21. Carson Realty vs.

Red Robin Security Agency and Santos

G.R. No. 225035
February 08, 2017

Doctrine: If the substituted service will be done at defendant's office or regular place of business, then it
should be served on a competent person in charge of the place. Thus, the person on whom the
substituted service will be made must be the one managing the office or business of defendant, such as
the president or manager; and such individual must have sufficient knowledge to understand the
obligation of the defendant in the summons, its importance, and the prejudicial effects arising from
inaction on the summons. Again, these details must be contained in the Return. (Carson Realty vs. Red
Robin Security Agency and Santos, G.R. No. 225035, February 08, 2017)

Facts: Respondent Monina C. Santos filed a Complaint for Sum of Money and Damages against
petitioner Carson Realty & Management Corp. with the Quezon City Regional Trial Court (RTC), Branch
216. As per the Officer’s Return, a copy of the Summons together with the Complaint and its annexes,
was served upon Carson at its business through its “corporate secretary,” Precilla S. Serrano. Thereafter,
the appointed Corporate Secretary and legal counsel of Carson, Atty. Tomas Z. Roxas, Jr. filed an
Appearance and Motion with the court wherein the latter entered his appearance and acknowledged
that the Summons was served and received by one of the staff assistants of Carson. Atty. Roxas prayed
for an extension of fifteen (15) days from April 27, 2007 within which to file a responsive pleading. The
RTC, in its Order noted the appearance of Atty. Roxas as counsel for Carson and granted his request for
extension of time to file a responsive pleading. Instead of filing a responsive pleading, Atty. Roxas moved
to dismiss the complaint, alleging that the Summonswas not served on any of the officers and personnel
authorized to receive summons under the Rules of Court. RTC denied Carson’s Motion to Dismiss and
directed the issuance of an alias summons to be served anew upon the corporation. Process Server
Pajila submitted his Officer’s Report stating in essence that he attempted to serve the alias Summons on
the President and General Manager of Carson, as well as on the Board of Directors and Corporate
Secretary, but they were not around. Hence, he was advised by a certain Lorie Fernandez, the ‘”
secretary” of the company, to bring the alias Summons to the law office of Atty. Roxas. Process Server
Pajila attempted to serve the alias Summons at the law office of Atty. Roxas twice, but to no avail. This
prompted him to resort to substituted service of the alias Summons by leaving a copy thereof with a
certain Mr. JR Taganila, but the latter also refused to acknowledge receipt of the alias Summons. Santos
filed a Motion to Declare Defendant in Default. Finding that there was an improper service of summons
on Carson, the RTC denied the motion.
Thereafter, Santos requested the RTC for the issuance of another alias Summons. The RTC granted this
request and issued an alias Summons. Process Server Pajila submitted his Officer’s Return on the
services of the alias Summons, and received by a receptionist. Loreta M. Fernandez the receptionist who
received the alias Summons, posited that, as a mere receptionist, she had no authority to receive the
said documents and that there was an improper service of summons. Santos filed a second Motion to
Declare Defendant in Default The RTC granted the motion and allowed her to present her evidence ex-
parte. Carson filed a Petition for Certiorari under Rule 65 of the Rules of Court with the CA, imputing
grave abuse of discretion amounting to lack or excess of jurisdiction to the RTC. The CA denied the
petition and ruled that the RTC had properly acquired jurisdiction over Carson due to its voluntary
appearance in court. In ruling thus, the CA considered Carson’s act of requesting additional time to file
its responsive pleading as voluntary submission to the jurisdiction of the trial court.

Issues: (1) Whether the RTC acquired jurisdiction over Carson.

 (2) Whether Carson was properly declared in default.

Ruling
1. YES. The invalidity of the substituted service, such is of little significance in view of the fact that
the RTC had already acquired jurisdiction over Carson early on due to its voluntary submission to the
jurisdiction of the court. Courts acquire jurisdiction over the plaintiffs upon the filing of the
complaint. On the other hand, jurisdiction over the defendants in a civil case is acquired either
through the service of summons upon them or through their voluntary appearance in court and
their submission to its authority, as provided in Section 20, Rule 14 of the Rules of Court On this
score, Philippine Commercial International Bank v. Spouses Day 24 instructs that: As a general
proposition, one who seeks an affirmative relief is deemed to have submitted to the jurisdiction of
the court. It is by reason of this rule that we have had occasion to declare that the filing of motions
to admit answer, for additional time to file answer, for reconsideration of a default judgment, and to
lift order of default with motion for reconsideration, is considered voluntary submission to the
court’s jurisdiction. This, however, is tempered only by the concept of conditional appearance, such
that a party who makes a special appearance to challenge, among others, the court’s jurisdiction
over his person cannot be considered to have submitted to its authority. From the foregoing, it is
thus clear that:
(1) Special appearance operates as an exception to the general rule on voluntary appearance;
(2) Accordingly, objections to the jurisdiction of the court over the person of the defendant must be
explicitly made, i.e., set forth in an unequivocal manner; and
(3) Failure to do so constitutes voluntary submission to the jurisdiction of the court, especially in
instances where a pleading or motion seeking affirmative relief is filed and submitted to the court for
resolution. The SC have, time and again, held that the filing of a motion for additional time to file answer
is considered voluntary submission to the jurisdiction of the court.alawred If the defendant knowingly
does an act inconsistent with the right to object to the lack of personal jurisdiction as to him, like
voluntarily appearing in the action, he is deemed to have submitted himself to the jurisdiction of the
court.26 Seeking an affirmative relief is inconsistent with the position that no voluntary appearance had
been made, and to ask for such relief, without the proper objection, necessitates submission to the
Court’s jurisdiction.
Carson voluntarily submitted to the jurisdiction of the RTC when it filed, through Atty. Roxas, the
Appearance and Motion dated April 25, 2007 acknowledging Carson’s receipt of the Summons dated
April 11, 2007 and seeking additional time to file its responsive pleading. As noted by the CA, Carson
failed to indicate therein that the Appearance and Motion was being filed by way of a conditional
appearance to question the regularity of the service of summons. Thus, by securing the affirmative relief
of additional time to file its responsive pleading, Carson effectively voluntarily submitted to the
jurisdiction of the RTC.

2. Yes. Carson was properly declared in default Section 3, Rule 9 of the Rules of Court states when a
party may be properly declared in default and the remedy available in such case.
It bears noting that the propriety of the default order stems from Carson’s failure to file its responsive
pleading despite its voluntary submission to the jurisdiction of the trial court reckoned from its filing of
the Appearance and Motion, and not due to its failure to file its answer to the September 8, 2008 alias
Summons. This conclusion finds support in Atiko Trans, Inc. and Cheng Lie Navigation Co., Ltd v.
Prudential Guarantee and Assurance, Inc., wherein the SC upheld the trial court’s order declaring
petitioner Atiko Trans, Inc. (Atiko) in default despite the invalid service of summons upon it. In this case,
respondent Prudential Guarantee and Assurance Inc. (Prudential) moved to declare Atiko in default due
to the latter’s failure to file its responsive pleading despite receipt of the summons. Acting on
Prudential’s motion, the trial court declared Atiko in default. In affirming the validity of the default
order, We took note that the trial court acquired jurisdiction over Atiko due to its voluntary submission
to the jurisdiction of the court by filing numerous pleadings seeking affirmative relief, and not on the
strength of the invalidly served summons

22. DANFOSS, INC., Petitioners, vs. CONTINENTAL CEMENT CORPORATION, Respondent.

G.R. No. 143788 September 9, 2005

FACTS:
Mechatronics Instruments and Controls, Inc. (MINCI) is an agent of Danfoss, Inc.’s products here
in the Philippines. On September 1997, CCC ordered two unit 132 KW Danfoss Brand Frequency
Converter/Inverter from MINCI to be used in the Finish Mill of its Cement Plant in Bulacan. In
the terms of conditions of the original purchase order, the two unit Frequency Converter shall
be delivered by Danfoss within 8 to 10 weeks from the opening of the letter of credit. The letter
of credit opened by CCC in favour of Danfoss on September 9, 1997.
On September 17, 1997, MINCI informed CCC that its order are already ready for shipment and
MINCI requested to amend the letter of credit changing the port of origin/loading from
Singapore to Denmark (Singapore is the Asian Regional Office of Danfoss, the Head Office of the
company is Denmark). CCC complied and the port of origin in the letter of credit was changed.
On November 6, 1997, MINCI relayed to CCC that Danfoss Inc. was still checking the status of
their order. CCC replied that every delay in the delivery of the order will cause loss to their
company, so CCC requested for early work out and immediate shipment to avoid further loss.
But, on November 9, 1997, Danfoss Inc. informed MINCI through fax, that the reason for the
delivery problems was that some of the supplied components for the new VLT 5000 series (this
may be a part of the converter which is the subject thing in this case or a machine to create the
converter) did not meet the agreed quality standard. So, Danfoss was canvassing for another
supplier for the said VLT 5000 series. In the fax, there was no clear message as to when normal
production will resume.
Upon receiving the relayed information, CCC surmised that Danfoss would not be able to deliver
their order. There was also no definite commitment of the delivery from Danfoss and MINCI, so
CCC informed MINCI that they intend to cancel its order. The order was cancelled on November
13, 1997.
Hence the complaint for damages filed by CCC with the RTC of Quezon City against Danfoss and
MINCI on November 5, 1998. In reply, Danfoss filed a motion to dismiss the complaint.
CCC’s contention : Due to the “impending” delay in the delivery of its order, it suffered more than P8
million and was compelled to look for another supplier.
Danfoss’s contention: The case should be dismissed on the ground that it did not state a cause of action.
1) The letter of credit was opened on September 9, 1997, so, since the agreed delivery period is 8 to
10 weeks from the opening of the letter of credit, the due date is until November 19, 1997.
2) Although Danfoss was having a problem with its supplier prior to CCC’s cancellation of its order,
CCC only surmised that Danfoss could not deliver within the due date agreed upon.
3) Neither Danfoss nor CCC agreed to change the date of delivery. Only the port of origin was changed
in the letter of credit. Danfoss has until November 19, 1997 to deliver the order, CCC cancelled the order
on November 13, 1997.
4) CCC never made an extrajudicial demand for the delivery of its order on its due date as it cancelled
the order before the due date.
5) Damages sought for by CCC could not have accrued yet since the order was cancelled before the
delivery was actually delayed.

1. RTC ruled in favor of CCC. According to the RTC: “...the issue of whether or not the defendants
incur delay in the delivery of the equipment in question within the period stipulated is a
debatable question which necessitates actual trial on the merits where the parties have to
adduce evidence in support of their respective stance.
2. CA: Affirmed the decision of the RTC and denied the Motion for Reconsideration of Danfoss.

ISSUE: WON there was a cause of action in the complaint filed by CCC against Danfoss

HELD: No, there was no cause of action in the complaint for damages filed by CCC.
SC ruled that “In order to sustain a dismissal on the ground of lack of cause of action, the insufficiency
must appear on the face of the complaint. And the test of the sufficiency of the facts alleged in the
complaint to constitute a cause of action is whether or not, admitting the facts alleged, the court can
render a valid judgment thereon in accordance with the prayer of the complaint. For this purpose, the
motion to dismiss must hypothetically admit the truth of the facts alleged in the complaint.”

After a careful perusal of the allegations in respondent’s complaint for damages against petitioner, we
rule that the same failed to state a cause of action. When respondent sued petitioner for damages,
petitioner had not violated any right of respondent from which a cause of action had arisen. Respondent
only surmised that petitioner would not be able to deliver the two units frequency converter/inverter on
the date agreed upon by them. Based on this apprehension, it cancelled its order six days prior to the
agreed date of delivery. How could respondent hold petitioner liable for damages (1) when petitioner
had not yet breached its obligation to deliver the goods and (2) after respondent made it impossible for
petitioner to deliver them by cancelling its order even before the agreed delivery date?

The trial court erred in ruling that the issue of whether or not the defendants incurred delay in the
delivery of the equipment within the period stipulated was a debatable question. It said that trial on the
merits was necessary and the parties had to adduce evidence in support of their respective positions.8
But what was there to argue about when, based on the allegations of the complaint, petitioner was not
yet due to deliver the two units frequency converter/inverter when respondent cancelled its order? It
still had six days within which to comply with its obligation. The court a quo should not have denied
petitioner’s motion to dismiss the complaint (for its failure to state a cause of action) when, on its face,
it was clear that petitioner had not yet reneged on its obligation to deliver the frequency
converter/inverter on the date mutually agreed upon by the parties. Moreover, the obligation itself was
negated by no less than respondent’s own act of cancelling its order even before the prestation became
due and demandable. Where therefore was the breach? Where was the damage caused by petitioner?
There was none.
Consequently, it was wrong for the CA to affirm the order of the trial court denying petitioner’s motion
to dismiss the complaint for its failure to state a cause of action.

The principle of anticipatory breach enunciated in Blossom & Company, Inc. v. Manila Gas Corporation
does not apply here. In that case, Blossom & Company, Inc. entered into a contract with Manila Gas
Corporation for the sale and delivery of water gas and coal gas tar at stipulated prices for a period of
four years. On the second year of the contract, Manila Gas willfully and deliberately refused to deliver
any coal and water gas tar to Blossom and Company, Inc. because it was asking for a higher price than
what had been previously stipulated by them. The price of its tar products had gone up. We held that:

even if the contract is divisible in its performance and the future periodic deliveries are not yet due, if the
obligor has already manifested his refusal to comply with his future periodic obligations, the contract is
entire and the breach total, hence, there can only be one action for damages.

Thus, the principle contemplates future periodic deliveries and a willful refusal to comply therewith.
Here, the obligation was single and indivisible to deliver two units of frequency converter/inverter by
November 19, 1997. The records do not show that petitioner refused to deliver the goods on the date
agreed upon. On the contrary, petitioner exerted efforts to make good its obligation by looking for other
suppliers who could provide it the parts needed to make timely delivery of the frequency
converter/inverter ordered by respondent.
The premature invocation of the courts intervention was fatal to respondents cause of action. Hence,
the dismissal of respondents complaint was in order.

23. LUI v ZUELLIG

Facts:

Lui Enterprises, Inc. and Zuellig Pharma Corporation entered into a 10-year contract of lease over a
parcel of land located in Barrio Tigatto, Buhangin, Davao City.

Zuellig Pharma, the lessee over the parcel of land, received a letter from the Philippine Bank of
Communications. Claiming to be the new owner of the leased property, the bank asked Zuellig Pharma
to pay rent directly to it.

Zuellig Pharma promptly informed Lui Enterprises of the Philippine Bank of Communications’ claim. As a
reply, Lui Enterprises wrote to Zuellig Pharma and insisted on its right to collect the leased property’s
rent

Due to conflicting claims, Zuellig Pharma filed a case for interpleader to compel Lui Enterprises and
Philippine Bank of Communications to litigate their conflicting claims on who should be the one entitled
to payment of monthly rents. Meanwhile, Zuellig asked the courts to tender and consign monthly rents
while the case is ongoing.

The Philippine Bank of Communications filed its answer to the complaint. On the other hand, Lui
Enterprises filed a motion to dismiss on the ground that Zuellig Pharma’s alleged representative did not
have authority to file the complaint for interpleader on behalf of the corporation

Zuellig Pharma filed its opposition to the motion to dismiss of Lui Enterprises. It argued that the motion
to dismiss should be denied for having been filed late. A motion to dismiss should be filed within the
required time given to file an answer to the complaint, which is 15 days from service of summons on the
defendant.23 Summons was served on Lui Enterprises on July 4, 2003. It had until July 19, 2003 to file a
motion to dismiss, but Lui Enterprises filed the motion only on July 23, 2003.
RTC Makati found Lui Enterprises to be declared in default for failure to file the motion to dismiss within
the reglementary period. Then, the court proceeded to hear the case without Lui Enterprises’
participation.
CA sustained the denial of admission of the motion to dismiss.

Petitioner now contends that the lower courts should have admitted the motion to dismiss since the
very purpose of an interpleader is to litigate who is entitled to the monthly rent. By declaring them in
default, it defeated the very purpose of the suit for interpleader

Issue: W/N the a party may be declared in default in an interpleader case

Held: Yes.

Under Rule 62, Section 1 of the 1997 Rules of Civil Procedure, a person may file a special civil action for
interpleader if conflicting claims are made against him or her over a subject matter in which he or she
has no interest. This remedy is for the lessee to protect him or her from „double vexation in respect of
one liability. A lessee may file an interpleader case to extinguish his or her obligation to pay rent,
remove him or her from the adverse claimants’ dispute, and compel the parties with conflicting claims
to litigate among themselves.

In this case, Zuellig Pharma filed the interpleader case to extinguish its obligation to pay rent. Its
purpose in filing the interpleader case was not defeated when the Makati trial court declared Lui
Enterprises in default.

An adverse claimant in an interpleader case may be declared in default. Under Rule 62, Section 5 of the
1997 Rules of Civil Procedure, a claimant who fails to answer within the required period may, on motion,
be declared in default. The consequence of the default is that the court may render judgment barring
[the defaulted claimant] from any claim in respect to the subject matter.

The Rules would not have allowed claimants in interpleader cases to be declared in default if it would
ironically defeat the very purpose of the suit.

Since Lui Enterprises failed to file its motion to dismiss within the prescribed period, Makati RTC
correctly declared them in default.

24. Spouses Manuel vs Ong

Respondent Ramon Ong (Ong) filed with the Regional Trial Court of La Trinidad, Benguet a complaint for
accion reivindicatoria. Ong charged the Spouses Manuel with having constructed improvements —
through force, intimidation, strategy, threats, and stealth — on a property he supposedly owned. Ong
filed with the Regional Trial Court a motion to declare the Spouses Manuel in default.
Sheriff Joselito Sales attempted to personally serve summons on the Spouses Manuel at their address in
Lower Bacong, Loacan, Itogon, Benguet.
Spouses Manuel, however, requested that service be made at another time considering that petitioner
Sandra Manuel's mother was then critically ill.
Sheriff Sales made another attempt at personal service to petitioner Sandra Manuel but she refused to
sign and receive the summons and the complaint. Sheriff Sales was thus prompted to merely tender the
summons.
As the Spouses Manuel failed to file their answer within the required 15-day period, Ong asked that they
be declared in default.
RTC issued an order granting Ong's motion to declare the Spouses Manuel in default. RTC also granted
motion for ex parte presentation of evidence.
Spouses Manuel filed a motion to lift the order of default. They claimed that it is the siblings of
petitioner Sandra Manuel who resided in Lower Bacong, Itogon, Benguet so summons could not have
been properly served on them in the former address. RTC denied motion to lift order of default.

Issue : W/N jurisdiction over their person was acquired? YES.

W/N the Spouses Manuel may be granted relief from the order of default? NO.
Ratio:
Issue #1:
Jurisdiction over the persons of both defendants was validly acquired because personal service of
summons, via tender to petitioner Sandra Manuel, was made by Sheriff Joselito Sales. The sheriff’s
return on summons indicated that Sheriff Joselito Sales endeavored to personally hand the summons
and a copy of the complaint to the Spouses Manuel on two (2) separate occasions.
The Spouses Manuel did not deny the occurrence of the events narrated in the sheriff’s return but
claimed that no valid service of summons was made. The Spouses Manuel cannot capitalize on the
supposed variance of address. Personal service of summons has nothing to do with the location where
summons is served. A defendant’s address is inconsequential.
Topical: the Spouses Manuel’s self-serving assertion must crumble in the face of the clear declarations
in the sheriff’s return. The acts of Sheriff Joselito Sales and the events relating to the attempt to
personally hand the summons and a copy of the complaint to the Spouses Manuel, as detailed in the
sheriff’s return, enjoy the presumption of regularity. Moreover, Sheriff Joselito Sales must be presumed
to have taken ordinary care and diligence in carrying out his duty to make service upon the proper
person(s) and not upon an impostor.
A sheriff’s return, if complete on its face, must be accorded the presumption of regularity and, hence,
taken to be an accurate and exhaustive recital of the circumstances relating to the steps undertaken by
a sheriff. In this case, the Spouses Manuel have harped on their (self-serving) claim of maintaining
residence elsewhere but failed to even allege that there was anything irregular about the sheriff’s return
or that it was otherwise incomplete.

Issue #2: The requisites for declaring a party in default were satisfied by respondent Ong.
1) the claiming party must file a motion asking the court to declare the defending party in default;
2) the defending party must be notified of the motion to declare him in default;
3) the claiming party must prove that the defending party has failed to answer within the period
provided by the Rule."
It is not disputed that Ong filed a motion to declare the Spouses Manuel in default. It is also not disputed
that the latter filed their answer after the fifteen-day period had lapsed. It is similarly settled that the
Spouses Manuel were notified that a motion to declare them in default had been filed.
Not only were the requisites for declaring a party in default satisfied, the Spouses Manuel’s motion to
lift order of default was also shown to be procedurally infirm. To lift the order of default, there are 3
requirements:
1.) the motion to lift order of default
2.) an affidavit showing the invoked ground - fraud, accident, mistake or excusable negligence
3.) the party's meritorious defense or defenses
In this case, the Court of Appeals noted that the Spouses Manuel’s motion to lift order of default was
not made under oath. We add that this motion was not accompanied by an affidavit of merit specifying
the facts which would show that their non-filing of an answer within fifteen (15) days from March 16,
2010 was due to fraud, accident, mistake, or excusable negligence.
Failing both in making their motion under oath and in attaching an affidavit of merits, the Spouses
Manuel’s motion to lift order of default must be deemed pro-forma. It is not even worthy of
consideration

25. MVRS vs Islamic Da’Wah Council of the Phils. (2003)

FACTS:

Islamic Da'wah Council of the Philippines, Inc., a local federation of more than seventy (70) Muslim
religious organizations, and individual Muslims (Linzag, Arcilla, de Guzman, da Silva, Junio) filed in the
RTC a complaint for damages in their own behalf and as a class suit in behalf of the Muslim members
nationwide against MVRS Publications, Inc., arising from an article published in the 1 August 1992 issue
of Bulgar, a daily tabloid.

The article reads:

“ALAM BA NINYO Na ang mga baboy at kahit anong uri ng hayop sa Mindanao ay hindi kinakain ng mga
Muslim? Para sa kanila ang mga ito ay isang sagradong bagay. Hindi nila ito kailangang kainin kahit na
sila pa ay magutom at mawalan ng ulam sa tuwing sila ay kakain. Ginagawa nila itong Diyos at
sinasamba pa nila ito sa tuwing araw ng kanilang pangingilin lalung-lalo na sa araw na tinatawag
nilang 'Ramadan'."

Islamic Da’Wah: the libelous statement was insulting and damaging to the Muslims; not only published
out of sheer ignorance but with intent to hurt the feelings, cast insult and disparage the Muslims and
Islam, that on account of these libelous words Bulgar insulted not only the Muslims in the Philippines
but the entire Muslim world.

MVRS Publications, Inc. : the article did not mention respondents as the object of the article and
therefore were not entitled to damages; and, that the article was merely an expression of belief or
opinion and was published without malice nor intention to cause damages. RTC dismissed the
complaint; persons allegedly defamed by the article were not specifically identified
CA reversed RTC decision. The defamation was directed to all adherents of the Islamic faith. The suit for
damages was a "class suit" and that ISLAMIC DA'WAH COUNCIL OF THE PHILIPPINES, INC.'s religious
status as a Muslim umbrella organization gave it the requisite personality to sue and protect the
interests of all Muslims.

ISSUE:
Whether this is a valid class suit.
HELD:
NO, it is not a valid class suit.

DOCTRINE:

Justice Jose C. Vitug: class suit elements:

(a) whether the interest of the named party is coextensive with the interest of the other members of the
class;

(b) the proportion of those made parties as it so bears to the total membership of the class; and,
(c) any other factor bearing on the ability of the named party to speak for the rest of the class.

Islamic Da'wah Council of the Philippines, Inc., seeks in effect to assert the interests not only of the
Muslims in the Philippines but of the whole Muslim world as well. But they obviously lack the sufficiency
of numbers to represent such a global group and were not able to demonstrate they have the same
interests with the rest of Muslims.

26. ROSENA FONTELAR OGAWA, -versus- ELIZABETH GACHE MENIGISHI,

G.R. No. 193089, 09 July 2012

FACTS:

Petitioner Roseña Fontelar Ogawa and respondent Elizabeth Gache Menigishi were childhood friends
and former residents of Sorsogon City. Respondent married a Japanese national, Tomohito Menigishi
(Tomohito),and lived in Japan. Sometime in June 1992, the Menigishis’ visited the Philippines and
introduced Yashoyuki Ogawa (Yashoyuki), Tomohito’s friend, to petitioner. Yashoyuki and petitioner
eventually got married in the Philippines and thereafter, also lived in Japan.

On January 26, 2004, petitioner filed a complaint for sum of money, damages, breach of good human
relation and unjust enrichment before the RTC against respondent, docketed as Civil Case No. 2004-
7299, alleging that the latter borrowed from her the amounts of P15,000.00, P100,000.00 and
P8,000.00, in September 2000, August 2001, and March 2003,respectively. Unable to pay, respondent
offered to sell her building and its improvements in Sorsogon City to petitioner for a consideration of
P1,500,000.00 with the agreement that her outstanding loans with petitioner be deducted from the
purchase price and the balance payable in installments.

As partial payment for the properties, petitioner remitted the following amounts to respondent: (a)
P150,000.00 through the account of her friend, Emma Fulleros on October 23, 2003; and (b)
P250,772.90 by way of bank remittance to respondent's Equitable-PCI Bank Account on December 8,
2003. Having paid huge amounts and in order to protect her proprietary rights, petitioner then
demanded for the execution of the corresponding deed of sale, but respondent backed out from the
deal and reneged on her obligations.

In her Answer with Counterclaim, respondent specifically denied her indebtedness to petitioner and
claimed that it was the latter who owed her 1,000,000.00 Yen, equivalent to about P500,000.00, as
evidenced by a receipt. In partial payment of her indebtedness, petitioner, thus, remitted the amounts of
P150,000.00 and P250,000.00 to respondent, leaving a balance of P100,000.00. Respondent also sought
reimbursement of the advances she allegedly made for the wedding expenses of petitioner and
Yashoyuki in the amount of 4,000,000.00 Yen. While she admitted offering her property for sale to
petitioner, respondent explained that the sale did not materialize as petitioner failed to produce the
stipulated downpayment. By way of counterclaim, respondent prayed for the award of 4,000,000.00
Yen, the balance of petitioner's purported loan in the amount of P100,000.00; moral and exemplary
damages; and attorney’s fees.

