintiff that MLPI is only a trading advisor and in fact it is a conduit in the plaintiff's business transactions in the Philippines as a basis for invoking the provisions of Section 133 of the Corporation Code,"

"SEC. 133. Doing business without a license. — No foreign corporation transacting business in the Philippines without a license, or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or proceeding in any court or administrative agency in the Philippines; but such corporation may be sued or proceeded against before Philippine courts or administrative tribunals on any valid cause of action recognized under Philippine laws."


It also declared that the evidence established that plaintiff had in fact been "doing business" in this country in legal contemplation. adverting to Mentholatum v. Mangaliman, 72 Phil. 524, 528-530, and Section 1 of Republic Act No. 5455 reading as follows: 9

"SEC. 1. Definition and scope of this ACT . ….AND ANY OTHER ACT OR ACTS THAT IMPLY A CONTINUITY OF COMMERCIAL DEALINGS OR ARRANGEMENTS AND CONTEMPLATE TO THAT EXTENT THE PERFORMANCE OF ACTS OR WORKS, OR THE EXERCISE OF SOME FUNCTIONS NORMALLY INCIDENT TO, AND IN PROGRESSIVE PROSECUTION OF COMMERCIAL GAIN OR OF THE PURPOSE AND OBJECT OF THE BUSINESS ORGANIZATION ."

ISSUE: WON the Lara Spouses are now estopped to impugn ML FUTURES capacity to sue them in the courts of the forum.

HELD: YES.

The other ground for dismissal relied upon, i.e., that the plaintiff has no legal capacity to sue — may be understood in two senses: one, that the plaintiff is prohibited or otherwise incapacitated by law to institute suit in Philippine Courts, or two, although not otherwise incapacitated in the sense just stated, that it is not a real party in interest.

Now, the Lara Spouses contend that ML Futures has no capacity to sue them because the transactions subject of the complaint were had by them, not with the plaintiff ML FUTURES, but with Merrill Lynch Pierce Fenner & Smith, Inc.

The Court is satisfied that the facts on record adequately establish that ML FUTURES, operating in the United States, had indeed done business with the Lara Spouses in the Philippines over several years, had done so at all times through Merrill Lynch Philippines, Inc. (MLPI), a corporation organized in this country, and had executed all these transactions without ML FUTURES being licensed to so transact business here, and without MLPI being authorized to operate as a commodity futures trading advisor.

The Court is satisfied, too, that the Laras did transact business with ML FUTURES through its agent corporation organized in the Philippines, it being unnecessary to determine whether this domestic firm was MLPI (Merrill Lynch Philippines, Inc.) or Merrill Lynch Pierce Fenner & Smith (MLPI's alleged predecessor).

The fact is that ML FUTURES did deal with futures contracts in exchanges in the United States in behalf and for the account of the Lara Spouses, and that on several occasions the latter received account documents and money in connection with those transactions.

The rule is that a party is estopped to challenge the personality of a corporation after having acknowledged the same by entering into a contract with it.

DOCTRINE : "doctrine of estoppel to deny corporate existence applies to foreign as well as to domestic corporations;" "one who has dealt with a corporation of foreign origin as a corporate entity is estopped to deny its corporate existence and capacity."

The principle "will be applied to prevent a person contracting with a foreign corporations from later taking advantage of its noncompliance with the statutes, chiefly in cases where such person has received the benefits of the contract where such person has acted as agent for the corporation and has violated his fiduciary obligations as such, and where the statute does not provide that the contract shall be void, but merely fixes a special penalty for violation of the statute. . . ."

Asia Banking Corporation v. Standard Products Co."The general rule that in the absence of fraud a person who has contracted or otherwise dealt with an association in such a way as to recognize and in effect admit its legal existence as corporate body is thereby estopped to deny its corporate existence in any action leading out of or involving such contract or dealing, unless its existence is attacked for causes which have arisen since making the contract or other dealing relied on as an estoppel and this applies to foreign as well as domestic corporations.

There would seem to be no question that the Laras received benefits generated by their business relations with ML FUTURES. Those business relations, according to the Laras themselves, spanned a period of seven (7) years; and they evidently found those relations to be of such profitability as warranted their maintaining them for that not insignificant period of time; otherwise, it is reasonably certain that they would have terminated their dealings with ML FUTURES much, much earlier

Given these facts, and assuming that the Lara Spouses were aware from the outset that ML FUTURES had no license to do business in this country and MLPI, no authority to act as broker for it, it would appear quite inequitable for the Laras to evade payment of an otherwise legitimate indebtedness due and owing to ML FUTURES upon the plea that it should not have done business in this country in the first place, or that its agent in this country, MLPI, had no license either to operate as a "commodity and/or financial futures broker."

G.R. No. L-58028 April 18, 1989 CHIANG KAI SHEK SCHOOL vs. CA and FAUSTINA FRANCO OH

FACTS:

One time, as she reported for work in the Chiang Kai Shek School in Sorsogon, Fausta F. Oh was informed that she had no assignment for the next semester. She had been teaching in the school since 1932 (almost 33 years) and for no apparent or given reason, she was abruptly dismissed from her service.

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. 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.

CFI OF SORSOGON

Dismissed the complaint.

COURT OF APPEALS (acting on an appeal)

Set aside the decision of the CFI

CA held the school suable and liable while absolving the other defendants.

CA also denied MR by the petitioner

Petitioner went to SC via petition for review on certiorari.

ISSUE: WON a school that has not been incorporated may be sued by reason alone of its long continued existence and recognition by the government

HELD: YES. SC ruled against the petitioner on this matter.

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 Faustina Franco Oh 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, which provided as follows:

Unless exempted for special reasons by the Secretary of Public Instruction, any private school or college recognized by the government shall be incorporated under the provisions of Act No. 1459 known as the Corporation Law, within 90 days after


the date of recognition, and shall file with the Secretary of Public Instruction a copy of its incorporation papers and by-laws.

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 school 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.

Having contracted with the private respondent every year for 32 years and thus represented itself as possessed of juridical personality to do so, the petitioner is now estopped from denying such personality to defeat Faustina Oh’s claim against it.

According to Article 1431 of the Civil Code, "through estoppel an admission or representation is rendered conclusive upon the person making it and cannot be denied or disproved as against the person relying on 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.

For the wrongful act of the petitioner, the private respondent is entitled to moral damages. As a proximate result of her illegal dismissal, she suffered mental anguish, serious anxiety, wounded feelings and even besmirched reputation as an experienced teacher for more than three decades. SC also ruled that respondent court did not err in awarding her exemplary damages because the petitioner acted in a wanton and oppressive manner when it dismissed her.

JUASING HARDWARE, petitioner, vs. THE HONORABLE RAFAEL T. MENDOZA, Judge of the Court of First Instance of Cebu, and PILAR DOLLA, respondents.

FACTS:

Juasing Hardware, single proprietorship, represented by its general manager Ong, filed a collection for money suit before the Court of First Instance of Cebu against Pillar Dolla, alleging in its complaint that despite repeated demands respondent Dolla refused to pay the purchase price of items, materials and merchandise which she bought from Juasing Hardware.

In her Answer, defendant stated, among others, that she "has no knowledge about plaintiff's legal personality and capacity to sue as alleged in ... the complaint."

After plaintiff had completed the presentation of its evidence and rested its case, defendant filed a Motion for Dismissal of Action (Demurrer to Evidence) praying that the action be dismissed for plaintiff's lack of legal capacity to sue.

o Defendant in said Motion contended that plaintiff Juasing Hardware is a single proprietorship, not a corporation or a partnership duly registered in accordance with law, and therefore is not a juridical person with legal capacity to bring an action in court.

Plaintiff filed an Opposition and moved for the admission of an Amended Complaint.

Plaintiff's Motion for Reconsideration of the above Order was denied in another Order issued by respondent Judge.

He now seeks to annul the Orders of respondent Judge.

ISSUE:

1. Whether or not Juasing Hardware has the capacity to sue.2. Whether or not it was right for the respondent Judge to outright dismiss the complaint and

deny the petitioner admission to amend the complaint.

HELD:

1. Juasing Hardware has no capacity to sue. The Supreme Court held that Section 1, Rule 3 of the Revised Rules of Court provides

that only natural or juridical persons or entities are authorized by law to be parties in a civil action.

The petitioner is not a natural person, it cannot also be considered as a juridical person since Article 44 of the New Civil Code enumerates what are juridical persons and as single proprietorship, is it not included in the enumeration."Art. 44. The following are juridical persons:(1) The State and its political subdivisions;(2) Other corporations, institutions and entities for public interest or purpose, created by law; their personality begins as soon as they have been constituted according to law;(3) Corporations, partnerships and associations for private interest or purpose to which the law grants a juridical personality, separate and distinct from that of each shareholder, partner or member."

There is no law authorizing sole proprietorships like petitioner to bring suit in court. 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 the proprietor or owner thereof to secure licenses and permits, register the business name, and pay taxes to the national government.

It does not vest juridical or legal personality upon the sole proprietorship nor empower it to file or defend an action in court.

RALLA VS RALLA JULY 23, 1991FACTS:*The CA upheld the disinheritance of Pablo and denied with finality the MR’s.

1. Rosendo Ralla had two sons, Pablo and Pedro. The father apparently loved the former but not the latter, Pablo and his family lived with Rosendo, who took care of all the household expenses.

2. Pablo administered part of the family properties and received a monthly salary of P250.00 plus part of the produce of the land. Pedro lived with his mother, Paz Escarella, in another town. He was not on good terms with his father.

3. Paz Escarella died in 1957 and the two brothers partitioned 63 parcels of land she left as her paraphernalia property. The partition was sustained by this Court in G.R. Nos. 63253-54 on April 27, 1989.


CFI: - Respondent Judge Mendoza dismissed the complaint and denied the admission of the

amended complaint by Juasing.o The Answer of the defendant to the complaint alleged the lack of legal capacity to

sue of the plaintiff as contained in its affirmative defense.o During the trial, it was found out that the affirmative defense of defendant of

plaintiff's lack of legal capacity to sue is very evident for plaintiff Juasing Hardware is a single proprietorship which is neither a partnership nor a corporation. The

4. Meanwhile, on December 22, 1958, Rosendo executed a will disinheriting Pedro and leaving everything he owned to Pablo, to whom he said he had earlier sold a part of his property for P10,000.00. Rosendo himself filed for the probate of the will but pendente lite died on October 1, 1960.

5. On November 3, 1966, the probate judge converted SP 564 into an intestate proceeding. On February 28, 1978, a creditor of the deceased filed a petition for the probate of Rosendo's will in SP 1106, which was heard jointly with SP 564.

6. On August 3, 1979, the order of November 3, 1966, was set aside.7. The last will and testament of Rosendo Ralla was allowed on June 7, 1982 2 but on October

20, 1982, the disinheritance of Pedro was disapproved. This order was elevated to the Court of Appeals in AC-G.R. Nos. 00472, 00489.

8. In a decision dated July 25, 1986, the Court of Appeals reversed the trial court and reinstated the disinheritance clause after finding that the requisites of a valid disinheritance had been complied with in the will.

9. The appellate court noted that Pedro had threatened to kill his father, who was afraid of him and had earlier sued him for slander and grave oral defamation.

10. The motion for reconsideration regarding the upholding of the disinheritance clause of Pedro was denied with finality by the Court of Appeals.

ISSUE:WON PEDRO STILL HAS A LEGAL STANDING IN QUESTIONING THE DEED OF SALE EXECUTED

BY ROSENDO RALLA IN FAVOR OF PABLO FOR 149 PARCELS OF LAND? NOHELD/RATIO:

As a validly disinherited heir, and not claiming to be a creditor of his deceased father, Pedro Ralla had no legal personality to question the deed of sale dated November 29, 1957, between Rosendo Ralla and his son Pablo. Legally speaking, Pedro Ralla was a stranger to the transaction as he did not stand to benefit from its annulment. His disinheritance had rendered him hors de combat.

JESUS M. IBONILLA et al petitioners, vs.PROVINCE OF CEBU, CEBU STATE COLLEGE OF SCIENCE & TECHNOLOGY (College of Agriculture) formerly Sudlon Agricultural School/Cebu (Sudlon) Agricultural School, its BOARD OF TRUSTEES and/or members namely, DR. LOURDES QUISUMBING, DR. ATANASCIO ELMA, DR FRANCISCO B. CONCILLO, MR. TOMAS RAMOS and HON. EMILIO M.R. OSMEÑA., ALQUIN VILLAHERMOSA and the COURT OF APPEALS, Manila, respondents.FACTS:

1. Petitioners are composed of officials, faculty and employees of the Cebu agricultural School, parents of the enrolled student and various school organizations.

2. In 1960 the Province of Cebu donated 40 parcels of land to Cebu Agricultural School subject to two conditions: a. that if the school ceases to operate, ownership of the lots will revert back to the province b. school cannot do any act of disposition in the properties

3. Pursuant to BP 412, certain schools in Province of Cebu were consolidated and hence the Cebu Agricultural School became ab extension of Cebu State College of Agriculture in 1983.

4. Province of Cebu now is demanding the return of the said lots on the grounds that: I donation as void ab initio since the School did not have eprsonalit ii. Cebu ceased to exist

5. Petitioner opposed the rescission of the donation and hence filed an action to quiet tile to the lots.

CFI and CA: dismissed the complaint on the ground that petitioners are not real parties in interest

Respondents contention: moot and academic since there was a MOA bet the school and the rovince of Cebu for the allocation of 19 lots over the subject parcels of land to Province of Cebu and the remaining 23 lots to the school.ISSUE: WoN petitioners are real parties in interestHELD: NO. the dismissal is valid. The numerous petitioners are admittedly not the owners of the lots in question. They do not claim any interest in them that was violated, nor have they suffered any

injury that might warrant a grant of relief. Clearly, the finding of the appellate court and the trial court that they are not real parties in interest who may sue to quiet the title to the properties in question, is correct.Only a real party in interest is allowed to prosecute and defend an action in court (Sec. 2, Rule 3 of the Rules of Court).

By "real party in interest" is meant such party who would be benefited or injured by the judgment or entitled to the avails of the suit. . . . A real party in interest-plaintiff is one who has a legal right, while a real party in interest-defendant is one who has a correlative legal obligation whose act or omission violates the legal right of the former, (Lee vs. Romillo, Jr., 161 SCRA 589.). . . And by real interest, is meant a present substantial interest, as distinguished from a mere expectancy, or future, contingent, subordinate or consequential interest .

Moreover, CA correctly observed that the execution of the Memorandum of Agreement which the Board of Trustees of the School ratified, laid to rest the controversy on whether the Province of Cebu may recover all or only some of the lots it had donated in 1960 to the Cebu (Sudlon) Agricultural School, now the Cebu State College of Agriculture.

VSC COMMERCIAL ENTERPRISES, INC., petitioner, vs. COURT OF APPEALS, OSCAR ESTOPACE and JOSE SILAPAN, respondents.

FACTS: Private Respondents filed with the RTC Manila a complaint against the Register of Deeds of

Manila and petitioner VSC. In their complaint, they alleged that:

a. they are bona-fide stallholders inside the Pamilihang Sentral ng Sta. Mesa, for about ten (10) years or so prior to the institution of this action.

b. They have been paying their market fees to defendant VSC Commercial Enterprises, Inc. under the latter’s claim that he (sic) was the registered owner of the lot and building known as the Pamilihang Sentral ng Sta. Mesa

c. They came into possession of certain documents which would indicate that TCT No. 153406 of the Register of Deeds of Manila (in the name of VSC), originating from O.C.T. No. 2863 covers lands not in Sta. Mesa, Manila but lands situated either in Caloocan, Mariquina Estate or in San Juan, Metro Manila.

d. They also prayed for the cancellation of defendant VSCs title over the subject property. Petitioner, instead of filing an answer, filed a Motion to Dismiss on the grounds that plaintiffs

are not the real parties in interest and complaint states no cause of action, among others. RTC: issued an order dismissing the complaint. (ruled in favor of VSC) Private respondents appealed the said order to the Court of Appeals. CA: reversed and set aside the Order issued by RTC (ruled for respondents) VSC filed an MR to CA but the same was denied. Hence, the present case. Petitioner contends that the CA erred in allowing the respondents to prosecute the complaint

despite the allegations that respondents are not the real party in interest to prosecute the same.

ISSUE: WON respondents are the real party in interest

HELD: No. The petition is impressed with merit. Private respondents do not directly assert title to the thing leased as against

petitioner. Instead, they contend that petitioners title over the subject property is void, praying that the same should be cancelled and the disputed property should be reverted back to the State.

We also agree with petitioner that private respondents are not the real parties in interest. Under Rule 3, Section 2 of the Revised Rules of Court, a real party in interest is defined as 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.


CFI: - Respondent Judge Mendoza dismissed the complaint and denied the admission of the

amended complaint by Juasing.o The Answer of the defendant to the complaint alleged the lack of legal capacity to

sue of the plaintiff as contained in its affirmative defense.o During the trial, it was found out that the affirmative defense of defendant of

plaintiff's lack of legal capacity to sue is very evident for plaintiff Juasing Hardware is a single proprietorship which is neither a partnership nor a corporation. The

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.[9]

The interest of the party must also be personal and not one based on a desire to vindicate the constitutional right of some third and unrelated party.[10] Real interest, on the other hand, means a present substantial interest, as distinguished from a mere expectancy or a future, contingent, subordinate, or consequential interest.[11]

In the case at bar, the private respondents are mere lessees of the property in question. As such, they have no present substantial and personal interest with respect to issues

involving ownership of the disputed property. The only interest they have, in the event that petitioners title over the subject property is cancelled and ownership reverts to the State, is the hope that they become qualified buyers of the subject parcel of land. Undoubtedly, such interest is a mere expectancy.

Even the private respondents themselves claim that in case of reversion of ownership to the State, they only have pre-emptive rights to buy the subject property;[12] that their real interest over the said property is contingent upon the governments consideration of their application as buyers of the same.[13]

It is settled that a suit filed by a person who is not a party in interest must be dismissed.[14]

It is only the government that has the personality to bring an action for the cancellation of petitioners title and reversion of ownership of the subject property to the State. Section 101 of the Public Land Act categorically declares that only the government may institute an action to recover ownership of a public land.

DISPOSITIVE: WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals, dated June 16, 1994 and July 7, 1995 are REVERSED and SET ASIDE. The Order of the Regional Trial Court of Manila (Branch 21) dated March 15, 1991, dismissing the complaint in Civil Case No. 90-55411, is REINSTATED.

J.M. TUASON & CO., INC., represented by it Managing PARTNER, GREGORIA ARANETA, INC., plaintiff-appellee, vs. QUIRINO BOLAÑOS, defendant-appellant.

Rule 3

FACTS: What: Action to Recover possesion of registered land situated in barrio Tatalon, Quezon City

Where: CFI, Rizal, Quezon City

Plaintiff filed a complaint which sseeks to recover disputed lot. The complaint was amended three times with respect to the extent and description of the land sought to be recovered.

Defendant contends his answer:o sets up prescription and title in himself thru "open, continuous, exclusive and public

and notorious possession (of land in dispute) under claim of ownership, adverse to the entire world by defendant and his predecessor in interest" from "time in-memorial"

o that registration of the land in dispute was obtained by plaintiff or its predecessors in interest thru "fraud or error and without knowledge of or interest either personal or thru publication to defendant and/or predecessors in interest."

Defendant prays that the complaint be dismissed with costs and plaintiff required to reconvey the land to defendant or pay its value.

CFI – in favour of Plaintiff

Declaring defendant to be without any right to the land in question and ordering him to restore possession thereof to plaintiff and to pay the latter a monthly rent of P132.62 from January, 1940, until he vacates the land, and also to pay the costs.

Defendant Appeals with the following assigned errors, inter alia:

I. The trial court erred in not dismissing the case on the ground that the case was not brought by the real property in interest.V. The trial court erred in holding that the land in dispute is covered by transfer certificates of Title Nos. 37686 and 37677.Vl. The trial court erred in not finding that the defendant is the true and lawful owner of the land.

ISSUE: Whether or not the case was brought by the real property in interest

HELD: Qualified answer.

There is nothing to the contention that the present action is not brought by the real party in interest, that is, by J. M. Tuason and Co., Inc.

What the Rules of Court require is that an action be brought in the name of, but not necessarily by, the real party in interest. (Section 2, Rule 2.) In fact the practice is for an attorney-at-law to bring the action, that is to file the complaint, in the name of the plaintiff. That practice appears to have been followed in this case, since the complaint is signed by the law firm of Araneta and Araneta, "counsel for plaintiff" and commences with the statement "comes now plaintiff, through its undersigned counsel."

Re Another Corporation representing the Real Party in Interest: ALLOWED (Joint Venture)

It is true that the complaint also states that the plaintiff is "represented herein by its Managing Partner Gregorio Araneta, Inc.", another corporation, but there is nothing against one corporation being represented by another person, natural or juridical, in a suit in court.

The contention that Gregorio Araneta, Inc. cannot act as managing partner for plaintiff on the theory that it is illegal for two corporations to enter into a partnership is without merit, for the true rule is that "though a corporation has no power to enter into a partnership, it may nevertheless enter into a joint venture with another where the nature of that venture is in line with the business authorized by its charter." (Wyoming-Indiana Oil Gas Co. vs. Weston, 80 A. L. R., 1043, citing 2 Fletcher Cyc. of Corp., 1082.)

There is nothing in the record to indicate that the venture in which plaintiff is represented by Gregorio Araneta, Inc. as "its managing partner" is not in line with the corporate business of either of them.

ISSUE 2: Owner of the Land in Dispute:

Admitting, though his attorney, at the early stage of the trial, that the land in dispute "is that described or represented in Exhibit A and in Exhibit B enclosed in red pencil with the name Quirino Bolaños," defendant later changed his lawyer and also his theory and tried to prove that the land in dispute was not covered by plaintiff's certificate of title. The evidence, however, is against defendant, for it clearly establishes that plaintiff is the registered owner of lots, both lots having been originally registered on July 8, 1914 under original certificate of title No. 735.

Re Torrens Title vs Adverse Possession

As the land in dispute is covered by plaintiff's Torrens certificate of title and was registered in 1914, the decree of registration can no longer be impugned on the ground of fraud, error or lack of notice to defendant, as more than one year has already elapsed from the issuance and entry of the decree. Neither court the decree be collaterally attacked by any person claiming title to, or interest in, the land prior to the registration proceedings. Nor could title to that land in derogation of that of plaintiff, the registered owner, be acquired by prescription or adverse possession. (Section 46, Act No. 496.) Adverse, notorious and continuous possession under claim of ownership for the period fixed by law is ineffective against a Torrens title.


http://sc.judiciary.gov.ph/jurisprudence/2002/dec2002/121159.htm#_ftn14






ISSUE 3: Identity of Cause of Action

Allegation: Bolanos filed a motion to dismiss alleging that there is pending before the Court of First Instance of Rizal another action between the same parties and for the same cause and seeking to sustain that allegation with a copy of the complaint filed in said action.