The RTC refused to give credence to respondent's testimony on her counterclaims for being incredible,
inconsistent, and contrary to human experience. It likewise disregarded the receipt presented by
respondent as proof of petitioner's purported indebtedness of 1,000,000.00 Yen.

On appeal, the CA affirmed the RTC’s awards of the sums of P150,000.00 and P250,772.90 in favor of
petitioner and sustained the denial of respondent's counterclaim of 4,000,000.00 Yen for lack of
evidence.

However, it gave probative value to the receipt for 1,000,000.00 Yen and held it sufficient to establish
petitioner's indebtedness to respondent, considering the purported admission of the former's counsel
as well as petitioner's own failure to specifically deny the same under oath as provided for under Section
8, Rule 8 of the Rules of Court. Consequently, it granted respondent's counterclaim of 1,000,000.00 Yen.
Finally, having found both parties at fault, the CA deleted the awards of damages and attorney’s fees.

ISSUE:

Whether the disputed receipt sufficiently established respondent's counterclaim that petitioner owed
her 1,000,000.00 Yen.

RULING:

In this case, the RTC and the CA gave different interpretations on the context of the receipt (Exhibit 1)
executed by the parties and arrived at incongruent findings. On one hand, the RTC considered it as
having failed to establish any right on the part of respondent to collect from petitioner the purported
indebtedness of 1,000,000.00 Yen, while on the other, the CA found it sufficient to confer liability.

A receipt is defined as a written and signed acknowledgment that money or good was delivered or
received.8 Exhibit 1, upon which respondent relies to support her counterclaim, sufficiently satisfies this
definition.

It reads in full:
June 13, 2003

I receive the total amount of 1,000,000 Yen (x x x)

Signed:

Elizabeth Menigishi Roseña Ogawa

However, while indubitably containing the signatures of both parties,a plain reading of the contents of
Exhibit 1 negates any inference as to thenature of the transaction for which the 1,000,000 Yen was
received and who between the parties is the obligor and the obligee. What is apparent is a mere written
and signed acknowledgment that money was received. There are no terms and conditions found therein
from which a right or obligation may be established. Hence, it cannot be considered an actionable
document upon which an action or defense may be founded.

Consequently, there was no need to deny its genuineness and due execution under oath in accordance
with Section 8, Rule 8 of the Rules of Civil Procedure. Corollary thereto, the manifestation made in open
court by Atty. Gerona, petitioner's counsel, cannot be construed as an admission of her liability. Hence,
absent any other evidence to prove the transaction for which the receipt was issued, the Court cannot
consider Exhibit 1 as evidence of a purported loan between petitioner and respondent which the former
categorically denied.

DOCTRINE:

It is settled that the burden of proof lies with the party who asserts his/her right. In a counterclaim, the
burden of proving the existence of the claim lies with the defendant, by the quantum of evidence
required by law which in this case is preponderance of evidence under Section 1, Rule 133 of the Revised
Rules on Evidence

“Preponderance of evidence” is the weight, credit, and value of theaggregate evidence on either side
and is usually considered to be synonymous with the term “greater weight of evidence” or “greater
weight of credible evidence.”

From the evidence on record, it is clear that respondent failed to prove her counterclaim by
preponderance of evidence. In view of the foregoing, the Court cannot sustain the findings of the CA
that both parties are at fault. Accordingly, the award of damages granted by the RTC in favor of
petitioner must be reinstated with the modification.

27. REBECCA PACAÑA-CONTRERAS and ROSALIE PACAÑA,

v.
ROVILA WATER SUPPLY, INC., EARL U KOKSENG, LILIA TORRES, DALLA P. ROMANILLOS and MARISSA
GABUYA
G.R. No. 168979 December 2, 2013
FACTS:

Petitioners Rebecca Pacaña-Contreras and Rosalie Pacaña, children of Lourdes Teves Pacaña and
Luciano Pacaña, filed the present case against Rovila Inc., Earl, Lilia, Dalla and Marisa for accounting and
damages. The petitioners filed the complaint in their own names although Rosalie was authorized by
Lourdes through a sworn declaration and special power of attorney (SPA).

The respondents filed a motion to dismiss on the grounds, among others, that the petitioners are not
the real parties in interest to institute and prosecute the case and that they have no valid cause of action
against the respondents.

The RTC denied the respondents’ motion to dismiss as well as respondents’ motion for reconsideration.

The respondents filed a petition for certiorari under Rule 65 of the Rules of Court with the Court of
Appeals, invoking grave abuse of discretion in the denial of their motion to dismiss. The CA granted the
petition and ruled that the RTC committed grave abuse of discretion as the petitioners filed the
complaint and the amended complaint as attorneys-in-fact of their parents. As such, they are not the
real parties in interest and cannot bring an action in their own names.

The petitioners filed the present petition and argued, among others, that in annulling the interlocutory
orders, the CA unjustly allowed the motion to dismiss which did not conform to the rules. Specifically,
the motion was not filed within the time for, but before the filing of, the answer to the amended
complaint, nor were the grounds raised in the answer. Citing Section 1, Rule 9 of the Rules of Court, the
respondents are deemed to have waived these grounds, as correctly held by the RTC.

The respondents argued that the grounds invoked in their motion to dismiss were timely raised,
pursuant to Section 2, paragraphs g and i, Rule 18 of the Rules of Court. Specifically, the nature and
purposes of the pre-trial include, among others, the dismissal of the action, should a valid ground
therefor be found to exist; and such other matters as may aid in the prompt disposition of the action.
Finally, the special civil action of certiorari was the proper remedy in assailing the order of the RTC.

ISSUE:

Whether the petition for certiorari under Rule 65 is a proper remedy for a denial of a motion to dismiss
attended by grave abuse of discretion.

RULING: YES.

We find the petition meritorious.

In Barrazona v. RTC, Branch 61, Baguio City, the Court held that while an order denying a motion to
dismiss is interlocutory and non-appealable, certiorari and prohibition are proper remedies to address
an order of denial made without or in excess of jurisdiction. The writ of certiorari is granted to keep an
inferior court within the bounds of its jurisdiction or to prevent it from committing grave abuse of
discretion amounting to lack or excess of jurisdiction.
The motion to dismiss in the present case based on failure to state a cause of action was not timely filed
and was thus waived.

DOCTRINE:

Rule 9 of the Rules of Court which states that defenses and objections not pleaded either in a motion to
dismiss or in the answer are deemed waived, except for the following grounds:

1) the court has no jurisdiction over the subject matter;

2) litis pendencia;

3) res judicata; and

4) prescription.

Therefore, the grounds not falling under these four exceptions may be considered as waived in the event
that they are not timely invoked. As the respondents’ motion to dismiss was based on the grounds which
should be timely invoked, material to the resolution of this case is the period within which they were
raised. Both the RTC and the CA found that the motion to dismiss was only filed after the filing of the
answer and after the pre-trial had been concluded.

The Court cannot uphold the dismissal of the present case based on the grounds invoked by the
respondents which they have waived for failure to invoke them within the period prescribed by the
Rules.

Therefore, the RTC did not commit grave abuse of discretion in issuing the assailed orders denying the
respondents’ motion to dismiss and motion for reconsideration.

Walang 28-30

31.AIDA PADILLA vs. GLOBE ASIATIQUE REALTY HOLDINGS CORPORATION, FILMAL REALTY
CORPORATION

Doctrine: Under the 1997 Rules of Civil Procedure, it is now explicitly provided that the dismissal of the
complaint due to failure of the plaintiff to prosecute his case is "without prejudice to the right of the
defendant to prosecute his counterclaim in the same or in a separate action”. The effect of this
amendment on previous rulings on whether the dismissal of a complaint carries with it the
counterclaims as well.

Facts
Philippine National Bank entered into several Contracts to Sell Facility Agreements with respondents
Globe Asiatique and Filmal Realty Corporation. PNB thereby agreed to make available to Globe Asiatique
and Filmal CTS Facility in sum of money to finance the purchase of certain Accounts Receivables or the
in-house installment receivables of respondents arising from the sale of subdivision houses in their real
estate/housing projects as evidenced by contracts to sell. These availments were later increased.
Respondents executed in favor of PNB several Deeds of Assignment covering accounts receivables in
dum of money. In the said instruments, respondents acknowledged the total amount of sum of money
released to them by PNB in consideration of the aforesaid accounts receivables.

Respondents defaulted in the payment of their outstanding balance and delivery to PNB of transfer
certificates of title corresponding to the assigned accounts receivables, for which PNB declared them in
default under the Agreements. Subsequently, respondents made partial payments and made proposals
for paying in full its obligation to PNB as shown in the exchange of correspondence between
respondents and PNB.
PNB made a demand upon respondents to settle the total amount of sum of money representing their
outstanding obligation. PNB claimed it discovered 231 out of 240 Contracts to Sell to have either
inexistent addresses of buyers or the names of the buyers are non-existent or both.

PNB instituted a complaint against the respondents for recovery of sum of money and damages with
prayer for writ of preliminary attachment before the RTC of Pasay City.

Pasay City RTC issued an Order granting PNB’s application for issuance of preliminary attachment after
finding that defendants are guilty of fraud in contracting their outstanding loan applications to plaintiff.

Defendants filed their Answer with Counterclaim with motion to dismiss, arguing that PNB has no cause
of action against them as there is nothing in the agreement that suggest they are personally liable or
serve as guarantors.

Defendants asserted that the allegations of fraud in the complaint are without basis and no proof was
presented by plaintiff on the existence of preconceived fraud and lack of intention to pay their
obligations, citing their timely payments made to PNB.

Pasay City RTC denied defendants’ motion to dismiss, motions to discharge preliminary attachment and
to expunge or suspend proceedings, as well as PNB’s motion to expunge.

Issue: whether or not a court can take cognizance of a compulsory counterclaim despite the fact that
the corresponding complaint was dismissed for lack of jurisdiction.

Ruling:
No, Respondents are incorrect in arguing that petitioner adopted the wrong mode of appeal, Petitioner
raises the lone issue of whether the Pasig City RTC was correct in refusing to hear her counterclaims
after the dismissal of respondents' complaint for lack of jurisdiction.

Petitioner's counterclaim for damages raised in her answer before the Pasig City RTC is compulsory,
alleging suffering and injury caused to her as a consequence of the unwarranted filing of the baseless
complaint. The RTC of Pasig City should have allowed petitioner's counterclaim to proceed
notwithstanding the dismissal of respondents' complaint, the same being compulsory in nature and with
its cause not eliminated by such dismissal.

. VIRGINIA S. DIO and H.S. EQUITIES, LTD., vs. SUBIC BAY MARINE EXPLORATORIUM 32.

Doctrine:

The established policy of strict observance of the judicial hierarchy of courts. As a rule, requires
that recourse must first be made to the lower-ranked court exercising concurrent jurisdiction with a
higher court. A regard for judicial hierarchy clearly indicates that petitions for the issuance of
extraordinary writs against first level courts should be filed in the RTC and those against the latter
should be filed in the Court of Appeals. The rule is not iron-clad, however, as it admits of certain
exceptions.

As the rule now stands, the nature of the counterclaim notwithstanding, the dismissal of the
complaint does not ipso jure result in the dismissal of the counterclaim, and the latter may remain for
independent and adjudication of the court, provided that such, counterclaim, states a sufficient cause of
action and does not labor under any infirmity that may warrant its outright dismissal.

Facts

Petitioner is a foreign corporation entered into an isolated transaction subject of the instant case. It is
represented in this action by Dio. Respondent is a domestic corporation and is represented in this action
by its Chief Executive Officer, Desmond.

Respondent decided to expand its business by operating a beach resort inside the property. Respondent
needed to solicit investors who are willing to infuse funds for the construction and operation of the
beach resort project. Petitioner agreed to invest the amount of sum of money with respondents by
purchasing 750,000 common shares with a par value of ₱100 per share from the increase in its
authorized capital stock. The agreement was writing wherein petitioner, in order to protect its interest
in the company, was afforded protection rights such as the right to appoint a member of the board of
directors and the right to veto certain board resolutions. After HSE initially paid sum of money for its
subscription, it refused to further lay out money for the expansion project of the respondents due to the
alleged mismanagement.
Respondent initiated an intra-corporate dispute before the RTC of Balanga City, Bataan against
petitioners. Before petitioners could file their answer to the complaint, respondents impleaded its
Corporate Secretary. Respondent essentially alleged that petitioner unjustly refused to pay the balance
of its unpaid subscription effectively jeopardizing the company’s expansion project. Apart from their
refusal to honor their obligation under the subscription contract, it was further alleged by SBME that Dio
tried to dissuade local investors and financial institutions from putting in capital to SBME by imputing
defamatory acts against Desmond. To protect the interest of the corporation and its stockholders, SBME
sought that petitioners be enjoined from committing acts inimical to the interest of the company.

To refute the claims of respondents, petitioners maintained in their Answer with Compulsory
Counterclaim that it would be highly preposterous for them to dissuade investors and banks from
putting in money to SBME considering that HSE and Dio are stakeholders of the company with
substantial investments therein. In turn, petitioners countered that their reputation and good name in
the business community were tarnished as a result of the filing of the instant complaint, and thus prayed
that they be indemnified in the amount of sum of maoney as moral damages, litigation expenses and
investments.

After petitioners filed their Answer with Compulsory Counterclaim, the RTC, instead of setting the case
for pre-trial, issued an order motu proprio dismissing Civil Case due on the defective certificate of non-
forum shopping which was signed by Desmond without specific authority from the Board of Directors of
SBME.

For lack of merit, RTC denied respondents’ motion and affirmed the dismissal in an order. Respondents
elevated the matter before the Court of Appeals assailing the propriety of the RTC Orders via Petition for
Review. For failure of the respondents to file their appellants’ brief, the appellate court proceeded to
dismiss resolution. After respondents failed to seasonably move for the reconsideration .

Acting on the motions filed by the opposing parties, the RTC, in an Order 13 granted the motion of the
respondents, thereby directing the dismissal of petitioners’ counterclaims but not on the ground of non-
payment of docket fees. In disallowing petitioners’ counterclaims to proceed independently of
respondents’ complaint, the lower court pointed out that in view of the dismissal of the main case,
which has already been affirmed with finality by the appellate court, it has already lost its jurisdiction to
act on petitioners’ counterclaim, the compulsory counterclaim being merely ancillary to the principal
controversy.

The RTC refused to reconsider its earlier disposition. Petitioners filed this instant Petition for Review on
Certiorari on pure question of law.

Issue:

The Court’s Ruling

The rule is that a compulsory counterclaim cannot "remain pending for independent adjudication by the
court." This is because a compulsory counterclaim is auxiliary to the proceeding in the original suit and
merely derives its jurisdictional support therefrom.

Thus, it necessarily follows that if the trial court no longer possesses jurisdiction to entertain the main
action of the case, as when it dismisses the same, then the compulsory counterclaim being ancillary to
the principal controversy, must likewise be similarly dismissed since no jurisdiction remains for the grant
of any relief under the counterclaim.

As the rule now stands, the nature of the counterclaim notwithstanding, the dismissal of the complaint
does not ipso jure result in the dismissal of the counterclaim, and the latter may remain for independent
adjudication of the court, provided that such counterclaim, states a sufficient cause of action and does
not labor under any infirmity that may warrant its outright dismissal. Stated differently, the jurisdiction
of the court over the counterclaim that appears to be valid on its face, including the grant of any relief
thereunder, is not abated by the dismissal of the main action.

The court’s authority to proceed with the disposition of the counterclaim independent of the main
action is premised on the fact that the counterclaim, on its own, raises a novel question which may be
aptly adjudicated by the court based on its own merits and evidentiary support. It bears to emphasize
that petitioner's counterclaim against respondent is for damages and attorney's fees arising from the
unfounded suit. While respondent's Complaint against petitioner is already dismissed, petitioner may
have very well already incurred damages and litigation expenses such as attorney's fees since it was
forced to engage legal representation in the Philippines to protect its rights and to assert lack of
jurisdiction of the courts over its person by virtue of the improper service of summons upon it. Hence,
the cause of action of petitioner's counterclaim is not eliminated by the mere dismissal of respondent's
complaint.

33. JESUS DACOYCOY vs. HON. INTERMEDIATE APPELLATE COURT

Doctrine:

Jurisdcition 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. Questions or issues relating to venue of actions are
basically governed by Rule 4 of the Revised Rules of Court.

Facts

On March 22, 1983, petitioner Jesus Dacoycoy, a resident of Balanti, Cainta, Rizal, filed before the
Regional Trial Court, Antipolo, Rizal, a complaint against private respondent Rufino de Guzman praying
for the annulment of two deeds of sale involving a parcel of riceland situated in Barrio Estanza,
Lingayen, Pangasinan, the surrender of the produce thereof and damages for private respondent's
refusal to have said deeds of sale set aside upon petitioner's demand. 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. Petitioner
appealed to the Intermediate Appellate Court, now Court of Appeals, which in its decision of April 11,
1986, affirmed the order of dismissal of his complaint. 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.

Private respondent, on the other hand, maintains that the dismissal of petitioner's complaint is proper
because the same can "readily be assessed as (a) real action." He asserts that "every court of justice
before whom a civil case is lodged is not even obliged to wait for the defendant to raise that venue was
improperly laid.

Issue:

WON the order to dismiss by the trial court was improperly laid due to incorrect venue was proper.

Ruling:

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.

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. Indeed, it was grossly erroneous for the trial court to
have taken a procedural short-cut by dismissing motu proprio the complaint on the ground of improper
venue without first allowing the procedure outlined in the Rules of Court to take its proper course.
Although we are for the speedy and expeditious resolution of cases, justice and fairness take primary
importance. The ends of justice require that respondent trial court faithfully adhere to the rules of
procedure to afford not only the defendant, but the plaintiff as well, the right to be heard on his cause.

34. Asian United Bank vs Goodland

G.R. No. 191388

Doctrine:

There is forum shopping "when a party repetitively avails of several judicial remedies in different courts,
simultaneously or successively, all substantially founded on the same transactions and the same
essential facts and circumstances, and all raising substantially the same issues either pending in or
already resolved adversely by some other court. Forum shopping can be committed in three ways:

(1) filing multiple cases based on the same cause of action and with the same prayer, the previous case
not having been resolved yet (litis pendentia)
(2) filing multiple cases based on the same cause of action and the same prayer, the previous case
having been finally resolved (res judicata)
(3) Filing multiple cases based on the same cause of action, but with different prayers (splitting causes of
action, where the ground for dismissal is also either litis pendentia or res judicata).

Facts:

Respondent Goodland Company, Inc. (Goodland) executed a Third Party Real Estate Mortgage (REM)
over two parcels of land in favor of petitioner Asia United Bank (AUB). The mortgage secured the
obligation amounting to ₱250 million of Radiomarine Network, Inc. (RMNI), doing business as Smartnet
Philippines, to AUB.

Goodland then filed a Complaint in the Regional Trial Court (RTC) of Biñan, Laguna for the annulment of
the REM on the ground that the same was falsified and done in contravention of the parties’ verbal
agreement (Annulment Case).
While the Annulment Case was pending, RMNI defaulted in the payment of its obligation to AUB,
prompting the latter to exercise its right under the REM to extrajudicially foreclose the mortgage. It filed
its Application for Extrajudicial Foreclosure of Real Estate Mortgage under Act No. 3135, as amended
with the Office of the Executive Judge of the RTC of Biñan, Laguna

Before AUB could consolidate its title, Goodland filed on November 28, 2006 another Complaint 10
docketed as Civil Case No. B-7110 before Branch 25 of the RTC of Biñan, Laguna, against AUB and its
officers, petitioners Christine Chan and Florante del Mundo. This Complaint sought to annul the
foreclosure sale and to enjoin the consolidation of title in favor of AUB (Injunction Case). Goodland
asserted the alleged falsified nature of the REM as basis for its prayer for injunction.

Petitioners then filed a Motion to Dismiss with Opposition to a Temporary Restraining Order in the
Injunction Case.13 They brought to the trial court’s attention Goodland’s forum shopping given the
pendency of the Annulment Case. They argued that the two cases both rely on the alleged falsification
of the real estate mortgage as basis for the reliefs sought.

Ruling of the Regional Trial Court- the trial court acted favorably on petitioners’ motion and dismissed
the Injunction Case with prejudice on the grounds of forum shopping and litis pendentia. 14 The trial
court explained that the Injunction Case and the Annulment Case are both founded on the same
transactions, same essential facts and circumstances, and raise substantially the same issues.

Ruling of the CA- Goodland was not guilty of forum shopping when it initiated the Annulment and
Injunction Cases. The CA held that the reliefs sought in the two cases were different.

Issue:

Whether the successive filing of the Annulment and Injunction Cases constitute forum shopping.

Ruling:

The cause of action in the earlier Annulment Case is the alleged nullity of the REM (due to its allegedly
falsified or spurious nature) which is allegedly violative of Goodland’s right to the mortgaged property. It
serves as the basis for the prayer for the nullification of the REM. The Injunction Case involves the same
cause of action, inasmuch as it also invokes the nullity of the REM as the basis for the prayer for the
nullification of the extrajudicial foreclosure and for injunction against consolidation of title. While the
main relief sought in the Annulment Case (nullification of the REM) is ostensibly different from the main
relief sought in the Injunction Case (nullification of the extrajudicial foreclosure and injunction against
consolidation of title), the cause of action which serves as the basis for the said reliefs remains the same
— the alleged nullity of the REM.

There can be no determination of the validity of the extrajudicial foreclosure and the propriety of
injunction in the Injunction Case without necessarily ruling on the validity of the REM, which is already
the subject of the Annulment Case. The identity of the causes of action in the two cases entails that the
validity of the mortgage will be ruled upon in both, and creates a possibility that the two rulings will
conflict with each other. This is precisely what is sought to be avoided by the rule against forum
shopping.

WHEREFORE, premises considered, the Petition is GRANTED. The June 5, 2009 Decision of the Court of
Appeals and its February 17, 2010 Resolution in CA-G.R. CV No. 90114 are hereby REVERSED and SET
ASIDE.

35. Navoa vs CA

G.R. No. 59255

Doctrine:

A cause of action is the fact or combination of facts which affords a party a right to judicial interference
in his behalf. The requisites for a cause of action are:

(a) A right in favor of the plaintiff by whatever means and under whatever law it arises or is created.
(b) An obligation on the part of the defendant to respect and not to violate such right.
(c) An act or omission on the part of the defendant constituting a violation of the plaintiff's right or
breach of the obligation of the defendant to the plaintiff.

Facts:

Private respondents filed with the Regional Trial Court of Manila an action against petitioners for
collection of various sums of money based on loans obtained by the latter. Petitioners filed a motion to
dismiss the complaint on the ground that the complaint stated no cause of action and that plaintiffs had
no capacity to sue.

After private respondents submitted their opposition to the motion to dismiss the trial court dismissed
the case. A motion to reconsider the dismissal was denied.

On 27 March 1978 private respondents appealed to the Court of Appeals which on 11 December 1980
modified the order of dismissal "by returning the records of this case for trial on the merits, upon filing
of an answer subject to the provisions of Articles 1182 and 1197 of the Civil Code for the first cause of
action. The other causes of action should be tried on the merits subject to the defenses the defendants
may allege in their answer."