HELD: No same cause of action.

An examination of that complaint reveals that appellant's allegation is not correct, for the pretended identity of parties and cause of action in the two suits does not appear. That other case is one for recovery of ownership, while the present one is for recovery of possession. And while appellant claims that he is also involved in that order action because it is a class suit, the complaint does not show that such is really the case. On the contrary, it appears that the action seeks relief for each individual plaintiff and not relief for and on behalf of others. The motion for dismissal is clearly without merit.

BIENVENIDO LIM, plaintiff and appellant, vs. DEE HAO KIM (alias MARIANO MABASA), ET AL., defendants and appellees.

FACTS:

Dee Chian Hong died intestate in Manila leaving valuable stock in financial and commercial institutions, Crispina Dee was one of his legitimate children and the other fourteen defendants were other heirs.

These other heirs executed an extrajudical settlement of the estate, dividing it among themselves, and in fraud of Crispina, awarded nothing to her.

Bienvenido Lim married Crispina in 1948; Bienvenido filed his action demanding a new partition, delivery of Crispina's inheritance

together with its income, and attorney's fees in 1954. Defendants filed a motion to dismiss on the grounds of lack of personality and prescription. Crispina submitted a motion to dismiss, alleging that plaintiff's complaint usurped a cause of

action completely hers, and that she had never authorized him to institute any action concerning the estate of her deceased father.

CFI

Dismissed the action filed by Bienvenido.

Bienvenido appealed the order of the Manila court of first instance dismissing, upon motion and without trial, his complaint to recover his wife's share (and its fruits) in the estate left by her deceased father.

Bienvenido Lim included his wife as codefendant because she was unwilling to sue with him.

ISSUE: WON Bienvenido has an interest in his wife’s paraphernal properties

HELD: NO

The contract of partition was not void, but merely voidable in so far as it concerns strangers who had mistakenly been included in the partition, as alleged by plaintiff.

Consequently, so long as it was not avoided, the contract had its effects; and when plaintiff married Crispina in 1948 such partition agreement was existing.

Wherefore, to all intents and purposes there was no inheritance brought by her to the marriage; hence, her husband acquired no rights thereto.

Not only that but the wife objects to the action, and under Article 1382 of the Civil Code the husband may not maintain actions of any kind whatsoever with respect to the paraphernal property, without the intervention or consent of the wife.

Anyway, her conduct practically amounts to a renunciation or disposition of her share or paraphernal property.

Judgment affirmed, with costs against appellant.

[G.R. No. 94005. April 6, 1993.]

LUISA LYON NUÑAL, herein represented by ALBERT NUÑAL, and ANITA NUÑAL HORMIGOS, vs. THE COURT OF APPEALS and EMMA LYON DE LEON in her behalf and as guardian ad litem of the minors HELEN SABARRE and KENNY SABARRE, EDUARDO GUZMAN, MERCEDEZ LYON TAUPAN, WILFREDO GUZMAN, MALLY LYON ENCARNACION and DORA LYON DELAS PEÑAS

NATURE: certiorari

FACTS:

Emma Lyon de Leon in her behalf and as guardian ad litem of the minors Helen Sabarre and Kenny Sabarre, Eduardo Guzman, Mercedes Lyon Taupan, Wilfredo Guzman, Mally Lyon Encarnacion and Dona Lyon de las Peñas, filedagainst Luisa Lyon Nuñal, now deceased and herein represented by her heirs, Albert Nuñal and Anita Nuñal Hormigos, for partition and accounting of a parcel of land located in Isabela, Basilan City.

Subject parcel of land was formerly owned by Frank C. Lyon and May Ekstrom Lyon, deceased parents of Helen, Dona, Luisa, Mary, Frank and William James.

Private respondents claimed that said parcel of land, in the name of Frank C. Lyon, has been in possession of petitioner Luisa Lyon Nuñal since 1946 and that she made no accounting of the income derived therefrom, despite demands made by private respondents for the partition and delivery of their shares.

CFI: Granted. Ordered partition, but dismissed complaint on accounting.

CA: Affirmed

On May 17, 1984, an order for the issuance of the writ of execution was issued by the court a quo. 3

On July 17, 1984, Mary Lyon Martin, daughter of the late Frank C. Lyon and Mary Ekstrom Lyon, assisted by her counsel filed a motion to quash the order of execution with preliminary injunction.

She contends that not being a party to the above-entitled case her rights, interests, ownership and participation over the land should not be affected by a judgment in the said case; that the order of execution is unenforceable insofar as her share, right, ownership and participation is concerned, said share not having been brought within the Jurisdiction of the court a quo. TC DENIED.

On September 24, 1986, the Commissioners manifested to the trial court that in view of the fact that the name of Mary Lyon Martin also appears in the Transfer Certificate of Title, she could therefore be construed as one of the heirs.

Without ruling on the manifestation, the lower court issued an order directing the Board of Commissioners to immediately partition the said property.

On January 9, 1987, the lower court issued the assailed order directing the inclusion of Mary Lyon Martin as co-owner with a share in the partition of the property

TC: Granted the inclusion

CA: Dismissed. Affirmed TC.

SC: Granted.


Petitioners contend that the trial court's decision dated December 14, 1974 in the suit ordering the partition of the parcel of land among plaintiffs and defendants has long become final and executory.

Hence the trial court has no jurisdiction to issue the questioned Order dated January 9, 1987 ordering the Board of Commissioners to include Mary Lyon Martin to share in the partition of said property despite the fact that she was not a party to the said case. Said Order, therefore, resulted in an amendment or modification of its decision rendered in Civil Case No. 872.

ISSUE: WON the trial court may order the inclusion of Mary L. Martin as co-heir entitled to participate in the partition of the property considering that she was neither a party plaintiff nor a party defendant in the suit for partition and accounting of the aforesaid property and that the decision rendered in said case has long become final and executory.

HELD: NO. Granted

RATIO:

Petitioners contend that the trial court's decision dated December 14, 1974 in the suit ordering the partition of the parcel of land among plaintiffs and defendants has long become final and executory.

Hence the trial court has no jurisdiction to issue the questioned Order dated January 9, 1987 ordering the Board of Commissioners to include Mary Lyon Martin to share in the partition of said property despite the fact that she was not a party to the said case. Said Order, therefore, resulted in an amendment or modification of its decision rendered in Civil Case No. 872.

Manning International Corporation v. NLRC,We held that ". . ., nothing is more settled in the law than that when a final judgment becomes executory, it thereby becomes immutable and unalterable. The judgment may no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous conclusion of fact or law, and regardless of whether the modification is attempted to be made by the Court rendering it or by the highest Court of land. The only recognized exceptions are the correction of clerical errors or the making of so-called nunc pro tunc entries which cause no prejudice to any party, and, of course, where the judgment is void."

Furthermore, "(a)ny amendment or alteration which substantially affects a final and executory judgment is null and void for lack of jurisdiction, including the entire proceedings held for that purpose."

In the case at bar, the decision of the trial court in Civil Case No. 872 has become final and executory. Thus, upon its finality, the trial judge lost his jurisdiction over the case. Consequently, any modification that he would make, as in this case, the inclusion of Mary Lyon Martin would be in excess of his authority.

The remedy of Mary Lyon Martin is to file an independent suit against the parties in Civil Case No. 872 and all other heirs for her share in the subject property, in order that all the parties in interest can prove their respective claims.

G.R. No. L-9782 April 26, 1957 HILARION CORTEZ vs. JUAN AVILA

FACTS:

Hilarion Cortez alleged in his complaint that since 1935, he has continuously, publicly and adversely occupied a parcel of land, of about sixteen (16) hectares in the Barrio of Conversion, Municipality of Pantabangan, Province of Nueva Ecija.

In the pleading, the land was particularly described: "described in the Original Certificate of Title No. P-1318 in the name (now) of Juan Avila, the herein defendant.”

On November 1946, Cortez applied for a homestead patent on said lot, the same being a public land. His homestead application was duly approved by the Director of Lands, on June 25, 1947.

The issuance of a homestead patent in his favor was recommended by the investigating public lands inspector as well as by the District Land Officer of Nueva Ecija.

However, for reasons unknown to Cortez, said homestead patent has not been issued to him, although he has already become the "equitable owner" of the lot aforementioned.

It was alleged that Defendant Avila filed a free patent application for the same lot, knowing that it had been in continuous and actual possession of the plaintiff since 1935 and despite his (Avila's) knowledge, actual or presumed, of the plaintiff’s application.

Through threat, intimidation and force, Avila succeeded in occupying the lot, on or about June 1953 to the exclusion of the plaintiff Cortez.

On October 15, 1954, Avila secured a free patent on said lot, by falsely alleging that he and his predecessors in interest were in possession of said lot, continuously, since July 4, 1925, and by misrepresenting to the Public Lands inspector that he had complied with the legal requirements.

According to Cortez, in consequence of the aforementioned acts of Avila, he has suffered damages amounting to P6,400 a year, apart from the sum of P5,000 by way of attorney's fees.

Cortez prays for the the court to (a) order cancellation of the free patent of Avila, (b) register the Certificate of Title in his name, (c) restore him in possession of the premises, (d) order Avila to pay him damages and attorney’s fees.

AVILA’S CONTENTION: Avila filed a MOTION TO DISMISS alleging that Cortez has no legal capacity to sue, because the land in dispute is part of the public domain; hence, an action to recover the same may be instituted exclusively by the Government, through the Solicitor-General.

LOWER COURT

Granted the Motion to Dismiss by Avila

Cortez maintains that the lower court erred in granting said motion because the former is the equitable owner of the lot in question. Cortez added that the Government could not have maintained the present action, the same being for the benefit of the plaintiff, in his private capacity.

ISSUE: WON the State is an indispensable party in this case

HELD: YES. Cortez claims a land previously owned by the State. State is an indispensable party.

Obviously, plaintiff Cortez herein has "legal capacity" to sue, which is independent of the public or private character of the lot in controversy. This does not mean, however, that he has a cause of action, or that his appeal should prosper.


To begin with, an indispensable party is lacking. The complaint is predicated upon the major premise that plaintiff is the equitable owner of said lot, for he has fully satisfied the prerequisites to the issuance of a homestead patent in his favor.

This pretense implies that said lot was a public land; that the legal, as well as the equitable, title thereto used to be in the State; and that, although still its legal owner, the State has already been divested of its equitable title, and plaintiff has acquired it, he having fulfilled all the conditions essential for the issuance of a patent in his name. Thus, the issue raised cannot be determined without affecting the interest of the State, which is not a party in this proceeding, and, hence, the State cannot protect and defend therein such interest.

GR: When a complaint is defective by reason of failure to include an indispensable party, reasonable opportunity to amend said pleading must be given, and the action should not be dismissed

EXCEPTION: When plaintiff fails or refuses to include said party, or the latter cannot be sued.

In the case at bar, such policy does not apply.

Plaintiff Cortez has not exhausted the administrative remedies available to him. Indeed, he seeks, in effect a review of the decision of the Director of Lands in causing a patent to be issued to defendant Avila. Yet, plaintiff does not appear to have asked the Director of Lands to reconsider said decision, or to have appealed therefrom to the Secretary of Agriculture and Natural Resources, who controls said official and is the "officer charged with carrying out the provisions" of our revised public land law (C. A. 141, sec. 3).

It is well settled that, before the decision of administrative bodies can be brought to courts for review, all administrative remedies must first be exhausted, especially in disputes concerning public lands, where the finding of said administrative bodies, as to questions of fact, are declared by statute to be “conclusive.”

The order of the Lower Court was affirmed by SC.

SERVICEWIDE SPECIALISTS INCORPORATED, petitioner, vs. HON. COURT OF APPEALS and ARMANDO CUSTODIO, JR., respondents.

FACTS:

The litigation concerns a motor vehicle, a Colt Galant Sigma 1600E, 1977 model, 4-door sedan, colored Baikal White.

Plaintiff's evidence shows that, on August 29, 1977, Eleuterio Bondoc executed and delivered to Carmark Philippines a promissory note in the sum of P66,119.04, payable in installments,and in order to secure payment, a chattel mortgage was executed in favor of Carmark Philippines over the aforementioned motor vehicle, which was subsequently assigned in favor of Filinvest Corporation, with the conformity of Eleuterio Bondoc.

On July 27, 1979, Eleuterio Bondoc, as vendor, executed a deed of sale with assumption of mortgage of the balance of the account in favor of Cesar Dollente, which, upon approval by Filinvest Corporation, Cesar Dollente executed and delivered to Filinvest Corporation a promissory note in the amount of P37,528.83, payable in installments.

On October 26, 1979, Cesar Dollente, as vendor, executed a deed of sale with assumption of mortgage over the aforementioned vehicle for the balance of his account in favor of Ernesto Dollente,.

On September 28, 1979, Ernesto Dollente executed and delivered to Filinvest Corporation a promissory note for the sum of P37,528.83, payable in monthly installments. This obligation was secured by a chattel mortgage executed between Cesar Dollente and Ernesto Dollente, which was annotated and registered.

Subsequently, Filinvest Corporation assigned all its rights and interests on the promissory note and chattel mortgage to plaintiff, with notice to Ernesto Dollente.

The original defendant Ernesto Dollente, having defaulted in the payment of the monthly installments which fell due on June 15, 1979 up to September 15, 1981, plaintiff demanded from said defendant the payment of the entire balance, which includes interest thereon and to return the motor vehicle in question.

By reason of the refusal of the original defendant to pay the entire balance and to surrender possession of the subject motor vehicle, this suit for replevin and damages was filed before the Regional Trial Court of Manila and, upon its filing, upon motion, a writ of seizure was issued and the same was implemented by the sheriff.

A counter-replevin bond having been filed, defendant Armando Custodio, Jr. had obtained possession of the mortgaged vehicle.

Hence, this present petition fro review.

ISSUE:

Whether or not an action filed by the mortgagee for replevin to effect a foreclosure of the property covered by the chattel mortgage would require that the mortgagor be so impleaded as an indispensable party thereto.

HELD:

YES. Dollente being, in the considered view of the appellate court, an indispensable party to the proceedings.

Rule 60 of the Rules of Court allows a plaintiff, in an action for the recovery of possession of personal property, to apply for a writ of replevin if it can be shown that he is "the owner of the property claimed . . . or is entitled to the possession thereof." 7

The plaintiff need not be the owner so long as he is able to specify his right to the possession of the property and his legal basis therefor.

The question then, insofar as the matter finds relation to the instant case, is whether or not the plaintiff (herein petitioner) who has predicated his right on being the mortgagee of a chattel mortgage should implead the mortgagor in his complaint that seeks to recover possession of the encumbered property in order to effect its foreclosure.

In a suit for replevin, a clear right of possession must be established.


RTC: - Finding preponderance of the evidence, it ruled in favor of herein

petitioner, the lower court.o The claim of herein defendant that, Ernesto Dollente's breach of

the chattel mortgage should not bind him, because he is not a privy to such contract, is hardly acceptable, for the reason that the registration of the chattel mortgage is an effective and binding notice to him of its existence.

CA:The Court of Appeals saw merit in the contention of private respondent that the dismissal at the instance of petitioner himself of the amended complaint against Ernesto Dollente after a failure of summons on him, was "fatal to the entire action". Dollente being, in the considered view of the appellate court, an indispensable party to the proceedings.

A foreclosure under a chattel mortgage may properly be commenced only once there is default on the part of the mortgagor of his obligation secured by the mortgage. The replevin in the instant case has been sought to pave the way for the foreclosure of the object covered by the chattel mortgage.

The conditions essential for that foreclosure would be to show, firstly, the existence of the chattel mortgage and, secondly, the default of the mortgagor.

These requirements must be established since the validity of the plaintiffs exercise of the right of foreclosure are inevitably dependent thereon.

It would thus seem, considering particularly an adverse and independent claim of ownership by private respondent, that the lower court acted improvidently when it granted the dismissal of the complaint against Dollente, albeit on petitioner's (then plaintiff) plea, on the ground that the "non-service of summons upon Ernesto Dollente (would) only delay the determination of the merits of the case, to the prejudice of the parties."

In Imson v. Court of Appeals, the Court explained:

. . . An indispensable party is one whose interest will be affected by the court's action in the litigation, and without whom no final determination of the case can be had. The party's interest in the subject matter of the suit and in the relief sought are so inextricably intertwined with the other parties' that his legal presence as a party to the proceeding is an absolute necessity. In his absence there cannot be a resolution of the dispute of the parties before the court which is effective, complete, or equitable.

Conversely, a party is not indispensable to the suit if his interest in the controversy or subject matter is distinct and divisible from the interest of the other parties and will not necessarily be prejudiced by a judgment which does complete justice to the parties in court.

He is not indispensable if his presence would merely permit complete relief between him and those already parties to the action or will simply avoid multiple litigation.

Without the presence of indispensable parties to a suit or proceeding, a judgment of a court cannot attain real finality.

VICTORIANO BORLASA, ET AL., plaintiffs-appellants, vs.VICENTE POLISTICO, ET AL., defendants-appellees.FACTS:

1. Petiitoners Victoriano Borlasa et al filed against Vicente Polistico and others before the CFI Laguna on 1917

2. Their action lodged on: i. securing the dissolution of a voluntary association named Turuhan Polistico & Co., and ii. To compel the defendants to account for and surrender the money and property of the association in order that its affairs may be liquidated and its assets applied according to law.

3. plaintiffs and defendants, together with several hundred other persons, formed an association under the name of Turuhan Polistico & Co. Vicente Polistico, the principal defendant herein, was elected president and treasurer of the association

4. each member obligated himself to pay to Vicente Polistico 50 centavos every Sunday, except that on every fifth Sunday the amount was P1.

5. The inducement to these weekly contributions was found in provisions of the by-laws to the effect that a lottery should be conducted weekly among the members of the association and that the successful member should be paid the amount collected each week, from which, however, the president-treasurer of the society was to receive the sum of P200, to be held by him as funds of the society.

6. By virtue of these weekly lotteries, as alleged by the complaint, Vicente Polistico received sums of money amounting to P74,000.

7. The defendants in the complaint are the members of the board of directors of the association.

DEFENDANTS CONTENTION: they raised the question of lack of parties and set out a list of some hundreds of persons whom they alleged should be brought in as parties defendant on the ground, among others, that they were in default in the payment of their dues to the association.

8. TC dismissed the complaint on the ground that all the members of the Turnuhan Polistico & Co. should be brought in either plaintiffs or defendants.

ISSUE: WoN the TC is correct in ruling that all parties must be impleaded.HELD: NO. (remand back to lower court for further proccedings ) It would be impossible to make all of the persons in interest parties to the cases and to require all of the members of the association to be joined as parties would be tantamount to a denial of justice. The addition of some hundreds of persons to the number of the plaintiffs, made in the amendment to the complaint of December 13, 1922, was unnecessary, and as the presence of so many parties is bound to prove embarrassing to the litigation from death or removal.The court required the plaintiff to amend their complaint and implead only those sufficient persons they think are responsible for their complaint and to make it more desirable, that the complaint should be made to show on its face that the action is intended to be litigated as a class suit. We accordingly recommend that the plaintiffs further amend by adding after the names of the parties plaintiffs the words, "in their own behalf and in behalf of other members of Turuhan Polistico & Co."Note: GR: With reference to the making of parties in a civil action requires, of course, the joinder of all necessary parties wherever possible, and the joinder of all indispensable parties under any and all conditions, the presence of those latter being a sine qua non of the exercise of judicial power. XPN: The class suit contemplates an exceptional situation where there are numerous persons all in the same plight and all together constituting a constituency whose presence in the litigation is absolutely indispensable to the administration of justice. Here the strict application of the rule as to indispensable parties would require that each and every individual in the class should be present. But at this point the practice is so far relaxed as to permit the suit to proceed, when the class is sufficient represented to enable the court to deal properly and justly with that interest and with all other interest involved in the suit. In the class suit, then, representation of a class interest which will be affected by the judgment is indispensable; but it is not indispensable to make each member of the class an actual party.

MR. & MRS. TADEO P. DAEL, petitioners, vs.THE HON. BERNARDO TEVES, as Presiding Judge, Court of First Instance of Misamis Oriental, Branch VIII and DIONISIO EDOROT, VIDAL EDOROT, PONCIANO EDOROT, PETRA EDOROT, DIOSDADA EDOROT, JUANA EDOROT, and the late HERMINIGILDO EDOROT, represented by his heirs. VICTOR EDOROT, PEDRITO EDOROT and JACOBO EDOROT, respondents.

FACTS:

Petitioners filed with the CFI Misamis Oriental, a complaint for: "Ownership, Recovery of Possession & Damages" against the private respondents.

Petitioners in their complaint alleged: that they are the true and absolute owners of a an 18,000 sqm parcel of land in Aplaya, Jasaan, Misamis Oriental, which they from the late Esteban Edorot and that after the death of Esteban Edorot, the defendants (herein private respondents) by means of force, threats and intimidation surreptitiously occupied the said property.

Private respondents, through counsel, filed their Answer with Counterclaim claiming that the property in question is owned by them pro-indiviso by inheritance from their deceased parents.

The case was set for Pre-trial in CFI Misamis presided then by Judge Malvar, counsel for Private respondent and respondent Vidal Edorot (for the other respondents) appeared. 2 other defendants PETRA and HERMINIGILDO died long before the filing of the complaint.


Judge Malvar was transferred to another court and Respondent Judge Teves was appointed to take his place.

Judge Teves issued an ORDER: giving the plaintiff a time within which to file an amended complaint to include the heirs or representatives of said deceased defendants.

Counsel for Private Respondents filed an Ex- Parte Manifestation, praying that the case be dismissed for failure of petitioners to comply with the aforequoted order of the Court to file an amended complaint.

RTC: dismissed the complaint of Petitioners for their failure to comply with the said order issued by Judge Teves.

Petitioners filed an MR but the same was denied, hence the present case. Petitioners contend that respondent judge acted w/o jurisdiction or acted with GAD in

ordering petitioners to file an amended complaint to include the alleged heirs and representatives of Deceased Respondents.

ISSUE: WON petitioner is correct.

HELD: NO.

Private Respondents claim to be the owners and possessors, pro-indiviso by inheritance from their deceased parents, of the subject litigated parcel.

Necessarily then, deceased defendants Herminigildo Edorot and Petra Edorot have an undivided interest, right and participation adverse to that of the petitioners' in the property in litigation.

Since both of them are already dead (Herminigildo died on September 29, 1969 and Petra died on April 5, 1970) even prior to the filing of the complaint against them in the court below and their interest in the property in question having inured by intestacy to their heirs, the latter thereby became the real parties in interest who should be impleaded as defendants without whom no final determination of Civil Case No. 3531 can be had.

Decidedly then they are indispensable parties who should be compulsory joined as defendants in the instant case.

Sections 2 and 7, Rule 3 of the Rules of Court provides-

Section 2. Parties in interest. —Every action must be prosecuted and defended in the name of the real party in interest. All persons having an interest in the subject of the action and in obtaining the relief demanded shall be joined as plaintiffs. All persons who claim an interest in the controversy or the subject thereof adverse to the plaintiff, or who are necessary to complete determination or settlement of the question involved therein shall be joined as defendants.

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.

The heirs of deceased defendants in the case at bar being clearly indispensable parties, respondent Judge acted properly in ordering the amendment of the complaint so as to include the said heirs as defendants.

Petitioners now claim that their failure to amend the complaint was due to the fact that private respondents' counsel failed to inform the Court of the names of the heirs and/or representatives of the deceased defendants (Herminigildo and Petra Edorot) pursuant to Section 16, Rule 3, New Rules of Court which provides-

Section 16. Duty of attorney upon death incapacity or incompetency of party.—Whenever a party to a pending case dies, becomes incapacitated, or incompetent, it shall be the duty of his attorney to inform the court promptly of such death,

incapacity or incompetency and to give the name and residence of his executor, administrator, guardian or other legal representative (Emphasis supplied)

We find petitioners' reliance on the aforequoted provision as misplaced. Rule 3, Section 16 of the Rules applies to a situation where a party (whether plaintiff or defendant) dies after the filing of the complaint and during the pendency of the case. This is not the situation in the case at bar since the two defendants, whose heirs are to be impleaded died even before the filing of the complaint.

DISPOSITIVE: WHEREFORE, the lower court's Order of dismissal, which should be understood to be without prejudice, is AFFIRMED. Cost against petitioners.

AGUSTIN O. CASEÑAS, plaintiff-appellant, vs. CONCEPCION SANCHEZ VDA. DE ROSALES (Substituted by her heirs), ROMEO S. ROSALES, ET AL., defendants-appellees.

Rule 3: Class Suit

FACTS:

Rodolfo Arañas i, acquired the rights and interest over a parcel of land covering an area of more or less than 2,273 square meters and designated as Lot No. 445-A of the Butuan Cadastre No. 84 from the spouses Jose A. Rosales and Concepcion Sanchez under a deed of sale executed on March 18, 1939

Terms of the Deed of Sale: the actual transfer of the aforesaid land unto the vendee would be made only on or before February 18, 1941;

Sometime in 1939, Agustin O. Caseñas acquired from Rodolfo Arañas under a deed of assignment, the latter's rights and interest over the said lot.

that despite the above documented transactions, and despite the arrival of the stipulated period for the execution of the final deed of transfer, the vendors spouses refused to fulfill their obligation to effect such transfer of the said lot to the vendee, Rodolfo Arañas or his assignee, the herein appellant, Agustin O. Caseñas

On August 21, 1952, Rodolfo Arañas and Agustin O. Caseñas filed:WHERE: Court of First Instance of Agusan,WHAT: a complaint for specific performance and enforcement of their alleged right under a certain deed of sale, and damages against the spouses

Thus, the principal relief prayed for in the above complaint was for an order directing the defendants-spouses to "execute a deed of absolute sale of the property described in the complaint in favor of the assignee, plaintiff Agustin O. Caseñas.:

Before trial, after defendant-spouses’ answer, the counsel for the plaintiffs gave notice to the trial court that plaintiff Rodolfo Arañas and defendant Jose A. Rosales had both died.

Lower Court ordered in April 27, 1956, directed, the surviving plaintiff, Agustin O. Caseñas, to amend the complaint to effect the necessary substitution of parties thereon.

Surviving plaintiff, however, failed altogether to comply with the order of April 27, 1956 On July 18, 1957, the lower court dismissed the complaint for failure to comply. No appeal was taken. On April 18, 1960, Agustin Casenas filed with the same court against the widow and heirs of

the late Jose A. Rosales WHAT: to quiet, and for reconveyance of, title to real property, with damages."

The complaint alleged the same facts as the first case. "that the plaintiff (Agustin O. Caseñas) has acquired the above-described property by purchase from its previous owner, Rodolfo Arañas now deceased, ...; and said Rodolfo Aranas had in turn acquired the same property by virtue of another deed of sale executed by Jose A. Rosales, now also deceased;" (Par. 3, Complaint) "that under the terms and stipulations of paragraph 2 of the deed of sale (between


Rosales and Arañas) ... Jose A. Rosales was to hold title to the land in question in favor of Rodolfo Arañas or the latter's signs and successors in interest for a period of (5) years from February 19, 1936, at the expiration of which said Jose A. Rosales was to execute a document conveying absolutely the title to the land in question in favor of the aforementioned Rodolfo Arañas or his assigns and successors in interest" (Par. 9, Complaint) ; "despite which obligation the defendants refused, even after the expiration of the stipulated period to "convey title to the land in question and to execute the corresponding document covering the same."

Plaintiff prayed for judgment "quieting the title of the plaintiff to the land in question and ordering the defendants to execute a deed of conveyance of the same in favor of the said plaintiff" plus costs and damages.

Defendants filed a Motion to Dismiss on several gorunds, among others, Res Judicata, prescription, lack of cause of action, failure to include indispensable parties, and that the contract subject of the complaint was void ab initio.

CFI RULED: dismissed the complaint: The Court, however, believes that this action is barred by prior judgment. The order of dismissal in Civil Case No. 261 was already final and has the effect of an adjudication upon the merits. The parties in Civil Case No. 261 and in this case are substantially the same; the subject matter is the same and there is identity of cause of action. All the elements of res judicata are therefore present.1äwphï1.ñët

Moreover, the complaint states no cause of action if its purpose is to quiet title, because the plaintiff has as yet no title to the land in question. Precisely, this action is brought in order to acquire or secure title by compelling the defendants to execute a deed of sale in favor of the plaintiff. However, this action for specific performance cannot also prosper because being based upon an agreement in writing it is already barred by prescription as the period of ten years has long expired when the present complaint was filed.

ISSUE: WON there was res judicata in the second case

HELD: NONE.

Re Death of a Party:

When certain of the parties died and due notice thereof was given to the trial court, it devolved on the said court to order, in accordance with not the amendment of the complaint, but the appearance of the legal representatives of the deceased the procedure in Rule 3, Section 17 of the Rules of Court:

SEC. 17. Death of Party. — After a party dies and the claim is not thereby extinguished, the court shall order, upon proper notice, the legal representative of the deceased to appear and to be substituted for the deceased, within a period of thirty (30) days, or within such time as may be granted. If the legal representative fails to appear within said time, the court may order the opposing party to procure the appointment of a legal representative of the deceased within a time to be specified by the court, and the representative shall immediately appear for and on behalf of the interest of the deceased. The court charges involved in procuring such appointment, if defrayed by the opposing party, may be recovered as costs. The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or administrator and the court may appoint guardian ad litem for the minor heirs.

An order to amend the complaint, before the proper substitution of parties as directed by the aforequoted rule has been effected, is void and imposes upon the plaintiff no duty to comply therewith to the end that an order dismissing the said complaint, for such non-

compliance, would similarly be void. The continuance of a proceedings during the pendency of which a party thereto dies, without such party having been validly substituted in accordance with the rules, amounts to a "lack of jurisdiction."

Consequently, as the dismissal of first civil case was void, it clearly may not be asserted to bar the subsequent prosecution of the same or identical claim.

As to cause of action, a cause of action is an act or omission of one party in violation of the legal right or rights of the other and both these elements were clearly alleged in the aforesaid complaint.

JOSE BARRAMEDA, DOLORES B. MAGADIA, and JULIAN BARRAMEDA, JR., plaintiffs-appellees, vs. PAULINO BARBARA and MARCELA BARBARA, defendants-appellants.FACTS:

The present case stems from the previous case (Civil Case No. R-119) Paulino and Marcela Barbara (defendants-appellants herein) filed a complaint

against Julian Barrameda (deceased father of the herein plaintiffs- appellees), alleging that Barrameda refused to allow the redemption of the land in question herein, which according to them had been mortgaged to Barrameda for the sum of P270, the original mortgagor and mortgagee being Jacoba Buyet and Juan Reis, respectively.

Juan Reis assigned his rights as mortgagee to Julian Barrameda. Jacoba Buyet was succeeded by her heirs Paulino and Marcela Barbara. Julian Barrameda filed an answer alleging that the transaction between him and Jacoba

Buyet was not a mortgage but a sale with pacto de retro and that neither Jacoba Buyet nor her heirs had redeemed the land within the stipulated period of six years, and, consequently, he, Julian Barrameda, had become the absolute owner of the property in question.

After the above pleadings had been filed and while the case was pending hearing, the court, after being informed that Julian Barrameda had died, ordered the plaintiffs to amend their complaint so as to substitute the legal representatives of Julian Barrameda as defendants.

Although seven months had elapsed since the plaintiffs were notified of said order, they had failed to comply with it.

Counsel for the deceased defendant Julian Barrameda filed a motion for dismissal on the ground that in failing to file an amended complaint, the plaintiffs in said case, R-119 (defendants-appellants herein), showed lack of interest in prosecuting the case.

The court granted the motion, dismissing the case based on the failure of the plaintiffs to comply with the order of the court to amend the complaint so as to substitute as defendants the heirs or representatives of the deceased defendant Julian Barrameda

The plaintiffs in the present case, Jose and Julian Barrameda, Jr., and Dolores B. Magadia, heirs of Julian Barrameda, filed a complaint, in the Court of First Instance of Camarines Sur, against Paulino and Marcela Barbara (plaintiffs in case No. R-119), alleging the facts above stated, and praying that they be declared the owners of the property in question and that the defendants be ordered to indemnify them in the sum of P200 per annum as damages from May, 1947 until the defendants should vacate the land.

The defendants herein Paulino and Marcela Barbara filed an answer, alleging in substance, that the deed which the plaintiffs claim to be of sale with pacto de retro was only of mortgage, which was null and void because their deceased mother Jacoba Buyet, who executed it, had no authority to do so, as the property belonged exclusively to their deceased father Pascual Barbara; that they had been in possession of the land as owners for more than twenty years.


The answer of the defendants ends with the prayer that the document in question be declared null and void; that if it is declared valid, it be considered only as a mortgage or guaranty of one-half of the property in question; and that they be ordered to pay to the plaintiffs only half of the sum of P270 with costs against the plaintiffs.

The plaintiffs in the present case filed a motion entitled "Motion to Dismiss the Counterclaim of the Defendants and Render Judgment in accordance with the Allegations in the Complaint,"based on the grounds:

1. "That the cause of action stated in said counterclaim is barred by prior judgment.2. That the said counterclaim states no cause of action.3. That the answer does not allege any valid defense."

CFI

Rendered judgment declaring the plaintiffs owners of the land in question and ordering the defendants in the present case to deliver the possession to the plaintiffs, and to pay the costs.It ruled that the prior dismissal was a final adjudication on the merits.

The defendants herein appealed to the Court of Appeals.

CA

Certified the present case to the SC considering that all the questions raised are of law and not of fact

ISSUE: WON the CFI was correct in ruling that the prior dismissal of the Civil Case R-119 was final because of the failure of the Barbaras to amend their complaint to substiture the legal representatives of BarramedaHELD: NO

Under Sec. 16, Rule 3 of the Rules of Court it is the duty of the attorney for the deceased defendant to inform the Court of his client's death and furnish it with the name and residence of the executor, administrator, or legal representative of the deceased.

This rule must have taken into consideration the fact that the attorney for the deceased party is in a better position that the attorney for the other party to ascertain who are the legal representative or heirs of his deceased client.

This duty should not be shifted to the plaintiff or his attorney. Although the attorney for the deceased defendant did not furnish the name of the legal

representative of his deceased client, the court directly ordered the plaintiffs to make the substitution without previously requiring the defendants to do so.

Consequently, the order of the court requiring the plaintiffs to make substitution without previously ordering the attorney for the defendants to name the legal representative and ordering the latter to appear, was a violation of Rule 3, sections 16 and 17 5, and was, therefore, void.

The non-compliance with the order could not be considered as failure to prosecute. The fault of the defendants should not be attributed to the plaintiffs, making the latter suffer

the serious consequences.

5 Rule 3, section 16, reads as follows:

"Duty of attorney upon death or incapacity of a party. — Whenever a party to a pending case dies or becomes insane, it shall be the duty of his attorney to inform the court promptly of such death or insanity and to give the name and residence of the executor or administrator, guardian, or other legal representatives of the deceased or insane."Section 17 of the same rule, reads as follows:"Death of party. — After a party dies and the claims is not thereby extinguished, the court shall order, upon proper notice, the legal representative of the deceased to appear and to be substituted for the deceased, within a period of thirty (30) days, or within such time as may be granted. If the legal representative fails to appear within said time, the court may order the opposing party to procure the appointment of a legal representative of the deceased within a time to be specified by the court, and the representative shall immediately appear for and on behalf of the interest of the deceased. The court charges involved in procuring such appointment, if defrayed by the opposing party, may be recovered as costs. The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or administrator and the court may appoint guardian ad litem for the minor heirs."

As the defendant had died, the attorney representing him could not file a motion to dismiss for, his client being dead, he had no longer any standing in court; he had no personality and could not have been represented by an attorney.

But if it had been the heirs of the deceased Barrameda who were represented in filing the motion to dismiss (which was not so), then instead of filing a motion for dismissal they should have appeared as defendants in lieu of the deceased Julian Barrameda.

If they had appeared in court to file a motion for dismissal, they could and should have appeared as defendants as it was their duty to do under sections 16 and 17 of Rule 3, without shifting this duty to the plaintiffs.

The case is ordered returned to the trial court for further and appropriate proceedings

[G.R. No. L-41107. February 28, 1979.]

AMANDA L. VDA. DE DELA CRUZ, ET AL., vs. HON. COURT OF APPEALS, MARCELO ABAGA, MARGARITA D. JOSE, MARTINA D. JOSE, QUIRINO D. JOSE, TEOFILO D. JOSE, ET AL.,

NATURE: Certiorari

FACTS:

Plaintiffs filed an action ejectment and collection of unpaid rentals against Felix Jose and 114 other tenants in the Court Agrarian Relations, Tayug, Pangasinan.

Their complaint alleged that Felix Jose is a tenant over a 4.5 ha. landholding in plaintiffs' hacienda in Tayug, Pangasinan, paying a fixed rental of 850 kilos of palay per hectare per agricultural year; that he failed to pay in full his rentals and despite plaintiffs' repeated demands, Felix Jose refused to vacate the landholding and to pay his obligation.

Atty. Fausto G. Cabotaje, defendant Felix Jose and his 114 co-defendants denied the material averments of the complaint, alleging payment of all the rentals of their respective landholdings.

Trial was commenced. However, Felix Jose died. It appears that upon Jose's demise no substitution of defendant was effected. Trial court rendered judgment against Felix Jose together with the other defendants holding

him liable to plaintiffs for 6,432 kilos of palay as unpaid rentals. Some of his co-defendants then brought the case to the Supreme Court for review on

certiorari whichwas dismissed due to the petitioners' failure to file their brief. To satisfy the award of damages under the decision of the Court of Agrarian Relations, the

conjugal properties of the deceased Felix Jose and his wife were sold at public auction. A certificate of sale dated July 31, 1969 was later issued in favor of plaintiff Amanda L. Vda.

de la Cruz as highest bidder. On October 27, 1970, the heirs of the deceased defendant, through their new counsel, Atty.

Juan V. Landingin, filed a motion to substitute the deceased and to set aside as null void the decisions, orders, writ of execution and sale at public auction made and entered against the latter.

TC: Granted substitution but Denied the motion to set aside the decision and the sale.

CA: Denied

SC: had no choice but to Affirm

The substituted defendants then appealed to the Court of Appeals, raising mainly the question of the validity of the lower court's decision on the ground that despite it's awareness


of the death of said defendant, no substitution was ordered before decision was rendered on March 29, 1962.

ISSUE: WON substitution must still be ordered even if the case is final,

HELD: YES.

1. "in entertaining an appeal from the order of the Court of Agrarian Relations, in reversing the decision of the Court of Agrarian Relations of March 29, 1962, setting aside the same and the auction sale of July 2, 1969, the certificate of sale dated July 31, 1969, and the final deed of sale of August 17, 1979," with respect to Felix Jose, considering that a period of more than eight (8) years had elapsed from the rendition of the decision of the trial court to the filing of the motion for substitution:

3. "in finding that the trial was still going on and not yet terminated when Felix Jose died on June 5, 1961, and that the continuance of the trial after the death of defendant, without such partly having been substituted in accordance with the aforesaid Rule amounts to lack of jurisdiction."

Whether defendant died before or after termination of trial is not all that important because one thing is certain; that he died before the rendition of judgment.

The Court of Appeals took this into consideration when it held that the decision of said court was a "patent nullity" insofar as Felix Jose was concerned.

As stated by the Appellate Court, no substitution of the deceased was ordered by the trial court, in disregard of the provisions of Rule 3, Sec. 17, Rules of Court which reed thus:

SEC. 17. Death of a party. After a party dies and the claim is not thereby extinguished, the court shall order, upon proper notice, the legal representative of the deceased to appear and to be substituted for the deceased within a period of thirty (30) days, or within such time as may be granted. If the legal representative fails to appear within said time, the court may order the opposing party to procure the appointment of a legal representative of the deceased within a time to be specified by the court, and the representative shall immediately appear for and on behalf of the interest of the deceased. The court charges involved in procuring such appointment, if defrayed by the opposing party, may be recovered as costs. The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or administrator and the court may be appoint guardian ad litem for the minor heirs.

Considering the complaint was for ejectment of the tenants, (defendant, being one of them) the provisions of said section and the rulings in the aforementioned cases are indeed applicable to the present case, where the action or the claim is not extinguish account of Section 9, RA 1199, (now RA 6389, Code of Agrarian Reforms) which provides in effect that in case of death or permanent incapacity of the agricultural lessee, the leasehold shall continue between the lessor and the persons enumerated in said Section which include the descendants of the deceased.

But as noted by the Court of Appeals 4 : "it appears that no legal representative was ever summoned to appear in court; that no legal representative appeared to be substituted; and that plaintiffs did not procure the appointment of such legal representatives." As a result, the "continuance of a proceeding during the pendency of which a party thereto dies, without such having been validly substituted in accordance with the rules, amounts to lack of jurisdiction."

Assuming that jurisdiction was ever acquired at the outset over defendant Felix Jose, it was "inevitably impaired on the death of the protestee pending the proceedings below such that unless and until a legal representative is for him duly named and within the jurisdiction of the trial court, no adjudication in the cause could have been accorded any validity or binding effect on any party, in representation of the deceased, without trenching upon the fundamental right to a day in court which is the very essence of the constitutionally enshrined guarantee of due process."

The need therefore for substitution is based on the right of a party to due process. In any case, substitution should be ordered even after judgment has been rendered since

proceedings may still be taken-as was done in this case — like an execution; and the legal representative must appear to protect the interests of the deceased and in all such proceedings.

In this instance, however, the Court of Appeals found that there is "no showing that the appellants were notified of the decision dated March 29, 1962 or of the auction sale held thereafter." Petitioners take issue with the Appellate Court on this point. But since the present petition is for review on certiorari, where "only questions of law may be raised," (R. 45, Sec. 2, Revised Rules of Court), this Court has held in a number of cases that findings of facts by the Court of Appeals are; in general, final and conclusive (Chan vs. Court of Appeals, 33 SCRA 737; Ramirez Te. Corp. vs. Bank of America, 32 SCRA 191; Castro vs. Tamporong, 78 Phil. 804 to name a few), except when: 10

1. the conclusion is a finding grounded entirely on speculation,

2. the inference made is manifestly mistaken, absurd or impossible;

3. there is a grave abuse of discretion;

4. the judgment is based on a misapprehension of facts;

5. the Court of Appeals is making its findings, went beyond the issues of the case and the same are contrary to the submission of both appellant and appellee.

None of the above exceptions however applies to the case at bar, so there is no reason to disturb the findings of the Court of Appeals.

G.R. Nos. L-42699 to L-42709 May 26, 1981

THE HEIRS OF THE LATE FLORENTINA NUGUID VDA. DE HABERER vs. CA ** FEDERICO MARTINEZ, ET AL.

FACTS:

The late Florentina Nuguid Vda. de Haberer, as the duly registered owner, filed in 1964 and 1965, 11 (eleven) complaints for recovery of possession of the parcel of land before the CFI of Rizal.

Florentina presented as evidence, a TCT of the Register of Deeds of Rizal issued in her name. The property was situated in Mandaluyong, Rizal. The late Florentina alleged that private respondents had surreptitiously entered the land and built their houses thereon.

LOWER COURT

Rendered a consolidated decision dismissing all the complaints.

On motion of the late Florentina, the cases were reopened and retried on grounds of newly discovered evidence.

On September 15, 1972, the lower court order the REVIVAL of its decision dismissing all the complaints.

COURT OF APPEALS (acting on appeal)

Dismissed the cases on the ground that the appeal was filed out of time.


SUPREME COURT

On January 29, 1975, SC rendered its judgment setting aside CA’s dismissal of the appeal.

The cases were remanded to the Court of Appeals upon a finding that petitioner duly and timely perfected her appeal within the reglementary period.

Appellant was required to file brief in 45 days days from receipt of notice***

Appellant’s counsel requested for an extension of time within which to file appellant's brief. Respondent court in a resolution dated June 23, 1975 granted the request and gave appellant a 90-day extension (with warning of no further extension) from receipt on June 27, 1975 or up to September 25, 1975 within which to file the appellant's printed brief. On June 23, 1975, private respondent opposed the extension

In the pendency of the case, appellant Florentina died on May 26, 1975. Counsels for appellant notified CA.

Appellant's counsels asked for the suspension of the running of the period within which to file the appellant's brief pending the appointment of an executor of the estate left by their client in the CFI of Quezon City where a petition for the probate of the alleged will of the deceased had been filed by a lawyer, Atty. Sergio Amante.

RESPONDENT’S CONTENTION: The lawyers of the deceased could no longer act for and in her behalf for the reason that their client-attorney relationship had been automatically terminated. Respondents asked that the appeal be DISMISSED.