Petitioners submit that private respondents failed to specify in their complaint a fixed period within
which petitioners should pay their obligations; that instead of stating that petitioners failed to discharge
their obligations upon maturity private respondents sought to collect on the checks which were issued
to them merely as security for the loans; and, that private respondents failed to make a formal demand
on petitioners to satisfy their obligations before filing the action.
For a proper determination of whether the complaint filed by private respondents sufficiently stated a
cause of action, we shall examine the relevant allegations in the complaint, to wit:

Allegations Common To All Causes of Actions

xxx xxx xxx

3. That sometime in . . . February, 1977, when the Reycard Duet was in Manila, plaintiff
Teresita got acquainted with defendant Olivia in the jewelry business, the former selling
the jewelries of the latter; that to the Reycard Duet alone, plaintiff Teresita sold
jewelries worth no less than ONE HUNDRED TWENTY THOUSAND (P120,000.00) PESOS
in no less than twenty (20) transactions; that even when the Reycards have already left,
their association continued, and up to the month of August, 1977, plaintiff Teresita sold
for defendant Olivia jewelries worth no less than TWENTY THOUSAND (P20,000.00)
PESOS, in ten (10) transactions more or less;

xxx xxx xxx

5. That sometime in the month of June and July of 1977, defendant Olivia, on two
occasions, asked for a loan from plaintiff Teresita, for the purpose of investing the same
in the purchase of jewelries, which loan were secured by personal checks of the former;
that in connection with these loans, defendant promised plaintiff a participation in an
amount equivalent to one half (1/2) of the profit to be realized; that on these loans,
plaintiff was given a share in the amount of P1,200.00 in the first transaction, and in the
second transaction, the sum of P950.00;

First Cause of Action

6. That on August 15, 1977, defendant Olivia got from plaintiff Teresita, one diamond
ring, one and one half (1-1/2) karats, heart shape, valued in the amount of Fifteen
thousand (P15,000.00) Pesos; that as a security for the said ring, Olivia issued a
Philippine Commercial and Industrial Bank Check, San Sebastian Branch, dated August
15, 1977, No. 13894, copy of which is hereto attached and made a part hereof as Annex
"A";

7. That the condition of the issuance of the check was — if the ring is not returned
within fifteen (15) days from August 15, 1977, the ring is considered sold; that after
fifteen days, plaintiff Teresita asked defendant Olivia if she could deposit the check, and
the answer of defendant Olivia was — hold it for sometime, until I tell you to deposit the
same; that the check was held until the month of November, 1977, and when deposited,
it was dishonored for lack of sufficient funds; that for the reason that the
aforementioned check was not honored when deposited, defendant Olivia should be
held liable for interest at the rate of one percent a month, from date of issue, until the
same is fully paid;

Second Cause of Action

8. That on August 25, 1977, plaintiff Teresita extended a loan to the herein defendant
Olivia in the amount of TEN THOUSAND (P10,000.00) PESOS, secured by a Philippine
Commercial and Industrial Bank Check, PCIBANK Singalong Branch, No. 14307, dated
Sept. 25, 1977, photo copy of which is hereto attached and made a part hereof as Annex
"B";

9. That this loan was extended upon representation of defendant Olivia that she needed
money to pay for jewelries which she can resell for a big profit; that having established
her goodwill, by reason of the transaction mentioned in par. "5" hereof, the loan was
extended by plaintiff;

10. That this check, Annex "B", when deposited was dishonored; that for the reason that
the check was dishonored when deposited, defendant Olivia should be held liable for
interest at the rate of one percent (1%) per month, from the date of issue until fully
paid;

Third Cause of Action

11. That on August 27, 1977, plaintiff extended to defendant Olivia a loan in the amount
of FIVE THOUSAND PESOS (P5,000.00), secured by a Philippine Commercial & Industrial
Bank check, PCIBANK Singalong Branch, No. 14308, dated Sept. 27, 1977, photo copy of
which is hereto attached and made a part hereof as Annex "C";

12. That this loan was extended on the same representation made by defendant Olivia,
stated in par. "9", under the terms and conditions stated in par. "5" hereof;

13. That the check Annex "C", has not as yet been paid up to now, hence, defendant
Olivia should be held liable for interest at the rate of one percent (1%) monthly, from
date of issue, until fully paid;

Fourth Cause of Action

14. That on August 30, 1977, plaintiff Teresita, extended a loan in favor of defendant
Olivia, in the amount of Five Thousand (P5,000.00) Pesos, secured by a Philippine
Commercial and Industrial Bank Check, PCIBANK Singalong Branch, No. 14311, dated
Sept. 30, 1977, photo copy of which is hereto attached and made a part hereof as Annex
"D";

15. That this loan was extended on the same representation made by defendant Olivia,
as stated in par. "9" hereof, under the terms and conditions stated in par. "5" hereof;

16. That this check, Annex "D" has not as yet been paid up to now, hence, she should be
held liable for interest thereon at the rate of one percent (1%) per month, from date of
issue, until fully paid;

Fifth Cause of Action

17. That on Sept. 15, 1977, plaintiff Teresita extended a loan in favor of defendant
Olivia, in the amount of TEN THOUSAND (P10,000.00) PESOS, secured by a Philippine
Commercial & Industrial Bank check, PCIBANK Singalong Branch, No. 14320, dated
October 15, 1977, photo copy of which is hereto attached and made a part hereof as
Annex "E";

18. That this loan was given on the same representation made by defendant Olivia,
stated on par. "9" hereof, and under the terms and conditions stated in par. "5" hereof;

19. That this check Annex "E" when deposited was dishonored; that for the reason that
the check was dishonored when deposited, defendant Olivia should be held liable for
interest at the rate of one percent (1%) monthly, from date of issue, until fully paid;

Sixth Cause of Action

20. That on Sept. 27, 1977, plaintiff Teresita extended a loan to defendant Olivia, in the
amount of TEN THOUSAND (P10,000.00) PESOS, secured by a Philippine Commercial &
Industrial Bank check, No. 14325, dated October 27, 1977, photo copy of which is hereto
attached and made a part hereof as Annex "F";

21. That this loan was given on the same representation made by defendant Olivia,
stated in par. "9" hereof, and under the terms and conditions stated in par. "5" hereof;

22. That this check, Annex F, when deposited was dishonored; that for the reason that
the check was dishonored when deposited, defendant Olivia should be held liable for
interest thereon, at the rate of one percent (1%) monthly, from date of issue, until fully
paid;

Seventh Cause of Action

23. That plaintiff, by reason of the two transactions in par. "5" hereof, reposed trust and
confidence on defendant Olivia, however, by virtue of these trust and confidence, she
availed of the same in securing the loans aforementioned by misrepresentations, and as
a direct consequence thereof, the loans have not as yet been settled up to now, for
which plaintiff Teresita suffered sleepless nights, mental torture and wounded feelings,
for the reason that the money used in said transactions do all belong to her; that this
situation is further aggravated by the malicious act of defendant Olivia, by having filed a
complaint with the Manila Police, to the effect that she (Teresita) stole the checks
involved in this case; that as a consequence thereof, she was investigated and she
suffered besmirched reputation, social humiliation, wounded feelings, moral shock and
similar injuries, for which defendant Olivia should be held liable, as and by way of moral
damages in the amount of EIGHTY THOUSAND (P80,000.00) PESOS;

Eight Cause of Action

 24. That as and by way of exemplary or corrective damages, to serve as an example or
correction for the public good, defendant Olivia should be held liable to pay to the
herein plaintiff Teresita, the amount of Ten Thousand Pesos, as exemplary damages;

Ninth Cause of Action

25. That plaintiff, in order to protect her rights and interests, engaged the services of the
undersigned, and she committed herself to pay the following:

a. The amount of P200.00 for every appearance in the trial of this case.

b. The amount of P2,000.00 as retainers fees.

c. An amount equivalent to ten percent of any recover from defendant.

On the basis of the allegations under the heading Allegations Common to all Causes of Action above
stated as well as those found under the First Cause of Action to the Ninth Cause of Action

Issue:

Should the complaint be dismissed for want of cause of action?

Ruling:

In determining the existence of a cause of action, only the statements in the complaint may properly be
considered. Lack of cause of action must appear on the face of the complaint and its existence may be
determined only by the allegations of the complaint, consideration of other facts being proscribed and
any attempt to prove extraneous circumstances not being allowed.

If a defendant moves to dismiss the complaint on the ground of lack of cause of action, such as what
petitioners did in the case at bar, he is regarded as having hypothetically admitted all the averments
thereof. The test of sufficiency of the facts found in a complaint as constituting a cause of action is
whether or not admitting the facts alleged the court can render a valid judgment upon the same in
accordance with the prayer thereof. The hypothetical admission extends to the relevant and material
facts well pleaded in the complaint and inferences fairly deducible there from. Hence, if the allegations
in a complaint furnish sufficient basis by which the complaint can be maintained, the same should not
be dismissed regardless of the defense that may be assessed by the defendants. 6

36. Pinausukan Seafood House vs Far East Bank

G.R. No. 155173

Doctrine:

The true office of the verification is merely to secure an assurance that the allegations of a pleading are
true and correct and not the product of the imagination or a matter of speculation, and that the
pleading is filed in good faith.

Facts:

On various dates in 1993, Bonier de Guzman (Bonier), then the President of petitioner corporation
(Pinausukan, for short), executed four real estate mortgages involving the petitioner’s 517 square meter
parcel of land situated in Pasay City 3 in favor of Far East Bank and Trust Company (now Bank of
Philippine Islands), to be referred to herein as the Bank. When the unpaid obligation secured by the
mortgages had ballooned to ₱15,129,303.67 as of June 2001, the Bank commenced proceedings for the
extrajudicial foreclosure of the mortgages.

Learning of the impending sale of its property by reason of the foreclosure of the mortgages,
Pinausukan, represented by Zsae Carrie de Guzman, brought against the Bank and the sheriff an action
for the annulment of real estate mortgages in the RTC, averring that Bonier had obtained the loans only
in his personal capacity and had constituted the mortgages on the corporate asset without Pinausukan’s
consent through a board resolution. Pinausukan applied for the issuance of a temporary restraining
order or writ of preliminary injunction to enjoin the Bank and the sheriff from proceeding with the
extrajudicial foreclosure and the public auction.

The counsels of the parties did not appear in court on the hearing scheduled despite having agreed
thereto. Accordinglythe RTC dismissed Civil Case No. 01-0300 for failure to prosecute. The order of
dismissal attained finality.

Claiming surprise over the turn of events, Pinausukan inquired from the RTC and learned that Atty.
Michael Dale Villaflor (Atty. Villaflor), its counsel of record, had not informed it about the order of
dismissal.

Pinausukan brought the petition for annulment in the CA seeking the nullification of the order dismissing
Civil Case No. 01-0300. Its petition, under the verification of Roxanne de Guzman-San Pedro (Roxanne),
who was one of its Directors, and concurrently its Executive Vice President for Finance and Treasurer,
stated that its counsel had been guilty of gross and palpable negligence in failing to keep track of the
case he was handling, and in failing to apprise Pinausukan of the developments on the case. It further
pertinently stated as follows:

The CA dismissed the petition for annulment, citing the failure to attach the affidavits of witnesses
attesting to and describing the alleged extrinsic fraud supporting the cause of action as required by
Section 4, Rule 47 of the Rules of Court; and observing that the verified petition related only to the
correctness of its allegations, a requirement entirely different and separate from the affidavits of
witnesses required under Rule 47 of the Rules of Court.
Issue:

wON the requirement for attaching the affidavits of witnesses to the petition for annulment should be
relaxed.

Ruling:

The procedural defect consisted in Pinausukan’s disregard consisting in its failure to submit together
with the petition the affidavits of witnesses or documents supporting the cause of action. It is true that
the petition, which narrated the facts relied upon, was verified under oath by Roxanne. However, the
submission of the affidavits of witnesses together with the petition was not dispensable for that reason.
We reiterate with approval the CA’s emphatic observation in the resolution of July 31, 2003 dismissing
the petition for annulment to the effect that Roxanne’s verification related only "to the correctness of
the allegations in the petition" and was "not the same or equivalent to the affidavit of witnesses that the
above-cited Rule requires."51

Pinausukan’s failure to include the affidavits of witnesses was fatal to its petition for annulment. Worthy
to reiterate is that the objective of the requirements of verification and submission of the affidavits of
witnesses is to bring all the relevant facts that will enable the CA to immediately determine whether or
not the petition has substantial merit. In that regard, however, the requirements are separate from each
other, for only by the affidavits of the witnesses who had competence about the circumstances
constituting the extrinsic fraud can the petitioner detail the extrinsic fraud being relied upon as the
ground for its petition for annulment. This is because extrinsic fraud cannot be presumed from the
recitals alone of the pleading but needs to be particularized as to the facts constitutive of it. The
distinction between the verification and the affidavits is made more pronounced when an issue is based
on facts not appearing of record. In that instance, the issue may be heard on affidavits or depositions
presented by the respective parties, subject to the court directing that the matter be heard wholly or
partly on oral testimony or depositions.

37)G.R. No. 173399

CENTRAL BANK BOARD OF LIQUIDATORS, Petitioner 

vs.
BANCO FILIPINO SAVINGS AND MORTGAGE BANK, Respondent

Doctrine:
second amendment of the Complaint

The prevailing rule on the amendment of pleadings is one of liberality, 50 with the end of obtaining
substantial justice for the parties. However, the option of a party-litigant to amend a pleading is not
without limitation. If the purpose is to set up a cause of action not existing at the time of the filing of the
complaint, amendment is not allowed. If no right existed at the time the action was commenced, the
suit cannot be maintained, even if the right of action may have accrued thereafter.

The second supplemental pleading

was improper.

This Court ruled in Leobrera v. CA59 that a supplemental complaint must be founded on the same cause
of action as that raised in the original complaint. Although in Planters Development Bank v. LZK Holdings
& Development Corporation,60 the Court clarified that the fact that a supplemental pleading technically
states a new cause of action should not be a bar to its allowance, still, the matter stated in the
supplemental complaint must have a relation to the cause of action set forth in the original pleading.
That is, the matter must be germane and intertwined with the cause of action stated in the original
complaint so that the principal and core issues raised by the parties in their original pleadings remain
the same.61

Facts:

On 14 February 1963, the MB of the then CB issued MB Resolution No. 223 allowing respondent Banco
Filipino to operate as a savings bank. Respondent began formal operations on 9 July 1964. 7

However, on 27 July 1984, the CB issued MB Resolution No. 955 placing Banco Filipino under
conservatorship after granting the latter's loan applications worth billions of pesos. 8 Respondent bank
filed with the RTC Makati a Complaint against the CB for the annulment of MB Resolution No. 955. 9 The
case was docketed as Civil Case No. 8108.

Thereafter, on 25 January 1985, the CB issued MB Resolution No. 75 ordering the closure of Banco
Filipino and placing the latter under receivership. The Resolution stated that since respondent had been
found to be insolvent, the latter was forbidden to continue doing business to prevent further losses to
its depositors and creditors. The Resolution further provided for the takeover of the assets and liabilities
of Banco Filipino for the benefit of its depositors and creditors, as well as for the termination of its
conservatorship.

 On 2 February 1985, Banco Filipino filed a Complaint with the RTC Makati against the MB, assailing the
latter's act of placing the bank under receivership. 12 The case was docketed as Civil Case No. 9675
On 22 March 1985, the CB issued another Resolution placing Banco Filipino under liquidation.
Respondent then filed another Complaint with the RTC Makati to question the propriety of the
liquidation.16 The case was docketed as Civil Case No. 10183.

Meanwhile, this Court in G.R. No. 70054 promulgated on 29 August 1985 a Resolution directing, among
others, the consolidation in Branch 136 of the RTC Makati of the following cases: (1) Civil Case No. 8108,
the case for the annulment of the conservatorship order; (2) Civil Case No. 9675, the case seeking to
annul the receivership order; and (3) Civil Case No. 10183, the case seeking to annul the order for the
liquidation of the bank.

On 29 May 1995, pursuant to the recent development, Banco Filipino filed a Motion to Admit Attached
Amended/Supplemental Complaint23 in the three consolidated cases - Civil Case Nos. 8108, 9675, and
10183 - before the RTC. In its Amended/Supplemental Complaint, respondent bank sought to substitute
the CB-BOL for the defunct CB and its MB. Respondent also aimed to recover at least ₱18 billion in
actual damages, litigation expenses, attorney's fees, interests, and costs of suit against petitioner and
individuals who had allegedly acted with malice and evident bad faith in placing the bank under
conservatorship and eventually closing it down in 1985. 24

The trial court, through an Order dated 29 March 1996, granted the Motion to Admit filed by Banco
Filipino and accordingly admitted the latter's Amended/Supplemental Complaint. Consequently, the CB-
BOL was substituted for the defunct CB in respondent's civil cases, which are still pending with the RTC.

On 25 September 2003, or more than 10 years from the enactment of R.A. 7653, Banco Filipino again
filed a Motion to Admit Second Amended/Supplemental Complaint 26 in the consolidated civil cases
before the RTC. In that Second Amended/Supplemental Complaint, 27 respondent sought to include the
BSP and its MB - "the purported successor-in-interest of the old CB

Banco Filipino's Motion to Admit its Second Amended/Supplemental Complaint was opposed by the CB-
BOL based on The second supplemental complaint raised new and independent causes of action against
a new party- the BSP - which was not an original party.

Issue:

Whether or not the RTC erred in admitting Banco Filipino's Second Amended/Supplemental Complaint in
the consolidated civil cases before it.

Held:
The second amendment of the Complaint was improper.

In the instant case, the causes of action subject of the Second Amended/Supplemental Complaint only
arose in 1994 - well after those subject of the original Complaint. The original Complaint was based on
the alleged illegal closure of Banco Filipino effected in 1985 by the defunct CB and its MB.

The second supplemental pleading

was improper.

In the instant case, Banco Filipino, through the Second Amended/Supplemental Complaint, attempted to
raise new and different causes of action that arose only in 1994. These causes of action had no relation
whatsoever to the causes of action in the original Complaint, as they involved different acts or
omissions, transactions, and parties. If the Court admits the Second Amended/Supplemental Complaint
under these circumstances, there will be no end to the process of amending the Complaint. What
indeed would prevent respondent from seeking further amendments by alleging acts that may be
committed in the future?

38) G.R. No. 155173. November 23, 2004]

LAFARGE CEMENT PHILIPPINES, INC., (formerly Lafarge Philippines, Inc.), LUZON CONTINENTAL LAND
CORPORATION, CONTINENTAL OPERATING CORPORATION and PHILIP ROSEBERG, petitioners,
vs. CONTINENTAL CEMENT CORPORATION, GREGORY T. LIM and ANTHONY A.
MARIANO, respondents.
Doctrine:
A counterclaim is defined as any claim for money or other relief which a defending party may have
against an opposing party. However, the general rule that a defendant cannot by a counterclaim bring
into the action any claim against persons other than the plaintiff admits of an exception under Section
14, Rule 6 which provides that when the presence of parties other than those to the original action is
required for the granting of complete relief in the determination of a counterclaim or cross-claim, the
court shall order them to be brought in as defendants, if jurisdiction over them can be obtained. The
inclusion, therefore, of Cardenas in petitioners counterclaim is sanctioned by the rules.
Facts:
Briefly, the origins of the present controversy can be traced to the Letter of Intent (LOI) executed by
both parties on August 11, 1998, whereby Petitioner Lafarge Cement Philippines, Inc. (Lafarge) -- on
behalf of its affiliates and other qualified entities, including Petitioner Luzon Continental Land
Corporation (LCLC) -- agreed to purchase the cement business of Respondent Continental Cement
Corporation (CCC). On October 21, 1998, both parties entered into a Sale and Purchase Agreement
(SPA). At the time of the foregoing transactions, petitioners were well aware that CCC had a case
pending with the Supreme Court. The case was docketed as GR No. 119712, entitled  Asset Privatization
Trust (APT) v. Court of Appeals and Continental Cement Corporation.
In anticipation of the liability that the High Tribunal might adjudge against CCC, the parties, under
Clause 2 (c) of the SPA, allegedly agreed to retain from the purchase price a portion of the contract price
in the amount of P117,020,846.84 -- the equivalent of US$2,799,140. This amount was to be deposited
in an interest-bearing account in the First National City Bank of New York (Citibank) for payment to APT,
the petitioner in GR No. 119712.
However, petitioners allegedly refused to apply the sum to the payment to APT, despite the
subsequent finality of the Decision in GR No. 119712 in favor of the latter and the repeated instructions
of Respondent CCC. Fearful that nonpayment to APT would result in the foreclosure, not just of its
properties covered by the SPA with Lafarge but of several other properties as well, CCC filed before the
Regional Trial Court of Quezon City on June 20, 2000, a Complaint with Application for Preliminary
Attachment against petitioners. Docketed as Civil Case No. Q-00-41103, the Complaint prayed, among
others, that petitioners be directed to pay the APT Retained Amount referred to in Clause 2 (c) of the
SPA.
Petitioners moved to dismiss the Complaint on the ground that it violated the prohibition on forum-
shopping. Respondent CCC had allegedly made the same claim it was raising in Civil Case No. Q-00-
41103 in another action, which involved the same parties and which was filed earlier before the
International Chamber of Commerce. After the trial court denied the Motion to Dismiss in its November
14, 2000 Order, petitioners elevated the matter before the Court of Appeals in CA-GR SP No. 68688.
In the meantime, to avoid being in default and without prejudice to the outcome of their appeal,
petitioners filed their Answer and Compulsory Counterclaims ad Cautelam  before the trial court in Civil
Case No. Q-00-41103. In their Answer, they denied the allegations in the Complaint. They prayed -- by
way of compulsory counterclaims against Respondent CCC, its majority stockholder and president
Gregory T. Lim, and its corporate secretary Anthony A. Mariano -- for the sums of (a)  P2,700,000 each as
actual damages, (b) P100,000,000 each as exemplary damages, (c) P100,000,000 each as moral
damages, and (d) P5,000,000 each as attorneys fees plus costs of suit.
Petitioners alleged that CCC, through Lim and Mariano, had filed the baseless Complaint in Civil
Case No. Q-00-41103 and procured the Writ of Attachment in bad faith. Relying on this Courts
pronouncement in Sapugay v. CA,[5] petitioners prayed that both Lim and Mariano be held jointly and
solidarily liable with Respondent CCC.
On behalf of Lim and Mariano who had yet to file any responsive pleading, CCC moved to dismiss
petitioners compulsory counterclaims on grounds that essentially constituted the very issues for
resolution in the instant Petition

Issue:

Whether or not the defendants in civil cases may implead in their counterclaims persons who were
not parties to the original complaints.
Held:

The counterclaims may properly implead Respondents Gregory T. Lim and Anthony A. Mariano, even if
both were not parties in the original Complaint.
39. G.R. No. 108119 January 19, 1994

FORTUNE CORPORATION, petitioner, 
vs.
HON. COURT OF APPEALS AND INTER-MERCHANTS CORPORATION,

doctrine:

The right to take statements and the right to use them in court have been kept entirely distinct. The
utmost freedom is allowed in taking depositions; restrictions are imposed upon their use. Regardless of
the development of devices for pre-trial fact investigation, our legal system is now thoroughly
committed to the notion that on the trial itself the adducing of facts by viva voce testimony of witnesses
whose demeanor and manner are subject to the observation of the judge is superior to the use of
written statements of the same witnesses. Preference for oral testimony has dictated most of the
limitations on the use of depositions as evidence. And since their use as evidence was originally
conceived as the sole function of depositions proper, the limitations on their taking dovetailed with the
limitations on their use. But under the concept adopted by the new Rules, the deposition serves the
double function of a method of discovery with use on trial not necessarily contemplated and a method
of presenting testimony. Accordingly, no limitations other than relevancy and privilege have been placed
on the taking of depositions, while the use at the trial is subject to circumscriptions looking toward the
use of oral testimony wherever practicable.

Facts:

An action for breach of contract was filed by petitioner Fortune Corporation against respondent Inter-
Merchants Corporation, docketed as Civil Case No. SP-3469, before the Regional Trial Court of San Pablo
City, Branch 30. After respondent corporation had filed its Answer, petitioner served the former with
written interrogatories pursuant to Rule 25 of the Rules of Court. The interrogatories were answered by
respondent corporation through its board chairman, Juanito A. Teope.

The pre-trial conference was thereafter scheduled for January 9, February 12 and April 22, 1992.

On March 26, 1992, however, petitioner served upon private respondent a Notice to Take Deposition
Upon Oral Examination2 dated March 26, 1992, notifying the latter that on April 7, 1992, at San Pablo
City, herein petitioner would take the deposition of said Juanito A. Teope, in accordance with Section 15,
Rule 24.

Private respondent filed an Urgent Motion Not To Take Deposition/Vehement Opposition to Plaintiff's
Notice to Take Deposition Upon Oral Examination, 3 dated March 27, 1992, alleging inter alia that : (a)
herein petitioner has previously availed of one mode of discovery, that is, the written interrogatories
which practically covered all the claims, counterclaims and defenses in the case; (b) there is absolutely
no sound reason or justification advanced for the taking of the oral deposition; (c) such taking would
cause annoyance, embarrassment and oppression upon the prospective deponent, Juanito A. Teope; (d)
Mr. Teope has no intention of leaving the country; and 
(e) the intended deponent is available to testify in open court if required during the trial on the merits.
The trial court thereafter issued on April 3, 1992 an order 4 that the requested deposition shall not be
taken

issue:

Whether or not the trial court gravely abused its discretion in ordering that the deposition be not taken
in the absence of good cause therefor.

held:

The availability of the proposed deponent to testify in court does not constitute "good cause" to justify
the court's order that his deposition shall not be taken. That the witness is unable to attend or testify is
one of the grounds when the deposition of a witness may be used in court during the trial. But the same
reason cannot be successfully invoked to prohibit the taking of his deposition.