Not certain whether their services would still be retained by the heirs of the deceased, counsel for the late Florentina reiterated their earlier request in a motion either for an extension of time to file appellant's brief or for the issuance of a resolution suspending the running of the period for filing the same, pending the appointment of an administrator or executor of the estate of the deceased appellant.

COURT OF APPEALS

Denied the appellant counsel’s request for extension and at the same time dismissed the appeal.

CA considered that appellant has already been given a total of 195 days within which to file brief.

Counsel for the deceased filed urgent MR explaining their predicament that the requests for extension/suspension of period to file brief was due to the uncertainty that their services may no longer be retained by the heirs/legal representatives of their deceased client but they felt obligated to preserve the right of such heirs/successors, pending the settlement of the question of who among them should be the executor of the deceased's estate.

CA denied MR

It cited the general principle that "litigants have no right to assume that such extensions will be granted as a matter of course."

ISSUE: WON the CA erred in denying the MR and the admission of the appellant’s brief

HELD: YES.SC said CA erred in applying the general principle (as mentioned above) and summarily denying reconsideration and denying admission of the appellant's brief.

***The rule is: ln the absence of a retainer from the heirs or authorized representatives of his deceased client, the attorney would thereafter have no further power or authority to appear or take any further action in the case, save to inform the court of the client's death and take the necessary steps to safeguard the deceased's rights in the case.

This is what the deceased's counsel did in the case at bar: (1) They properly informed respondent court of the death of the appellant and (2) sought suspension of the proceedings and

of the period for filing appellant's brief pending the appointment of the executor of the deceased's estate.

Section 17, Rule 3 of the Rules of Court sets the RULE ON SUBSTITUTION OF PARTIES in case of death of any of the parties.

Under the Rule, it is the court that is called upon, after notice of a party's death and the claim is not thereby extinguished, to order upon proper notice the legal representative of the deceased to appear within a period of 30 days or such time as it may grant.

Since no administrator of the estate of the deceased appellant had yet been appointed as the same was still pending determination in the CFI of Quezon City, the motion of the deceased's counsel for the suspension of the running of the period within which to file appellant's brief was well-taken.

Under the Rule, the CA should have set a period for the substitution of the deceased party with her legal representative or heirs, failing which, the court is called upon to order the opposing party to procure the appointment of a legal representative of the deceased at the cost of the deceased's estate, and such representative shall then "immediately appear for and on behalf of the interest of the deceased."

CA gravely erred in not following the Rule and requiring the appearance of the legal representative of the deceased and instead dismissing the appeal of the deceased who yet had to be substituted in the pending appeal.

It has been held that when a party dies in an action that survives, and no order is issued by the court for the appearance of the legal representative or of the heirs of the deceased in substitution of the deceased, and as a matter of fact no such substitution has ever been effected , the trial held by the court without such legal representatives or heirs and the judgment rendered after such trial are NULL AND VOID because the court acquired no jurisdiction over the persons of the legal representatives or of the heirs upon whom the trial and the judgment would be binding.

CA erred in ruling: “that upon the demise of the party-appellant, the attorney-client relationship between her and her counsels was automatically severed and terminated, whatever pleadings filed by said counsel with it after the death of said appellant are mere scraps of paper."

SC said that due to said death on May 25, 1975 and severance of the attorney-client relationship, further proceedings and specifically the running of the original 45-day period for filing the appellant's brief should be legally deemed as having been automatically suspended, until the proper substitution of the deceased appellant by her executor or administrator or her heirs shall have been effected within the time set by respondent court pursuant to the cited Rule.

Justice and equity dictate under the circumstances of the case at bar that the rules, while necessary for the speedy and orderly administration of justice, should not be applied with the rigidity and inflexibility of respondent court's resolutions. A liberal, rather than a strict and inflexible adherence to the Rules, is justified not only because appellant (in this case, her estate and/or heirs) should be given every opportunity to be heard but also because no substantial injury or prejudice can well be caused to the adverse parties principally, since they are in actual possession of the disputed land.

The failure of an appellant to file his brief within the time prescribed does not have the effect of dismissing the appeal automatically. Rather, CA has the discretion to dismiss or not to dismiss appellant's appeal, which discretion must be a sound one to be exercised in accordance with the tenets of justice and fair play having in mind the circumstances obtaining in each case.


A final note: On March 19, 1976, counsels submitted with their Manifestation the written authority dated January 20, 1976 individually signed by instituted heirs and/or legal representatives of the testate estate of the deceased Florentina Nuguid Vda. de Haberer granting said counsels full authority to file and prosecute the case and any other incidental cases for and in their behalf, 18 which was duly noted in the Court's Resolution of March 26, 1976. Such manifestation and authority may be deemed the formal substitution of the deceased by her heirs, as in fact they appear as petitioners in the title of the case at bar. Hence, the proper determination of the pending appeal may now proceed, as herein directed.

SC granted the petition. The CA resolutions were set aside. The appellant's brief was admitted and the cases are REMANDED to CA for further proceedings.

SOCORRO SEPULVEDA LAWAS, petitioner, vs. COURT OF APPEALS, HON. BERNARDO LL. SALAS, [as Judge, CFI, Cebu, Branch VIII], and PACIFICO PELAEZ, respondents.

FACTS:

Private respondent Pacifico Pelaez filed a Complaint on December 6, 1972 against petitioner's father, Pedro Sepulveda, for ownership and partition of certain parcels of land.

Defendant Pedro Sepulveda filed his Answer dated December 31, 1972 resisting the claim and raising the special defenses of laches, prescription and failure to ventilate in a previous special proceeding.

During the presentation of evidence for the plaintiff, the defendant died on March 25, 1975. On May 21, 1975, counsels for the deceased defendant filed a notice of death wherein were enumerated the thirteen children and surviving spouse of the deceased.

On May 5, 1975, petitioner filed a petition for letters of administration and she was appointed judicial administratrix of the estate of her late father in July, 1976.

At the hearing of the case on November 27, 1975, Attys. Domingo Antigua and Serafin Branzuela, former counsels for the deceased defendant, manifested in open court that with the death of their client, their contract with him was also terminated and none of the thirteen children nor the surviving spouse had renewed the contract, but instead they had engaged the services of other lawyers in the intestate proceedings.

Notwithstanding the manifestation of the former counsels of the deceased defendant, the respondent trial judge set the case for hearing on January 13, 1976 and sent the notice of hearing to said counsels.

On January 13, 1976, the respondent trial judge issued three orders. o The first order substituted the heirs of the deceased defendant, namely, his thirteen children and

surviving spouse, as defendants; o The second order authorized Atty. Teodoro Almase, counsel for the plaintiff, to present his

evidence in the absence of Attys. Antigua and Branzuela and;o The third order treated the case submitted for decision, after the plaintiff had presented his

evidence and rested his case, and directed that said counsels and the fourteen heirs of the deceased defendant be furnished copies thereof.

On February 19, 1976, ten of the children of the deceased defendant, who apparently did not know that a decision had already been rendered, filed an Answer in-substitution of the deceased defendant through their counsel Atty. Jesus Yray.

o This was denied admission by the respondent trial judge for being already moot and academic because of the earlier decision.

On March 9, 1976, the widow and two other children of the deceased defendant, through their counsel Atty. Delfin Quijano, filed a motion for substitution and for reconsideration of the decision dated January 28, 1976.

o On April 7, 1976, the respondent trial judge issued an order setting aside his decision and setting the case in the calendar for cross-examination of the plaintiff, Pacifico Pelaez, with a proviso that said order was applicable only to the three heirs who had filed the motion.

o On July 14, 1976, the respondent trial judge lifted the order setting aside his decision, despite the verbal petition for postponement of the hearing made by one of the three heirs on the ground of the absence of their counsel.

On July 9, 1976, petitioner, who had been appointed judicial administratrix of the estate of the deceased defendant and who was one of the heirs who had filed an Answer on February 19, 1976, filed a motion to intervene and/or substitute the deceased defendant.

o On August 25, 1976, the respondent trial judge denied the motion for the reason that the decision had already become final.

Petitioner then filed a special civil action of certiorari with the Court of Appeals to annul the proceedings in the respondent trial court.

Hence, the present appeal.

ISSUE: Whether or not the Court the proceedings conducted by the respondent trial judge after the death of the deceased defendant are null and void.

HELD:YES. The appeal is meritorious.

Section 16 of Rule 3 provides as follows:

Duty of attorney upon death, incapacity, or incompetency of party. — Whenever a party to a pending case dies, becomes incapacitated or incompetent, it shall be the duty of his attorney to inform the court promptly of such death, incapacity or incompetency, and to give the name and residence of his executor, administrator, guardian or other legal representative.

The former counsels for the deceased defendant, Pedro Sepulveda, complied with this rule by filing a notice of death on May 21, 1975. They also correctly manifested in open court at the hearing of the case on November 27, 1975, that with the death of their client their contract with him was also terminated and none of the heirs of the deceased had renewed the contract, and the heirs had instead engaged the services of other lawyers in the intestate proceedings.


RTC:

- On January 28, 1976, the respondent trial judge rendered a decision against the heirs of the deceased defendant.

CA:

However, the Court of Appeals dismissed the petition for certiorari.

Both the respondent trial judge and the Court of Appeals erred in considering the former counsels of the deceased defendant as counsels for the heirs of the deceased.

The statement in the decision of the Court of Appeals that "the appearance of the lawyers of their deceased father in court on January 13, 1976 carries the presumption that they were authorized by the heirs of the deceased defendant" is erroneous.

As this Court held in People vs. Florendo (77 Phil. 16), "the attorneys for the offended party ceased to be the attorneys for the deceased upon the death of the latter, the principal."

Moreover, such a presumption was not warranted in view of the manifestation of said lawyers in open court on November 27, 1975 that they were not representing the heirs of the deceased defendant.

Consequently, when on the same date, November 27, 1975, the respondent trial judge issued an order setting the continuation of the trial of the case on January 13, 1976, with notices sent to Atty. Almase for the plaintiff and Attys. Antigua and Branzuela for the deceased defendant, he acted with grave abuse of discretion amounting to excess of jurisdiction.

The refusal of said former counsels of the deceased defendant to cross-examine the plaintiff was justified.

Moreover, as above stated, petitioner had as early as May 5, 1975 filed a petition for letters of administration, and the same was granted in July, 1975.

Section 17 of Rule 3 provides as follows:

Death of party. After a party dies and the claim is not thereby extinguished, the court shag order, upon proper notice, the legal representative of the deceased to appear and to be substituted for the deceased, within a period of thirty (30) days, or within such time as may be granted. If the legal representative fails to appear within said time, the court may order the opposing party to procure the appointment of a legal representative of the deceased within a time to be specified by the court, and the representative shall immediately appear for and on behalf of the interest of the deceased. The court charges involved in procuring such appointment, if defrayed by the opposing party, may be recovered as costs. The heirs of the de ceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or administrator and the court may appoint guardian ad litem for the minor heirs.

In view of the pendency of Special Proceeding No. 37-SF Intestate Estate of Pedro Sepulveda, and the pending application of petitioner to be appointed judicial administratrix of the estate, the respondent trial judge should have awaited the appointment of petitioner and granted her motion to substitute the deceased defendant.

HEIRS OF MAXIMO REGOSO VS CA & BELEN REGOSO JULY 6, 1992FACTS:*An action for judicial partition of property with accounting and damages was filed by Belen Regoso against her husband Maximo Regoso in the RTC of Bulacan. The RTC ruled in favor of Belen Regoso.

*The CA dismissed the appeal and the MR with finality.

1. Regoso died on January 17, 1985 after the case had been submitted for decision, but he was not substituted as defendant by his heirs because, apparently, the trial court was not informed of his death until the decision had been promulgated on November 14, 1988.

2. On November 29, 1988, Regoso's counsel, Attorney Adriano Javier, Sr., filed a notice of appeal which the trial court approved. The appeal was docketed in the Court of Appeals as CA-G.R. No. 20183.

3. The plaintiff, Belen Cruz-Regoso, through counsel, moved to dismiss the appeal on the ground that the deceased defendant ceased to have legal personality and that Attorney Javier's authority to represent him was terminated or expired upon his demise, hence, the notice of appeal filed by said counsel was invalid, a worthless piece of paper.

ISSUE:WON the notice of Appeal filed by Atty. Javier was valid? NO

HELD/RATIO:In the case at bar, no such notice of death, nor a motion for substitution of the deceased

defendant, was ever made. Hence, the trial court could not be expected to know or take judicial notice of the death of defendant, Maximo Regoso, without the proper manifestation from his counsel. It must be remembered that the fault or negligence was Attorney Javier's alone.

The supervening death of the defendant, Maximo Regoso, did not extinguish his wife's action for partition of their conjugal assets, for it is an action that survives. The trial of the case on the merits was already finished before the defendant died. Since it was not informed about that event, the trial court may not be faulted for proceeding to render judgment without ordering the substitution of the deceased defendant. Its judgment is valid and binding upon the defendant's legal representatives or successors-in-interest, insofar as his interest in the property subject of the action is concerned.

*RELEVANT LAW:Under the rules, it is the duty of the attorney for the deceased defendant to inform the court of his client's death and to furnish the court with the names and residences of the executor, administrator, or legal representative of the deceased. Sections 16 and 17, Rule 3 of the Rules of Court provide:Sec. 16. Duty of attorney upon death, incapacity, or incompetency of party.— Whenever a party to a pending case dies, becomes incapacitated or incompetent, it shall be the duty of his attorney to inform the court promptly of such death, incapacity or incompetency, and to give the name and residence of his executor, administrator, guardian or other legal representative.Sec. 17. Death of party.— After a party dies and the claim is not thereby extinguished, the court shall order, upon proper notice, the legal representative of the deceased to appear and to be substituted for the deceased, within a period of thirty (30) days, or within such time as may be granted. If the legal representative fails to appear within said time, the court may order the opposing party to procure the appointment of a legal representative of the deceased within a time to be specified by the court, and the representative shall immediately appear for and on behalf of the interest of the deceased. The court charges involved in procuring such appointment, if defrayed by the opposing party, may be recovered as costs. The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or administrator and the court may appoint guardian ad litem for the minor heirs.

RE DEATH OF A PARTY

RAFAEL S. DIZON, in his capacity as Administrator of the Estate of the Deceased JOSE P. FERNANDEZ, REDENTOR MELO, ELIODORO C. CRUZ, PIER 8 ARRASTRE & STEVEDORING SERVICES, INC., COMPAÑIA MARITIMA, PASIG STEVEDORING COMPANY, INC., and WESTERN PACIFIC CORPORATION,petitioners, vs.HON. COURT OF APPEALS, HON. PROTACIO C. STO. TOMAS, Judge, RTC, Branch 14, Ligao, Albay, and JOSE BALDE, respondents.


FACTS:1. Jose Balde ,respondent herein, filed for the recovery of damages resulting from the alleged

illegal termination of his employment (as Chief Accountant & Collection Manager of Pier 8 since 1973 and Chief Accountant of Western Pacific Corp since 1974) from the so-called "Fernandez Companies" effected by Jose P. Fernandez

2. Defendants filed a motion to dismiss on the ground that the Court had no jurisdiction over the nature of the action, which was essentially a "money claim" arising from an employer-employee relationship exclusively cognizable by the National Labor Relations Commission, and that no official decision had yet been reached regarding termination of Balde's employment.

3. Some two weeks afterwards, or more precisely on November 7, 1987, defendant Jose P. Fernandez died. Notice thereof was given to the Court by his counsel, through a manifestation dated November 16, 1987.

Note: (interruption of facts muna like what the Court did in this case)

The effects of the death of a defendant in a civil suit are dependent upon:i. Nature of the actionii. Time of his demise (death before or after judgment)

PERSONAL ACTION (one for recovery of money, debt or interest thereon)

BEFORE final judgment of RTC AFTER final judgment of RTC- It shall be dismissed to be

prosecuted in the manner especially provided in these ru;es (Sec 21 Rule 3)

- The “especial” manner of the prosecution of said money claims against the decedent is set forth in Rule 86 of the Rules of Court, in connection with the judicial proceedings for the settlement of the estate of a deceased person.

RATIO for the dismissal of the case: that upon the death of the defendant a testate or intestate proceeding shall be instituted in the proper court wherein all his creditors must appear and file their claims which shall be paid proportionately out of the property left by the deceased. It is, therefore, to avoid useless duplicity of procedure that the ordinary action must be wiped out from the ordinary courts.

- The action is not dismissed, and an appeal may be taken by or against the administrator.

- BUT, if thejudgment against the deceased becomes final and executor , it shall be enforced not by execution under Rule 39 but in accordance with Section 5 of Rule 86, i.e by presenting as a claims against the estate.

REAL ACTION (one for recovery of personal property or to enforce a lien thereon and actions to recover damages for an injury to person or property, real or personal) under RULE 3 SEC 17

GR: If defendant dies, the claim against him is NOT thereby extinguished and the action will not be dismissed but continue against the decedent’s legal representative.

LEGAL REPRESENTATIVE OPPOSING PARTY PROCUREMENT OF REPRESENTATIVE- The court shall order, upon

proper notice, the legal - If the legal representative fails to appear within

said time, the court may order the opposing

representative of the deceased to appear and to be substituted for the deceased, within a period of thirty (30) days, or within such time as may be granted.

party to procure the appointment of a legal representative of the deceased within a time to be specified by the court, and the representative shall immediately appear for and on behalf of the interest of the deceased.

- The court charges involved in procuring such appointment, if defrayed by the opposing party, may be recovered as costs.

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

4. Record discloses that the lower court did not dismiss the case against the deceased defendant conformably under Sec 21 of Rule 3 ( why? The action was a personal one: it is for recovery of money, debt or interest thereon)but instead required the defendant’s new counsel, Justice Dizon, to effectively substitute the said deceased w/in 30 days.

5. Counsel of the deceased failed to appear on the hearings twice due to:i. In his first absence, he reasoned out his poor healthii. Second absence, due to late reciving of the telegram of the order

TC : did not dismiss the case but ordered the counsel of defendant for substitution of party. Affirmed by the CA.

ISSUE: WoN the ruling of the TC is correct in not dismissing the case

HELD: NO. The decision of the CA as well as the orders of RTC are reversed for lack of jurisdiction of the subject matter and against the person of the deceased Jose Fernandez as set forth under Sec 17 Rule 3 of the ROC. "When the action is for recovery of money, debt or interest thereon, and the defendant dies before final judgment in the Court of First Instance (now Regional Trial Court), it shall be dismissed to be prosecuted in the manner especially provided in these rules." It was therefore error for the Trial Court to decline to dismiss the suit as against the deceased Fernandez and to insists on continuing with the action as to Fernandez by ordering his substitution by his administrator.

Note: (Sub issue re motion to dismiss filed by defendant Fernandez on the ground that NLRC has jurisdiction)

- Court held that the claims in question do not involve "wages, rates of pay hours of work and other terms and conditions of employment." They do constitute, however, a "termination dispute," and are actually "claims for actual, moral, exemplary and other forms of damages arising from employer-employee relations," unaccompanied by a prayer for reinstatement. As such they are, as the law clearly says, within the "original and exclusive jurisdiction" of Labor Arbiters. In other words, whether under the law at present in force, or that at the time of the filing of the complaint, Jose Balde's cause falls within the exclusive original jurisdiction of the Labor Arbiters and not of the Regional Trial Court (formerly, Court of First Instance).

LAMBERTO V. TORRIJOS, petitioner, vs.THE HONORABLE COURT OF APPEALS, respondent.

FACTS:


Wakat Diamnuan and his wife were the registered owners of ¼ share of a parcel of land in Sitio Cacuban, Barrio Gumatdang, Pitogon, Benguet, issued in their names and in the names of Kangi Erangyas, and the heirs of Komising Tagle, who owned the remaining portions.

On May 11, 1968, Wakat Diamnuan and his wife sold their one-fourth share in favor of petitioner Torrijos for P7,493.00. the deed of sale, however, was refused registration because Torrijos, who produced OCT No. O-36, did not have the copies thereof held by the other co-owners, Kangi Erangyas and heirs of Komising Tagle.

In 1969, the entire property, together with the share of Wakat Diamnuan and his wife, was sold to Victor de Guia for P189,379.50.

Hence, Torrijos prosecuted Wakat Diamnuan for estafa before the Baguio Court of First Instance.

RTC: the trial Judge convicted the accused (WAKAT) in a decision sentencing him to an imprisonment of 3 months of arresto mayor, to pay a fine of P7,493.00 with subsidiary imprisonment, to indemnify petitioner Lamberto Torrijos in the sum of P7,493.00 and to pay the costs.

Thereafter, the accused appealed to the Court of Appeals. August 5, 1973-the accused died Counsel for accused moved to dismiss the appeal under paragraph 1 of Article 89 of the

Revised Penal Code, which provides that the death of a convict extinguishes, not only the personal penalties, but also the "pecuniary penalties" as long as the death occurs before final judgment.

Complainant Torrijos opposed the said motion to dismiss appeal on the ground that the term "pecuniary penalty" should not include civil liability in favor of the offended party, which was decreed by the trial court in this case, as the civil action therefor was not reserved, much less filed separately from the criminal action.

CA: sustained the motion filed by counsel (ruled against Torrijos) Hence, this petition.

HELD: SC ruled in favor of petitioner

It should be stressed that the extinction of civil liability follows the extinction of the criminal liability under Article 89, only when the civil liability arises from the criminal act as its only basis.

The said principle does not apply in instant case wherein the civil liability springs neither solely nor originally from the crime itself but from a civil contract of purchase and sale.

The estafa or swindle existed only after the subsequent sale by the accused of the same interest in favor of Victor de Guia. There was no crime of estafa until the accused re-sold the same property to another individual about 5 years after the first sale to Torrijos.

Then again, Articles 19, 20 and 21 of the New Civil Code on human relations establish the civil liability of the accused in this particular case independently of his criminal liability, despite his death before final conviction.

Article 19 directs that "every person must, in the exercise of his right and the performance of his duties, act with justice, give anymore his due, and observe honesty and good faith." The accused in the case at bar, by executing a second sale of the property which he already sold to the offended party, certainly did not observe honesty nor good faith, much less act with justice to the complaining witness.

Article 20 provides that "every person who, contrary to law, willfully or negligently causes damage to another, shall indemnify the latter for the same." Certainly in deliberately selling again the same property to another person after he had sold the same to the offended party, the accused willfully or intentionally inflicted damage on the offended party, to whom indemnification therefor shall be made by him.

Article 21 states that "any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy, shall compensate the latter for the damage." It is patent that the act of the accused in the case at bar in alienating the same

property which he already sold to the complainant, has violated all the rules of morality and good customs.

Consequently, while the death of the accused herein extinguished his criminal liability including fine, his civil liability based on the laws of human relations aforecited, remains.

There is greater reason to allow the appeal to proceed with respect to the civil liability of the accused as the judgment of conviction did not become final by reason of the appeal of the accused, who died during the pendency of the appeal.

Finally, Section 21 of Rule 3 of the Revised Rules of Court, provides that if defendant dies before the final judgment in the Court of First Instance, an action for the recovery of money, debt or interest thereon "shall be dismissed to be prosecuted in the manner specially provided in these rules," meaning the claim should be presented in the testate or intestate proceedings over the estate of the deceased. The implication is that if death supervenes after the judgment of the Court of First Instance but pending appeal in the appellate court, the action for the recovery of money may not be dismissed. In such case, the name of the offended party shall be included in the title of the case as plaintiff-appellee and the legal representatives or the heirs of the deceased accused should be substituted as defendants-appellants.

JUDGE ENRIQUE T. JOCSON, EDILBERTO Y. EMPESTAN, and ATTY. PRESTON V. BARBASA, petitioners, vs. HON. COURT OF APPEALS and BANK 0F THE PHILIPPINE ISLANDS (BACOLOD MAIN BRANCH), respondents.

Rule 3: Transfer of Interest

On April 26, 1982, petitioner Preston V. Barbasa bought a brand new car from Southern Motors. Filinvest Finance and Leasing Corp. (FFLC) financied the account. This account was later assigned to Filinvest Credit Corp. (FCC), FFLC's sister company.

On July 7, 1983, the car was repossessed by FFLC. On November 8, 1983, the petitioner, claiming that FFLC had acted illegally and maliciously,

filed a complaint for damages against it. Subsequently, the Bank of the Philippine Islands Credit Corporation (BPICC) having bought

FCC, the complaint was amended to include (BPICC) as co-defendant. On July 31, 1987, during the pendency of the case, the Bank of the Philippine Islands (BPI)

acquired all the assets of its wholly owned subsidiary, BPICC. The merger was made known to the court by the petitioners, but BPI was not formally impleaded or substituted for BPICC. The defendants continued to be FFLC and BPICC.

TC: in favour of Barbasa Judge Enrique T. Jocson granted partial execution pending appeal for the sum of P400,000.00 upon a bond of P500,000.00.

In view of the BPI merger, the writ of partial execution was served against the bank. The bank, under protest, delivered to the petitioner TCT No. 121486 to secure the judgement.

It then filed several motions to recall the issued writ, arguing that it was null and void because BPI had never been notified of the proceedings.

Judge Jocson issued an order holding that since BPI had not appealed to the TC decision, the same had become final and executory to BPI.

CA reversed the writ of final execution could not be issued against BPI since it was BPICC (formerly Fil-invest Credit Corporation) that was merged with the Bank of the Philippine Islands and consequently it was BPI that should have been notified of the subsequent proceedings in the case.

It held that notice to BPICC was notice to the BPI, stressing that the merger was made as early as July 31, 1987, before the decision was promulgated. No corresponding substitution had been made of the surviving corporation (BPI) in place of the absorbed defendants (BPICC and FCC)


ISSUE: WON TC decision was binding on BPI given the fact that BPI had not been substituted for the original defendant and had not been notified of the proceedings against them.

HELD: Binding.

A transferee pendente lite stands in exactly the same position as its predecessor-in-interest, the original defendant, and is bound by the proceedings had in the case before the property was transferred to it. It is a proper but not an indispensable party as it would in any event be bound by the judgment against his predecessor. This would follow even if it is not formally included as a defendant through an amendment of the complaint.

BASIS:

Sec. 4, Art. II, of the Articles of Merger between BPICC and BPI states that:

Sec. 4. BPI shall acquire as liquidating dividends all of the assets of BPICC, it being understood that in consonance with the pertinent provisions of the Corporation Code, BPI shall be responsible and liable for all the liabilities and obligations of BPICC in the same manner as if BPI itself incurred such liabilities or obligations, and any claim, action or proceeding pending by or against BPICC shall be prosecuted by or against BPI. Neither the rights of creditors nor any lien upon the property of BPICC shall be impaired by the merger.

Sec. 2. BPI shall take such measures as it may deem necessary or advisable to substitute itself in all suits and proceedings where BPICC is a party and to substitute its name for BPICC in all titles, documents, deeds and papers where BPICC appears as a party.

It is clear that the duty to substitute BPI in the proceedings before the trial court fell on BPI itself and not on any other party. It did not discharge that duty. Consequently, it cannot now claim that it is not bound by the judgment of February 10, 1988. Whether its failure to do so was due to negligence or to a desire to evade possible liability, there is no question that BPI should not benefit from such omission.

Re Appeal by the defendants:

Surely, if the judgment is considered binding upon BPI as a transferee pendente lite, it should follow that the appeal made by the original party would also, by the same token, redound to the transferee's benefit. As it is the transferee that may ultimately be required to satisfy the judgment if it is affirmed on appeal, it is only fair that it be deemed to have also appealed, together with its predecessor-in-interest, from the decision of February 10, 1988.

Re the Final Writ of Execution

The appeal of Civil Case No. 2567 was perfected on March 15, 1988, and the trial court as a consequence lost jurisdiction over the matter. Hence, Judge Jocson had no more authority to order the issuance of the final writ of execution on October 25, 1988, when the case had already come under the exclusive appellate jurisdiction of the Court of Appeals and was, in fact, still pending resolution.

FELIPE ACAR, ET AL., petitioners, vs. HON. INOCENCIO ROSAL, in his capacity as Executive Judge, Court of First Instance of Negros Oriental, 12th Judicial District, respondent.FACTS:

A suit was filed in the Court of First Instance of Negros Oriental by ten persons for their own behalf and that of 9,000 other farm laborers working off and on in sugar cane plantations at the Bais milling district, Negros Oriental, against Compañia General de Tabacos de Filipinas, Central Azucarera de Bais, Compañia Celulosa de Filipinas, Ramon Barata, Aurelio Montinola, Sr., and Miguel Franco.

Plaintiffs sought to recover their alleged participations or shares amounting to the aggregate sum of P14,031,836.74, in the sugar, molasses, bagasse and other derivatives based on the provisions of Republic Act 809 (The Sugar Act of 1952), particularly Sections 1 and 9 thereof.

Furthermore, plaintiffs asked thereunder as well as by separate motion, that the aforementioned court authorize them to sue as pauper litigants, under Sec. 22, Rule 3 of the Rules of Court6

Invoking Sec. 1, subsec. (21) of Art. III of the Constitution of the Philippines7, They alleged that they had no means to pay the docket fee of P14,500.00, being laborers dependent solely on their daily wages for livelihood and possessed of no properties.

And in support of the foregoing, the ten named plaintiffs submitted certificates of the municipal treasurers of their places of residence stating that they have no real property declared in their names in said municipalities.

CFI Denied the plaintiffs claim on the ground that the plaintiffs have regular employment and sources of income and, thus, cannot be classified as poor or paupers.

Judge adopted the definition of "pauper" in Black's Law Dictionary as "a person so poor that he must be supported at public expense". And, as afore-stated, he ruled that petitioners are not that poor

Plaintiffs sought reconsideration of said order but reconsideration was denied Assailing said two CFI orders and asserting their alleged right not to be denied free access to

the courts by reason of poverty, plaintiffs in said case filed herein, the present special civil action or certiorari and mandamus. Petition to litigate as pauper in the instant case beforethe SC was also filed.

ISSUE: WON the petitioners were deprived, by the orders in question, of free access to the courts by reason of poverty. HELD: YES

The definition of the respondent judge does not fit with the purpose of the rules on suits in forma pauperis and the provision of the Constitution, in the Bill of Rights, that: "Free access to the courts shall not be denied to any person by reason of poverty."

It has thus been recognized that: "An applicant for leave to sue in forma pauperis need not be a pauper; the fact that he is able-bodied and may earn the necessary money is no answer to his statement that he has not sufficient means to prosecute the action or to secure the costs

It suffices that plaintiff is indigent (Ibid.), tho not a public charge. And the difference between "paupers" and "indigent" persons is that the latter are "persons

who have no property or source of income sufficient for their support aside from their own labor, though self-supporting when able to work and in employment

It is therefore in this sense of being indigent that "pauper" is taken when referring to suits in forma pauperis.

6 "SECTION 22. Pauper litigant. — 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 favorably to the pauper, unless the court otherwise provides." 7 Subsec. 21, Sec. 1 of Art. III: "Free access to the courts shall not be denied to any person by reason of poverty." It is the one involved

in this case.


Black's Law Dictionary in fact defines pauper, thus: "A person so poor that he must be supported at public expense; also a suitor who, on account of poverty, is allowed to sue or defend without being chargeable with costs"

It is further argued that the docket fee of P14,500 could very well be shouldered by petitioners since there are around 9,000 of them.

It must be remembered, however, that the action in question was filed by way of a class suit under Sec. 12, Rule 3 of ROC.8

So that in the suit before respondent Judge the ten named petitioners herein are the ones suing, albeit for the benefit of all the others.

It follows that the payment of docket fee would be directly charged upon them, not upon the unnamed "9,000 other laborers." And even if the 9,000 other laborers should later bear the payment of said docket fee of P14,500, the same would be spread among them at about P1.60 each. Said cost of pressing their respective average demand of P1.60 each is, to Our mind, a substantial imposition on a seasonal farm laborer earning barely subsistent wages.

And as pointed out, this is only the initial fee; subsequent fees and charges would have to be paid.

The philosophy underlying the constitutional mandate of free access to the courts notwithstanding poverty, therefore, calls for exemption of herein petitioners from payment of the aforesaid legal fees in their assertion and claim of substantial rights under the Sugar Act of 1952.

As regards the fact that the supporting certifications of indigence refer only to the ten named plaintiffs, suffice it to reiterate that this involves a class suit, where it is not practicable to bring all the other 9,000 laborers before the court.

This Court finds the supporting evidence of indigence adequate, showing in petitioners' favor, as plaintiffs in the suit before respondent Judge, the right not to be denied free access to the courts by reason of poverty.

Since they were excluded from the use and enjoyment of said right, mandamus lies to enforce it. Appeal was unavailing, since they were not even accorded the status of litigants, for non-payment of docket fee; and perfecting an appeal would have presented the same question of exemption from legal fees, appeal bond and similar requisites.

Wherefore, petitioners are declared entitled to litigate as paupers in their class suit before respondent Judge and the latter is hereby ordered to grant their petition to litigate in forma pauperis.

[G.R. No. L-49247. March 13, 1979.]

REPUBLIC OF THE PHILIPPINES, vs. HON. WENCESLAO M. POLO, Presiding Judge, Court of First Instance of Samar, Branch V (Calbayog City); BASILIO ROSALES, TRINIDAD D. ENRIQUEZ, JOSE ROÑO, CESAR DEAN, MARIA S. QUESADA, AURORA SOLIMAN, JAIME ROCO and HERMINIGILDO ROSALES,

NATURE: Mandamus

FACTS:

The Court of First Instance of Samar in a decision dated May 10, 1978 in LRC Case granted the application of Basilio Rosales, Herminigildo Rosales, Trinidad D. Enriquez, Jose Roño, Maria S. Quesada, Cesar Dean, Aurora Soliman and Jaime Roco for the registration of thirteen lots (including a small island), with a total area of about seven hectares, located at Barangay Malahug, Tinambacan, Calbayog City.

A copy of that decision was received in the Solicitor General's Office on May 25, 1978.

8 "SECTION 12. Class suit. — When the subject matter of the controversy is one of common or general interest to many persons, and the

parties are so numerous that it is impracticable to bring them all before the court, one or more may sue or defend for the benefit of all. But in such case the court shall make sure that the parties actually before it are sufficiently numerous and representative so that all interests concerned are fully protected. Any party in interest shall have a right to intervene in protection of his individual interest."

Twenty-nine days after service of the said decision, the Solicitor General filed a motion for reconsideration.

A copy of the order denying that motion was received in the Solicitor General's Office on August 18, 1978.

On that same date, he filed a notice of appeal and a motion for an extension of thirty days from August 19 (last day of the thirty-day reglementary period) within which to file the record on appeal. The motion for extension was not acted upon. The record on appeal was filed on September 15, 1978 or within the period sought in the motion for extension.

The lower court disapproved the record on appeal and did not give due course to the Government's appeal because the record on appeal was allegedly filed out of time.

The lower court reasoned out that the thirty-day period should be computed, not from May 25, 1978, when the Solicitor General was served with a copy of the decision, but from May 11, 1978, when the city fiscal of Calbayog City, who represented the Solicitor General at the hearings, was served with that decision.

ISSUE: Whether the thirty-day period should he reckoned from the service of the decision upon the fiscal or from the time it was served upon the Solicitor General.

HELD: SolGen.

RATIO:

We hold that the thirty-day period should be counted from the date when the Solicitor General received a copy of the decision because the service of the decision upon the city fiscal did not operate as a service upon the Solicitor General.

It should be clarified that, although the Solicitor General requested the city fiscal to represent him in the trial court, he, nevertheless, made his own separate appearance as counsel for the State.

In that "notice of appearance", he expressly requested that he should be served in Manila with "all notices of hearings, orders, resolutions, decisions and other processes" and that such service is distinct from the service of notices and other papers on the city fiscal.

The Solicitor General also indicated in his "notice of appearance" that he "retains supervision and control of the representation in this case and has to approve withdrawal of the case, non-appeal or other actions which appear to compromise the interests of the Government" and that "only notices of orders, resolutions and decisions served on him will bind" the Government.

In this case, it is obvious that, strictly speaking, the city fiscal did not directly represent the Government. He was merely a surrogate of the Solicitor General whose office, "as the law office of the Government of the Republic of the Philippines", is the entity that is empowered to "represent the Government in all land registration and related proceedings" (Sec. 1[e], Presidential Decree No. 478).

The trial court in disallowing the Government's appeal relied on the ruling that the service of the decision in a land registration case on the fiscal is necessarily a service on the Solicitor General

The private respondents further contend that the Solicitor General's motion for reconsideration, which was filed on June 23, 1978 or on the twenty-ninth day, did not interrupt the period for appeal because they were personally served with a copy of the motion on June 27, 1978 or three days after the expiration of the period. They invoke the ruling that a motion for reconsideration, which was not served upon the adverse party, could not be entertained and did not interrupt the period for appeal

The instant case is not a case where there was no service at all of the motion for reconsideration, It is a case where the service of the motion was late. But the tardiness is more apparent than real because if the Solicitor General's office, on June 23, 1978, had opted to send a copy of that motion to the private respondents by registered mail, that copy would


have reached them most likely after June 27, 1978, when they were personally served with a copy thereof.

WHEREFORE, we hold that the appeal was perfected seasonably. The trial court's order disallowing petitioner's appeal is reversed and set aside. It is directed to pass upon the record on appeal, and, if found to be sufficient, to give due course to petitioner's appeal. No costs.

G.R. No. L-61997 November 15, 1982

REPUBLIC OF THE PHILIPPINES & TRADERS ROYAL BANK vs. ELFREN PARTISALA and HON. MIDPANTAO L. ADIL, in his capacity as Presiding Judge of the 2nd Branch of the Court of First Instance of Iloilo

Elfren Partisala was accused of estafa before the CFI of Iloilo upon complaint of his employer Traders Royal Bank.

Partisala pleaded guilty and was sentenced to suffer an indeterminate imprisonment from 4 years, 2 months and 1 day (minimum) to 6 years of prision correccional (maximum) together with all the accessory penalties provided for by law and to pay the costs.

Partisala was ordered to reimburse to the bank the amount malversed immediately. After he was sentenced, he filed an application for probation.

Three (3) weeks later, an assistant provincial fiscal and private prosecutor opposed the application for probation. They argued that Partisala can best be rehabilitated in prison and if he is set free, he might commit other crimes.

Before the trial judge could act on the application (which appears to have attracted attention), the Sangguniang Bayan of Calinog, Iloilo, in special session passed a resolution:

"RESOLVED to manifest, as this Body do hereby manifest, the alarm and vehement sentiment of the people of this Municipality over reprehensive conduct of Elfren Partisala for his abstraction and misappropriation of the peoples' savings and deposits and other funds of the Calinog Branch of the Traders Royal Bank.”

The Acting Provincial Fiscal intervened. He sought to educate the trial judge by filing a "MOTION TO CORRECT ERROR IN COMPUTATION OF PENALTY AND TO HOLD IN ABEYANCE PETITION FOR PROBATION."

TRIAL COURT

Denied the motion to correct error/to hold in abeyance petition for probation because of the following:

(a) The motion is in the nature of a motion for reconsideration. It should have been filed before the sentence of the accused became FINAL.

Under P.D. No. 968, the Probation Law, a convict who files a petition for probation automatically waives his right to appeal and therefore his conviction becomes final. Therefore, the instant motion is filed out of time.

(b) The motion, if granted will place the accused in double jeopardy.

The Trial Court also DENIED the MR.

In the meantime, the trial judge GRANTED Partisala's APPLICATION FOR PROBATION.

ISSUE: WON the Acting Provincial Fiscal may properly file the motion in this case

HELD: NO. Only the Solicitor General can represent the Republic.

The Acting Provincial Fiscal’s contention: Partisala should have been sentenced to a penalty higher than six years which would then make him ineligible for probation. (Sec. 9, par. a, Probation Law, as amended.) But even the learned fiscal was not absolutely certain as to the correct penalty. Firstly, he said the penalty "is between 6 years, 8 months, 21 days to 8 years." But alternatively he said that the imposable penalty can also "be in the medium period of prision mayor, which has a range of from 8 years, 1 day and 10 years." He asked that the sentenced imposed on Partisala be "corrected."

The instant petition prays that the orders of the trial judge denying the motion to correct, denying the motion to reconsider the denial, and granting the application for probation be annulled; that the correct penalty be imposed on Partisala; and that his application for probation be denied.

The SC ruled that it does not have to decide whether or not the penalty which the trial judge imposed on Partisala is correct. For correct or not, it is a valid sentence because the trial judge had jurisdiction to impose it. So for the reasons given by him when he denied the motion to correct, the sentence was already beyond his reach, including this Court.

It is to be noted the Republic of the Philippines is one of the petitioners herein. The one who signed the petition for the Republic is a mere second assistant provincial fiscal, albeit he is the Officer-in-Charge of the Iloilo Provincial Fiscal's Office.

We make it known that ONLY THE SOLICITOR GENERAL can bring or defend actions on behalf of the Republic of the Philippines. Actions filed in the name of the Republic of the Philippines IF NOT INITIATED BY THE SOLGEN will be summarily dismissed.

The petition was dismissed by SC for lack of merit.

RULE 4FORTUNE MOTORS PHIL.’S VS CA & METROPOLITAN BANK & TRUST CO. OCTOBER 16, 1989FACTS:*A case was filed by FORTUNE MOTORS for improper venue in the RTC of Manila. The bank filed an MTD which the RTC reserved its resolution until after trial on the merits has finished because the grounds relied upon by defendant were unclear, subsequently the bank filed an MR to this but was denied. *Thus a petition for certiorari was filed to the CA in which it was granted and the case is dismissed without prejudice to it being filed in the proper venue. Hence the petition for review in the Supreme Court.

1. On March 29,1982 up to January 6,1984, private respondent Metropolitan Bank extended various loans to petitioner Fortune Motors in the total sum of P32,500,000.00 (according to the borrower; or P34,150,000.00 according to the Bank) which loan was secured by a real estate mortgage on the Fortune building and lot in Makati, Rizal. (Rollo, pp. 60-62)

2. Due to financial difficulties and the onslaught of economic recession, the petitioner was not able to pay the loan which became due.

3. For failure of the petitioner to pay the loans, the respondent bank initiated extrajudicial foreclosure proceedings. After notices were served, posted, and published, the mortgaged property was sold at public auction for the price of P47,899,264.91 to mortgagee Bank as the highest bidder.

4. The sheriff's certificate of sale was registered on October 24, 1984 with the one-year redemption period to expire on October 24,1985.

5. On October 21, 1985, three days before the expiration of the redemption period, petitioner Fortune Motors filed a complaint for annulment of the extrajudicial foreclosure sale alleging that the foreclosure was premature because its obligation to the Bank was not yet due, the


publication of the notice of sale was incomplete, there was no public auction, and the price for which the property was sold was "shockingly low". (Rollo, pp. 60-68)

6. Before summons could be served private respondent Bank filed a motion to dismiss the complaint on the ground that the venue of the action was improperly laid in Manila for the realty covered by the real estate mortgage is situated in Makati, therefore the action to annul the foreclosure sale should be filed in the Regional Trial Court of Makati. (Rollo, pp. 67-71-A )

7. The motion was opposed by petitioner Fortune Motors alleging that its action "is a personal action" and that "the issue is the validity of the extrajudicial foreclosure proceedings" so that it may have a new one year period to redeem.

ISSUE:WON petitioner's action for annulment of the real estate mortgage extrajudicial foreclosure sale of Fortune Building is a personal action or a real action for venue purposes. REAL ACTION, MUST BE FILED WHERE PROPERTY IS LOCATEDHELD/RATIO:

Real actions or actions affecting title to, or for the recovery of possession, or for the partition or condemnation of, or foreclosure of mortgage on real property, must be instituted in the Court of First Instance of the province where the property or any part thereof lies. A prayer for annulment or rescission of contract does not operate to efface the true objectives and nature of the action which is to recover real property. An action to annul a real estate mortgage foreclosure sale is no different from an action to annul a private sale of real property.

While it is true that petitioner does not directly seek the recovery of title or possession of the property in question, his action for annulment of sale and his claim for damages are closely intertwined with the issue of ownership of the building which, under the law, is considered immovable property, the recovery of which is petitioner's primary objective. The prevalent doctrine is that an action for the annulment or rescission of a sale of real property does not operate to efface the fundamental and prime objective and nature of the case, which is to recover said real property. It is a real action. Respondent Court, therefore, did not err in dismissing the case on the ground of improper venue (Sec. 2, Rule 4) which was timely raised (Sec. 1, Rule 16).

DOMINGA TORRES, plaintiff-appellant, vs.J.M. TUASON & CO., INC. and EUSTAQUIO ALQUIROS, defendants-appellees.

FACTS:

1. Telesfor Deudor was the sole owner of the disputed property situated in Quezon City with an area of 50 quinones (quinon realengo = 5.7755 hectares). He was succeeded by his son Tomas Deudor.