40. LIANAS SUPERMARKET v. NLRC

G.R. No. 111014 | May 31, 1996 |
DOCTRINE: What makes the situation a proper case for a class suit is the circumstance that
there is only one right or cause of action pertaining or belonging in common to many persons,
not separately or severally to distinct individuals. The object of the suit is to obtain relief for or
against numerous persons as a group or as an integral entity, and not as separate, distinct
individuals whose rights or liabilities are separate from and independent of those affecting the
others The rule is that for a class suit to be allowed, it is needful inter alia that the parties be so
numerous that it would be impracticable to bring them all before the court.
FACTS: Petitioner entered into a 3-year contract with Warner Laputt, owner of BAVSPIA
International Services to supply petitioner with Laborers. Rosa Sy met with the employees and
told them quit their membership, or be suspended, dismissed or criminally prosecuted. Some
employees refused and many were dismissed without any charges and others were given
memorandum on concocted offenses and violations. On another occasion, Petitioner, through
Rosa Sy and Peter Sy required the other employees to resign from employment and to
accomplish information sheets and/or application forms with BAVSPIA otherwise they would be
dismissed and/or not paid their salaries. Respondent Union, on behalf of its members filed a
complaint against petitioner and/or Peter Sy, Rosa Sy, BAVSPIA and Warner Laputt before the
LA.
The complaint was amended since respondent Union manifested that it was intended as a class
suit. 3 more cases were filed: 2nd case - Elorde Padilla, Jr. et al as complainants 3rd case -
Carmelita Reyes, Elizabeth Mahanlud, Danny Sida, Omar Napiri and Edgar Mahusay, as
individual complainants 4th case - Gloria Estoque and Estrellita Bansig as individual
complainants
The 4 cases were consolidated. The NLRC submitted 2 lists of 136 workers, 73 assigned at
Sucat and 63 at Pasig. There were 85 original complainants in the lists. BAVSPIA participated
during the initial stages of the hearings but later moved to have its name dropped as
co-respondent when it noted, after complainants have rested, that the evidence formally offered
was directed only against petitioner. The LA ruled in favor of complainants.
Petitioner was the employer of complainants with BAVSPIA being engaged in labor only
contracting; Complainants were illegally dismissed; Peter Sy and Rosa Sy were not personally
liable; and the charge of unfair labor practice and all labor standards claims were
unsubstantiated by evidence. The NLRC affirmed the LA ruling. Petitioner Argues; There are
only 7 individual complainants whose names appear in the captions of the decision of the LA.
Sec 3, Rule 5 – the names of residences of the parties, plaintiff and defendant must be stated in
the complaint. Sec 1. Rule III of the New Rules of Procedure of NLRC - the full names of all the
real parties in interest, whether natural or juridical persons or entities authorized by law, shall be
stated in the caption of the complaint or petition as well as in the decision, award or judgment. o
Cases do not fall under the definition of class suit under Sec. 12, Rule 31 - The parties are not
so numerous that it would be impracticable to bring them all before the court. 1 Sec. 12, Rule 3 -
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.
ISSUE: W/N the NLRC was correct in recognizing that there are 85 complainants.
HELD: Yes. The case is a representative suit, and not a class suit as defined by Sec 12, Rule 3.
A class suit contemplates:
a) the subject matter in controversy is of common or general interest to many persons;
b) those persons are so numerous as to make it impracticable to bring them all before
the court
What makes the situation a proper case for a class suit is the circumstance that there is only
one right or cause of action pertaining or belonging in common to many persons, not separately
or severally to distinct individuals. The object of the suit is to obtain relief for or against
numerous persons as a group or as an integral entity, and not as separate, distinct individuals
whose rights or liabilities are separate from and independent of those affecting the others The
rule is that for a class suit to be allowed, it is needful inter alia that the parties be so numerous
that it would be impracticable to bring them all before the court. In the present case, there are
multiple rights or causes of action pertaining separately to several, distinct employees who are
members of respondent Union. Therefore, the applicable rule is that provided in Sec. 3, Rule 32
, of the Rules of Court on representative parties. Art. 242 of the Labor Code grants legitimate
labor organizations to sue and be sued in its registered name. A union is authorized to file a
representative suit for the benefit of its members in the interest of avoiding an otherwise
cumbersome procedure of joining all union members in the complaint, even if they number by
the hundreds. A representative suit is akin to a class suit in the limited sense that the phrases
found in Sec. 12 of Rule 3: o One or more may sue or defend for the benefit of all, and the
parties actually before it are sufficiently numerous and representative, are similar to the phrase
may sue or be sued without joining the party for whose benefit the action is presented or
defended found in Sec. 3 of the same Rule. o Both suits are always filed in behalf of another or
others. That is why the two terms are sometimes used interchangeably. Respondent Union, the
LA, and the NLRC erroneously denominated the suit as a class suit when in reality, it is a
representative suit. Considering that the NLRC held that there are 85 complainants, the Court
held that the instant cases have been filed by the Union in representation of the 85. Section 1,
Rule III, of the NLRC New Rules of Procedure cited by petitioner is simply inapplicable because
it was issued on 31 August 1990 or six (6) years after the complaints in these cases were filed
in 1984.
41. DAVID REYES v. JOSE LIM
G.R. No. 134241 | Aug. 11, 2003 |
DOCTRINE: The instant case, the Supreme Court held that if this was a case where there is
hiatus in the law and in the Rules of Court - If this case was left alone, the hiatus will result in
unjust enrichment to Reyes at the expense of Lim. Here the court exercised equity
jurisdiction.The purpose of the exercise of equity jurisdiction in this case is to prevent unjust
enrichment and to ensure restitution so that substantial justice may be attained in cases where
the prescribed or customary forms of ordinary law are inadequate.
FACTS: Petitioner David Reyes filed a complaint for annulment of contract and damages
against respondents. The complaint alleged that Reyes as seller and Lim as buyer entered into
a contract to sell a parcel of land located along F.B. Harrison Street, Pasay City with a monthly
rental of P35,000. The complaint claimed that Reyes had informed Harrison Lumber to vacate
the Property before the end of January 1995. Reyes also informed Keng and Harrison Lumber
that if they failed to vacate by 8 March 1995, he would hold them liable for the penalty of
P400,000 a month as provided in the Contract to Sell. It was also alleged that Lim connived with
Harrison Lumber not to vacate the Property until the P400,000 monthly penalty would have
accumulated and equaled the unpaid purchase price of P18,000,000. Keng and Harrison
Lumber denied that they connived with Lim to defraud Reyes, and that Reyes approved their
request for an extension of time to vacate the Property due to their difficulty in finding a new
location for their business. Harrison Lumber claimed that it had already started transferring
some of its merchandise to its new business location in Malabon.
Lim filed his Answer stating that he was ready and willing to pay the balance of the purchase
price. Lim requested a meeting with Reyes through the latter’s daughter on the signing of the
Deed of Absolute Sale and the payment of the balance but Reyes kept postponing their
meeting. Reyes offered to return the P10 million down payment to Lim because Reyes was
having problems in removing the lessee from the Property. Lim rejected Reyes’ offer and
proceeded to verify the status of Reyes’ title to the Property. Lim learned that Reyes had
already sold the Property to Line One Foods Corporation Lim denied conniving with Keng and
Harrison Lumber to defraud Reyes.Reyes filed a Motion for Leave to File Amended Complaint
due to supervening facts. These included the filing by Lim of a complaint for estafa against
Reyes as well as an action for specific performance and nullification of sale and title plus
damages before another trial court. The trial court granted the motion. In his Amended Answer
Lim prayed for the cancellation of the Contract to Sell and for the issuance of a writ of
preliminary attachment against Reyes. The trial court denied the prayer for a writ of preliminary
attachment. Lim requested in open court that Reyes be ordered to deposit the P10 million down
payment with the cashier of the Regional Trial Court of Parañaque. The trial court granted this
motion. Reyes filed a Motion to Set Aside the Order on the ground the Order practically granted
the reliefs Lim prayed for in his Amended Answer. The trial court denied Reyes’ motion.
The trial court denied Reyes’ Motion for Reconsideration. In the same order, the trial court
directed Reyes to deposit the P10 million down payment with the Clerk of Court. Reyes filed a
Petition for Certiorari with the Court of Appeals and prayed that the orders of the trial court be
set aside for having been issued with grave abuse of discretion amounting to lack of jurisdiction.
But the Court of Appeals dismissed the petition for lack of merit. Hence, this petition for review.
ISSUE: Whether on not the equity jurisdiction is an applicable law on the matter?
HELD: The instant case, the Supreme Court held that if this was a case where there is hiatus in
the law and in the Rules of Court - If this case was left alone, the hiatus will result in unjust
enrichment to Reyes at the expense of Lim. Here the court exercised equity jurisdiction.The
purpose of the exercise of equity jurisdiction in this case is to prevent unjust enrichment and to
ensure restitution so that substantial justice may be attained in cases where the prescribed or
customary forms of ordinary law are inadequate. The Supreme Court also state that rescission
is possible only when the person demanding rescission can return whatever he may be obliged
to restore. A court of equity will not rescind a contract unless there is restitution, that is, the
parties are restored to the status quo ante. In this case, it was just, equitable and proper for the
trial court to order the deposit of the P10 million down payment. The decision of the Court of
Appeals.was affirmed.

42. BULAWAN v. AQUENDE

G.R. No. 182819 | June 22, 2011 |
DOCTRINE: The general rule with reference to the making of parties in a civil action requires, of
course, the joinder of all necessary parties where possible, and the joinder of all indispensable
parties under any and all conditions, their presence being a sine qua non for the exercise of
judicial power. It is precisely when an indispensable party is not before the court (that) the action
should be dismissed. The absence of an indispensable party renders all subsequent actions of
the court null and void for want of authority to act, not only as to the absent parties but even as
to those present.
Section 7, Rule 3 of the Rules of Court defines indispensable parties as parties in interest
without whom no final determination can be had of an action. An indispensable party is one
whose interest will be affected by the courts action in the litigation. As such, they must be joined
either as plaintiffs or as defendants.
FACTS: On 1 March 1995, Bulawan filed a complaint for annulment of title,
reconveyance and damages against Lourdes Yap (Yap) and the Register of Deeds
before the trial court docketed as Civil Case No. 9040. Bulawan claimed that she is the
owner of Lot No. 1634-B of Psd-153847 covered by Transfer Certificate of Title (TCT)
No. 13733 having bought the property from its owners, brothers Santos and Francisco
Yaptengco (Yaptengco brothers), who claimed to have inherited the property from Yap
Chin Cun. Bulawan alleged that Yap claimed ownership of the same property and
caused the issuance of TCT No. 40292 in Yaps name.
In a letter dated 24 July 2002, the Register of Deeds informed Aquende of the trial
courts writ of execution and required Aquende to produce TCT No. 40067 so that a
memorandum of the lien may be annotated on the title. On 25 July 2002, Aquende
wrote a letter to the Register of Deeds questioning the trial courts writ of execution
against his property. Aquende alleged that he was unaware of any litigation involving his
property having received no summons or notice thereof, nor was he aware of any
adverse claim as no notice of lis pendens was inscribed on the title.
On 2 August 2002, Aquende filed a Third Party Claim against the writ of execution
because it affected his property and, not being a party in Civil Case No. 9040, he
argued that he is not bound by the trial courts 26 November 1996 Decision. In a letter
dated 5 August 2002, the Clerk of Court said that a Third Party Claim was not the
proper remedy because the sheriff did not levy upon or seize Aquendes property.
Moreover, the property was not in the sheriffs possession and it was not about to be
sold by virtue of the writ of execution.
The Court of Appeals declared that Aquende was an indispensable party who was
adversely affected by the trial courts 26 November 1996 Decision. The Court of Appeals
said that the trial court should have impleaded Aquende under Section 11, Rule 3 of the
Rules of Court. Since jurisdiction was not properly acquired over Aquende, the Court of
Appeals declared the trial courts 26 November 1996 Decision void. According to the
Court of Appeals, Aquende had no other recourse but to seek the nullification of the trial
courts 26 November 1996 Decision that unduly deprived him of his property.
ISSUE: W/N the CA erred in declaring Aquende as an indispensable party in the case.
HELD: Bulawan argues that Aquende was not an indispensable party in Civil Case No.
9040 because the lot Aquende claims ownership of is different from the subject matter
of the case. Bulawan clarifies that she claims ownership of Lot No. 1634-B of
Psd-153847, while Aquende claims ownership of Lot No. 1634-B of Psd-187165.
Bulawan argues that even if Aquende will be affected by the trial courts 26 November
1996 Decision, this will not make him an indispensable party. Contrary to Bulawans
argument, it appears that Aquendes Lot No. 1634-B of Psd-187165 and Bulawans Lot
No. 1634-B of Psd-153847 actually refer to the same Lot No. 1634-B originally owned
by Yap Chin Cun. Both Aquende and Bulawan trace their ownership of the property to
Yap Chin Cun. Aquende maintains that he purchased the property from Yap Chin Cun,
while Bulawan claims to have purchased the property from the Yaptengco brothers, who
alleged that they inherited the property from Yap Chin Cun. However, as the Court of
Appeals declared, the title of the Yaptengco brothers over Lot No. 1634-B of
Psd-153847 had already been cancelled and they were forever enjoined not to disturb
the right of ownership and possession of Yap Chin Cun.
Section 7, Rule 3 of the Rules of Court defines indispensable parties as parties in
interest without whom no final determination can be had of an action. An indispensable
party is one whose interest will be affected by the court’s action in the litigation. As
such, they must be joined either as plaintiffs or as defendants.

43.) ADA v. BAYLON

G.R. NO. 182435

DOCTRINE:

1. While parties to an action may assert in one pleading, in the alternative or otherwise, as many
causes of action as they may have against an opposing party, such joinder of causes of action is
subject to the condition, inter alia, that the joinder shall not include special civil actions
governed by special rules. 
2. Upon motion of a party the court may, upon reasonable notice and upon such terms as are just,
permit him to serve a supplemental pleading setting forth transactions, occurrences or events
which have happened since the date of the pleading sought to be supplemented. The adverse
party may plead thereto within ten (10) days from notice of the order admitting the
supplemental pleading.

FACTS:

This case involves the estate of spouses Florentino Baylon and Maximina Elnas Baylon (Spouses Baylon)
who died on November 7, 1961 and May 5, 1974, respectively. 3 At the time of their death, Spouses
Baylon were survived by their legitimate children, namely, Rita Baylon (Rita), Victoria Baylon (Victoria),
Dolores Baylon (Dolores), Panfila Gomez (Panfila), Ramon Baylon (Ramon) and herein petitioner Lilia B.
Ada (Lilia).

Dolores died intestate and without issue on August 4, 1976. Victoria died on November 11, 1981 and
was survived by her daughter, herein petitioner Luz B. Adanza. Ramon died intestate on July 8, 1989 and
was survived by herein respondent Florante Baylon (Florante), his child from his first marriage, as well as
by petitioner Flora Baylon, his second wife, and their legitimate children, namely, Ramon, Jr. and herein
petitioners Remo, Jose, Eric, Florentino and Ma. Ruby, all surnamed Baylon.

Petitioners filed with the RTC complaint for partition, accounting, and damages against respondent
Florante, Rita, and Panfila. They alleged that Spouses Baylon owned 43 parcels of land. They claimed
that Rita took possession of the land and appropriated the income derived therefrom. Florante, Rita and
Panfila asserted, in their answer, that the co-owned the properties in question. On July 1997, Rita
donated a parcel of land to Florante. In July 2000, Rita died. Petitioners learned of the donation made by
Rita in favor of Florante. They filed for a Supplemental Pleading, asking the court to rescind the Deed of
Donation.

The RTC rendered a decision, finding the existence of co-ownership but ordered the partition of the
estate of the Spouses Baylon. RTC also rescinded the donation made.

The case was appealed to the CA. The appellate court set aside the decision and remanded the case to
determine ownership of Lot Nos. 4706 and 4709.

The complaint filed by the petitioners with the RTC involves two separate, distinct and independent
actions — partition and rescission. First, the petitioners raised the refusal of their co-heirs, Florante, Rita
and Panfila, to partition the properties which they inherited from Spouses Baylon. Second, in their
supplemental pleading, the petitioners assailed the donation inter vivos of Lot No. 4709 and half of Lot
No. 4706 made by Rita in favor of Florante pendente lite.

ISSUE/S: W/N joinder of causes of action is subject to the condition.

RULING:

By a joinder of actions, or more properly, a joinder of causes of action is meant the uniting of two or
more demands or rights of action in one action, the statement of more than one cause of action in a
declaration. It is the union of two or more civil causes of action, each of which could be made the basis
of a separate suit, in the same complaint, declaration or petition. A plaintiff may under certain
circumstances join several distinct demands, controversies or rights of action in one declaration,
complaint or petition. 
While parties to an action may assert in one pleading, in the alternative or otherwise, as many causes of
action as they may have against an opposing party, such joinder of causes of action is subject to the
condition, inter alia, that the joinder shall not include special civil actions governed by special rules . 

Here, there was a misjoinder of causes of action. The action for partition filed by the petitioners could
not be joined with the action for the rescission of the said donation inter vivos in favor of Florante. Lest
it be overlooked, an action for partition is a special civil action governed by Rule 69 of the Rules of Court
while an action for rescission is an ordinary civil action governed by the ordinary rules of civil procedure.
The variance in the procedure in the special civil action of partition and in the ordinary civil action of
rescission precludes their joinder in one complaint or their being tried in a single proceeding to avoid
confusion in determining what rules shall govern the conduct of the proceedings as well as in the
determination of the presence of requisite elements of each particular cause of action. 

Nevertheless, misjoinder of causes of action is not a ground for dismissal. Indeed, the courts have the
power, acting upon the motion of a party to the case or sua sponte, to order the severance of the
misjoined cause of action to be proceeded with separately. However, if there is no objection to the
improper joinder or the court did not motu proprio direct a severance, then there exists no bar in the
simultaneous adjudication of all the erroneously joined causes of action.

It should be emphasized that the foregoing rule only applies if the court trying the case has jurisdiction
over all of the causes of action therein notwithstanding the misjoinder of the same. If the court trying
the case has no jurisdiction over a misjoined cause of action, then such misjoined cause of action has to
be severed from the other causes of action, and if not so severed, any adjudication rendered by the
court with respect to the same would be a nullity.

Here, Florante posed no objection, and neither did the RTC direct the severance of the petitioners'
action for rescission from their action for partition. While this may be a patent omission on the part of
the RTC, this does not constitute a ground to assail the validity and correctness of its decision. The RTC
validly adjudicated the issues raised in the actions for partition and rescission filed by the petitioners.

Asserting a New Cause of Action in a Supplemental Pleading

Section 6, Rule 10 of the Rules of Court reads:

Sec. 6.Supplemental Pleadings. — Upon motion of a party the court may, upon reasonable notice and
upon such terms as are just, permit him to serve a supplemental pleading setting forth transactions,
occurrences or events which have happened since the date of the pleading sought to be supplemented.
The adverse party may plead thereto within ten (10) days from notice of the order admitting the
supplemental pleading.

In Young v. Spouses Sy,  this Court had the opportunity to elucidate on the purpose of a supplemental
pleading. Thus:

As its very name denotes, a supplemental pleading only serves to bolster or add something to the
primary pleading. A supplement exists side by side with the original. It does not replace that which it
supplements. Moreover, a supplemental pleading assumes that the original pleading is to stand and that
the issues joined with the original pleading remained an issue to be tried in the action. It is but a
continuation of the complaint. Its usual office is to set up new facts which justify, enlarge or change the
kind of relief with respect to the same subject matter as the controversy referred to in the original
complaint.

The purpose of the supplemental pleading is to bring into the records new facts which will enlarge or
change the kind of relief to which the plaintiff is entitled; hence, any supplemental facts which further
develop the original right of action, or extend to vary the relief, are available by way of supplemental
complaint even though they themselves constitute a right of action. (Citations omitted and emphasis
ours)

Thus, a supplemental pleading may properly allege transactions, occurrences or events which had
transpired after the filing of the pleading sought to be supplemented, even if the said supplemental
facts constitute another cause of action.

Here, the issue as to the validity of the donation inter vivos of Lot No. 4709 and half of Lot No. 4706
made by Rita in favor of Florante is a new cause of action that occurred after the filing of the original
complaint. However, the petitioners' prayer for the rescission of the said donation inter vivos in their
supplemental pleading is germane to, and is in fact, intertwined with the cause of action in the partition
case. Lot No. 4709 and half of Lot No. 4706 are included among the properties that were sought to be
partitioned.

The petitioners' supplemental pleading merely amplified the original cause of action, on account of the
gratuitous conveyance of Lot No. 4709 and half of Lot No. 4706 after the filing of the original complaint
and prayed for additional reliefs, i.e., rescission. Indeed, the petitioners claim that the said lots form part
of the estate of Spouses Baylon, but cannot be partitioned unless the gratuitous conveyance of the same
is rescinded. Thus, the principal issue raised by the petitioners in their original complaint remained the
same.

Petition is partly granted. The case is remanded to the RTC.

44.) PANTRANCO NORTH EXPRESS, INC., v. STANDARD INSURANCE COM,PANY, INC.,

G.R. NO. 140746

DOCTRINE:

The following requirements for a permissive joinder of parties: (a) the right to relief arises out of the
same transaction or series of transactions; (b) there is a question of law or fact common to all the
plaintiffs or defendants; and (c) such joinder is not otherwise proscribed by the provisions of the Rules
on jurisdiction and venue.
FACTS: 

Crispin Gicale was driving the passenger jeepney owned by his mother Martina Gicale. Alexander
Buncan, on the other hand, was driving a bus owned by Pantranco North Express Inc. Both drivers were
travelling along the National Highway of Talavera, Nueva Ecija in a rainy afternoon. Buncan was driving
the bus northbound while Cripin was trailing behind. When the two vehicles were negotiating a curve
along the highway, the passenger bus overtook the jeepney. In so doing, thhe passenger bus hit the left
rear side of the jeepney and sped away. 

            Crispin reported the incident to the police and to the insurer of their jeepney, Standard Insurance
Co. The total cost of the repair amounted to P21, 415. Standard only paid P8,000 while Martina Gicale
shouldered the remaining P13,415. Thereafter, Standard and Martina demanded reimbursements from
Pantranco and Buncan, but the bus company and the driver refused. Thus, Standard and Martina were
prompted to file a complaint for sum of money with the RTC of Manila.

            Pantranco and Buncan denied the allegations of the complaint and asserted that it is the MeTC
which has jurisdiction over the case.

RTC: The trial court ruled in favor of Standard and Martina, and ordered Pantranco and Buncan to pay
the former reimbursements with interests due thereon plus attorney's fees, and litigation expenses.

Pantranco and Buncan: The RTC has no jurisdiction over the complaint.

            1) Martina Gicale was claiming P13,415, while Standard was claiming P8,000. Their individual
claims are below P20,000. Thus, the case falls under the exclusive jurisdiction of the MTC.

            2) There was a misjoinder of parties.

CA: The appellate court affirmed the decision of the RTC.

            1) Under the Totality Rule provided for under Sec. 19 of BP 129, it is the sum of the two claims
that determines the jurisdictional amount. At the time this case was heard, cases involving money claims
that amounts to more than P20,000 falls under the exclusive jurisdiction of the RTC. 

            2) Even assuming that there was a misjoinder of parties, it does not affect the jurisdiction of the
court nor is it a ground to dismiss the complaint. The claims of Gicale and Standard arose from the same
vehicular accident involving Pantranco's bus and Gicale's jeepney. Thus, there was a question of fact
common to all parties.

            Pantranco and Buncan's motion for reconsideration was denied by the CA.
Gicale and Standard: There was no misjoinder of parties. Their individual claims arose from the same
vehicular accident and involve a common question of fact and law. Thus, the RTC has jurisdiction over
the case.

ISSUE: 

WON there was a misjoinder of parties in the case.

HELD: 

No. Sec. 6, Rule 3 of the Revised Rules of Court provides the following requirements for a permissive
joinder of parties: (a) the right to relief arises out of the same transaction or series of transactions; (b)
there is a question of law or fact common to all the plaintiffs or defendants; and (c) such joinder is not
otherwise proscribed by the provisions of the Rules on jurisdiction and venue.

In this case, there is a single transaction common to all, that is, Pantranco’s bus hitting the rear side of
the jeepney.  There is also a common question of fact, that is, whether petitioners are negligent.   There
being a single transaction common to both respondents, consequently, they have the same cause of
action against petitioners.

To determine identity of cause of action, it must be ascertained whether the same evidence which is
necessary to sustain the second cause of action would have been sufficient to authorize a recovery in
the first. Here, had respondents filed separate suits against petitioners, the same evidence would have
been presented to sustain the same cause of action.    Thus, the filing by both respondents of the
complaint with the court below is in order.   Such joinder of parties avoids multiplicity of suit and
ensures the convenient, speedy and orderly administration of justice.

There is NO MISJOINDER OF PARTIES if the money sought to be claimed is in favor of the same plaintiff/s
and against the same defendant/s.

On the issue of lumping together the claims of Gicale and Standard, Section 5(d), Rule 2 of the same
Rules provides:

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

xxx

(d) Where the claims in all the causes of action are principally for recovery of money the aggregate
amount claimed shall be the test of jurisdiction.”

Further, the Court reiterates the Totality rule exemplified by Sec. 33 (1) of BP 129: “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.”

Hence, PETITION IS DENIED.

45.)CENTRAL BANK BOARD OF LIQUIDATORS v. BANCO FILIPINO SAVINGS AND MORTGAGE BANK

G.R. NO. 173399

DOCTRINE:

Pendency of the case did not diminish the powers and authority of the designated liquidator to
effectuate and carry on the administration of the bank. In the instant case, the basic standards of
substantial due process were not observed.

FACTS:

Top Management Programs Corporation and Pilar Development Corporation are corporations engaged
in the business of developing residential subdivisions.Top Management and Pilar Development obtained
several loans from Banco Filipino all secured by real estate mortgage in their various properties in
Cavite.

The Monetary Board by Ramon Tiaoqui, Special Assistant to the Governor and Head, SES Department III
submitted a report finding that the bank is insolvent and recommending the appointment of a receiver.    
The Monetary Board, based on the Tiaoqui report, issued a resolution finding Banco Filipino insolvent
and placing it under receivership. Subsequently, the Monetary Board issued another resolution placing
the bank under liquidation and designated a liquidator. By virtue of her authority as liquidator,
Valenzuela appointed the law firm of Sycip, Salazar, et al. to represent Banco Filipino in all litigations.

Banco Filipino filed the petition for certiorari questioning the validity of the resolutions issued by the
Monetary Board authorizing the receivership and liquidation of Banco Filipino.A temporary restraining
order was issued enjoining the respondents from executing further acts of liquidation of the bank.
However, acts and other transactions pertaining to normal operations of a bank are not enjoined.
Subsequently, Top Management and Pilar Development failed to pay their loans on the due date. Hence,
the law firm of Sycip, Salazar, et al. acting as counsel for Banco Filipino under authority of the liquidator,
applied for extra-judicial foreclosure of the mortgage over Top Management and Pilar Development’s
properties. Thus, the Ex-Officio Sheriff of the Regional Trial Court of Cavite issued a notice of extra-
judicial foreclosure sale of the properties. Top Management and Pilar Development filed 2 separate
petitions for injunction and prohibition with the respondent appellate court seeking to enjoin the
Regional Trial Court of Cavite, the ex-officio sheriff of said court and Sycip, Salazar, et al. from
proceeding with foreclosure sale which were subsequently dismissed by the court. Hence this petition

 
ISSUES:

1) Whether or not the liquidator has the authority to prosecute as well as to defend suits and to
foreclose mortgages for and behalf of the bank while the issue on the validity of the receivership and
liquidation is still pending resolution.

2) Whether or not the closure of the bank based on the Tiaoqui report is correct.

RULING:

1) Whether or not the liquidator has the authority to prosecute as well as to defend suits and to
foreclose mortgages for and behalf of the bank while the issue on the validity of the receivership and
liquidation is still pending resolution.

Section 29 of the Republic Act No. 265, as amended known as the Central Bank Act,  provides that when
a bank is forbidden to do business in the Philippines and placed under receivership, the person
designated as receiver shall immediately take charge of the bank’s assets and liabilities, as expeditiously
as possible, collect and gather all the assets and administer the same for the benefit of its creditors, and
represent the bank personally or through counsel as he may retain in all actions or proceedings for or
against the institution, exercising all the powers necessary for these purposes including, but not limited
to, bringing and foreclosing mortgages in the name of the bank. If the Monetary Board shall later
determine and confirm that banking institution is insolvent or cannot resume business safety to
depositors, creditors and the general public, it shall, public interest requires, order its liquidation and
appoint a liquidator who shall take over and continue the functions of receiver previously appointed by
Monetary Board.  The liquid for may, in the name of the bank and with the assistance counsel as he may
retain, institute such actions as may necessary in the appropriate court to collect and recover a counts
and assets of such institution or defend any action ft against the institution.

Pendency of the case did not diminish the powers and authority of the designated liquidator to
effectuate and carry on the administration of the bank. The Court did not prohibit however acts a as
receiving collectibles and receivables or paying off credits claims and other transactions pertaining to
normal operate of a bank. There is no doubt that the prosecution of suits collection and the foreclosure
of mortgages against debtors the bank by the liquidator are among the usual and ordinary transactions
pertaining to the administration of a bank.

2) Whether or not the closure of the bank based on the Tiaoqui report is correct.