2. Tomas Deudor sole 1 ½ quinines of the land to Juliana de la Cruz, she was succeeded by her son Eisatquio Alquiros.

3. Eustaquio then sold the portion of 690 meters to plaintiff Dominga.

4. Meanwhile, the successors in interest of Tomas Deudor filed actions against J/M Tuason & Co., for the quieting of title. Plaintiff tried to intervene with the said case but went futile.

5. A compromise was made among the Deudors, Eustaquio Alquiros and JM Tuason wherein the disputed property was transferred to JM Tuason & Co., by virtue of sale ,including the portion of Dominga’s.

6. That pursuant to the said agreement, Tuason Co. assumed certain obligations in the sense that a sort of contractual relation existed between Tuason Co. and the purchasers of land from the Deudors including Dominga.

7. Plaintiff Dominga demanded to Tuason Co. the execution of new contract of sale in favour of her but the Company failed to do so.

TC of MANILA ruling: dismissed the complaint since the property is situated in Quezon City, it shall be filed there.

DOMINGA’S CONTENTION: that the nature of the complaint is one of specific performance and therefore personal and transitory in nature

ISSUE: WoN the action involved is within the jurisdiction if RTC QC

YES. The contention of plaintiff is untenable. Although appellant's complaint is entitled to be one for specific performance, yet the fact that she asked that a deed of sale of a parcel of land situated in Quezon City be issued in his favor and that a transfer certificate of title covering said land be issued to her shows that the primary objective and nature of the action is to recover the parcel of land itself because to execute in favor of appellant the conveyance requested there is need to make a finding that she is the owner of the land which in the last analysis resolves itself into an issue of ownership. Hence, the action must be commenced in the province where the property is situated

Note: An action to compel execution of deed of sale of real property is a real action to be brought in the province or city where land is situated.

DR. ANTONIO A. LIZARES, INC., petitioner, vs.HON. HERMOGENES CALUAG, as Judge of the Court of First Instance of Quezon City, and FLAVIANO CACNIO, respondents.

FACTS:

Flaviano Cacnio instituted Civil Case No. Q-5197 of the CFI Rizal, Quezon City Branch, against said petitioner.

Cacnio alleged in his complaint: that he bought from petitioner, on installment, Lot 4, Block 1 of the Sinkang Subdivision in Bacolod City, making therefor a downpayment of P1,206, and the balance of P10,858 to be paid in ten (10) yearly installments.

That he received from petitioner a letter demanding payment of P7,324.69, representing arrears in the payment of installments up to April 20, 1960, plus "regular and overdue" interest, as well as "land taxes”

In view of petitioner’s demand, Cacnio sent thereto a check for P5,824.69, drawn by one Antonino Bernardo in favor of said petitioner, in payment of the amount due from Cacnio by way of arrears.

That "without legal and equitable grounds" therefor, petitioner returned said check and "refused the tender of payment" aforementioned.

That by reason of said illegal act of petitioner, Cacnio is entitled to compensatory damages in the sum of P5,000, plus P2,000 by way of attorney's fees, Cacnio having been constrained to


engage the services of counsel and bring the action; and that petitioner "is doing threatens, or is about to do, or is procuring or suffering

Petitioner moved to dismiss the complaint upon the ground that "venue is improperly laid," for the action affects the title to or possession of real property located in Bacolod City, which was the subject matter of a contract, between petitioner and Cacnio, made in said City.

CFI denied the motion to dismiss upon the ground that the action was in personam.

Petitioner filed with the Court of Appeals a petition praying that said order be set aside and that a writ of prohibition be issued commanding respondent Hon. Hermogenes Caluag, as Judge of said Court, to desist from taking cognizance of said Civil Case No. Q-5197.

CA: rendered a decision dismissing said petition.

Hence, this appeal by certiorari taken by petitioner herein.

ISSUE: WON the main case falls under section 3 of Rule 5 of the Rules of Court

HELD: YES

Section 3, Rule 5 of ROC states, "Actions affecting title to, or for recovery of possession, or for partition or condemnation of, or foreclosure of mortgage on, real property, shall be commenced and tried in the province where the property or any part thereof lies."

CA and CFI Rizal held that Civil Case No. Q-5197 of the latter court is an action in personam, and that, as such, it does not fall within the purview of said section 3, and was properly instituted in the court of first instance of the province in which Cacnio, as plaintiff in said case, resided, pursuant to section 1 of said rule 5.

We are unable to share such view. Although the immediate remedy sought by Cacnio is to compel petitioner to accept the tender of payment allegedly made by the former, it is obvious that this relief is merely the first step to establish Cacnio's title to the real property adverted to above.

Moreover, Cacnio's complaint is a means resorted to by him in order that he could retain the possession of said property.

In short, venue in the main case was improperly laid and the Court of First Instance of Rizal, Quezon City Branch, should have granted the motion to dismiss. 1äwphï1.ñët

DISPOSITIVE: WHEREFORE, the decision appealed from is hereby reversed and another one shall be entered directing respondent Judge to desist from taking further cognizance of Civil Case No. Q-5197 of said court, with costs against respondent Flaviano Cacnio. It is so ordered.

JOSE M. HERNANDEZ, petitioner, vs. DEVELOPMENT BANK OF THE PHILIPPINES and COURT OF FIRST INSTANCE OF BATANGAS, LIPA CITY BRANCH, respondents.

Rule 4: Personal Action

Petitioner Jose M. Hernandez was an employee of private respondent Development Bank of the Philippines in its Legal Department for 21 years until his retirement on February 28, 1966 due to illness.

On August 12, 1964, he was awarded a lot, identified as Lot No. 15, Block No. W-21, in the private respondent's Housing Project at No. 1 West Avenue, Quezon City, containing an area of 810 square meters, in due recognition of his service as Assistant Attorney in DBP’s Legal Department.

On August 31, 1968, after the petitioner received from DBP a statement of account of the purchase price of the said lot and house amounting to P21,034.56, payable on a monthly amortization, he sent to the Housing Project Committee a Cashier's Check dated -October 21, 1968 in the name of his wife in the sum of P21,500.00 to cover the cash and full payment of the purchase price of the lot and house awarded to him.

However, on October 29, 1968, DBP returned to the petitioner ,the aforementioned check, informing him that the private respondent had cancelled the award of the lot and house previously awarded to him on the following grounds:

(1) that he has already retired; (2) that he has only an option to purchase said house and lot; (3) that there are a big number of employees who have no houses or lots; (4) that he has been given his retirement gratuity; and (5) that the awarding of the aforementioned house and lot to an employee of DBP would better subserve the objective of its Housing Project. Petitioner protested against the cancellation of the award of the house and lot in his favor and demanded from private respondent the restoration of all his rights to said award.

However, private respondent refused. Petitioner filed:

WHAT: annulment of the cancellation of the award of the lot and house in his favor and the restoration of all his rights theretoWHERE: Court of First Instance of Batangas

PETITIONER’S CONTENTION: that the cancellation of said award was unwarranted and illegal for he has already become the owner of said house and lot by virtue of said award on August 12, 1964 and has acquired a vested right thereto, which cannot be unilaterally cancelled without his consent

DBP’S ANSWER: motion to dismiss: improper venue. Petitioner's action affects the title to a house and lot situated in Quezon City, the same should have been commenced in the CFI Quezon City where the real property is located and not in the CFI Batangas where petitioner resides

CFI BAtangas: Dismiss the complaint Improper venue

ISSUE: whether the action of the petitioner was properly filed in the Court of First Instance of Batangas

HELD: Properly filed.

DOCTRINES:

Venue of actions or the county where the action is triable depends to a great extent on the nature of the action to be filed, whether it is real or personal. A real action is one brought for the specific recovery of land, tenements, or hereditaments. A 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.


Section 2, Rule 4 of the Rules of Court, "actions affecting title to, or for recovery of possession, or for partition, or condemnation of , or foreclosure of mortgage in real property, shall be commenced and tried where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff".

What is sought for in this case is the annulment of the cancellation of the award of the Quezon City lot and house in his favor originally given him by respondent DBP in service.

This is a PERSONAL ACTION. his action is one to declare null and void the cancellation of the lot and house in his favor which does not involve title and ownership over said properties but seeks to compel respondent to recognize that the award is a valid and subsisting one which it cannot arbitrarily and unilaterally cancel and accordingly to accept the proffered payment in full which it had rejected and returned to petitioner.

Citing Adamus vs. J.M. Tuason & Co., Inc.:

... All the allegations as well as the prayer in the complaint show that this is not a real but a personal action — to compel the defendants to execute the corresponding purchase contracts in favor of the plaintiffs and to pay damages. The plaintiffs do not claim ownership of the lots in question: they recognize the title of the defendant J.M. Tuason & Co., Inc. They do not ask that possession be delivered to them, for they allege to be in possession. The case cited by the defendants (Abao, et al. vs. J. M. Tuason & Co., Inc. G.R. No. L-16796, Jan. 30, 1962) is therefore not in point. In that case, as stated by this Court in its decision, the 'plaintiffs' action is predicated on the theory that they are 'occupants, landholders,' and 'most' of them owners by purchase' of the residential lots in question; that, in consequence of the compromise agreement adverted to above, between the Deudors; and defendant corporations, the latter had acknowledged the right and title of the Deudors in and to said lots; and hence, the right and title of the plaintiffs, as successors-in-interest of the Deudors; that, by entering into said agreement, defendant corporations had, also, waived their right to invoke the indefeasibility of the Torrens title in favor of J. M. Tuason & Co., Inc.; and that defendants have no right, therefore, to oust plaintiffs from the lots respectively occupied by them and which they claim to be entitled to hold. Obviously, this action affects, therefore, not only the possession of real property, but, also, the title thereto. Accordingly, it should have been instituted in the Court of First Instance of the Province of Rizal in which said property is situated (Section 3, Rule 5 of the Rules of Court).

SWEET LINES, INC., petitioner, vs. HON. BERNARDO TEVES, Presiding Judge, CFI of Misamis Oriental Branch VII, LEOVIGILDO TANDOG, JR., and ROGELIO TIRO, respondents.

Rule 4: On the exclusivity of venue in contracts of adhesion

FACTS:

Private respondents Atty. Leovigildo Tandog and Rogelio Tiro, a contractor by professions, bought tickets on December 31, 1971 at the branch office of petitioner, a shipping company transporting inter-island passengers and cargoes, at Cagayan de Oro City

Respondents were to board petitioner's vessel, M/S "Sweet Hope" bound for Tagbilaran City via the port of Cebu.

Upon learning that the vessel was not proceeding to Bohol, since many passengers were bound for Surigao, private respondents per advice, went to the branch office for proper relocation to M/S "Sweet Town". Because the said vessel was already filled to capacity, they were forced to agree "to hide at the cargo section to avoid inspection of the officers of the Philippine Coastguard."

Private respondents alleged that they were, during the trip," "exposed to the scorching heat of the sun and the dust coming from the ship's cargo of corn grits," and that the tickets they

bought at Cagayan de Oro City for Tagbilaran were not honored and they were constrained to pay for other tickets.

Private Respondents then sued petitioner:WHAT: damages and for breach of contract of carriage in the alleged sum of P10,000.00

WHERE: Court of First Instance of Misamis Oriental

PETITIONER’s CONTENTIONS: Condition No. 14 printed at the back of the ticket:

14. It is hereby agreed and understood that any and all actions arising out of the conditions and provisions of this ticket, irrespective of where it is issued, shall be filed in the competent courts in the City of Cebu.

o that the condition of the venue of actions in the City of Cebu is proper since venue may be validly waived, citing cases;

o that is an effective waiver of venue, valid and binding as such, since it is printed in bold and capital letters and not in fine print and merely assigns the place where the action sing from the contract is institution likewise citing cases;

o and that condition No. 14 is unequivocal and mandatory, the words and phrases "any and all", "irrespective of where it is issued," and "shag" leave no doubt that the intention of Condition No. 14 is to fix the venue in the City of Cebu, to the exclusion of other places;

Hence they moved for the dismissal of the complaint on the ground of improper venue.

PRIVATE RESPONDENT’S CONTENTIONS:

Condition No. 14 is not valid, that the same is not an essential element of the contract of carriage, being in itself a different agreement which requires the mutual consent of the parties to it; that they had no say in its preparation, the existence of which they could not refuse, hence, they had no choice but to pay for the tickets and to avail of petitioner's shipping facilities out of necessity; that the carrier "has been exacting too much from the public by inserting impositions in the passage tickets too burdensome to bear," that the condition which was printed in fine letters is an imposition on the riding public and does not bind respondents, citing cases; 13 that while venue 6f actions may be transferred from one province to another, such arrangement requires the "written agreement of the parties", not to be imposed unilaterally; and that assuming that the condition is valid, it is not exclusive and does not, therefore, exclude the filing of the action in Misamis Oriental,

CFI denied the motion to dismiss.

ISSUE: Is Condition No. 14 printed at the back of the petitioner's passage tickets purchased by private respondents, which limits the venue of actions arising from the contract of carriage to theCourt of First Instance of Cebu, valid and enforceable?

HELD: Void and unenforceable.

There is a dearth of and acute shortage in inter- island vessels plying between the country's several islands, and the facilities they offer leave much to be desired. It is hardly just and proper to expect the passengers to examine their tickets received from crowded/congested counters, more often than not during rush hours, for conditions that may be printed much charge them with having consented to the conditions. Condition No. 14 was prepared solely by petitioner, respondents had no say in its preparation. Neither did the latter have the opportunity to take the into account prior to the purpose chase of their tickets. For, unlike the small print provisions of contracts — the common example of contracts of adherence — which are entered into by the insured in his awareness of said conditions, since the insured is afforded the op to and co the same, passengers of inter-island v do not have the


same chance, since their alleged adhesion is presumed only from the fact that they purpose chased the tickets.

Re Subversive of Public Policy:

Condition No. 14 is subversive of public policy on transfers of venue of actions. For, although venue may be changed or transferred from one province to another by agreement of the parties in writing Rule 4, Section 3, of the Rules of Court, such an agreement will not be held valid where it practically negates the action of the claimants, such as the private respondents herein. The philosophy underlying the provisions on transfer of venue of actions is the convenience of the plaintiffs as well as his witnesses and to promote the ends of justice. Considering the expense and trouble a passenger residing outside of Cebu City would incur to prosecute a claim in the City of Cebu, he would most probably decide not to file the action at all. The condition will thus defeat, instead of enhance, the ends of justice. Upon the other hand, petitioner has branches or offices in the respective ports of call of its vessels and can afford to litigate in any of these places. Hence, the filing of the suit in the CFI of Misamis Oriental, as was done in the instant case, will not cause inconvenience to, much less prejudice, petitioner. Clearly, Condition No. 14, if enforced, will be subversive of the public good or interest, since it will frustrate in meritorious cases, actions of passenger cants outside of Cebu City, thus placing petitioner company at a decided advantage over said persons, who may have perfectly legitimate claims against it. The said condition should, therefore, be declared void and unenforceable, as contrary to public policy — to make the courts accessible to all who may have need of their services.

CARLOS BELL RAYMOND and AGUSTIN ALBA, petitioners, vs. HON. COURT OF APPEALS, HON. RICARDO M. ILARDE, etc., and SANTIAGO BITERA, respondents.

FACTS:

A complaint for damages was filed with the Regional Trial Court of Iloilo by Santiago Bitera against Carlos Bell Raymond and Agustin Alba.

Raymond and Alba moved to dismiss the action on the ground of improper venue. They argued that although Bitera's complaint gives his address as 240-C Jalandoni Street,

Iloilo City, he is, and for many years has been actually residing at the so-called UPSUMCO Compound, Bais City, he being the officer-in-charge of the business firm known as UPSUMCO, which has offices at Bais and Manjuyod, Negros Oriental, and that, indeed, his affidavit, appended to his complaint, contains his affirmation that he is "a resident of the UPSUMCO Compound, City of Bais," and shows (in the jurat) that his residence certificate had been issued at Manjuyod, Negros Oriental.

RTC

Denied the motion to dismiss

They then filed a special civil action of certiorari and prohibition with the Court of Appeals.

CA

Dismissed their petition and ruled the following:

Why Bitera chose to file this action for damages in Iloilo City instead of in Dumaguete City is beyond this Court, even as the pleadings show that plaintiff is actually residing at UPSUMCO, the defendants are both residents of UPSUMCO, the cause of damages arose out of a controversy in the UPSUMCO and because of plaintiff's and defendant's positions as officer and board members of UPSUMCO.

Plaintiff is given the right to elect where to bring his action. As plaintiff chose his legal domicile or residence, Court cannot compel him to bring suit in the place where he has his temporary residence

The petititioners filed a petition for review on certiorari with the SC assailing the refusal of the respondent Judge to dismiss the action filed against petitioners by private respondent Santiago Bitera on the ground of improper venue

ISSUE: WON Bitera correctly filed his personal action (complaint for damages) in IloiloHELD: NO

According to Section 2, Rule 4 of the Rules of Court, personal actions, such as Bitera's, "may be commenced and tried where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff."

The term, where a person "resides," or "residence," may be understood as synonymous with domicile: as referring to a person's "permanent home, the place to which, whenever absent for business or pleasure, one intends to return," and it has been held that "a man can have but one domicile at a time."

The term may also be taken in another sense, and it is this which is germane to the determination of venue, as meaning a person's actual residence, different and distinct from his permanent one, or domicile, where he was born and rested, and e.g., where he usually casts his vote during elections.

SC cited previous rulings to illustrate the effect of a person’s actual residence or domicile in determining the venue.9

It was held in Garcia Fule v. Court of Appeals, that the doctrinal rule is that the term "resides" connotes Ex Vi Termini "actual residence' as distinguished from 'legal residence or domicile."

Even where the statute uses the word "domicile," still it construed as meaning residence and not "domicile" in the technical sense. Some cases make a distinction between the terms "residence and "domicile," but as generally used in statutes fixing venue, the terms are synonymous and convey the same meaning as the term "inhabitant".

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 therefore clearly appears that both the respondent Judge and the Court of Appeals, the former in the first instance and the latter on review, committed reversible legal error, if not grave abuse of discretion, in not dismissing Bitera's action despite the fact that its venue had clearly been improperly laid, and had been seasonably objected to on that ground by petitioners in a motion to dismiss.

WHEREFORE, the questioned Order of the respondent Judge denying petitioner's motion to dismiss and the Decision of the Court of Appeals affirming said order are REVERSED AND SET ASIDE on the ground that venue has been improperly laid.

[G.R. No. 53485. February 6, 1991.]

PATRIA ESUERTE and HERMINIA JAYME, vs. HON. COURT OF APPEALS (Eleventh Division), HON. RAFAEL T. MENDOZA, Judge, Branch VI, Court of First Instance of Cebu and MA. BEVERLY TAN, respondents.

NATURE: Certiorari

FACTS:

An action for damages was filed by Beverly Tan against Patria Esuerte and Herminia Jayme with the CFI of Cebu.

Ma. Beverly Tan, a Junior Resident Physician of Corazon Locsin-Montelibano Memorial Hospital, Bacolod City, shouted at, humiliated and insulted Patria Esuerte, Head Nurse,

9 This Court has held that venue was improperly laid in a case where the complaint was filed in the Court of First Instance of Ilocos Norte

by the plaintiff who was born and reared in that province, but whose actual residence at time of suit was admittedly at Quezon City. In another case, where the plaintiffs instituted a personal action 4 in the Court of First Instance at Lipa City, claiming that their domicile was San Juan, Batangas, the Court declared the venue to be erroneously selected in view of the fact that the plaintiffs' place of abode, where they actually reside, was at Quezon City.


Medicare Department of the said hospital and as a result of the said incident, said petitioner complained to the Chief of the Hospital, Dr. Teodoro P. Motus, in writing.

Herminia Jayme, who was one of those who were present at the time of the incident also sent a letter to the Chief of the Hospital, Dr. Teodoro Motus, informing the latter of what she had witnessed

Respondent was advised to explain in writing by the Chief of the Hospital, but private respondent instead of explaining only her side of the incident also complained against the petitioners.

The Discipline and Grievance Committee, Corazon Locsin-Montelibano Memorial Hospital, conducted a fact-finding investigation and later, the Chief of the Hospital, Dr. Teodoro P. Motus, issued A RESOLUTION transmitting the records of the case to the Regional Health Office, No. 6, Jaro, Iloilo City for appropriate action

Esuerte and Jayme filed a motion to dismiss the complaint on the ground of improper venue and for being premature for failure of Tan to exhaust administrative remedies.

CFI: Denied motion to dismiss

CA: Dismissed

SC: Granted. Dismissed for improper venue.

It is the contention of petitioners that the proper venue of the action filed by Tan should be Bacolod City and not Cebu City.

At the time of the filing of her action in court, Tan was actually residing and may be found in Bacolod City.

ISSUE: WON the proper venue of the case is in Bacolod City where Tan temporarily resides.

HELD: Yes.

RATIO:

Section 2(b), Rule 4 of the Rules of Court provides:

"Sec. 2. Venue in Courts of First Instance. —

"xxx xxx xxx

"(b) Personal Actions. — All other actions may be commenced and tried where the defendants 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 choice of venue for personal actions cognizable by the Regional Trial Court is given to the plaintiff but not to the plaintiff's caprice because the matter is regulated by the Rules of Court.

The rule 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.

The option of the plaintiff in personal actions cognizable by the Regional Trial Court is either the place where the defendant resides or may be found or the place where the plaintiff resides. If plaintiff opts for the latter, he is limited to that place.

"Resides" in the rules on venue on personal actions means the place of abode, whether permanent or temporary, of the plaintiff or defendants as distinguished from "domicile" which denotes a fixed permanent residence

And, in Hernandez v. Rural Bank of Lucena, Inc., venue of personal actions should be at the place of abode or place where plaintiffs actually reside, not in domicile or legal residence.

There is no question that private respondent as plaintiff in the Civil Case is a legal resident of Cebu City. Her parents live there.

However, it cannot also be denied that at the time of her filing of the complaint against petitioners, she was a temporary resident of Bacolod City.

She was then employed with the Corazon Locsin Montelibano Memorial Hospital, Bacolod City, as resident physician. Moreover, the acts complained of were committed in Bacolod City. The private respondents were all residents of Bacolod City at the time of the bringing of the action.

Though Tan's employment was only temporary there was no showing when this employment will end. Justice would be better served if the complaint were heard and tried in Bacolod City where all the parties resided.

G.R. No. 154096 August 22, 2008

IRENE MARCOS-ARANETA vs. CA, JULITA C. BENEDICTO and FRANCISCA BENEDICTO-PAULINO

FACTS:

Sometime in 1968 and 1972, Ambassador Roberto S. Benedicto, now deceased, and his business associates (Benedicto Group) organized Far East Managers and Investors, Inc. (FEMII) and Universal Equity Corporation (UEC), respectively.