Clearly, Tiaoqui based his report on an incomplete examination of petitioner bank and outrightly
concluded therein that the latter’s financial status was one of insolvency or illiquidity.  In the instant
case, the basic standards of substantial due process were not observed. Time and again, We have held in
several cases, that the procedure of administrative tribunals must satisfy the fundamentals of fair play
and that their judgment should express a well-supported conclusion.  The test of insolvency laid down in
Section 29 of the Central Bank Act is measured by determining whether the realizable assets of a bank
are leas than its liabilities. Hence, a bank is solvent if the fair cash value of all its assets, realizable within
a reasonable time by a reasonable prudent person, would equal or exceed its total liabilities exclusive of
stock liability; but if such fair cash value so realizable is not sufficient to pay such liabilities within a
reasonable time, the bank is insolvent. 

 Examination appraises the soundness of the institution’s assets, the quality and character of
management and determines the institution’s compliance with laws, rules and regulations.  Audit is a
detailed inspection of the institution’s books, accounts, vouchers, ledgers, etc. to determine the
recording of all assets and liabilities. Hence, examination concerns itself with review and appraisal, while
audit concerns itself with verification. 

46. Wood Technology v. Equitable Banking

G.R 153867 February 17, 2005

The existence or appearance of ostensible issues in the pleadings, on the one hand, and their
sham or fictitious character, on the other, are what distinguish a proper case for summary judgment
from one for a judgment on the pleadings.
In a proper case for judgment on the pleadings, there is no ostensible issue at all because of
the failure of the defending party’s answer to raise an issue. On the other hand, in the case a of a
summary judgment, issues apparently exist (i.e. facts are asserted in the complaint regarding which
there is as yet no admission, disavowal or qualification); or specific denials or affirmative defenses are
in truth set out in the answer but the issues thus arising from the pleadings are sham, fictitious or not
genuine, as shown by affidavits, depositions, or admissions.

Facts:
A Complaint for Sum of Money was filed before the RTC by respondent Equitable Banking Corporation
against the petitioners, Wood Technology Corporation (WTC), Chi Tim Cordova, and Robert Tiong King
Young.
The complaint alleged WTC obtained a loan from the bank in the amount of US$75,000, with 8.75%
interest per annum, evidenced by a Promissory Note signed by Cordova and Young as representatives of
WTC.  Cordova and Young executed a Surety Agreement binding themselves as sureties of WTC for the
loan.  The bank made a final demand on April 19, 1996, for WTC to pay its obligation, but petitioners
failed to pay.  Respondent prayed that petitioners be ordered to pay it $75,603.65 plus interest, penalty,
attorney’s fees and other expenses of litigation; and the cost of suit.
In their answer, Petitioners stated that WTC obtained the $75,000 loan; that Cordova and Young bound
themselves as its sureties.  They claimed that only one demand letter, dated April 19, 1996, was made
by the bank.  They added that the promissory note did not provide the due date for payment. 
Petitioners also claimed that the loan had not yet matured as the maturity date was purposely left
blank, to be agreed upon by the parties at a later date.  Since no maturity date had been fixed, the filing
of the Complaint was premature, and it failed to state a cause of action.   They further claimed that the
promissory note and surety agreement were contracts of adhesion with terms on interest, penalty,
charges and attorney’s fees that were excessive, unconscionable and not reflective of the parties’ real
intent.  Petitioners prayed for the reformation of the promissory note and surety agreement to make
their terms and conditions fair, just and reasonable.  They also asked payment of damages by
respondent.
Equitable moved for a judgment on the pleadings.  The RTC rendered judgment in favour of Equitable.
Petitioners appealed, but the CA affirmed the RTC’s judgment.  The appellate court noted that
petitioners admitted the material allegations of the Complaint, with their admission of the due
execution of the promissory note and surety agreement as well as of the final demand made by the
respondent.  The appellate court ruled that there was no need to present evidence to prove the
maturity date of the promissory note, since it was payable on demand.  In addition, the Court of Appeals
held that petitioners failed to show any ambiguity in the promissory note and surety agreement in
support of their contention that these were contracts of adhesion. 

Issue:
Whether the appellate court was correct when it affirmed the RTC’s judgment on the pleadings (Yes)

Ratio:
A judgment on the pleadings is proper when an answer fails to tender an issue, or otherwise admits the
material allegations of the adverse party’s pleading. Both the RTC and CA recognize that issues were
raised by petitioners in their Answer before the trial court. We note that (1) the RTC knew that the
Answer asserted special and affirmative defenses; (2) the CA recognized that certain issues were raised,
but they were not genuine issues of fact; (3) petitioners insisted that they raised genuine issues; and (4)
respondent argued that petitioners’ defenses did not tender genuine issues. We have explained this
vital distinction in Narra Integrated Corporation v. Court of Appeals, thus,

The existence or appearance of ostensible issues in the pleadings, on the one hand, and their
sham or fictitious character, on the other, are what distinguish a proper case for summary
judgment from one for a judgment on the pleadings. In a proper case for judgment on the
pleadings, there is no ostensible issue at all because of the failure of the defending party’s
answer to raise an issue. On the other hand, in the case a of a summary judgment, issues
apparently exist i.e. facts are asserted in the complaint regarding which there is as yet no
admission, disavowal or qualification; or specific denials or affirmative defenses are in truth set
out in the answer but the issues thus arising from the pleadings are sham, fictitious or not
genuine, as shown by affidavits, depositions, or admissions.

However, whether or not the issues raised by the Answer are genuine is not the crux of inquiry in a
motion for judgment on the pleadings. It is so only in a motion for summary judgment. In a case for
judgment on the pleadings, the Answer is such that no issue is raised at all. The essential question in
such a case is whether there are issues generated by the pleadings. This is the distinction between a
proper case of summary judgment, compared to a proper case for judgment on the pleadings.

Indeed, petitioners’ Answer apparently tendered issues. While it admitted that WTC obtained the loan,
that Cordova and Young signed the promissory note and that they bound themselves as sureties for the
loan, it also alleged special and affirmative defenses that the obligation had not matured and that the
promissory note and surety agreement were contracts of adhesion.

Applying the requisites of a judgment on the pleadings vis-à-vis a summary judgment, the judgment
rendered by the RTC was not a judgment on the pleadings, but a summary judgment. Although the
Answer apparently raised issues, both the RTC and the Court of Appeals after considering the parties’
pleadings, petitioners’ admissions and the documents attached to the Complaint, found that the issues
are not factual ones requiring trial, nor were they genuine issues.
Summary judgment is a procedure aimed at weeding out sham claims or defenses at an early stage of
the litigation. The proper inquiry in this regard would be whether the affirmative defenses offered by
petitioners constitute genuine issues of fact requiring a full-blown trial.[18] In a summary judgment, the
crucial question is: are the issues raised by petitioners not genuine so as to justify a summary judgment?
[19] A “genuine issue” means an issue of fact which calls for the presentation of evidence, as
distinguished from an issue which is fictitious or contrived, an issue that does not constitute a genuine
issue for trial.[20]

We note that this is a case for a sum of money, and petitioners have admitted that they obtained the
loan. They also admitted the due execution of the loan documents and their receipt of the final demand
letter made by the respondent. These documents were all attached to the Complaint. Petitioners
merely claimed that the obligation has not matured. Notably, based on the promissory note, the RTC
and the Court of Appeals found this defense not a factual issue for trial, the loan being payable on
demand. We are bound by this factual finding. This Court is not a trier of facts.

When respondent made its demand, in our view, the obligation matured. We agree with both the trial
and the appellate courts that this matter proferred as a defense could be resolved judiciously by plain
resort to the stipulations in the promissory note which was already before the trial court. A full-blown
trial to determine the date of maturity of the loan is not necessary. Also, the act of leaving blank the
maturity date of the loan did not necessarily mean that the parties agreed to fix it later. If this was the
intention of the parties, they should have so indicated in the promissory note. They did not show such
intention.

Petitioners likewise insist that their defense tendered a genuine issue when they claimed that the loan
documents constituted a contract of adhesion. Significantly, both the trial and appellate courts have
already passed upon this contention and properly ruled that it was not a factual issue for trial. We agree
with their ruling that there is no need of trial to resolve this particular line of defense. All that is needed
is a careful perusal of the loan documents. As held by the Court of Appeals, petitioners failed to show
any ambiguity in the loan documents. The rule is that, should there be ambiguities in a contract of
adhesion, such ambiguities are to be construed against the party that prepared it. However, if the
stipulations are clear and leave no doubt on the intention of the parties, the literal meaning of its
stipulations must be held controlling.[21]

In sum, we find no cause to disturb the findings of fact of the Court of Appeals, affirming those of the
RTC as to the reasonableness of the interest rate of 8.75% per annum on the loan. We also find no
persuasive reason to contradict the ruling of both courts that the loan secured by petitioner WTC, with
co-petitioners as sureties, was payable on demand. Certainly, respondent’s complaint could not be
considered premature. Nor could it be said to be without sufficient cause of action therein set forth.
The judgment rendered by the trial court is valid as a summary judgment, and its affirmance by the
Court of Appeals, as herein clarified, is in order.

47. HEIRS OF DR. MARIANO FAVIS SR vs. JUANA GONZALES

G.R. No. 185922 January 15, 2014

 Section 1, Rule 9 provides for only four instances when the court may  motu proprio dismiss
the claim, namely: (a) lack of jurisdiction over the subject matter; (b) litis pendentia; (c) res judicata;
and (d) prescription of action.

The motu proprio dismissal of a case was traditionally limited to instances when the court
clearly had no jurisdiction over the subject matter and when the plaintiff did not appear during trial,
failed to prosecute his action for an unreasonable length of time or neglected to comply with the rules
or with any order of the court.  Outside of these instances, any motu proprio  dismissal would amount
to a violation of the right of the plaintiff to be heard.

FACTS: Dr. Favis was married to Capitolina with whom he had seven children. When Capitolina died in
March 1994. Dr. Favis married Juana, his common-law wife with whom he has one child-Mariano, he
executed an affidavit acknowledging Mariano as one of his legitimate children. Mariano is married to
Larcelita, with whom he has four children.

Dr. Favis died intestate on July 29, 1995. On October 16, 1994, prior his death, he allegedly executed a
Deed of Donation transferring and conveying properties in favor of his grandchildren with Juana.
Claiming the said donation prejudiced their legitime, Dr. Favis children with Capitolina, petitioners
herein, filed an action for annulment of the Deed of Donation, inventory, liquidation, liquidation and
partition of property before the RTC against Juana, Sps. Mariano and Larcelita and their grandchildren as
respondents.

RTC nullified the Deed of Donation. The trial court found that Dr. Favis, at the age of 92 and plagued
with illnesses, could not have had full control of his mental capacities to execute a valid Deed of
Donation.

The Court of Appeals ordered the dismissal of the petitioners nullification case. The CA motu proprio
ordered the dismissal of the complaint for failure of petitioners to make an averment that earnest
efforts toward a compromise have been made, as mandated by Article 151 of the Family Court.

ISSUE: Whether or not the CA gravely and seriously erred in dismissing the complaint for failure to exert
earnest efforts towards a compromise.

HELD: YES. CA committed egregious error in dismissing the complaint. A failure to allege earnest but
failed efforts at a compromise in a complaint among members of the same family, is not a
jurisdictional defect but merely a defect in the statement of a cause of action.

In the case at hand, the proceedings before the trial court ran the full course. The complaint of
petitioners was answered by respondents without a prior motion to dismiss having been filed. The
decision in favor of the petitioners was appealed by respondents on the basis of the alleged error in the
ruling on the merits, no mention having been made about any defect in the statement of a cause of
action. In other words, no motion to dismiss the complaint based on the failure to comply with a
condition precedent was filed in the trial court; neither was such failure assigned as error in the appeal
that respondent brought before the Court of Appeals.
Therefore, the rule on deemed waiver of the non-jurisdictional defense or objection is wholly applicable
to respondent. If the respondents as parties-defendants could not, and did not, after filing their answer
to petitioners complaint, invoke the objection of absence of the required allegation on earnest efforts at
a compromise, the appellate court unquestionably did not have any authority or basis to motu propio
order the dismissal of petitioners complaint.

The correctness of the finding was not touched by the Court of Appeals. The respondents opted to rely
only on what the appellate court considered, erroneously though, was a procedural infirmity. The trial
court's factual finding, therefore, stands unreversed; and respondents did not provide us with any
argument to have it reversed.

The decision of the Court of Appeals is reversed and set aside and the Judgment of the Regional Trial
Court is AFFIRMED.

48. CHUA vs. TORRES

G.R. No. 151900 August 30, 2005

The absence of the signature in the required verification and certification against forum-
shopping of a party “misjoined” as a plaintiff is a not valid ground for the dismissal of the complaint.

FACTS:

Christine Chua filed a complaint for damages before RTC (Caloocan City) against Jorge Torres and
Antonio Beltran. She impleads her brother Jonathan Chua as a necessary co-plaintiff.

Torres was the owner of the 9th Avenue Caltex Service Center (Caltex Service Center), while Beltran was
an employee of the said establishment as the head of its Sales and Collection Division.

EVENTS BEFORE THE FILING OF CASE IN RTC:

 Jonathan Chua issued in favor of the Caltex Service Center his personal Rizal Commercial
Banking Corporation (RCBC) Check No. 0412802 in the amount of ₱9,849.20 in payment for
purchases of diesel oil. However, the check was dishonored by the drawee bank when
presented for payment on the ground that the account was closed.

 Beltran then sent petitioner a demand letter informing her of the dishonor of the check and
demanding the payment thereof.

 Christine ignored the demand letter on the ground that she was not the one who issued the said
check.
  Without bothering to ascertain who had actually issued the check, Beltran instituted against
petitioner a criminal action for violation of B.P. 22. Subsequently, a criminal information was
filed against petitioner with the MTC (Caloocan City).

 MTC then issued a warrant of arrest against petitioner. The police officers tasked with serving
the warrant looked for her in her residence, in the auto repair shop of her brother, and even at
the Manila Central University where she was enrolled as a medical student.

 Beltran’s purported negligence amounted to either malicious prosecution or serious defamation

in prosecuting petitioner resulting from the issuance of a check she herself did not draw, and
served cause for a claim of moral damages.

While Jonathan Chua was named as a plaintiff to the suit, it was explicitly qualified in the second
paragraph of the complaint that he was being "impleaded here-in as a necessary party-plaintiff".  There
was no allegation in the complaint of any damage or injury sustained by Jonathan, and the prayer
therein expressly named petitioner as the only party to whom respondents were sought to recompense.

Neither did Jonathan Chua sign any verification or certification against forum-shopping, although
petitioner did sign an attestation, wherein she identified herself as "the principal plaintiff".

RTC:

 Dismissed the complaint (upon motion of respondents)

 Jonathan Chua had not executed a certification against forum-shopping, as required under
Section 5, Rule 7 of RoC.

 Further MR by the petitioners was also denied.

The matter at bar was elevated directly to SC by way of petition for review under Rule 45.

ISSUE/S: W/N a co-plaintiff impleaded only as a necessary party, who however has no claim for
relief or is not asserting any claim for relief in the complaint, should also make a
certification against forum shopping.

RULING: NO. The absence of the signature in the required verification and certification against
forum-shopping of a party misjoined as a plaintiff is a not valid ground for the
dismissal of the complaint.

The verification requirement is separate from the certification requirement.  It is noted that as a matter
of practice, the verification is usually accomplished at the same time as the certification against forum-
shopping; hence the customary nomenclature, "Verification and Certification of Non Forum-Shopping"
or its variants. For this reason, it is quite possible that the RTC meant to assail as well the failure of
Jonathan Chua to verify the complaint.

The verification requirement is significant, as it is intended to secure an assurance that the allegations in
the pleading are true and correct and not the product of the imagination or a matter of speculation, and
that the pleading is filed in good faith.  The absence of a proper verification is cause to treat the pleading
as unsigned and dismissible.

Jonathan Chua was misjoined as a party plaintiff in this case.

The complaint shows that Jonathan claims nothing. If he alone filed the complaint, it would have been
dismissed on the ground that the complaint states no cause of action, instituted as it was by a person
who was not a real party in interest.

Petitioner alleged in her complaint that Jonathan was a necessary party, but she failed to substantiate
such allegation other than by noting that he was "the one who really issued the check in controversy."

Jonathan Chua does not stand to be affected should the RTC rule either favorably or unfavorably of the
complaint. This is due to the nature of the cause of action of the complaint, which alleges an injury
personal to petitioner, and the relief prayed for, which is to be adjudicated solely to petitioner. There is
no allegation in the complaint alleging any violation or omission of any right of Jonathan, either arising
from contract or from law.

A misjoined party plaintiff has no business participating in the case as a plaintiff in the first place, and
it would make little sense to require the misjoined party in complying with all the requirements
expected of plaintiffs.

Section 11, Rule 3 of RoC:

Neither misjoinder nor non-joinder of parties is ground for dismissal of an action. Parties may
be dropped or added by order of the court on motion of any party or on its own initiative at any
stage of the action and on such terms as are just. Any claim against a misjoined party may be
severed and proceeded with separately.

Misjoinder of parties is not fatal to the complaint. It should then follow that any act or omission
committed by a misjoined party plaintiff should not be cause for impediment to the prosecution of the
case, much less for the dismissal of the suit. After all, such party should not have been included in the
first place, and no efficacy should be accorded to whatever act or omission of the party. 33 Since the
misjoined party plaintiff receives no recognition from the court as either an indispensable or necessary
party-plaintiff, it then follows that whatever action or inaction the misjoined party may take on the
verification or certification against forum-shopping is inconsequential.

Hence, it should not have mattered to the RTC that Jonathan Chua had failed to sign the certification
against forum-shopping, since he was misjoined as a plaintiff in the first place. The fact that Jonathan
was misjoined is clear on the face of the complaint itself, and the error of the RTC in dismissing the
complaint is not obviated by the fact that the adverse party failed to raise this point. After all, the RTC
could have motu proprio dropped Jonathan as a plaintiff, for the reasons above-stated which should
have been evident to it upon examination of the complaint.

WHEREFORE, the Petition is GRANTED. The Orders  dated 3 December 2001 and 15 January 2002 of the
Regional Trial Court of Caloocan City, Branch 126, in Civil Case No. C-19863 are SET ASIDE, and the
Complaint in the aforementioned case is REINSTATED. The lower court is enjoined to hear and decide
the case with deliberate dispatch. No pronouncement as to costs.

SO ORDERED.

49. Cruz vs Cruz G.R. No. 173292 September 1, 2010

The petition for annulment of deed of sale involves property and property rights, and hence, survives the
death of petitioner.

Facts:

On October 18, 1993, Memoracion Z. Cruz filed with the Regional Trial Court in Manila a Complaint
against her son, defendant-appellee Oswaldo Z. Cruz, for Annulment of Sale, Reconveyance and
Damages.

Memoracion claimed that during her union with her common-law husband (deceased) Architect Guido
M. Cruz, she acquired a parcel of land located at Tabora corner Limay Streets, Bo. Obrero, Tondo Manila;
that the said lot was registered in her name under TCT No. 63467 at the Register of Deeds of Manila;
that sometime in July 1992, she discovered that the title to the said property was transferred by
appellee and the latters wife in their names in August 1991 under TCT No. 0-199377 by virtue of a Deed
of Sale dated February 12, 1973; that the said deed was executed through fraud, forgery,
misrepresentation and simulation, hence, null and void; that she, with the help of her husbands
relatives, asked appellee to settle the problem; that despite repeated pleas and demands, appellee
refused to reconvey to her the said property; that she filed a complaint against appellee before the
office of the Barangay having jurisdiction over the subject property.

After Memoracion finished presenting her evidence in chief, she died on October 30, 1996. Through a
Manifestation, Memoracions counsel, Atty. Roberto T. Neri, notified the trial court on January 13, 1997
of the fact of such death, evidenced by a certificate thereof.

For his part, appellee filed a Motion to Dismiss on the grounds that (1) the plaintiffs reconveyance action
is a personal action which does not survive a partys death, pursuant to Section 21, Rule 3 of the Revised
Rules of Court, and (2) to allow the case to continue would result in legal absurdity whereby one heir is
representing the defendant [and is a] co-plaintiff in this case.

On June 2, 1997, the trial court issued the appealed Order in a disposition that reads:

Wherefore, in view of the foregoing, this case is ordered dismissed without prejudice to the prosecution
thereof in the proper estate proceedings.

On October 17, 1997, Memoracions son-heir, Edgardo Z. Cruz, manifested to the trial court that he is
retaining the services of Atty. Neri for the plaintiff. Simultaneously, Atty. Neri filed a Motion for
Reconsideration of the June 2, 1997 Order. However, the said motion was subsequently denied by
Acting Presiding Judge Cielito N. Mindaro-Grulla [on October 31, 2000].

Thereafter, Edgardo Cruz, as an heir of Memoracion Cruz, filed a notice of appeal in behalf of the
deceased plaintiff, signed by Atty. Neri, but the appeal was dismissed by Judge Mindaro-Grulla, [stating
that] the proper remedy being certiorari under Rule 65 of the Rules of Court. On appellants motion for
reconsideration, Judge Lucia Pena Purugganan granted the same, stating that the remedy under the
circumstances is ordinary appeal.

Issue: Whether Petition for Annulment of Deed of Sale, Reconveyance and Damages is a purely personal
action and that it does not survives the death of petitioner?

Held: No.

When a party dies during the pendency of a case, Section 16, Rule 3 of the 1997 Revised Rules of Civil
Procedure necessarily applies, viz:

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

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

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

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

The question as to whether an action survives or not depends on the nature of the action and the
damage sued for. In the causes of action which survive, the wrong complained [of] affects primarily and
principally property and property rights, the injuries to the person being merely incidental, while in the
causes of action which do not survive, the injury complained of is to the person, the property and rights
of property affected being incidental.

If the case affects primarily and principally property and property rights, then it survives the death of the
plaintiff or petitioner. In Sumaljag v. Literato,[9] we held that a Petition for Declaration of Nullity of Deed
of Sale of Real Property is one relating to property and property rights, and therefore, survives the death
of the petitioner. Accordingly, the instant case for annulment of sale of real property merits survival
despite the death of petitioner Memoracion Z. Cruz.

If the action survives despite death of a party, it is the duty of the deceaseds counsel to inform the court
of such death, and to give the names and addresses of the deceaseds legal representatives. The
deceased may be substituted by his heirs in the pending action.

50. Otero vs Tan G.R. No. 200134 August 15, 2012

In civil cases, it is a basic rule that the party making allegations has the burden of proving them by a
preponderance of evidence. The parties must rely on the strength of their own evidence and not upon
the weakness of the defense offered by their opponent. This rule holds true especially when the latter has
had no opportunity to present evidence because of a default order. Needless to say, the extent of the
relief that may be granted can only be so much as has been alleged and proved with preponderant
evidence required under Section 1 of Rule 133.

Facts:

A Complaint for collection of sum of money and damages was filed by Roger Tan (Tan) with the MTCC,
Cagayan de Oro City on July 28, 2005 against Roberto Otero (Otero). Tan alleged that on several
occasions from February 2000 to May 2001, Otero purchased on credit petroleum products from his
Petron outlet in Valencia City, Bukidnon in the aggregate amount of ? 270,818.01. Tan further claimed
that despite several verbal demands, Otero failed to settle his obligation.

Despite receipt of the summons and a copy of the said complaint served through his wife Grace R. Otero
on August 31, 2005, Otero failed to file his answer with the MTCC.

On November 18, 2005, Tan filed a motion with the MTCC to declare Otero in default for his failure to
file his answer. Otero opposed Tan’s motion, claiming that he did not receive a copy of the summons
and a copy of Tan’s complaint. Hearing on the said motion was set on January 25, 2006, but was later
reset to March 8, 2006, Otero manifesting that he only received the notice therefor on January 23, 2006.
The hearing on March 8, 2006 was further reset to April 26, 2006 since the presiding judge was
attending a convention. Otero failed to appear at the next scheduled hearing, and the MTCC issued an
order declaring him in default. A copy of the said order was sent to Otero on May 9, 2006. Tan was then
allowed to present his evidence ex parte.

Otero then filed a petition for review with the CA asserting that both the RTC and the MTCC erred in
giving credence to the pieces of evidence presented by Tan in support of his complaint. Otero explained
that the statements of account, which Tan adduced during the ex parte presentation of his evidence,
were prepared by a certain Betache who was not presented as a witness by Tan. Otero avers that the
genuineness and due execution of the said statements of account, being private documents, must first
be established lest the said documents be rendered inadmissible in evidence. Thus, Otero asserts, the
MTCC and the RTC should not have admitted in evidence the said statements of account as Tan failed to
establish the genuineness and due execution of the same.

Issue:

Whether Otero, having been declared in default by the MTCC, may, in the appellate proceedings, still
raise the failure of Tan to authenticate the statements of account which he adduced in evidence?

Held: Yes

A defendant who was declared in default may nevertheless appeal from the judgment by default, albeit
on limited grounds.

Nonetheless, the fact that a defendant has lost his standing in court for having been declared in default
does not mean that he is left sans any recourse whatsoever. In Lina v. CA, et al.,15 this Court
enumerated the remedies available to party who has been declared in default, to wit:

a) The defendant in default may, at any time after discovery thereof and before judgment, file a motion,
under oath, to set aside the order of default on the ground that his failure to answer was due to fraud,
accident, mistake or excusable neglect, and that he has meritorious defenses; (Sec 3, Rule 18)

b) If the judgment has already been rendered when the defendant discovered the default, but before
the same has become final and executory, he may file a motion for new trial under Section 1(a) of Rule
37;

c) If the defendant discovered the default after the judgment has become final and executory, he may
file a petition for relief under Section 2 of Rule 38; and

d) He may also appeal from the judgment rendered against him as contrary to the evidence or to the
law, even if no petition to set aside the order of default has been presented by him. (Sec. 2, Rule 41)

Indeed, a defending party declared in default retains the right to appeal from the judgment by default.
However, the grounds that may be raised in such an appeal are restricted to any of the following: first,
the failure of the plaintiff to prove the material allegations of the complaint; second, the decision is
contrary to law; and third, the amount of judgment is excessive or different in kind from that prayed
for.17 In these cases, the appellate tribunal should only consider the pieces of evidence that were
presented by the plaintiff during the ex parte presentation of his evidence.

51. Samaniego vs Aguila G.R. No. 125567. June 27, 2000

An indispensable party is a party in interest without whom no final determination can be had of an
action without that party being impleaded. Indispensable parties are those with such an interest in the
controversy that a final decree would necessarily affect their rights, so that the court cannot proceed
without their presence.
Facts:

Petitioners are tenants in a landholding with an aggregate area of 10.4496 hectares, more or less, in
Patul (now Malvar), Santiago, Isabela. The land belongs to Salud Aguila, whose children, Vic Alvarez
Aguila and Josephine Taguinod, are private respondents.

It appears that the land in question was identified by the Department of Agrarian Reform (DAR)-Region
2 as covered by the Operation Land Transfer Program of the government. In 1976, Aguila, in behalf of
her children, filed a petition for exemption from the coverage of P.D. No. 27. Petitioners opposed the
application on the ground that Aguilas transfer of the title to the lands to her children was in violation of
the rules and regulations of the DAR.

Issue: Whether the Office of the President is an indispensable party in an appeal from its decision and,
therefore, must be impleaded pursuant to the Rules of Civil Procedure

Held: No

In the case at bar, even assuming that the Office of the President should have been impleaded by
petitioner, it is clear that the Office of the President is merely a pro forma party, in the same way that a
respondent court is a pro forma party in special civil actions for certiorari.

52. Lu v Lu YM GR. No. 153690

FACTS:

The three consolidated cases stemmed from the complaint for “Declaration of Nullity of Share Issue,
Receivership and Dissolution” filed on August 14,2000 before the Regional Trial Court (RTC) of Cebu City
by David Lu, et al. against Paterno Lu Ym, Sr. and sons (Lu Ym father and sons) and LLDC.

The RTC ruled in favor of David et al. by annulling the issuance of the shares of stock subscribed and paid
by Lu Ym father and sons at less than par value, and ordering the dissolution and asset liquidation of
LLDC.

In G.R. No. 157381 wherein Lu Ym father and sons challenged the appellate court’s resolution
restraining the trial court from proceeding with their motion to lift the receivership order which was
filed during the pendency of G.R. No.153690, the Court, by Decision of August 26, 2008 resolved that
the issue was mooted by the amendment of the complaint and by the trial court’s decision on the
merits.

The Court, in a turnaround, by Resolution of August 4, 2009, reconsidered its position on the matter of
docket fees. It ruled that the trial court did not acquire jurisdiction over the case for David Lu, et al.’s
failure to pay the correct docket fees, hence, all interlocutory matters and incidents subject of the
present petitions must consequently be denied.
Issue: Whether the original complaint filed before the RTC should have been dismissed for non-payment
of the correct docket fees.

Held:

A court acquires jurisdiction over a case only upon the payment of the prescribed fees.  The
importance of filing fees cannot be gainsaid for these are intended to take care of court expenses in
the handling of cases in terms of costs of supplies, use of equipment, salaries and fringe benefits of
personnel, and others, computed as to man-hours used in the handling of each case.  Hence, the non-
payment or insufficient payment of docket fees can entail tremendous losses to the government in
general and to the judiciary in particular.

However, the Supreme Court cannot grant the dismissal prayed for because of the following reasons: 

 First, the case instituted before the RTC is one incapable of pecuniary estimation.  Hence, the correct
docket fees were paid.  

Second, John and LLDC are estopped from questioning the jurisdiction of the trial court because of
their active participation in the proceedings, and because the issue of payment of insufficient docket
fees had been belatedly raised before the Court of Appeals, i.e., only in their motion for
reconsideration.  

Lastly, assuming that the docket fees paid were truly inadequate, the mistake was committed by the
Clerk of Court who assessed the same and not imputable to David; and as to the deficiency, if any, the
same may instead be considered a lien on the judgment that may thereafter be rendered.

53. DEVELOPMENT BANK OF THE PHILIPPINES, Petitioner  vs. HON. EMMANUEL C. CARPIO, et al.,
Respondent G.R. No. 195450.

FACTS:

On August 21, 2001, Dabay Abad, Hatab Abad, Omar Abas, Hanapi Abdullah, Rojea Ab Abdullah,
Abdullah Abedin, Alex Abedin, et al .(Abad, et al.), represented by their attorney-in-fact, Manuel L. Te,
filed a complaint for delivery of certificates of title, damages, and attorney's fees against petitioner
Development Bank of the Philippines (DBP) and Guarantee Fund for Small and Medium Enterprise
(GFSME) before the RTC.

In their, Complaint, Abad, et al. prayed, among others, for the issuance of a writ of seizure, pending
hearing of the case, for delivery of their certificates of title they claimed to be unlawfully detained by
DBP and GFSME. They alleged that their certificates of title were submitted to DBP for safekeeping
pursuant to the loan agreement they entered into with DBP. The same certificates of title were turned
over by DBP to GFSME because of its call on GFSME's guarantee on their loan, which became due and
demandable, and pursuant to the guarantee agreement between DBP and GFSME.
As prayed for, the RTC issued the Writ of Seizure on August 24, 2001. The writ was accompanied by
Plaintiffs Bond for Manual Delivery of Personal Property issued by Country Bankers Insurance
Corporation (CBIC).

On September 5, 2001, DBP filed its Omnibus Motion to Dismiss Complaint and to Quash Writ of Seizure
on the ground of improper venue, among others. Abad, et al. filed their Opposition and later, their
Supplemental Opposition, to which they attached the Delivery Receipt showing that the court sheriff
took possession of 228 certificates of title from GFSME.

In its Order, dated September 25, 2001, the RTC granted DBP's omnibus motion and dismissed the case
for improper venue.

On December 20, 2001, DBP and GFSME filed their Joint Motion to Order Plaintiffs to Return Titles to
Defendants DBP and GFSME. After Abad, et al. filed their opposition, the RTC issued the Order, dated
January 27, 2003, directing Abad, et al. to return the 228 certificates of title.

Abad, et al. filed a petition for certiorari and prohibition with the Court praying, among others, for the
nullification and reversal of the January 27, 2003 Order of the RTC. The Court, however, in its June 9,
2003 Resolution, dismissed the petition.

On September 18, 2003, DBP filed its Motion for Writ of Execution of the January 27, 2003 Order before
the RTC. On December 16, 2003, the RTC issued the corresponding Writ of Execution. The Sheriffs
Return of Service, however, indicated that Abad, et al. failed to deliver the certificates of title

ISSUE:

Whether or not the court erred in its blind adherence to and strict application of section 20, Rule 57 of
the 1997 Rules of Civil Procedure

RULING:

No. Accordingly, the CA did not commit any reversible error when it applied the rules of procedure in
resolving the issue at hand. The application for damages was belatedly filed.

Section 10, Rule 60 of the Rules of Court provides that in replevin cases, as in receivership and injunction
cases, the damages to be awarded to either party upon any bond filed by the other shall be claimed,
ascertained, and granted in accordance with Section 20 of Rule 57 which reads:

SEC. 20. Claim for damages on account of illegal attachment. — If the judgment on the action be in favor
of the party against whom attachment was issued, he may recover, upon the bond given or deposit
made by the attaching creditor, any damages resulting from the attachment. Such damages may be
awarded only upon application and after proper hearing, and shall be included in the final
judgment. The application must be filed before the trial or before appeal is perfected or before the
judgment becomes executory, with due notice to the attaching creditor and his surety or sureties,
setting forth the facts showing his right to damages and the amount thereof.
If the judgment of the appellate court be favorable to the party against whom the attachment was
issued, he must claim damages sustained during the pendency of the appeal by filing an application
with notice to the party in whose favor the attachment was issued or his surety or sureties, before the
judgment of the appellate court becomes executory. The appellate court may allow the application to be
heard and decided by the trial court.

In other words, to recover damages on a replevin bond (or on a bond for preliminary attachment,
injunction or receivership), it is necessary (1) that the defendant-claimant has secured a favorable
judgment in the main action, meaning that the plaintiff has no cause of action and was not, therefore,
entitled to the provisional remedy of replevin; (2) that the application for damages, showing
claimant's right thereto and the amount thereof, be filed in the same action before trial or before
appeal is perfected or before the judgment becomes executory; (3) that due notice be given to the
other party and his surety or sureties, notice to the principal not being sufficient; and (4) that there
should be a proper hearing and the award for damages should be included in the final judgment.

54. De Pedro V Romasan GR. No. 194751

Facts:

This Rule 45 petition seeks the review of the Court of Appeals This case originated from separate
complaints for nullification of free patent and original certificates of title, filed against several
defendants. One of the defendants is petitioner Aurora De Pedro (De Pedro).   The complaints were filed
by respondent Romasan Development Corporation before the Regional Trial Court.

Attempts to personally serve summons on De Pedro failed. The officer's return, dated February 22, 1999
reads in part:

OFFICER'S RETURN

I HEREBY CERTIFY that on the 15th and 18th day of February, 1999, I have served a copy of the summons
with complaint and annexes dated January 29, 1999 issued by Regional Trial Court, Fourth Judicial
Region, Branch 74, Antipolo City... upon defendants in the above-entitled case on the following, to wit;

1. AURORA N. DE PEDRO Unserved for the reason that according to the messenger of Post Office of
Pasig their [sic] is no person in the said given address.[16]

Respondent filed a motion to serve summons and the complaint by publication

The Regional Trial Court granted the motion. The summons and the complaint were published in
People's Balita.

Respondent moved to declare all defendants in its complaints, including De Pedro, in default for failure
to file their answers.

Respondent also moved to be allowed to present evidence ex parte. The Regional Trial Court granted
the motion.
The Regional Trial Court issued an order declaring as nullity the titles and free patents issued to all
defendants in respondent's complaint, including the free patent issued to De Pedro.

In so ruling, the Regional Trial Court noted that none of the defendants, including De Pedro, filed an
answer to respondent's complaints.  The Regional Trial Court also noted the committee report admitting
CENRO's irregularity in the issuance of... the free patents to the defendants in the case.

The Regional Trial Court also found that the title and free patent issued to De Pedro were void. Before
the free patents were issued to the defendants in the case, OCT No. 438 was already issued to the
property's... original owner. Hence, the property was already "segregated from the mass of public
domain" that can be disposed by the government.

On March 30, 2000, De Pedro, through counsel, filed before the Regional Trial Court a motion for new
trial, alleging that the counsel received notice of the January 7, 2000 decision on March 16, 2000.

De Pedro argued that the Regional Trial Court did not acquire jurisdiction over her person because of
improper and defective service of summons.  Citing the officer's return dated February 22, 1999, De
Pedro pointed out that summons was not personally served upon her "for... the reason that according to
the messenger of Post Office of Pasig their (sic) is no person in the said given address."

De Pedro al

De Pedro also argued that the case should have been dismissed on the ground of litis pendentia.

On September 30, 2002, the Regional Trial Court issued an order denying De Pedro's motion for new
trial.

The Regional Trial Court ruled that summons was validly served upon De Pedro through publication, in
accordance with the Rules of Court.

Moreover, counting from the date of the summons' publication beginning on March 2, 2000, the motion
for new... trial was filed beyond the 15-day period within which the motion may be filed.   Therefore, the
Regional Trial Court decision had become final and executory.

The Regional Trial Court also ruled that the reckoning period for filing the motion for new trial cannot be
De Pedro's counsel's receipt of the decision.  This is because at the time of the issuance of the court's
decision, which had already become final and executory, De Pedro's counsel was yet to enter his
appearance for De Pedro.

De Pedro filed a petition for certiorari before the Court of Appeals, alleging that the Regional Trial Court
committed grave abuse of discretion when it denied her motion for new trial.

The Court of Appeals dismissed the petition for certiorari for lack of merit,... De Pedro's motion for
reconsideration was denied in the Court of Appeals resolution dated August 24, 2006.

De Pedro elevated the case to this court, but this was likewise denied in the resolution for failure to pay
the Special Allowance for the Judiciary and sheriff's fees.
On October 11, 2006, De Pedro filed before the Court of Appeals a petition for annulment of the January
7, 2000 judgment of the Regional Trial Court on grounds of lack of jurisdiction, litis pendentia, and for
having been dispossessed of her... property without due process.

Citing Pantaleon v. Asuncion, De Pedro pointed out that "due process of law requires personal service to
support a personal judgment, and, when the proceeding is strictly in personam brought to determine
the personal rights and... obligations of the parties, personal service within the state or a voluntary
appearance in the case is essential to the acquisition of jurisdiction as to constitute compliance with the
constitutional requirement of due process."

The Court of Appeals ruled that since petitioner already availed herself of the remedy of new trial, and
raised the case before the Court of Appeals via petition for certiorari, she can no longer file a petition for
annulment of judgment.

De Pedro filed before this court a Rule 45 petition, seeking the reversal of the July 7, 2010 Court of
Appeals decision and the December 3, 2010 Court of Appeals resolution.

Issue: Whether the petition for annulment of judgment was properly dismissed.

Yes. An action for annulment of judgment “may not be invoked (1) where the party has availed
himself of the remedy of new trial, appeal, petition for relief, or other appropriate remedy and lost; or
(2) where he has failed to avail himself of those remedies through his own fault or negligence.” Thus,
an action for annulment of judgment is not always readily available even if there are causes for
annulling a judgment.

In this case, petitioner’s main grounds for filing the action for annulment are lack of jurisdiction over her
person (for failure to serve summons), and litis pendentia. These are the same grounds that were raised
in the motion for new trial filed before and denied by the Regional Trial Court. In fact, petitioner had
already filed a motion for new trial and petition for certiorari invoking lack of jurisdiction as ground. The
petition for annulment of judgment was properly dismissed.

55. Socorro Limos v Spouses Odones

G.R. No. 186979 August 11, 2010

Facts: Private respondents Spouses Odones filed a complaint for Annulment of Deed, Title and Damages
against petitioners Limos, Rosa delos Reyes and Sps Delos Reyes before Tarlac RTC. The complaint
alleged that they are the owners of a 940 sq m land by virtue of an Extrajudicial Succession of Estate and
Sale dated Jan 29, 2004, executed by the surviving heirs of Donata Lardizabal, in whom the original title
was vested.

After registering the document of conveyance, they found out that the OCT was cancelled and
replaced by a TCT in the petitioners’ name.
 Petitioners were able to secure TCT by virtue of a Deed of Sale allegedly executed by Donata and
husband on April 18, 1972. Respondents sought the cancellation of said TCTs on the ground that the Sps
Lardizabal’s signatures were forgeries.

In response, petitioners filed a Motion for Bill of Particulars, which was denied, and in their answer
pleaded affirmative defenses: (a) failure to state a cause of action inasmuch as the respondents’ alleged
title is void & are not real parties-in-interest (b) non-joinder of the other heirs of Donata as
indispensable parties (c) respondents’ claim is barred by laches. In reply, respondents maintained their
standing and appended a sworn statement of heir Amadeo Razalan.

Petitioners also served upon respondents a Request for Admission, which respondents failed to
respond to, prompting petitioners to file a Motion to Set for Preliminary Hearing on the Special and and
arguing that the failure of respondents to object to the Request for Admission amounted to an implied
admission pursuant to Rule 26, Sec. 2 of the Rules of Court. As such, a hearing on the affirmative
defenses had become imperative because petitioners were no longer required to present evidence on
the admitted facts.

Respondents filed a comment on the Motion, contending that the facts sought to be admitted were
not material and relevant to the case.

Issue: W/N respondents’ failure to respond to the Request for Admission amounted to an implied
admission & a preliminary hearing should therefore be conducted

Held: No. The application of the rules and determination of sanction to be imposed upon failure to
comply with modes of discovery rests on sound judicial discretion. Matters set forth in the petitioners’
Request for Admission were the same affirmative defenses in their answer which respondents already
traversed in their Reply.

DOCTRINE:

Under Rule 26, Sec 1 and 2: A party who fails to respond to a Request for Admission shall be deemed
to have impliedly admitted all matters contained therein. It must be emphasized that the application of
the rules on modes of discovery rests upon the discretion of the court. A request for admission is not
intended merely to reproduce or reiterate the allegations but should set forth relevant evidentiary
matters of fact described in the request.

Thus, if the trial court finds that the matters in the Request were already admitted then the
requested party cannot be compelled to admit or deny them again. In turn the requesting party cannot
reasonably expect a response to request or even demand the application of the implied admission rule
in Rule 26, Sec 2.

In the case, the redundant and unnecessary nature of the Petitioner’s Request rendered it irrelevant
so as to apply the implied admission rule. Since there is no implied admission attributable to the
Respondent’s failure to respond, then the argument that a preliminary hearing is imperative loses its
point.
56. LORETO BOTE vs. SPOUSES ROBERT VELOSO and GLORIA VELOSO

G.R. No. 194270 December 3, 2012

Facts: Pedro Baello and his sister Nicanora filed an application for reigtration of their property, which
was successfully registered under their names. The lot was subdivided into Lot A in favor of Pedro and
Lot B for Nicanora. Pedro died intestate leaving 32 heirs while Nicanora died intestate without issue.

The property was included in the Dagat-Dagatan Project under First Lady Imelda marcos. Armed
military personnel forcibly evicted the caretaker of the heirs of Pedro and Nicanora, destroying the
residential structure and fishponds thereon. The NHA took over and awarded the lots to chosen
beneficiaries.

After the Marcos regime, the heirs executed an extrajudicial partition of their share of the
property. The NHA then filed an expropriation case. In the meantime, Lot A was subdivided into six TCTs
as well as Lot B with six TCTs. The heirs then filed separated motions to dismiss the expropriation case
on the ground of res judicata and lack of cause of action, which the RTC granted and CA affirmed.

The NHA filed another complaint against the heirs for declaration of nullity of the property,
which was eventually dismissed on the ground of res judicata.

In the meantime, one Veloso was awarded a residential lot at Dagat Dagatan Project. Veloso
constructed a two-storey house and leased it to Bote. Bote executed a Promissory Note undertaking to
pay the Veloso spouses the amount of PhP 850,000 as purchase price for property. Bote failed to pay
the purchase price indicated in the Promissory Note. Thus, the spouses Veloso issued a Demand Letter
dated demanding the payment of the purchase price. Despite such demand letter, Bote still failed to
pay.

Spouses Veloso filed a Complaint against Bote for Sum of Money and/or Recovery of Real
Property with Damages. It was filed at the Marikina RTC.

In his Answer, Bote alleged that the Marikina RTC had no territorial jurisdiction to try a case for
recovery of possession of real property located in Caloocan City and that the subject property is not
owned by the spouses Veloso but by Cynthia T. Baello (Cynthia) as shown in TCT No. 290183 covering
the subject property, an alleged heir of Pedro Baello. He further alleged that he purchased the property
from Cynthia. During the hearing of the case, Cynthia testified before the trial court claiming to be one
of the heirs of Pedro Baello. Such contention was never rebutted by the spouses Veloso.

The RTC dismissed the complaint. The trial court, thus, concluded that because the NHA failed to
expropriate the property, the spouses Veloso could not derive any right from the award. Thereafter, the
spouses Veloso appealed the RTC Decision to the CA. In their Appellant’s Brief, they interposed for the
first time their status as builders in good faith and are, thus, entitled to possession of the house that
Gloria built.
Issue: Whether or not the Spouses Veloso are precluded from raising the issue that they are builders in
good faith for the first time on appeal.

Held: Yes. Section 15, Rule 44 of the Rules of Court limits the questions that may be raised on appeal:

Section 15. Questions that may be raised on appeal. – Whether or not the appellant has filed a
motion for new trial in the court below, he may include in his assignment of errors any question of law or
fact that has been raised in the court below and which is within the issues framed by the parties.

In Union Bank of the Philippines v. Court of Appeals, the Court clarified this provision of the
Rules of Court stating that, "It is settled jurisprudence that an issue which was neither averred in the
complaint nor raised during the trial in the court below cannot be raised for the first time on appeal as it
would be offensive to the basic rules of fair play, justice and due process."

This principle forbids the parties from changing their theory of the case.

DOCTRINE:

It is already well-settled in this jurisdiction that a party may not change his theory of the case on
appeal. Such a rule has been expressly adopted in Rule 44, Section 15 of the 1997 Rules of Civil
Procedure, which provides –

SEC. 15. Questions that may be raised on appeal. – Whether or not the appellant has filed a
motion for new trial in the court below, he may include in his assignment of errors any question of law
or fact that has been raised in the court below and which is within the issues framed by the parties.

Thus, in Carantes v. Court of Appeals, this Court emphasized that –

The settled rule is that defenses not pleaded in the answer may not be raised for the first time
on appeal. A party cannot, on appeal, change fundamentally the nature of the issue in the case. When a
party deliberately adopts a certain theory and the case is decided upon that theory in the court below,
he will not be permitted to change the same on appeal, because to permit him to do so would be unfair
to the adverse party.

In the more recent case of Mon v. Court of Appeals, this Court again pronounced that, in this
jurisdiction, the settled rule is that a party cannot change his theory of the case or his cause of action on
appeal. It affirms that "courts of justice have no jurisdiction or power to decide a question not in issue."
Thus, a judgment that goes beyond the issues and purports to adjudicate something on which the court
did not hear the parties, is not only irregular but also extrajudicial and invalid. The rule rests on the
fundamental tenets of fair play.

57. THE UNITED RESIDENTS OF DOMINICAN HILL, INC. vs. COMMISSION ON THE SETTLEMENT
OF LAND PROBLEMS (COSLAP)

G.R. No. 135945 March 7, 2001

 Facts: Dominican Hills a 10.3-hectare property in Baguio City. It appeared that the property was
mortgaged to the UCPB which was eventually foreclosed with the latter being the highest bidder. It was
then donated to the government. The deed of donation stipulated that Dominican Hills would be utilized
for the priority programs, projects, activities in human settlements and economic development and
governmental purposes of the Ministry of Human Settlements. When the Ministry of Human
Settlements was abolished, all agencies under the latter’s supervision as well as its assets, programs and
projects, were transferred to the Presidential Management Staff (PMS).

In 1998, United Residents of Dominican Hill, Inc. , a community housing association composed of
non-real property owning residents of Baguio City, filed an application to the PMS to acquire a portion of
the Dominican Hills property. The application was referred to the Home Insurance Guaranty Corp
(HIGC). A MOA was signed by and among the PMS, the HIGC, and UNITED. The Memorandum of
Agreement called for the PMS to sell the Dominican Hills property to HIGC which would, in turn, sell the
same to UNITED. The parties agreed on a selling price of P75.00 per square meter.In 1991, the HIGC sold
2.48 hectares of property to United.

In 1993, United alleged that COSLAP entered the property and constructed houses thereon.
United was able to secure a demolition order from the city mayor. Private respondents, the Dominican
Hill Baguio Residents Homeless Association (Association), filed an action for injunction. They were able
to obtain a TRO but the writ of preliminary injunction was denied.

While the injunction case was pending, the Association, represented by Land Reform
Beneficiaries Association, Inc. (LRBAI), filed a case for damages, injunction and annulment of the MOA
between United and HIGC. The case was dismissed.

Despite the demolition order, private respondents returned and reconstructed the demolished
structures. To prevent the re-implementation of the demolition order, private respondents filed a
petition for annulment of contracts with prayer for a TRO in the COSLAP against petitioner, HIGC, PMS,
the City Engineers Office, the City Mayor, as well as the Register of Deeds of Baguio City. On the very
same day, public respondent COSLAP issued the contested order requiring the parties to maintain the
status quo.

Without filing a motion for reconsideration from the aforesaid status quo order, petitioner filed
the instant petition questioning the jurisdiction of the COSLAP.

Issue: Whether or not the private respondents committed forum-shopping

Held: Yes. A scrutiny of the pleadings filed before the trial courts and the COSLAP sufficiently establishes
private respondents’ propensity for forum shopping. The Court lays the premise that the certification
against forum shopping must be executed by the plaintiff or principal party, and not by his counsel.
Hence, one can deduce that the certification is a peculiar personal representation on the part of the
principal party, an assurance given to the court or other tribunal that there are no other pending cases
involving basically the same parties, issues and causes of action. In the case at bar, private respondents
litany of omissions range from failing to submit the required certification against forum shopping to
filing a false certification, and then to forum shopping itself. First, the petition filed before the COSLAP
conspicuously lacked a certification against forum shopping. Second, it does not appear from the record
that the ASSOCIATION informed Branch 4 of the Regional Trial Court of Baguio City before which Civil
Case No. 3316-R was pending, that another action, Civil Case No. 3382-R, was filed before Branch 61 of
the same court. Another group of homeless residents of Dominican Hill, the LAND REFORM
BENEFICIARIES ASSOCIATION, INC. initiated the latter case. The aforesaid plaintiff, however, does not
hesitate to admit that it filed the second case in representation of private respondent, as one of its
affiliates. In the same manner, the certification against forum shopping accompanying the complaint in
Civil Case No. 3382-R does not mention the pendency of Civil Case No. 3316-R. In fact, the opposite
assurance was given, that there was no action pending before any other tribunal. Another transgression
is that both branches of the trial court do not appear to have been notified of the filing of the subject
COSLAP Case No. 98-253.

It is evident from the foregoing facts that private respondents, in filing multiple petitions, have
mocked the Court’s attempts to eradicate forum shopping and have thereby upset the orderly
administration of justice. They sought recourse from three different tribunals in order to obtain the writ
of injunction they so desperately desired. The willful attempt by private respondents to obtain a
preliminary injunction in another court after it failed to acquire the same from the original court
constitutes grave abuse of the judicial process.

DOCTRINES:

1. Forum shopping is evident where the elements of litis pendentia or res judicata are present.
Private respondents subterfuge comes to naught, for the effects of res judicata or litis pendentia may
not be avoided by varying the designation of the parties or changing the form of the action or adopting a
different mode of presenting ones case. In view of the foregoing, all that remains to be done is the
imposition of the proper penalty. A party’s willful and deliberate act of forum shopping is punishable by
summary dismissal of the actions filed.

2. Compliance with the certification against forum shopping is separate from, and independent
of, the avoidance of forum shopping itself. Thus, there is a difference in the treatment in terms of
imposable sanctions between failure to comply with the certification requirement and violation of the
prohibition against forum shopping. The former is merely a cause for the dismissal, without prejudice, of
the complaint or initiatory pleading, while the latter is a ground for summary dismissal thereof and
constitutes direct contempt.

Walang 58-60,61-63,64-66

67.
As a rule, in civil cases, the procedure of calling the adverse party to the witness stand is not allowed,
unless written interrogatories are first served upon the latter. This is embodied in Section 6, Rule 25 of
the Rules, which provides –

Sec. 6. Effect of failure to serve written interrogatories.