Petitioner Irene Marcos-Araneta alleges that 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.

When petitioner requested for the reconveyance of said 65% stockholdings, the Benedicto Group refused.

On March 2000, petitioner Irene instituted before the RTC in Batac, Ilocos Norte, two similar complaints for conveyance of shares of stock, accounting and receivership against the Benedicto Group with prayer for the issuance of a TRO.

A motion to dismiss was filed for both complaints, alleging among others (a) improper venue, (b) failure to state a cause of action and (c) that SEC has jurisdiction over intra-corporate disputes and not the RTC.

Upon Benedicto’s motion, both cases were consolidated.

In the preliminary proceedings on the motion to dismiss, a Joint Affidavit of Gilmia B. Valdez, Catalino A. Bactat, and Conchita R. Rasco (who all attested being employed as “household staff” at the Marcos’ Mansion in Brgy. Lacub, Batac, Ilocos Norte) was presented to support the claim of improper venue.

The Joint Affidavit states 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.


Petitioner Irene presented her PhP 5 community tax certificate (CTC) issued on “11/07/99” in Curimao, Ilocos Norte to support her claimed residency in Batac, Ilocos Norte.

May 15, 2000 - Benedicto died and was substituted by his wife, Julita C. Benedicto, and daughter Francisca.

RTC

On June 29, 2000, both complaints were dismissed.

Stating that these partly constituted “real action,” and that Irene did not actually reside in Ilocos Norte, and, therefore, venue was improperly laid.

Petitioner Irene filed an MR. Pending such MR, petitioner filed a Motion to Admit Amended Complaint, putting additional plaintiffs as petitioner’s new trustees, all from Ilocos Norte.

MR was DENIED but amended complaint was admitted and defendants were ordered to answer the complaint.

RTC also denied the Motion to Dismiss the amended complaint filed by Julita and Francisca.

Julita and Francisca filed their answer to avoid being declared in default.

COURT OF APPEALS

Granted petition for certiorari by Julita and Francisca. CA dismissed the amended complaints.

CA denied MR. Petitioner filed petition for review to SC.

Issue: WON venue was properly laid

Held: NO. The venue was improperly laid. Petition dismissed.

In a personal action, the plaintiff seeks the recovery of personal property, the enforcement of a contract, or the recovery of damages.

In the instant case, petitioners are basically asking Benedicto and his Group, as defendants, to acknowledge holding in trust Irene’s purported 65% stockownership of UEC and FEMII, inclusive of the fruits of the trust, and to execute in Irene’s favor the necessary conveying deed over the said 65% shareholdings.

In other words, petitioner seeks to compel recognition of the trust arrangement she has with the Benedicto Group. IT IS AN ACTION IN PERSONAM. The venue of personal actions is the court where the plaintiff or any of the principal plaintiffs reside, or where the defendant or any of the principal defendants reside, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff.

The Court held that as to petitioner, she is not a resident of Batac, as such she cannot opt for Batac as venue of her reconveyance complaint. The CTC she presented is of no moment, anyone can easily secure a CTC.

As to petitioner’s co-plaintiffs, although they are residents of Batac Ilocos Norte, the Court held that venue was still improperly laid. The additional plaintiffs, as new trustees of petitioner, serve only as mere representatives of petitioner. As trustees, they may be accorded, by virtue of Sec. 3 of Rule 3, the right to prosecute a suit, but only on behalf

of the “beneficiary” who must be included in the title of the case and shall be deemed to be the real party-in-interest.

In the final analysis, the residences of Irene’s co-plaintiffs cannot be made the basis in determining the venue of the subject suit. ** The real party in interest is still petitioner Irene Marcos-Araneta.

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. As such, the subject civil cases ought to be commenced and prosecuted at the place where Irene resides.

Another Issue: There is substantial compliance with the verification and certification of non-forum shopping in Julita and Francisca’s petition. Verification is, under the Rules, not a jurisdictional but merely a formal requirement which the court may motu proprio direct a party to comply with or correct. Regarding the certificate of non-forum shopping, the general rule is that all the petitioners or plaintiffs in a case should sign it. As has been ruled by the Court, the signature of any of the principal petitioners or principal parties, as Francisca is in this case, would constitute a substantial compliance with the rule on verification and certification of non-forum shopping.

Another Issue: The CA, in the exercise of its certiorari jurisdiction under Rule 65, is limited to reviewing and correcting errors of jurisdiction only. It cannot validly delve into the issue of trust which, under the premises, cannot be judiciously resolved without first establishing certain facts based on evidence.

FINAL NOTE:

Irene was a resident during the period material of Forbes Park, Makati City. She was not a resident of Brgy. Lacub, Batac, Ilocos Norte, although jurisprudence has it that one can have several residences, if such were the established fact. The Court will not speculate on the reason why petitioner Irene, for all the inconvenience and expenses she and her adversaries would have to endure by a Batac trial, preferred that her case be heard and decided by the RTC in Batac. On the heels of the dismissal of the original complaints on the ground of improper venue, three new personalities were added to the complaint doubtless to insure, but in vain as it turned out, that the case stays with the RTC in Batac.

Litigants ought to bank on the righteousness of their causes, the superiority of their cases, and the persuasiveness of arguments to secure a favorable verdict. It is high time that courts, judges, and those who come to court for redress keep this ideal in mind.

POLYTRADE CORPORATION, plaintiff-appellee, vs. VICTORIANO BLANCO, defendant-appellant.

FACTS:

Suit before the Court of First Instance of Bulacan on four causes of action to recover the purchase price of rawhide delivered by plaintiff to defendant.

Plaintiff corporation has its principal office and place of business in Makati, Rizal. Defendant is a resident of Meycauayan, Bulacan. Defendant moved to dismiss upon the ground of improper venue.

He alleges that the suit can only be instituted in the courts of Manila since they had an agreement stating that “the parties agree to sue and be sued in the courts of Manila.”

Charles’ Angels Digest Bank - BVTC| 45RTRTC:

- The Bulacan court overruled him.

Defendant appealed.

ISSUE:Whether or not venue was properly laid in the province of Bulacan where defendant is a resident.

HELD:

YES. Venue here was properly laid. The stipulation that “the parties agree to sue and be sued in the courts of Manila,” does not preclude

the filing of suits in the residence of plaintiff or defendant. The plain meaning is that the parties merely consented to be sued in Manila.

Qualifying or restrictive words which would indicate that Manila and Manila alone is the venue are totally absent therefrom.

For, that agreement did not change or transfer venue. It simply is permissive. The parties solely agreed to add the courts of Manila as tribunals to which they may resort. They did not waive their right to pursue remedy in the courts specifically mentioned in Section 2(b) of

Rule 4. Renuntiatio non praesumitur.

A MUST NOTE: o The provisions of the Rules of Court on venue of personal actions provides that

“actions may be commenced and tried where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff.”

o “By written agreement of the parties the venue of an action may be changed or transferred from one province to another.”

VIRGILIO CAPATI VS. JESUS OCAMPO APRIL 30, 1982FACTS:*Plaintiff filed an action for recovery of consequential damages in the amount of 85,000 in the RTC of Pampanga. RTC dismissed the case because of improper venue thus the petition to the Supreme Court.

1. Plaintiff Virgilio Capati a resident of Bacolor, Pampanga, was the contractor of the Feati Bank for the construction of its building in Iriga, Camarines Sur. On May 23, 1967, plaintiff entered into a sub-contract with the defendant Dr. Jesus Ocampo, a resident of Naga City, whereby the latter, in consideration of the amount of P2,200.00, undertook to construct the vault walls, exterior walls and columns of the said Feati building in accordance with the specifications indicated therein.

2. Defendant further bound himself to complete said construction on or before June 5, 1967 and, to emphasize this time frame for the completion of the construction job, defendant affixed his signature below the following stipulation written in bold letters in the sub-contract: "TIME IS ESSENTIAL, TO BE FINISHED 5 JUNE' 67."

3. Claiming that defendant finished the construction in question only on June 20, 1967, plaintiff filed in the Court of First Instance of Pampanga an action for recovery of consequential damages in the sum of P85,000.00 with interest, plus attorney's fees and costs. The complaint alleged inter alia that "due to the long unjustified delay committed by defendant, in open violation of his express written agreement with plaintiff, the latter has suffered great irreparable loss and damage ... "

4. Defendant filed a motion to dismiss the complaint on the ground that venue of action was improperly laid. The motion was premised on the stipulation printed at the back of the contract which reads:

14.That all actions arising out, or relating to this contract may be instituted in the Court of First Instance of the City of Naga.

5. Plaintiff filed an opposition to the motion, claiming that their agreement to hold the venue in the Court of First Instance of Naga City was merely optional to both contracting parties. In support thereof, plaintiff cited the use of the word "may " in relation with the institution of any action arising out of the contract.

ISSUE:WON CAPATI CORRECTLY FILED IN THE CFI OR RTC OF PAMPANGA HIS CASE AGAINTS

OCAMPO OR HE SHOULD HAVE FILED IN THE CFI OR RTC OF NAGA AS STATED IN THE CONTRACT? CORRECTLY FILED IN PAMPANGA.HELD/RATIO:Relevant Law:

The rule on venue of personal actions cognizable by the courts of first instance is found in Section 2 (b), Rule 4 of the Rules of Court, which provides that such "actions may be commenced and tried where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff." The said section is qualified by the following provisions of Section 3 of the same rule:

By written agreement of the parties the venue of an action may be changed or transferred from one province to another.

It is well settled that the word "may" is merely permissive and operates to confer discretion upon a party. Under ordinary circumstances, the term "may be" connotes possibility; it does not connote certainty. "May" is an auxillary verb indicating liberty, opportunity, permission or possibility.

We hold that the stipulation as to venue in the contract in question is simply permissive. By the said stipulation, the parties did not agree to file their suits solely and exclusively with the Court of First Instance of Naga. They merely agreed to submit their disputes to the said court, without waiving their right to seek recourse in the court specifically indicated in Section 2 (b), Rule 4 of the Rules of Court.

Since the complaint has been filed in the Court of First Instance of Pampanga, where the plaintiff resides, the venue of action is properly laid in accordance with Section 2 (b), Rule 4 of the Rules of Court.

UNIMASTERS CONGLOMERATION, INC., petitioner, vs.COURT OF APPEALS and KUBOTA AGRI MACHINERY PHILIPPINES, INC., respondents.

FACTS:

1. Kubota Agri-Machinery Philippines, Inc. (hereafter, simply KUBOTA/ respondent) and Unimasters Conglomeration, Inc. (hereafter, simply UNIMASTERS/plaintiff) entered into a "Dealership Agreement for Sales and Services" of the former's products in Samar and Leyte Provinces.

2. The contract contained, among others contain a stipulation reading: i.)". . . All suits arising out of this Agreement shall be filed with/in the proper Courts of Quezon City," and ii.) a provision binding UNIMASTERS to obtain (as it did in fact obtain) a credit line with Metropolitan Bank and Trust Co.-Tacloban Branch in the amount of P2,000,000.00 to answer for its obligations to KUBOTA.


RTRTC: - The Bulacan court overruled him.

3. 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 (hereafter, simply METROBANK) for damages for breach of contract, and injunction with prayer for temporary restraining order.

4. KUBOTA filed-two motions. One prayed for dismissal of the case on the ground of improper venue The other prayed for the transfer of the injunction hearing to January 11, 1994 because its counsel was not available on January 10 due to a prior commitment before another court.

5. KUBOTA’S CONTENTION: that the stipulation regarding venue was agreed upon and therefore filing to RTC Tacloban is improper.

TC RULING: denied KUBOTA's motion to dismiss on the ground that: The plaintiff UNIMASTERS is holding its principal place of business in the City of Tacloban while the defendant . . (KUBOTA) is holding its principal place of business in Quezon City. The proper venue therefore pursuant to Rules of Court would either be Quezon City or Tacloban City at the election of the plaintiff. Quezon City and Manila (sic), as agreed upon by the parties in the Dealership Agreement, are additional places other than the place stated in the Rules of Court. The filing, therefore, of this complaint in the Regional Trial Court in Tacloban City is proper.

CA ruling In favour of KUBOTA

the stipulation respecting venue in its Dealership Agreement with UNIMASTERS did in truth limit the venue of all suits arising thereunder only and exclusively to "the proper courts of Quezon City." The Court also held that the participation of KUBOTA's counsel at the hearing on the injunction incident did not in the premises operate as a waiver or abandonment of its objection to venue; that assuming that KUBOTA's standard printed invoices provided that the venue of actions thereunder should be laid at the Court of the City of Manila, this was inconsequential since such provision would govern "suits or legal actions between petitioner and its buyers" but not actions under the Dealership Agreement between KUBOTA and UNIMASTERS, the venue of which was controlled by paragraph No. 7 thereof; and that no impediment precludes issuance of a TRO or injunctive writ by the Quezon City RTC against METROBANK-Tacloban since the same "may be served on the principal office of METROBANK in Makati and would be binding on and enforceable against, METROBANK branch in Tacloban

ISSUE: WoN the stipulation re venue limit the jurisdiction of the court

HELD:NO. 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 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 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 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 court cited several jurisprudence which involves permissive stipulation and held that it shall not limit the venue of the actions. 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

Note: Rule 4 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.

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.

HOECHST PHILIPPINES, INC., petitioner, vs.FRANCISCO TORRES and the Honorable PROCORO J. DONATO, Judge of the Court of First Instance of Isabela, respondents.


FACTS:

Private respondent, Francisco Torres, filed with CFI Isabela a complaint in Civil Case No. V-296 alleging breach of a distributorship contract on the part of petitioner, Hoechst Philippines, Inc.

Petitioner filed a motion to dismiss said complaint based on the ground that as the contract, the very actionable document invoked in the complaint, provides that "(I)n case of any litigation arising out of this agreement, the venue of any action shall be in the competent courts of the Province of Rizal", venue has been improperly laid in respondent court.

CFI Isabela (ruled for Private Respondent)--denied the said motion to dismiss as well as the motion for reconsideration of that denial, hence the present petition.

Respondent do not deny in their respective answers the clear tenor of the above-quoted stipulation as to venue in the contract in dispute.

It is further contended in said answer that reading the terms of the contract, it can be gathered that most likely, it would be petitioner who would have to sue private respondent, and, therefore, the stipulation as to venue was meant to apply only to suits to be filed by petitioner.

Finally, it is maintained that there are no words in the contract expressly restricting the venue to the courts of Rizal.

TORRES’ CONTENTIONS: He capitalizes on theory that inasmuch as petitioner is a multinational company, it is against

public policy for it to stipulate in any contract that the venue of actions thereunder should be in any particular place, much less its place of residence, to the prejudice of small-time distributors, the private respondent.

It is urged that to give effect to the stipulation in controversy "is to serve the convenience and the purpose of the petitioner only; its effect is to discourage, to deter to render expensive and uneconomical and filing of suits by small-time company distributors against the petitioner even for extremely meritorious cases of latter's breach or violation of such distribution agreement. "

ISSUE: WON the complaint should be filed in CFI Isabela.

HELD: No.

Change or transfer of venue from that fixed in the rules may be effected upon written agreement of the parties not only before the actual filing of the action but even after the same has been filed.

The settled rule of jurisprudence in this jurisdiction is that a written agreement of the parties as to venue, as authorized by Section 3, Rule 4, is not only binding between the parties but also enforceable by the courts. 1

It is only after the action has been filed already that change or transfer of venue by agreement of the parties is understandably controllable in the discretion of the court. 2

The agreement in this case was entered into long before the petitioner's action was filed. It is clear and unequivocal. The parties therein stipulated that "(I)n case of any litigation arising out of this agreement, the venue of any action shall be in the competent courts of the Province of Rizal." No further stipulations are necessary to elicit the thought that both parties agreed that any action by either of them would be filed only in the competent courts of Rizal province exclusively.

We have given due attention to this posture of respondents. Indeed, there may be instances when an agreement as to venue may be so oppressive as to

effectively deny to the party concerned access to the courts by reason of poverty. The difficulties pictured y respondents that a poor plaintiff from a distant province may have

to encounter in filing suit in a particular place ran indeed happen. In such an eventuality and depending on the peculiar circumstances of the case, the Court may declare the agreement as to venue to be in effect contrary to public policy, — despite that in general, changes and

transfers of venue by written agreement of the parties is allowable — whenever it is shown that a stipulation as to venue works injustice by practically denying to the party concerned a fair opportunity to file suit in the place designated by the rules.

But a cursory inquiry into the respective economic conditions of the parties herein as reflected in the record before Us does not show that private respondent Francisco Torres is really in no position to carry on a litigation in the Province of Rizal, because of his residence or place of business being in Isabela province.

Considering the nature and volume of the business he has with petitioner, there is nothing oppressive in his being required to litigate out of his province. After all, for practical reasons, there seems to justification also for petitioner to see to it that all suits against it be concentrated in the Province of Rizal, as otherwise, considering the nationwide extent of its business, it would be greatly inconvenienced if it has to appear in so many provinces everytime an action is filed against it. We are convinced both parties agreed to the venue in controversy with eyes wide open.

DISPOSITIVE: IN VIEW OF ALL THE FOREGOING, the petition is granted, the orders of respondent judge of May 13, 1976 and July 12, 1976 are hereby set aside, and petitioner's motion to dismiss private respondent's complaint in question is granted. Costs against private respondent Francisco Torres.

PILIPINO TELEPHONE CORPORATION, petitioner, vs. DELFINO TECSON, respondent.FACTS:

Delfino C. Tecson applied for six (6) cellular phone subscriptions with petitioner Pilipino Telephone Corporation (PILTEL), a company engaged in the telecommunications business, which applications were each approved and covered, respectively, by six mobiline service agreements.

Tecson filed with the Regional Trial Court of Iligan City, Lanao Del Norte, a complaint against petitioner for a “Sum of Money and Damages.”

PILTEL moved for the dismissal of the complaint on the ground of improper venue, citing a common provision in the mobiline service agreements10

RTC

Denied petitioner’s motion to dismiss

Petitioner PILTEL filed a motion for the reconsideration, through registered mail, of the order of the trial court.

Trial court denied the motion for reconsideration. Petitioner filed a petition for certiorari under Rule 65 of the Revised Rules of Civil

Procedure before the Court of Appeals.

CA

affirmed the RTC in denying PILTEL’S motion

It anchors its decision on the thesis that the subscription agreement, being a mere contract of adhesion, does not bind respondent on the venue stipulation.

Petitioner moved for a reconsideration, but the appellate court, denied the motion.

ISSUE: WON the provision in the adhesion contract (Mobiline service agreements) regarding the venue of all suits arising from the agreement is binding to the parties

HELD: YES

Section 4, Rule 4, of the Revised Rules of Civil Procedure [2] allows the parties to agree and stipulate in writing, before the filing of an action, on the exclusive venue of any litigation between them.

10 “Venue of all suits arising from this Agreement or any other suit directly or indirectly arising from the relationship between PILTEL and subscriber shall be in the proper courts of Makati, Metro Manila. Subscriber hereby expressly waives any other venues.”


http://sc.judiciary.gov.ph/jurisprudence/2004/may2004/156966.htm#_ftn2

Such an agreement would be valid and binding provided that the stipulation on the chosen venue is exclusive in nature or in intent, that it is expressed in writing by the parties thereto, and that it is entered into before the filing of the suit.

The provision contained in paragraph 22 of the “Mobile Service Agreement,” a standard contract made out by petitioner PILTEL to its subscribers, apparently accepted and signed by respondent, states that the venue of all suits arising from the agreement, or any other suit directly or indirectly arising from the relationship between PILTEL and subscriber, “shall be in the proper courts of Makati, Metro Manila.”

The added stipulation that the subscriber “expressly waives any other venue” [3] should indicate, clearly enough, the intent of the parties to consider the venue stipulation as being preclusive in character.

Indeed, the contract herein involved is a contract of adhesion. But such an agreement is not per se inefficacious. The rule instead is that, should there be ambiguities in a contract of adhesion, such

ambiguities are to be construed against the party that prepared it. If, however, the stipulations are not obscure, but are clear and leave no doubt on the

intention of the parties, the literal meaning of its stipulations must be held controlling. A contract of adhesion is just as binding as ordinary contracts. It is true that this Court has, on occasion, struck down such contracts as being assailable

when the weaker party is left with no choice by the dominant bargaining party and is thus completely deprived of an opportunity to bargain effectively.

Nevertheless, contracts of adhesion are not prohibited even as the courts remain careful in scrutinizing the factual circumstances underlying each case to determine the respective claims of contending parties on their efficacy.

In the case at bar, respondent secured six (6) subscription contracts for cellular phones on various dates. It would be difficult to assume that, during each of those times, respondent had no sufficient opportunity to read and go over the terms and conditions embodied in the agreements. Respondent continued, in fact, to acquire in the pursuit of his business subsequent subscriptions and remained a subscriber of petitioner for quite sometime.

In Development Bank of the Philippines vs. National Merchandising Corporation,[ the contracting parties, being of age and businessmen of experience, were presumed to have acted with due care and to have signed the assailed documents with full knowledge of their import. The situation would be no less true than that which obtains in the instant suit.

The circumstances in Sweet Lines, Inc. vs. Teves,[wherein this Court invalidated the venue stipulation contained in the passage ticket, would appear to be rather peculiar to that case. There, the Court took note of an acute shortage in inter-island vessels that left passengers literally scrambling to secure accommodations and tickets from crowded and congested counters. Hardly, therefore, were the passengers accorded a real opportunity to examine the fine prints contained in the tickets, let alone reject them.

A contract duly executed is the law between the parties, and they are obliged to comply fully and not selectively with its terms. A contract of adhesion is no exception.[

WHEREFORE, the instant petition is GRANTED and the case in the RTC is DISMISSED without prejudice to the filing of an appropriate complaint by respondent against petitioner with the court of proper venue.

[G.R. No. 74854. April 2, 1991.]

JESUS DACOYCOY, vs. HON. INTERMEDIATE APPELLATE COURT, HON. ANTONIO V. BENEDICTO, Executive Judge, Regional Trial Court, Branch LXXI, Antipolo, Rizal, and RUFINO DE GUZMAN,

FACTS:

On March 22, 1983, petitioner Jesus Dacoycoy, a resident of Balanti, Cainta, Rizal, filed before the RTC,Antipolo, Rizal, a complaint against private respondent Rufino de Guzman praying for the annulment of two (2) deeds of sale involving a parcel of riceland situated in Barrio Estanza, Lingayen, Pangasinan, the surrender of the produce thereof

On May 25, 1983, before summons could be served on private respondent as defendant therein, the RTC Executive Judge issued an order requiring counsel for petitioner to confer with respondent trial judge on the matter of venue.