Unless thereafter allowed by the court for good cause shown and to prevent a failure of justice, a party
not served with written interrogatories may not be compelled by the adverse party to give testimony in
open court, or to give a deposition pending appeal.

One of the purposes of the above rule is to prevent fishing expeditions and needless delays; it is there to
maintain order and facilitate the conduct of trial. It will be presumed that a party who does not serve
written interrogatories on the adverse party beforehand will most likely be unable to elicit facts useful
to its case if it later opts to call the adverse party to the witness stand as its witness. Instead, the process
could be treated as a fishing expedition or an attempt at delaying the proceedings; it produces no
significant result that a prior written interrogatories might bring.

Besides, since the calling party is deemed bound by the adverse party’s testimony,33 compelling the
adverse party to take the witness stand may result in the calling party damaging its own case. Otherwise
stated, if a party cannot elicit facts or information useful to its case through the facility of written
interrogatories or other mode of discovery, then the calling of the adverse party to the witness stand
could only serve to weaken its own case as a result of the calling party’s being bound by the adverse
party’s testimony, which may only be worthless and instead detrimental to the calling party’s cause.

Another reason for the rule is that by requiring prior written interrogatories, the court may limit the
inquiry to what is relevant, and thus prevent the calling party from straying or harassing the adverse
party when it takes the latter to the stand.

Thus, the rule not only protects the adverse party from unwarranted surprises or harassment; it likewise
prevents the calling party from conducting a fishing expedition or bungling its own case. Using its own
judgment and discretion, the court can hold its own in resolving a dispute, and need not bear witness to
the parties perpetrating unfair court practices such as fishing for evidence, badgering, or altogether
ruining their own cases.

FACTS:

G.R. No. 185145               February 5, 2014

SPOUSES VICENTE AFULUGENCIA and LETICIA AFULUGENCIA, Petitioners,

vs.
METROPOLITAN BANK & TRUST CO. and EMMANUEL L. ORTEGA, Clerk of Court, Regional Trial Court
and Ex-Officio Sheriff, Province of Bulacan, Respondents.

Petitioners, spouses Vicente and Leticia Afulugencia, filed a Complaint for nullification of mortgage,
foreclosure, auction sale, certificate of sale and other documents, with damages, against respondents
Metropolitan Bank & Trust Co. (Metrobank) and Emmanuel L. Ortega (Ortega) before the Regional Trial
Court (RTC) of Malolos City
Metrobank is a domestic banking corporation existing under Philippine laws, while Ortega is the Clerk of
Court and Ex-Officio Sheriff of the Malolos RTC.

After the filing of the parties’ pleadings and with the conclusion of pre-trial, petitioners filed a Motion
for Issuance of Subpoena Duces Tecum Ad Testificandum to require Metrobank’s officers to appear and
testify as the petitioners’ initial witnesses during the August 31, 2006 hearing for the presentation of
their evidence-in-chief, and to bring the documents relative to their loan with Metrobank, as well as
those covering the extrajudicial foreclosure and sale of petitioners’ 200-square meter land in
Meycauayan, Bulacan covered by Transfer Certificate of Title No. 20411.

Metrobank filed an Opposition arguing that for lack of a proper notice of hearing, the Motion must be
denied; that being a litigated motion, the failure of petitioners to set a date and time for the hearing
renders the Motion ineffective and pro forma; that pursuant to Sections 1 and 611 of Rule 25 of the
Rules, Metrobank’s officers – who are considered adverse parties – may not be compelled to appear and
testify in court for the petitioners since they were not initially served with written interrogatories; that
petitioners have not shown the materiality and relevance of the documents sought to be produced in
court; and that petitioners were merely fishing for evidence.

Petitioners submitted a Reply  stating that the lack of a proper notice of hearing was cured by the filing
of Metrobank’s Opposition; that applying the principle of liberality, the defect may be ignored; that
leave of court is not necessary for the taking of Metrobank’s officers’ depositions; that for their case, the
issuance of a subpoena is not unreasonable and oppressive, but instead favorable to Metrobank, since it
will present the testimony of these officers just the same during the presentation of its own evidence;
that the documents sought to be produced are relevant and will prove whether petitioners have paid
their obligations to Metrobank in full, and will settle the issue relative to the validity or invalidity of the
foreclosure proceedings; and that the Rules do not prohibit a party from presenting the adverse party as
its own witness.

Issue:
            THE COURT OF APPEALS COMMITTED REVERSIBLE ERRORS IN REQUIRING NOTICE AND
HEARING (SECS. 4 AND 5, RULE 15, RULES OF COURT) FOR A MERE MOTION FOR SUBPOENA OF
RESPONDENT BANK’S OFFICERS WHEN SUCH REQUIREMENTS APPLY ONLY TO DEPOSITION UNDER
SEC. 6, RULE 25, RULES OF COURT.

Held:
On the procedural issue, it is quite clear that Metrobank was notified of the Motion for Issuance of
Subpoena Duces Tecum Ad Testificandum; in fact, it filed a timely Opposition thereto. The technical
defect of lack of notice of hearing was thus cured by the filing of the Opposition.

As officers of the adverse party Metrobank are being compelled to testify as the calling party’s main
witnesses; likewise, they are tasked to bring with them documents which shall comprise the petitioners’
principal evidence. This is not without significant consequences that affect the interests of the adverse
party, as will be shown below.

As a rule, in civil cases, the procedure of calling the adverse party to the witness stand is not allowed,
unless written interrogatories are first served upon the latter. This is embodied in Section 6, Rule 25 of
the Rules, which provides –
Sec. 6. Effect of failure to serve written interrogatories.
Unless thereafter allowed by the court for good cause shown and to prevent a failure of justice, a party
not served with written interrogatories may not be compelled by the adverse party to give testimony in
open court, or to give a deposition pending appeal.

One of the purposes of the above rule is to prevent fishing expeditions and needless delays; it is there to
maintain order and facilitate the conduct of trial. It will be presumed that a party who does not serve
written interrogatories on the adverse party beforehand will most likely be unable to elicit facts useful
to its case if it later opts to call the adverse party to the witness stand as its witness. Instead, the process
could be treated as a fishing expedition or an attempt at delaying the proceedings; it produces no
significant result that prior written interrogatories might bring.

Besides, since the calling party is deemed bound by the adverse party’s testimony, compelling the
adverse party to take the witness stand may result in the calling party damaging its own case. Otherwise
stated, if a party cannot elicit facts or information useful to its case through the facility of written
interrogatories or other mode of discovery, then the calling of the adverse party to the witness stand
could only serve to weaken its own case as a result of the calling party’s being bound by the adverse
party’s testimony, which may only be worthless and instead detrimental to the calling party’s cause.

Another reason for the rule is that by requiring prior written interrogatories, the court may limit the
inquiry to what is relevant, and thus prevent the calling party from straying or harassing the adverse
party when it takes the latter to the stand.

Thus, the rule not only protects the adverse party from unwarranted surprises or harassment; it likewise
prevents the calling party from conducting a fishing expedition or bungling its own case. Using its own
judgment and discretion, the court can hold its own in resolving a dispute, and need not bear witness to
the parties perpetrating unfair court practices such as fishing for evidence, badgering, or altogether
ruining their own cases. Ultimately, such unnecessary processes can only constitute a waste of the
court’s precious time, if not pointless entertainment.

In the present case, petitioners seek to call Metrobank’s officers to the witness stand as their initial and
main witnesses, and to present documents in Metrobank’s possession as part of their principal
documentary evidence. This is improper. Petitioners may not be allowed, at the incipient phase of the
presentation of their evidence-in-chief at that, to present Metrobank’s officers – who are considered
adverse parties as well, based on the principle that corporations act only through their officers and duly
authorized agents – as their main witnesses; nor may they be allowed to gain access to Metrobank’s
documentary evidence for the purpose of making it their own. This is tantamount to building their
whole case from the evidence of their opponent. The burden of proof and evidence falls on petitioners,
not on Metrobank; if petitioners cannot prove their claim using their own evidence, then the adverse
party Metrobank may not be pressured to hang itself from its own defense.

It is true that under the Rules, a party may, for good cause shown and to prevent a failure of justice, be
compelled to give testimony in court by the adverse party who has not served written interrogatories.
But what petitioners seek goes against the very principles of justice and fair play; they would want that
Metrobank provide the very evidence with which to prosecute and build their case from the start. This
they may not be allowed to do.
Finally, the Court may not turn a blind eye to the possible consequences of such a move by petitioners.
As one of their causes of action in their Complaint, petitioners’ claim that they were not furnished with
specific documents relative to their loan agreement with Metrobank at the time they obtained the loan
and while it was outstanding. If Metrobank were to willingly provide petitioners with these documents
even before petitioners can present evidence to show that indeed they were never furnished the same,
any inferences generated from this would certainly not be useful for Metrobank. One may be that by
providing petitioners with these documents, Metrobank would be admitting that indeed, it did not
furnish petitioners with these documents prior to the signing of the loan agreement, and while the loan
was outstanding, in violation of the law.

68.

Consolidation of actions is expressly authorized under Section 1, Rule 31 of the 1997 Rules of Civil
Procedure, which states:

SECTION 1. Consolidation. – When actions involving a common question of law or fact or pending before
the court, it may order a joint hearing or trial of any or all the matters in issue in the actions; it may
order all the actions consolidated; and it may make such orders concerning proceedings therein as may
tend to avoid unnecessary costs or delay.

A court may order several actions pending before it to be tried together where they arise from the same
act, event or transaction, involve the same or like issues, and depend largely or substantially on the
same evidence, provided that the court has jurisdiction over the cases to be consolidated and that a
joint trial will not give one party an undue advantage or prejudice the substantial rights of any of the
parties.19 The obvious purpose of the rule allowing consolidation is to avoid multiplicity of suits to guard
against oppression or abuse, to prevent delays, to clear congested dockets, to simplify the work of the
trial court; in short the attainment of justice with the least expense and vexation to the parties
litigants.20 Consolidation of actions is addressed to the sound discretion of the court and its action in
consolidating will not be disturbed in the absence of manifest abuse of discretion. 21

G.R. NO. 144374 November 11, 2005

ROMEO TESTON, represented by Conrado Colarina, Petitioner,

vs.
DEVELOPMENT BANK OF THE PHILIPPINES, LAND BANK OF THE PHILIPPINES, and SECRETARY OF
AGRARIAN REFORM, Respondents.

DECISION

FACTS:

On November 3, 1993, petitioner Romeo Teston, through his attorney-in-fact, Conrado Colarina
(petitioner), filed a complaint against respondents Development Bank of the Philippines (DBP), Land
Bank of the Philippines (LBP) and Secretary of the Department of Agrarian Reform (DAR Secretary) for
the determination and payment of just compensation of two parcels of agricultural land, docketed as
SCC No. 4243.

In his complaint, petitioner alleges that: he is the owner of the said two parcels of agricultural land,
situated in Barangay Lantangan, Mandaon, Masbate, covered by Transfer Certificate of Title (TCT) No. T-
6176 and TCT No. T-6177, having purchased the same from DBP by way of Deed of Conditional Sale
dated July 15, 1987; on December 1, 1998, he, through Colarina, voluntarily offered to sell the said
parcels of land to the DAR Secretary, under the Comprehensive Agrarian Reform Law or Republic Act
(R.A.) No. 6657; the DAR Secretary accepted the voluntary offer to sell for a total price of
₱12,172,854.63; the DBP, without notifying him and ignoring the Conditional Sale, transferred the
parcels of land to the Government, through the DAR, for the coverage of the Comprehensive Agrarian
Reform Program (CARP) and immediate distribution to farmer beneficiaries; after execution of the Deed
of Conditional Sale in his favor, DBP has no more right to sell and transfer to the DAR the subject
properties, which were already previously voluntarily offered for sale by him and accepted by the DAR.

On the same day, Colarina filed his own personal complaint against the Government Service Insurance
System (GSIS), LBP and the DAR Secretary for the determination and payment of just compensation of
fifteen parcels of agricultural land, docketed as SCC No. 4242.

Colarina alleged that: the said fifteen parcels of agricultural land, situated in Barrio Malaran and
Lamintao, Municipality of Dimasalong (now Uson), Masbate, with a total land area of 32,398,264 square
meters, were mortgaged by the Associated Agricultural Activities, Inc. (AAA) to the GSIS as security for
the payment of its loan; when AAA failed to pay the loan, GSIS foreclosed the mortgage on the lands, at
public auction, GSIS was the highest bidder; on May 19, 1988, certificates of sale were issued and
registered in the name of GSIS; on December 8, 1988, he bought the lots from AAA; on April 25, 1989,
he voluntarily offered to sell said properties to the DAR under R.A. No. 6657; on May 6, 1989, he
informed GSIS of his offer to sell the properties to the DAR; subsequently, GSIS consolidated ownership
over the lots in its name; on November 5, 1990, GSIS executed a Deed of Transfer in favor of the DAR, by
virtue of which, TCT Nos. T-7882 to T-7891 were issued on December 11, 1990 in the name the Republic
of the Philippines by the Register of Deeds of Masbate; on April 16, 1991, TCT Nos. T-94 to T-103 were
issued in the names of farmer beneficiaries; despite repeated demands, the LBP and the DAR refused to
determine and pay the just compensation for the lots.

Both cases were raffled to RTC, Masbate, Branch 48.

In separate Answers in SCC No. 4243, respondents DBP, LBP and the DAR Secretary commonly averred
that petitioner has no cause of action since he was never the owner of the properties under TCT Nos. T-
6176 and T-6177 because DBP rescinded the Deed of Conditional Sale for nonpayment of the purchase
price.

On the other hand, in separate Answers in SCC No. 4242, respondents GSIS, LBP and DAR Secretary
contend that Colarina has no cause of action since he is not the owner of the lands he voluntarily offered
for CARP coverage; he only bought from AAA the right to redeem the property and he failed to exercise
such right on May 19, 1989, within the one-year period allowed by the law.
Without any order of the RTC expressly consolidating SCC No. 4242 and No. 4243, a notice of hearing of
both cases was sent to the parties by the clerk of the RTC. 2 In an Order dated November 16, 1994, the
RTC terminated the pre-trial in both cases. 3

Subsequently, or on September 19, 1995, GSIS filed a motion to dismiss for failure of the complaint to
state a cause of action. It argued that Colarina had no right to sell the lots to the DAR because what it
acquired from AAA was only the right to redeem the lots in question; failing to so redeem, he never
became the owner of said lots and therefore was not the real party-in-interest in the case. 4

In an Order dated December 8, 1995, the RTC directed Colarina to file his comment or opposition
thereto.5

In his opposition to the motion to dismiss, Colarina did not dispute the claim of GSIS that he failed to
redeem subject property within the allotted period. He simply declared that GSIS was a necessary party
in the case being the mortgagee of the lots. 6

No pleading, manifestation or motion was filed by the petitioner or respondents DBP, LBP and the DAR
Secretary concerning the motion to dismiss.

At the scheduled hearing of the motion to dismiss, the parties and counsels, except respondent DBP,
failed to appear despite notice. Only respondent LBP filed a telegraphic motion for postponement. The
RTC thus considered the motion to dismiss submitted for resolution. 7

On March 13, 1996, the RTC issued its Order dismissing the complaints in both cases for failure to state a
cause of action.8 It ratiocinated thus:

…As admitted in the complaint that the properties in question in Spec. Civil Case No. 4242 has been
foreclosed by the defendant Government Service Insurance System (GSIS). During redemption period
the plaintiff acquired the said properties from its original owner, AAA Inc. However, what the plaintiff
had actually acquired then was only the owner’s right of redemption within the reglamentary (sic)
period. … So when the plaintiff made a voluntary offer to sell the properties in question to the
Department of Agrarian Reform (DAR) he had no personality for the same inasmuch as he is not the real
party in interest.

While the properties involved in Spec. Civil Case No. 4243 are concerned, T-6176 and T-6177 the same
were allegedly acquired by plaintiff Romeo Teston from defendant DBP by virtue of a deed of
conditional sale dated July 15, 1987, with DBP as conditional vendor and Romeo Teston as conditional
vendee. However the said conditional sale was rescinded in 1990 in view of plaintiff’s failure to update
his account, who has been informed of said rescission per letter of DBP dated September 24, 1990. …

The DBP in transferring the properties in question to the DAR was only complying (sic) Executive Order
405 and 407 which provide the surrender to the DAR of all agricultural landholdings of the Government
financial institution including that of defendant DBP. So the plaintiff, Romeo Teston has no right
whatsoever to make any voluntary offer to sell the properties in question to the DAR much more to ask
the Court (sic) determination and payment of just compensation. 9
On March 25, 1996, a motion for reconsideration 10 was filed by Pejo Buenviaje & Associates, the
common counsel of petitioner and Colarina, but it was denied by the RTC in its Order dated April 24,
1996.11

Dissatisfied, petitioner and Colarina filed separate petitions for review with the CA, docketed as CA-G.R.
SP Nos. 4060912 and 40610, respectively.

On October 28, 1996, the CA rendered its decision on Colarina’s appeal in CA-G.R. SP No. 40610, setting
aside the RTC’s Order dated March 13, 1996, which dismissed SCC No. 4242. 13 However, on petition for
review on certiorari with this Court by GSIS, entitled Government Service Insurance System vs. Court of
Appeals, docketed as G.R. No. 128118, the Court, on February 15, 2002, set aside the CA decision and
reinstated the RTC’s Order dated March 13, 1996, which dismissed SCC No. 4242. 14

Meanwhile, on March 9, 2000, the CA rendered judgment in CA-G.R. SP No. 40609, affirming in toto the
RTC’s order which dismissed SCC No. 4243. 15 The CA held that: the RTC is given the option to have a joint
hearing or to order consolidation if the motion involves a common question of law or fact, pursuant to
Section 1, Rule 32 of the 1997 Rules of Civil Procedure; since SCC Nos. 4242 and 4243 have a common
question of law and fact, which is the determination and payment of just compensation, the joint
hearing conducted by the RTC is proper and valid; the rule clearly gives the RTC discretion to decide
what course of action to take, that is, whether to have joint hearing/trial or to order the cases
consolidated; furthermore, the Court may make such orders concerning proceedings therein to avoid
unnecessary costs or delay and, in this case, to order the dismissal of both cases.

Petitioner filed a motion for reconsideration but it was denied by the CA in its Resolution dated August 4,
2000.

Hence, the present petition for review on certiorari anchored on a sole error, to wit:

ISSUE: whether the two cases were consolidated and involved common questions of law and facts.

RULNG:

The Court rules in favor of the petitioner.

Consolidation of actions is expressly authorized under Section 1, Rule 31 of the 1997 Rules of Civil
Procedure, which states:

SECTION 1. Consolidation. – When actions involving a common question of law or fact or pending before
the court, it may order a joint hearing or trial of any or all the matters in issue in the actions; it may
order all the actions consolidated; and it may make such orders concerning proceedings therein as may
tend to avoid unnecessary costs or delay.

A court may order several actions pending before it to be tried together where they arise from the same
act, event or transaction, involve the same or like issues, and depend largely or substantially on the
same evidence, provided that the court has jurisdiction over the cases to be consolidated and that a
joint trial will not give one party an undue advantage or prejudice the substantial rights of any of the
parties.19 The obvious purpose of the rule allowing consolidation is to avoid multiplicity of suits to guard
against oppression or abuse, to prevent delays, to clear congested dockets, to simplify the work of the
trial court; in short the attainment of justice with the least expense and vexation to the parties
litigants.20 Consolidation of actions is addressed to the sound discretion of the court and its action in
consolidating will not be disturbed in the absence of manifest abuse of discretion. 21

In the present case, although both cases which were raffled to the same branch of RTC Masbate (Branch
48), involve the prayer for determination and payment of just compensation, and petitioner and
Colarina are represented by the same counsel, Pejo Buenviaje & Associates, and respondents LBP and
DAR Secretary are common defendants, these are not sufficient justifications for joint trial and joint
order dismissing both cases. It cannot be denied that there is no real identity of parties, facts or rights
asserted. SCC No. 4242 was instituted by Colarina in his own name principally against GSIS and concerns
fifteen parcels of agricultural land in Barrio Malaran and Lamintao, Municipality of Dimasalong (now
Uson), Masbate, while SCC No. 4243 was instituted by petitioner represented by Colarina principally
against DBP and concerns two parcels of agricultural land in Barangay Lantangan, Mandaon, Masbate.
Furthermore, a perusal of the complaints in SCC Nos. 4242 and 4243 plainly shows that Colarina claims
ownership as redemptioner while petitioner claims ownership as buyer. Clearly, the causes of action in
the two cases arose from different events or transactions, involve different issues, and ultimately will
depend on different evidence.

Therefore, the RTC exceeded its jurisdiction in setting the joint trial of the two cases. Consolidation
should be denied when prejudice would result to any of the parties or would cause complications, delay,
cut off, or restrict the rights of a party,22 as in this case.

In view of the improper consolidation, the RTC judge was equally less than judicious in dismissing SCC
No. 4243 based on a motion to dismiss filed by GSIS. Notably, the motion to dismiss was filed by GSIS
only with respect to the complaint in SCC No. 4242. The claim of GSIS that Colarina never became the
owner of the fifteen parcels of land, since he failed to exercise his right of redemption, is totally alien
from the claim of respondent DBP against petitioner with respect to two different parcels of land
covered by a deed of conditional sale, which was allegedly rescinded by DBP, an issue not raised by the
DBP in said motion to dismiss.

Furthermore, it must be noted that only Colarina was directed by the RTC to file his comment or
opposition to the motion to dismiss of GSIS. 23 No pleading, manifestation or motion, was filed by the
petitioner or respondents DBP, LBP or the DAR Secretary concerning the motion to dismiss. And, as
already stated, at the scheduled hearing on the motion to dismiss, all the parties and counsels, except
herein respondent DBP, failed to appear despite notice. 24 Even at that stage, nothing was heard from
respondent DBP; it did not move for the dismissal of the complaint against it.

Accordingly, the RTC can not, motu proprio or on its own initiative, consider the ground of lack of cause
of action on the part of petitioner when it was not raised by DBP in the motion to dismiss filed by GSIS,
without running afoul of petitioner’s constitutionally protected right to due process. Without any iota of
doubt, due process of law lies at the foundation of a civilized society which accords paramount
importance to justice and fairness. It has to be accorded the weight it deserves.

69.

Rule 33, Section 1 of the 1997 Rules of Civil Procedure provides:

 Section 1. Demurrer to evidence.––After the plaintiff has completed the presentation of his
evidence, the defendant may move for dismissal on the ground that upon the facts and the law
the plaintiff has shown no right to relief. If his motion is denied, he shall have the right to
present evidence. If the motion is granted but on appeal the order of dismissal is reversed he
shall be deemed to have waived the right to present evidence.

In Gutib v. Court of Appeals, we defined a demurrer to evidence as "an objection by one of the parties in
an action, to the effect that the evidence which his adversary produced is insufficient in point of law,
whether true or not, to make out a case or sustain the issue." 21

What should be resolved in a motion to dismiss based on a demurrer to evidence is whether the plaintiff
is entitled to the relief based on the facts and the law. The evidence contemplated by the rule on
demurrer is that which pertains to the merits of the case, excluding technical aspects such as capacity to
sue.22 However, the plaintiff’s evidence should not be the only basis in resolving a demurrer to evidence.
The "facts" referred to in Section 8 should include all the means sanctioned by the Rules of Court in
ascertaining matters in judicial proceedings. These include judicial admissions, matters of judicial notice,
stipulations made during the pre-trial and trial, admissions, and presumptions, the only exclusion being
the defendant’s evidence.

Section 8. How to contest such documents.––When an action or defense is founded upon a

written instrument, copied in or attached to the corresponding pleading as provided in the
preceding section, the genuineness and due execution of the instrument shall be deemed
admitted unless the adverse party, under oath, specifically denies them, and sets forth, what he
claims to be the facts; but the requirement of an oath does not apply when the adverse party
does not appear to be a party to the instrument or when compliance with an order for an
inspection of the original instrument is refused.

Since respondent failed to file a Reply, in effect, respondent admitted the genuineness and due
execution of said documents. This judicial admission should have been considered by the appellate court
in resolving the demurrer to evidence. Rule 129, Section 4 of the Rules of Court provides:

Section 4. Judicial admissions.––An admission, verbal or written, made by a party in the course
of the proceeding in the same case, does not require proof. The admission may be contradicted
only by showing that it was made through palpable mistake or that no such admission was
made.

On appeal to the CA, respondent claimed that even though it failed to file a Reply, all the new matters
alleged in the Answer are deemed controverted anyway, pursuant to Rule 6, Section 10:

Section 10. Reply.––A reply is a pleading, the office or function of which is to deny, or allege
facts in denial or avoidance of new matters alleged by way of defense in the answer and thereby
join or make issue as to such new matters. If a party does not file such reply, all the new matters
alleged in the answer are deemed controverted.

We agree with petitioner. Rule 8, Section 8 specifically applies to actions or defenses founded upon a
written instrument and provides the manner of denying it. It is more controlling than Rule 6, Section 10
which merely provides the effect of failure to file a Reply. Thus, where the defense in the Answer is
based on an actionable document, a Reply specifically denying it under oath must be made; otherwise,
the genuineness and due execution of the document will be deemed admitted. 23 Since respondent failed
to deny the genuineness and due execution of the Dacion and Confirmation Statement under oath, then
these are deemed admitted and must be considered by the court in resolving the demurrer to evidence.
We held in Philippine American General Insurance Co., Inc. v. Sweet Lines, Inc. that "[w]hen the due
execution and genuineness of an instrument are deemed admitted because of the adverse party’s
failure to make a specific verified denial thereof, the instrument need not be presented formally in
evidence for it may be considered an admitted fact." 24

G.R. No. 150731             September 14, 2007

CASENT REALTY DEVELOPMENT CORP., petitioner, vs. PHILBANKING CORPORATION, respondent.