After said conference, the trial court dismissed the complaint on the ground of improper venue. It found, based on the allegations of the complaint, that petitioner's action is a real action as it sought not only the annulment of the aforestated deeds of sale but also the recovery of ownership of the subject parcel of riceland located in Estanza, Lingayen, Pangasinan, which is outside the territorial jurisdiction of the trial court.

TC: Dismissed for improper venue

CA: Affirmed the dismissal

SC: Granted.

In this petition for review, petitioner faults the appellate court in affirming what he calls an equally erroneous finding of the trial court that the venue was improperly laid when the defendant, now private respondent, has not even answered the complaint nor waived the venue.

Petitioner claims that the right to question the venue of an action belongs solely to the defendant and that the court or its magistrate does not possess the authority to confront the plaintiff and tell him that the venue was improperly laid, as venue is waivable.

In other words, petitioner asserts, without the defendant objecting that the venue was improperly laid, the trial court is powerless to dismiss the case motu proprio.

ISSUE: May the trial court motu proprio dismiss a complaint on the ground of improper venue?

HELD: NO. Venue may be waived expressly or impliedly.

RATIO:

The motu proprio dismissal of petitioner's complaint by respondent trial court on the ground of improper venue is plain error, obviously attributable to its inability to distinguish between jurisdiction and venue.

Questions or issues relating to venue of actions are basically governed by Rule 4 of the Revised Rules of Court. It is said that the laying of venue is procedural rather than substantive. It relates to the jurisdiction of the court over the person rather than the subject matter. Provisions relating to venue establish a relation between the plaintiff and the defendant and not between the court and the subject matter. Venue relates to trial not to jurisdiction, touches more of the convenience of the parties rather than the substance of the case.

Jurisdiction treats of the power of the court to decide a case on the merits; while venue deals on the locality, the place where the suit may be had.




Rule 4, Section 2, of the Rules of Court requiring that an action involving real property shall be brought in the Court of First Instance of the province where the land lies is a rule on venue of actions, which may be waived expressly or by implication."

In the instant case, even granting for a moment that the action of petitioner is a real action, respondent trial court would still have jurisdiction over the case, it being a regional trial court vested with the exclusive original jurisdiction over "all civil actions which involve the title to, or possession of, real property, or any interest therein . . ." in accordance with Section 19 (2) of Batas Pambansa Blg. 129. With respect to the parties, there is no dispute that it acquired jurisdiction over the plaintiff Jesus Dacoycoy, now petitioner, the moment he filed his complaint for annulment and damages.

Although petitioner contends that on April 28, 1963, he requested the City Sheriff of Olongapo City or his deputy to serve the summons on defendant Rufino de Guzman at his residence at 117 Irving St., Tapinac, Olongapo City, 8 it does not appear that said service had been properly effected or that private respondent had appeared voluntarily in court 9 or filed his answer to the complaint. 10 At this stage, respondent trial court should have required petitioner to exhaust the various alternative modes of service of summons under Rule 14 of the Rules of Court, i.e., personal service under Section 7, substituted service under Section 8, or service by publication under Section 16 when the address of the defendant is unknown and cannot be ascertained by diligent inquiry.

Dismissing the complaint on the ground of improper venue is certainly not the appropriate course of action at this stage of the proceeding, particularly as venue, in inferior courts as well as in the courts of first instance (now RTC), may be waived expressly or impliedly.

Where defendant fails to challenge timely the venue in a motion to dismiss as provided by Section 4 of Rule 4 of the Rules of Court, and allows the trial to be held and a decision to be rendered, he cannot on appeal or in a special action be permitted to challenge belatedly the wrong venue, which is deemed waived.

Thus, unless and until the defendant objects to the venue in a motion to dismiss, the venue cannot be truly said to have been improperly laid, as for all practical intents and purposes, the venue, though technically wrong, may be acceptable to the parties for whose convenience the rules on venue had been devised. The trial court cannot pre-empt the defendant's prerogative to object to the improper laying of the venue by motu proprio dismissing the case.

RULE 6G.R. No. L-22485 March 13, 1968CONSUELO V. CALO, doing business under the trade name CVC Lumber Industries, assisted by MARCOS M. CALO vs. AJAX INTERNATIONAL, INCORPORATED

FACTS:

Sometime on May 1959, plaintiff-appellant Consuelo Calo ordered from defendant-appellee Ajax International, Inc., 1,200 ft. of John Shaw wire rope at P2.85 per foot. The transaction was evidenced by Charge Order No. 37071, for P3,420.00.

According to plaintiff Calo, when the wire rope was delivered to Butuan City, the same was found short of 300 ft.

Plaintiff wrote two letters to defendant asking for either (1) completion of delivery or (2) account adjustment of the alleged undelivered 300 ft. of wire rope.

November 20, 1961- a complaint was filed in the Municipal Court of Manila by one Adolfo Benavides who claimed to have acquired the outstanding credit account of Calo from defendant Ajax International, Inc. Charge Order No. 37071 was among those included in the assigned account.

Subsequently, a JUDGMENT BY DEFAULT was entered, and a WRIT OF EXECUTION ISSUED, AGAINST PLAINTIFF CALO.***

Consuelo Calo went to SC on a petition for certiorari, prohibition and mandamus.

SC

Set aside the judgment of default and writ of execution issued against plaintiff Calo and remanded the case for further proceedings.

January 23, 1962 - plaintiff Calo, assisted by her husband, Marcos Calo, filed in the CFI of Agusan a complaint against defendant asking: (1) that the latter either effect complete delivery of Charge Order No. 37071 or that she be relieved from paying P855.00 and; (2) that the latter indemnify her for P12,000 as attorney's fees, damages and expenses of litigation.

Instead of filing an answer, defendant Ajax moved for the dismissal of the complaint on the ground that the subject thereof was involved and intimately related to the civil case in the Municipal Court of Manila.

CFI OF AGUSAN

Sustained the motion and DISMISSED the case filed by Calo.

It also denied Calo’s MR and Motion for New Trial.

Thus, herein petition. ISSUE: WON the case filed in the CFI Agusan is a compulsory counter-claim

HELD:

The dismissal of the Civil case filed in the CFI of Agusan because of the pendency of another Civil case in the Municipal Court of Manila is predicated on the supposition that plaintiff's claim is a compulsory counter-claim that should be filed in the latter case.

However, plaintiff's claim is NOT A COMPULSORY COUNTERCLAIM for the simple reason that the amount thereof exceeds the jurisdiction of the municipal court.

The rule that a compulsory counterclaim not set up is barred, when applied to the municipal court, presupposes that the amount involved is within the said court's jurisdiction. Otherwise, as this Court had already noted in Yu Lay v. Galmes 3 we would come to the absurd situation where a claim must be filed with the municipal court which it is prohibited from taking cognizance of, being beyond its jurisdiction.

Besides, the reason underlying the rule, which is to settle all related controversies in one sitting only, does not obtain. For, even if the counterclaim in excess of the amount cognizable by the inferior court is set up, the defendant cannot obtain positive relief. The Rules allow this only for the defendant to prevent plaintiff from recovering from him.

This means that should the court find both plaintiff's complaint and defendant's counterclaim (for an amount exceeding said court's jurisdiction) meritorious, it will simply dismiss the complaint on the ground that defendant has a bigger credit. Since defendant still has to institute a separate action for the remaining balance of his counterclaim, the previous litigation did not really settle all related controversies.


Plaintiff Calo's claim of P12,000.00 not being a compulsory counterclaim in Civil Case No. VI-93062, it need not be filed there. The pendency then of said civil case could not be pleaded in abatement of Civil Case No. 860. Consequently, the lower court erred in dismissing plaintiff's complaint.

The order of dismissal appealed from is hereby REVERSED and the case REMANDED for further proceedings. Costs against appellee Ajax International, Inc.

FLORENTINO NAVARRO and BEATRIZ VINOYA, petitioners, vs. HON. ELOY BELLO, Judge of the Court of First Instance of Pangasinan, JUAN CABUANG, FLORENTINA BAUTISTA, FLORENCIO GALICIA and CONSOLACION BAUTISTA, respondents.

FACTS: Petitioners-plaintiffs filed a complaint on September 30, 1954, with the Court of First Instance of

Pangasinan praying for the annulment of transfer certificates of titleand the corresponding deeds of sale executed by respondents Florencio Galicia and Consolacion Bautista in favor of respondents Juan Cabuang and Florentino Bautista over lots of the San Carlos Cadastre, claiming ownership of said parcels of land, and alleging actual possession.

Respondents filed their answer to the amended complaint, also claiming ownership over the questioned lots with a counterclaim for the damages allegedly arising out of the unlawful usurpation of the possession of the above described parcels of land by the petitioners through force and intimidation.

No answer to the counterclaim having been filed within the time prescribed by the Rules, the petitioners (plaintiffs below) were declared in default in an order of the lower court.

CFI: The court rendered decision adjudicating the defendant's counterclaim for damages, declaring the respondents owners of the disputed parcels of land, and dismissing the complaint.

Petitioners filed their first motion for reconsideration to set aside the decision and order of default; it was denied. A second motion for reconsideration filed on October 3, 1956, having been also denied by the lower court.

Notice of appeal was filed by petitioners and with the notice of appeal they asked for a fifteen-day extension within which to file the record on appeal and appeal bond, which was granted.

But upon objection interposed by the respondents, the court in its order denied the approval of the record on appeal on the ground that the decision sought to be reviewed has become final and that the plaintiffs having been declared in default, they have no right to appeal unless and until the order of default is revoked and set aside.

Petitioners’ contention: Declaration of default is null and void, because the issues raised in the counterclaim, particularly those contained in the second and third causes of action, are so inextricably linked with those raised by the complaint, that an answer would merely require a repleading of the complaint.

ISSUE:

Whether or not an answer or reply is necessary to the counterclaim in the case at bar.

HELD:NO. To answer such counterclaim would require plaintiffs to replead the same facts already alleged in their complaint.

It is plain from the records that the complaint and the answer have not as yet been set for trial in the court below.

Only after the issues of the complaint and answer are tried, and the parties heard, may the court resolve the defendants' counterclaim for damages.

If the court finds for plaintiffs, defendants' defenses, and counterclaim, must necessarily fail.

On the other hand, if the court finds for the defendants, then plaintiff's complaint must be dismissed, defendants would be declared owners of the lands in question, and they would be awarded damages under their counterclaim.

But until and unless the whole case is heard on the merits, the court a quo cannot decide on defendants' counterclaim, without depriving plaintiffs their day in court

Even if plaintiffs had really defaulted on the counterclaim, still the court was bound to limit its decision to the specific reliefs ask for. Sec. 9, Rule 35, of the Rules of Court provides:

A judgment entered by default shall not exceed the amount or be different in kind from that prayed for in the demand for judgment . . .

Since the counterclaim was set to recover damages caused by the petitioners alleged entering the land in question through force and intimidation, the court could, at most, award the damages sought; hence, in adjudging also the defendants, Juan Cabuang and Florentina Bautista, to be the owners of thetwo parcels of land described in the complaint, when what was tried was thecounterclaim, the court below exceeded its jurisdiction.

Since the ownership of the disputed land was put in issued by the allegations of the complaint and the special defenses in the answer, the correct procedure, assuming that the declaration of default was properly entered, should have been for the trial court to set the complaint and answer for the hearing.

The lower court, even in the case of a true default on the counterclaim, could not deny the petitioners-palintiffs the right to be heard and produce evidence in support of their complaint, as that pleading was valid and had not been stricken from the records.

Their having defaulted on the counterclaim, if they did so at all, did not operate to deprive the plaintiffs from any standing or remedy in court in connection with their complaint.

FELICISIMA BALLECER and JOSE S. AGAWIN, petitioners, vs.JOSE BERNARDO, The Hon. JESUS P. MORFE, Presiding Judge, Branch XIII of the Court of First Instance of Manila, and the Sheriff of Manila, respondents.

FACTS:

1. Petitioners SPS. Jose S. Agawin and Felicisima Ballecer instituted against respondent Jose Bernardo, to recover damages allegedly caused by him in consequence of the destruction and demolition of a portion of a wall of the petitioners, along the common boundary line of their lot and that of Bernardo, at Felix Huertas Street, Manila, as well as to recover possession of a portion of petitioners' aforementioned lot, with an area of 0.80 square meters, which was allegedly encroached upon by the wall subsequently erected by Bernardo in place of the one he had destroyed.

2. By way of counterclaim, Bernardo set up two (2) causes of action, namely: (1) that petitioners were the parties who had encroached upon and occupied a portion of Bernardo's property (2)


that petitioners' complaint is premature, uncalled for, capricious and without any justifiable cause, for which reason Bernardo prayed that they be sentenced to vacate his aforementioned portion of land allegedly encroached upon by them and to turn it over to him, and to pay damages aggregating P48,000.00

3. Petitioners filed a motion for extension of time to answer the counterclaim but RTC denied and ordered the petioners in default.

4. TC ruling: in favour of defendant5. A reconsideration of this order having been denied, the Clerk of Court issued an alias writ of

execution and, in pursuance thereof, the Sheriff of Manila caused to be published a notice of sale at public auction of a property of petitioners herein. Hence, the present case against Bernardo, the Judge of the lower court and the Sheriff of Manila.

ISSUE: WoN the lower court erred in declaring petiitoner’s in default and in rendering judgment against them on Bernardo’s counterclaim after an ex parte hearing

HELD: YES. a motion for extension of time to file an answer to the counterclaim had been filed within the reglementary period and plausible reasons were given in support thereof: counsel for petitioners had been unable to contact them owing to a typhoon that had just hit Manila, and the flood and inclement weather that had followed.

- Bernardo's counterclaim was predicated upon allegations of fact which are inconsistent with, and, hence, controverted by, the allegations in petitioners' complaint. In this connection, it should be noted that Bernardo had, according to the complaint, encroached upon petitioners' property, whereas Bernardo maintained the exact opposite in his counterclaim — not only that petitioners' allegation was not true, but, also, that they were the ones encroaching upon the property of Bernardo. Certainly, this contention, of Bernardo can not be decided without passing upon the truth of the allegations in the complaint, which petitioners are entitled to prove, whether they had answered Bernardo's counterclaim or not.

- In other words, the issues raised in the counterclaim were inseparable from those posed in the complaint, and so it was not absolutely necessary for the petitioners to file an answer to the counterclaim.

G.R. No. 94093 August 10, 1993FAR EAST MARBLE (PHILS.), INC., LUIS R. TABUENA, JR. and RAMON A. TABUENA, petitioners, vs.HONORABLE COURT OF APPEALS and BANK OF PHILIPPINE ISLANDS, respondents.

FACTS:

On February 5, 1987, herein respondent Bank of the Philippines Islands (BPI) filed a complaint for foreclosure of chattel mortgage with replevin against petitioner Far East Marble (Phils.), Inc. (Far East), Ramon A. Tabuena and Luis R. Tabuena, Jr. before RTC Br 14 Manila.

The complaint alleges:

1st cause of Action against Far East

2nd cause of action against Far East

Cause of Action against individual defendants

-that on various dates, Far East received several loans evidenced by promissory notes executed by said Far East

-that on various dates, Far East received and was extended by BPI credit facilities in the form of

-that defendants executed in favor of BPI a continuing guaranty

-that despite demands for

-that said PN long matured but despite demands Far East failed and refused to pay

-that because of said refusal, plaintiff was constrained to file this suit

Trust Receipts

-that said Trust Receipts have long matured and despite demands for payment, Far East failed and refused

-that because of said refusal, plaintiff was constrained to file this suit.

-that Far East executed in favor of BPI a Chattel Mortgage to secure payment

their payment, they have failed and refused to pay said Far East accounts

-That because of failure, plaintiff was constrained to file this suit.

Far East filed an answer with compulsory counterclaim admitting the genuineness and due execution of the promissory notes, it raised the affirmative defenses of prescription and lack of cause of action as it denied the allegation of the complaint that BPI had made previous repeated requests and demands for payment.

Far East claimed that during the more than 10 years which elapsed from the dates of maturity of said obligations up to the time the action for foreclosure of the chattel mortgage securing said obligations was filed, it had not received from BPI or its predecessor any demand for payment and thus, it had "labored under the belief that they [the obligations] have already been written off" in the books of BPI.

BPI filed an opposition to the motion to hear affirmative defenses, alleging that its cause of action against Far East have not prescribed.

BPI also filed a motion for summary judgment on the ground that since Far East had admitted the genuineness and due execution of the promissory notes and the deed of chattel mortgage annexed to its complaint, there was no genuine issue as to any material fact, thus entitling BPI to a favorable judgment as a matter of law in regard to its causes of action and on its right to foreclose the chattel mortgage.

RTC (ruled in favor of Far East)- dismissed the complaint against Far East for lack of cause of action and on grounds of prescription

CA (ruled in favor of BPI)- set aside the decision rendered by RTC Hence, the instant petition for review on certiorari filed by Far East.

ISSUE: WON the complaint filed by BPI lacks cause of action

HELD:

No.

Section 3 of Rule 6 state that a "complaint is a concise statement of the ultimate facts constituting the plaintiff's cause or causes of action." Further elaborating thereon, Section 1 of Rule 8 declares that every pleading, including, of course, a complaint, "shall contain in a methodical and logical form, a plain, concise and direct statement of the ultimate facts . . . omitting the statement of mere evidentiary facts."

"Ultimate facts" are the essential and substantial facts which either form the basis of the primary right and duty or which directly make up the wrongful acts or omissions of the


defendant while "evidentiary facts" are those which tend to prove or establish said ultimate facts.

Basically, a cause of action consists of three elements, 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

These elements are manifest in BPI's complaint, particularly when it was therein alleged that: (1) for valuable consideration, BPI granted several loans, evidenced by promissory notes, and extended credit facilities in the form of trust receipts to Far East (photocopies of said notes and receipts were duly attached to the Complaint); (2) said promissory notes and trust receipts had matured; and (3) despite repeated requests and demands for payment thereof, Far East had failed and refused to pay.

Clearly then, the general allegation of BPI that "despite repeated requests and demands for payment, Far East has failed to pay" is sufficient to establish BPI's cause of action. Besides, prescription is not a cause of action; it is a defense which, having been raised, should, as correctly ruled by the Court of Appeals, be supported by competent evidence. But even as Far East raised the defense of prescription, BPI countered to the effect that the prescriptive period was interrupted and renewed by written extrajudicial demands for payment and acknowledgment by Far East of the debt.

A complaint is sufficient if it contains sufficient notice of the cause of action even though the allegation may be vague or indefinite, for in such case, the recourse of the defendant would be to file a motion for a bill of particulars.

In the case at bar, the circumstances of BPI extending loans and credits to Far East and the failure of the latter to pay and discharge the same upon maturity are the only ultimate facts which have to be pleaded, although the facts necessary to make the mortgage valid enforceable must be proven during the trial.

MATIAS DE LOS SANTOS, ET AL., plaintiff-appellants, vs. THE PROVINCIAL SHERIFF OF RIZAL, his deputies and delegates, RAFAEL LARA, EDUARDO TATCO, and THE BANK OF THE PHILIPPINE ISLANDS, in its a capacity-appellees.

FACTS:

Four complaints were successively filed. Demurrers were sustained as to each of the first 3 complaints.

On October 29, 1934, defendant filed a Demurrer to the 3rd amended complaint on the following grounds: (a) ambiguity, (b) failure to state facts sufficient to constitute cause of action, and (c) defect of parties. On October 30, the trial court issued an order sustaining the demurrer to the third amended complaint of October 5 and directing the plaintiffs to amend the complaint within ten days from receipt of notice of the order.

Plaintiff received notice of the order on November 3, 1934, but filed their last amended complaint only on November 14, 1934, after the expiration of the ten-day period allowed.

ISSUE: whether the court erred in sustaining the demurrer to the third amended complaint of October 5, 1934.

Re (a) Ambiguity:

the allegations are sufficiently clear and definite as to give the defendants notice of what the plaintiffs are complaining against them. Not only specific wrong complained of but also the particular acts constituting the same are intelligibly stated. The damages which the plaintiffs demand for the alleged invasion of their property rights have been fixed at P150,000. The defendants cannot be misled in making their defense, and the court may render a definite judgment upon the subject matter involved. "While a complaint may be awkwardly drafted, and for this reason be subject to criticism with respect to incidental particulars, it will be held sufficient if it fairly apprises the defendant of the plaintiff's real

claims and contentions in such manner that the defendant is not misled to his surprise or injury," (Lizarraga Hermanos vs. Yap Tico, 24 Phil., 504.)

Re (b) failure to state facts sufficient to constitute cause of action:

Allegations of plaintiffs:

o they and their predecessors in interest have been in the peaceful and continuous possession, in good faith under a claim of ownership, of the two parcel of land described in the complaint even before 1890;

o that they have constructed on said lands about 150 houses belonging to them, and have made other improvements thereon consisting of fruit trees, cane, palay and other plantations;

o and, that the defendants, in conspiracy with one another, were demolishing said 150 houses of the plaintiffs and were destroying the other improvements on the land thereby causing to plaintiff's damages amounting to P150,000;

o that the peace of land over which the defendants might levy on execution by virtue of the final judgment in the case of Bank of the Philippine Island vs. Acuña (59 Phil., 183), is different from, and not included within any portion of the two parcel of land claimed by the plaintiffs in this case.

These averment, taken for granted in the demurrer, are sufficient to constitute a cause of action. They plainly show the substantial facts which form the basis of the primary right of the plaintiffs and the culpatory acts of the defendants. The rules of pleading limit the statement of the cause of action only to such operative facts as give rise to the right of action of the plaintiff to obtain relief against the wrong doer. The details of probative matter or particulars of evidence, statements of law, inferences and arguments need not be stated

DEFENDANT’s CONTENTION: the plaintiffs should set forth the specific extent of their respective share in the parcels of land claimed by them as well as the specific nature of their title

HELD: not well taken. They are merely matter of evidence which the plaintiffs under the rules herein above referred to need not allege and which they may prove at the trial on the merits in support of their claim of ownership.

A general allegation of ownership is a sufficient averment of the ultimate fact, and a complaint containing it sufficiently pleads plaintiff's ownership

The facts involved in a demurrer are only those set out in the pleading demurred to, and the demurrer merely raises a question of law as to the insufficiency of those facts to constitute a cause of action. The defendants assume pro re nata the truth of the plaintiff's allegations and submit to the court the question of law whether they are obliged to proceed further in the suit upon the assumed state of facts (Sutherland, Code Pleading and Practice, sec. 237)



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