Facts

In 1984, petitioner Casent Realty Development Corporation executed two promissory notes in favor of
Rare Realty Corporation (Rare Realty) involving the amounts of PhP 300,000 (PN No. 84-04) and PhP
681,500 (PN No. 84-05). It was agreed in PN No. 84-04 that the loan it covered would earn an interest of
36% per annum and a penalty of 12% in case of non-payment by June 27, 1985, while the loan covered
by PN No. 84-05 would earn an interest of 18% per annum and 12% penalty if not paid by June 25,
1985.4 On August 8, 1986, these promissory notes were assigned to respondent Philbanking Corporation
through a Deed of Assignment.5

Respondent alleged that despite demands, petitioner failed to pay the promissory notes upon maturity
such that its obligation already amounted to PhP 5,673,303.90 as of July 15, 1993. Respondent filed on
July 20, 1993 a complaint before the Makati City RTC for the collection of said amount. In its Answer, 6
petitioner raised the following as special/affirmative defenses:

1. The complaint stated no cause of action or if there was any, the same was barred by estoppel,
statute of frauds, statute of limitations, laches, prescription, payment, and/or release;

2. On August 27, 1986, the parties executed a Dacion en Pago7 (Dacion) which ceded and
conveyed petitioner’s property in Iloilo City to respondent, with the intention of totally
extinguishing petitioner’s outstanding accounts with respondent. Petitioner presented a
Confirmation Statement8 dated April 3, 1989 issued by respondent stating that petitioner had no
loans with the bank as of December 31, 1988.

3. Petitioner complied with the condition in the Dacion regarding the repurchase of the property
since the obligation was fully paid. Respondent sent confirmation statements in the latter
months of 1989, which showed that petitioner had no more outstanding loan; and

4. Assuming that petitioner still owed respondent, the latter was already estopped since in
October 1988, it reduced its authorized capital stock by 50% to wipe out a deficit of PhP
41,265,325.12.9
Thus, petitioner, by way of compulsory counterclaim, alleged that it made an overpayment of
approximately PhP 4 million inclusive of interest based on Central Bank Reference Lending Rates on
dates of overpayment. Petitioner further claimed moral and exemplary damages and attorney’s fee,
amounting to PhP 4.5 million plus the costs of suit as a consequence of respondent’s insistence on
collecting.10

The parties failed to reach an amicable settlement during the pre-trial conference. Thereafter,
respondent presented its evidence and formally offered its exhibits. Petitioner then filed a Motion for
Judgment on Demurrer to the Evidence, 11 pointing out that the plaintiff’s failure to file a Reply to the
Answer which raised the Dacion and Confirmation Statement constituted an admission of the
genuineness and execution of said documents; and that since the Dacion obliterated petitioner’s
obligation covered by the promissory notes, the bank had no right to collect anymore.

Respondent subsequently filed an Opposition 12 which alleged that: (1) the grounds relied upon by
petitioner in its demurrer involved its defense and not insufficiency of evidence; (2) the Dacion and
Confirmation Statement had yet to be offered in evidence and evaluated; and (3) since respondent
failed to file a Reply, then all the new matters alleged in the Answer were deemed controverted. 1

The Ruling of the Regional Trial Court

The trial court ruled in favor of petitioner and dismissed the complaint through the May 12, 1999 Order.

The Ruling of the Court of Appeals

On appeal, respondent alleged that the trial court gravely erred because the promissory notes were not
covered by the Dacion, and that respondent was able to prove its causes of action and right to relief by
overwhelming preponderance of evidence. It explained that at the time of execution of the Dacion, the
subject of the promissory notes was the indebtedness of petitioner to Rare Realty and not to the
"Bank"––the party to the Dacion. It was only in 1989 after Rare Realty defaulted in its obligation to
respondent when the latter enforced the security provided under the Deed of Assignment by trying to
collect from petitioner, because it was only then that petitioner became directly liable to respondent. It
was also for this reason that the April 3, 1989 Confirmation Statement stated that petitioner had no
obligations to repondent as of December 31, 1988. On the other hand, petitioner claimed that the Deed
of Assignment provided that Rare Realty lost its rights, title, and interest to directly proceed against
petitioner on the promissory notes since these were transferred to respondent. Petitioner reiterated
that the Dacion covered all conceivable amounts including the promissory notes. 15

The appellate court ruled that under the Rules of Civil Procedure, the only issue to be resolved in a
demurrer is whether the plaintiff has shown any right to relief under the facts presented and the law.
Thus, it held that the trial court erred when it considered the Answer which alleged the Dacion, and that
its genuineness and due execution were not at issue. It added that the court a quo should have resolved
whether the two promissory notes were covered by the Dacion, and that since petitioner’s demurrer
was granted, it had already lost its right to present its evidence. 16

The CA found that under the Deed of Assignment, respondent clearly had the right to proceed against
the promissory notes assigned by Rare Realty. Thus, the CA ruled, as follows:
 WHEREFORE, premises considered, the Order dated May 12, 1999 of the Regional Trial Court,
National Capital Judicial Region, Branch 145, Makati City is hereby REVERSED and SET ASIDE.

Petitioner filed a Motion for Reconsideration 18 which was denied by the CA in its November 7, 2001
Resolution.19

The Issues

WHETHER OR NOT THE COURT OF APPEALS ERRED IN EXCLUDING THE PETITIONER’S

AFFIRMATIVE DEFENSES IN ITS ANSWER IN RESOLVING A DEMURRER TO EVIDENCE; AND

WHETHER OR NOT PETITIONER IS LIABLE TO PAY THE RESPONDENT

In other words, the questions posed by this case are:

1. Does respondent’s failure to file a Reply and deny the Dacion and Confirmation Statement
under oath constitute a judicial admission of the genuineness and due execution of these
documents?

2. Should judicial admissions be considered in resolving a demurrer to evidence? If yes, are the
judicial admissions in this case sufficient to warrant the dismissal of the complaint?

Petitioner asserts that its obligation to pay under the promissory notes was already extinguished as
evidenced by the Dacion and Confirmation Statement. Petitioner submits that when it presented these
documents in its Answer, respondent should have denied the same under oath. Since respondent failed
to file a Reply, the genuineness and due execution of said documents were deemed admitted, thus also
admitting that the loan was already paid. On the other hand, respondent states that while it failed to file
a Reply, all the new matters were deemed controverted pursuant to Section 10, Rule 6 of the Rules of
Court. Also, the loan which was covered by the Dacion refers to another loan of petitioner amounting to
PhP 3,921,750 which was obtained directly from the respondent as of August 1986. 20 Furthermore,
petitioner argued that assuming respondent admitted the genuineness and due execution of the Dacion
and Confirmation Statement, said admission was not all-encompassing as to include the allegations and
defenses pleaded in petitioner’s Answer.

The Court’s Ruling

The petition is partly meritorious.

Rule 33, Section 1 of the 1997 Rules of Civil Procedure provides:

Section 1. Demurrer to evidence.––After the plaintiff has completed the presentation of his
evidence, the defendant may move for dismissal on the ground that upon the facts and the law
the plaintiff has shown no right to relief. If his motion is denied, he shall have the right to
present evidence. If the motion is granted but on appeal the order of dismissal is reversed he
shall be deemed to have waived the right to present evidence.
In Gutib v. Court of Appeals, we defined a demurrer to evidence as "an objection by one of the parties in
an action, to the effect that the evidence which his adversary produced is insufficient in point of law,
whether true or not, to make out a case or sustain the issue." 21

What should be resolved in a motion to dismiss based on a demurrer to evidence is whether the plaintiff
is entitled to the relief based on the facts and the law. The evidence contemplated by the rule on
demurrer is that which pertains to the merits of the case, excluding technical aspects such as capacity to
sue.22 However, the plaintiff’s evidence should not be the only basis in resolving a demurrer to evidence.
The "facts" referred to in Section 8 should include all the means sanctioned by the Rules of Court in
ascertaining matters in judicial proceedings. These include judicial admissions, matters of judicial notice,
stipulations made during the pre-trial and trial, admissions, and presumptions, the only exclusion being
the defendant’s evidence.

Petitioner points out that the defense of Dacion and Confirmation Statement, which were submitted in
the Answer, should have been specifically denied under oath by respondent in accordance with Rule 8,
Section 8 of the Rules of Court:

Section 8. How to contest such documents.––When an action or defense is founded upon a

written instrument, copied in or attached to the corresponding pleading as provided in the
preceding section, the genuineness and due execution of the instrument shall be deemed
admitted unless the adverse party, under oath, specifically denies them, and sets forth, what he
claims to be the facts; but the requirement of an oath does not apply when the adverse party
does not appear to be a party to the instrument or when compliance with an order for an
inspection of the original instrument is refused.

Since respondent failed to file a Reply, in effect, respondent admitted the genuineness and due
execution of said documents. This judicial admission should have been considered by the appellate court
in resolving the demurrer to evidence. Rule 129, Section 4 of the Rules of Court provides:

Section 4. Judicial admissions.––An admission, verbal or written, made by a party in the course
of the proceeding in the same case, does not require proof. The admission may be contradicted
only by showing that it was made through palpable mistake or that no such admission was
made.

On appeal to the CA, respondent claimed that even though it failed to file a Reply, all the new matters
alleged in the Answer are deemed controverted anyway, pursuant to Rule 6, Section 10:

Section 10. Reply.––A reply is a pleading, the office or function of which is to deny, or allege
facts in denial or avoidance of new matters alleged by way of defense in the answer and thereby
join or make issue as to such new matters. If a party does not file such reply, all the new matters
alleged in the answer are deemed controverted.

We agree with petitioner. Rule 8, Section 8 specifically applies to actions or defenses founded upon a
written instrument and provides the manner of denying it. It is more controlling than Rule 6, Section 10
which merely provides the effect of failure to file a Reply. Thus, where the defense in the Answer is
based on an actionable document, a Reply specifically denying it under oath must be made; otherwise,
the genuineness and due execution of the document will be deemed admitted. 23 Since respondent failed
to deny the genuineness and due execution of the Dacion and Confirmation Statement under oath, then
these are deemed admitted and must be considered by the court in resolving the demurrer to evidence.
We held in Philippine American General Insurance Co., Inc. v. Sweet Lines, Inc. that "[w]hen the due
execution and genuineness of an instrument are deemed admitted because of the adverse party’s
failure to make a specific verified denial thereof, the instrument need not be presented formally in
evidence for it may be considered an admitted fact." 24

In any case, the CA found that:

From the facts of the case, the genuineness and due execution of the Dacion en Pago were
never put to issue. Genuineness merely refers to the fact that the signatures were not falsified
and/or whether there was no substantial alteration to the document. While due execution
refers to whether the document was signed by one with authority. 25

The more important issue now is whether the Dacion and Confirmation Statement sufficiently prove
that petitioner’s liability was extinguished. Respondent asserts that the admission of the genuineness
and due execution of the documents in question is not all encompassing as to include admission of the
allegations and defenses pleaded in petitioner’s Answer. In executing the Dacion, the intention of the
parties was to settle only the loans of petitioner with respondent, not the obligation of petitioner arising
from the promissory notes that were assigned by Rare Realty to respondent.

We AGREE.

Admission of the genuineness and due execution of the Dacion and Confirmation Statement does not
prevent the introduction of evidence showing that the Dacion excludes the promissory notes. Petitioner,
by way of defense, should have presented evidence to show that the Dacion includes the promissory
notes.

70. METROPOLITAN BANK & TRUST COMPANY, petitioner, vs.  COURT OF APPEALS and ALFONSO
ROXAS CHUA, respondents.
DOCTRINE:

An interlocutory order does not terminate or finally dismiss or finally dispose of the case, but leaves
something to be done by the court before the case is finally decided on the merits. It refers to
something between the commencement and end of the suit which decides some point or matter but it
is not the final decision on the whole controversy. Conversely, a final order is one which leaves to the
court nothing more to do to resolve the case. The test to ascertain whether an order is interlocutory,
or final is: Does it leave something to be done in the trial court with respect to the merits of the
case? If it does, it is interlocutory; if it does not, it is final.

FACTS: Metrobank and Trust Company (Metrobank for short) brought an action for a sum of money
against private respondents Pacific Multi Commercial Corporation and Alfonso Roxas Chua, Jr. on
November 25, 1982. Private respondents failed to file their answer and were, for that reason, declared
in default.
On May 26, 1983, the trial court rendered judgment in favor of Metrobank. The Decision became final
and executory. The sheriff sold at public auction respondent Roxas Chuas Certificate of Ownership No.
809 in the Club Filipino to the Metrobank as the highest bidder. A certificate of sale was issued to the
Metrobank. However, Alfonso Roxas Chua, Jr. filed with the trial court a motion to hold in abeyance the
delivery to Metrobank of the certificate of ownership and to declare the sale to Metrobank as null and
void on the ground that the certificate of ownership was the conjugal property of respondent Roxas
Chua, Jr. and his wife Kiang Ming Chu. Metrobank opposed the private respondent’s motion.

The trial court issued an order denying Chua’s motion to hold in abeyance the delivery of [the]
certificate of ownership to Metrobank and to declare the sale as null and void.  Alfonso Roxas Chua, Jr.
moved for a reconsideration, but his motion was denied by the court.

Metrobank moved to strike out or expunge from the record the notice of appeal of respondent Roxas
Chua, Jr. on the ground that private respondent, having been declared in default, ha[d] no standing to
file the notice. However, the court, in its order dated April 10, 1992 denied the petitioners motion.

Metrobank moved for reconsideration but again [its] motion was denied. Hence, this petition for
certiorari.

Relying on Section 2, Rule 41 of the pre-1997 Rules of Court, the CA ruled that a defendant may
appeal a judgment of default without need to set aside the order declaring him in default.
The CA also disallowed the new grounds raised before it by petitioner. More important, the
appellate court held that those grounds were not proper in a petition for certiorari, because they did not
involve grave abuse of discretion or jurisdiction. 

ISSUE: Whether Alfonso Roxas Chua can appeal from the denial of the Motion to hold in abeyance the
delivery of the Certificate of Sale and to declare the sale void.

RULING: A party who has been declared in default may likewise appeal from the judgment rendered
against him as contrary to the evidence or to the law, even if no petition for relief to set aside the order
of default has been presented by him in accordance with Rule 38.

The above provision clearly states that one who has been declared in default may appeal, without
need of an order lifting the default. Hence, the mere fact that the trial court has not lifted its default
order does not bar herein respondent from filing an appeal.
Decisions and final orders are appealable. Because the RTC Orders were final, not merely
interlocutory, the CA did not err in allowing respondents appeal.
An interlocutory order does not terminate or finally dismiss or finally dispose of the case, but leaves
something to be done by the court before the case is finally decided on the merits. It refers to
something between the commencement and end of the suit which decides some point or matter but it
is not the final decision on the whole controversy. Conversely, a final order is one which leaves to the
court nothing more to do to resolve the case. The test to ascertain whether an order is interlocutory,
or final is: Does it leave something to be done in the trial court with respect to the merits of the
case? If it does, it is interlocutory; if it does not, it is final.
 In the present case, the April 10, 1992 Order denied private respondents Motion to hold in
abeyance the delivery of the Certificate of Sale of his Club Filipino share and to declare the sale
void. After rendering the Order, the trial court did not need to do anything more to settle the rights of
the parties. Upon the affirmation of the validity of the sale, the Certificate of Sale was to be delivered to
petitioner as the new owner. Indeed, while appeal does not lie against the execution of a judgment, it is
available in case of an irregular implementation of a writ of execution. This was the factual scenario in
the present case.
WHEREFORE, the Petition is hereby DISMISSED and the assailed Decision and Resolution
AFFIRMED. Costs against petitioner.

71. DOMINGO NEYPES, ET AL. vs. COURT OF APPEALS, ET AL.

G.R. No. 141524  (September 14, 2005)
DOCTRINE:  A party-litigant should be allowed a fresh period of 15 days within which to file a notice of
appeal in the RTC, counted from receipt of the order dismissing or denying a motion for new trial or
motion for reconsideration, so as to standardize the appeal periods provided in the Rules of Court and
do away with the confusion as to when the 15-day appeal period should be counted. 

FACTS: Petitioners filed an action for annulment of judgment and titles of land and/or reconveyance
and/or reversion with preliminary injunction before the RTC against the private respondents. Later, in an
order, the trial court dismissed petitioners’ complaint on the ground that the action had already
prescribed. Petitioners allegedly received a copy of the order of dismissal on March 3, 1998 and, on the
15th day thereafter or on March 18, 1998, filed a motion for reconsideration. On July 1, 1998, the trial
court issued another order dismissing the motion for reconsideration which petitioners received on July
22, 1998. Five days later, on July 27, 1998, petitioners filed a notice of appeal and paid the appeal fees
on August 3, 1998.

On August 4, 1998, the court a quo denied the notice of appeal, holding that it was filed eight days late.
This was received by petitioners on July 31, 1998. Petitioners filed a motion for reconsideration but this
too was denied in an order dated September 3, 1998. Via a petition for certiorari and mandamus under
Rule 65, petitioners assailed the dismissal of the notice of appeal before the CA. In the appellate court,
petitioners claimed that they had seasonably filed their notice of appeal. They argued that the 15-day
reglementary period to appeal started to run only on July 22, 1998 since this was the day they received
the final order of the trial court denying their motion for reconsideration. When they filed their notice of
appeal on July 27, 1998, only five days had elapsed and they were well within the reglementary period
for appeal. On September 16, 1999, the CA dismissed the petition. It ruled that the 15-day period to
appeal should have been reckoned from March 3, 1998 or the day they received the February 12, 1998
order dismissing their complaint. According to the appellate court, the order was the “final order”
appealable under the Rules.

ISSUES: (1) Whether or not receipt of a final order triggers the start of the 15-day reglmentary period to
appeal, the February 12, 1998 order dismissing the complaint or the July 1, 1998 order dismissing the
Motion for Reconsideration.

(2) Whether or not petitioners file their notice of appeal on time.

RULING:

(1)  The July 1, 1998 order dismissing the motion for reconsideration should be deemed as the final
order. In the case of Quelnan v. VHF Philippines, Inc., the trial court declared petitioner non-suited and
accordingly dismissed his complaint. Upon receipt of the order of dismissal, he filed an omnibus motion
to set it aside. When the omnibus motion was filed, 12 days of the 15-day period to appeal the order
had lapsed. He later on received another order, this time dismissing his omnibus motion. He then filed
his notice of appeal. But this was likewise dismissed ― for having been filed out of time. The court a quo
ruled that petitioner should have appealed within 15 days after the dismissal of his complaint since this
was the final order that was appealable under the Rules. The SC reversed the trial court and declared
that it was the denial of the motion for reconsideration of an order of dismissal of a complaint which
constituted the final order as it was what ended the issues raised there. This pronouncement was
reiterated in the more recent case of Apuyan v. Haldeman et al. where the SC again considered the
order denying petitioner’s motion for reconsideration as the final order which finally disposed of the
issues involved in the case. Based on the aforementioned cases, the SC sustained petitioners’ view that
the order dated July 1, 1998 denying their motion for reconsideration was the final order contemplated
in the Rules.

(2)    YES. To standardize the appeal periods provided in the Rules and to afford litigants fair opportunity
to appeal their cases, the Court deems it practical to allow a fresh period of 15 days within which to file
the notice of appeal in the RTC, counted from receipt of the order dismissing a motion for a new trial or
motion for reconsideration. Henceforth, this “fresh period rule” shall also apply to Rule 40, Rule 42, Rule
43 and Rule 45. The new rule aims to regiment or make the appeal period uniform, to be counted from
receipt of the order denying the motion for new trial, motion for reconsideration (whether full or
partial) or any final order or resolution.

The SC thus held that petitioners seasonably filed their notice of appeal within the fresh period of 15
days, counted from July 22, 1998 (the date of receipt of notice denying their motion for
reconsideration). This pronouncement is not inconsistent with Rule 41, Section 3 of the Rules which
states that the appeal shall be taken within 15 days from notice of judgment or final order appealed
from. The use of the disjunctive word “or” signifies disassociation and independence of one thing from
another. It should, as a rule, be construed in the sense in which it ordinarily implies. Hence, the use of
“or” in the above provision supposes that the notice of appeal may be filed within 15 days from the
notice of judgment or within 15 days from notice of the “final order,” which we already determined to
refer to the July 1, 1998 order denying the motion for a new trial or reconsideration.

Neither does this new rule run counter to the spirit of Section 39 of BP 129 which shortened the appeal
period from 30 days to 15 days to hasten the disposition of cases. The original period of appeal (in this
case March 3-18, 1998) remains and the requirement for strict compliance still applies. The fresh period
of 15 days becomes significant only when a party opts to file a motion for new trial or motion for
reconsideration. In this manner, the trial court which rendered the assailed decision is given another
opportunity to review the case and, in the process, minimize and/or rectify any error of judgment. While
we aim to resolve cases with dispatch and to have judgments of courts become final at some definite
time, we likewise aspire to deliver justice fairly.

To recapitulate, a party litigant may either file his notice of appeal within 15 days from receipt of the
RTC’s decision or file it within 15 days from receipt of the order (the “final order”) denying his motion for
new trial or motion for reconsideration. Obviously, the new 15-day period may be availed of only if
either motion is filed; otherwise, the decision becomes final and executory after the lapse of the original
appeal period provided in Rule 41, Section 3. Petitioners here filed their notice of appeal on July 27,
1998 or five days from receipt of the order denying their motion for reconsideration on July 22, 1998.
Hence, the notice of appeal was well within the fresh appeal period of 15 days, as already discussed.

NOTE:

The “FRESH PERIOD RULE” do not apply to Rule 64 (Review of Judgments and Final Orders or Resolutions
of the Commission on Elections and the Commission on Audit) because Rule 64 is derived from the
Constitution. It is likewise doubtful whether it will apply to criminal cases.

72. MADARANG VS MORALES

G.R. No. 199283               June 9, 2014
JULIET VITUG MADARANG and ROMEO BARTOLOME, represented by his attorneys-in-fact and acting
in their personal capacities, RODOLFO and RUBY BARTOLOME, Petitioners, 
vs.
SPOUSES JESUS D. MORALES and CAROLINA N. MORALES, Respondents.
DOCTRINE:

A petition for relief from judgment is an equitable relief granted only under exceptional
circumstances. To set aside a judgment through a petition for relief, parties must file the petition within
60 days from notice of the judgment and within six (6) months after the judgment or final order was
entered; otherwise, the petition shall be dismissed outright.

If the petition for relief is filed on the ground of excusable negligence of counsel, parties must show that
their counsel’s negligence could not have been prevented using ordinary diligence and prudence.  The
mere allegation that there is excusable negligence simply because counsel was 80 years old is a
prejudicial slur to senior citizens. It is based on an unwarranted stereotype of people in their advanced
years. It is as empty as the bigotry that supports it.

FACTS:

The Spouses Morales alleged that on March 23, 1993, Spouses Nicanor and Luciana Bartolome loaned
₱500,000.00 from them. The period to pay lapsed without the Spouses Bartolome having paid their
loan. Spouses Bartolome died. The Spouses Morales, thus, filed a complaint for judicial foreclosure of
the Bago Bantay property against Juliet Vitug Madarang, Romeo Bartolome, and the Spouses Rodolfo
and Ruby Anne Bartolome.

The Spouses Morales sued Madarang as the latter allegedly represented herself as Lita Bartolome and
convinced the Spouses Morales to lend money to the Spouses Bartolome. Romeo and Rodolfo
Bartolome were sued in their capacities as legitimate heirs of the Spouses Bartolome. Ruby Anne
Bartolome is Rodolfo Bartolome’s wife.

In its decision, the trial court ordered defendants to pay the Spouses Morales ₱500,000.00 plus 7%
interest per month and costs of suit within 90 days but not more than 120 days from entry of judgment.
Should defendants fail to pay, the Bago Bantay property shall be sold at public auction to satisfy the
judgment.

On September 24, 2010,defendants filed a petition for relief from judgment, blaming their 80-year-old
lawyer who failed to file the notice of appeal within the reglementary period. They argued that Atty.
Tugonon’s failure to appeal within the reglementary period was a mistake and an excusable negligence
due to their former lawyer’s old age:

15. Undersigned Petitioner’s counsel is already eighty (80) years of age and the lapses and failure of
their counsel to take appropriate steps immediately for the protection of his client is a mistake and an
excusable negligence due to the latter’s age and should not be attributable to undersigned defendants.

The trial court denied the petition for relief from judgment. The trial court held that the petition for
relief was filed beyond 60 days from the finality of the trial court’s decision, contrary to Section 3, Rule
38 of the 1997 Rules of Civil Procedure.

On July 13, 2011, Madarang, Romeo, and Rodolfo and Ruby Anne Bartolome filed the petition for
certiorari with the Court of Appeals. In its resolution dated July 27, 2011, the appellate court denied
outright the petition for certiorari. The Court of Appeals found that petitioners did not file a motion for
reconsideration of the order denying the petition for relief from judgment, a prerequisite for filing a
petition for certiorari.

Petitioners filed a motion for reconsideration that the Court of Appeals denied in its resolution dated
November 10, 2011. Petitioners filed the petition for review on certiorari with this court. They argue
that they need not file a motion for reconsideration of the order denying their petition for relief from
judgment because the questions they raised in the petition for relief were pure questions of law. They
cite Progressive Development Corporation, Inc. v. Court of Appeals 23 as authority.

ISSUE: Whether the failure of petitioners’ former counsel to file the notice of appeal within the
reglementary period is excusable negligence.

RULING: The petition lacks merit.

This court agrees that the petition for relief from judgment was filed out of time. However, the trial
court erred in counting the 60-day period to file a petition for relief from the date of finality of the trial
court’s decision. Rule 38, Section 3 of the 1997 Rules of Civil Procedure is clear that the 60-day period
must be counted after petitioner learns of the judgment or final order. The period counted from the
finality of judgment or final order is the six-month period. Section 3, Rule 38 of the 1997 Rules of Civil
Procedure states:

Sec. 3. Time for filing petition; contents and verification.– A petition provided for in either of the
preceding sections of this Rule must be verified, filed within sixty (60) days after petitioner learns of the
judgment, final order, or other proceeding to be set aside, and not more than six (6) months after such
judgment or final order was entered, or such proceeding was taken; and must be accompanied with
affidavits, showing the fraud, accident, mistake or excusable negligence relied upon and the facts
constituting the petitioner’s good and substantial cause of action or defense, as the case may be.

The double period required under Section 3, Rule 38 is jurisdictional and should be strictly complied
with. A petition for relief from judgment filed beyond the reglementary period is dismissed outright. This
is because a petition for relief from judgment is an exception to the public policy of immutability of final
judgments.

A party filing a petition for relief from judgment must strictly comply with two (2) reglementary periods:
(a) the petition must be filed within sixty (60) days from knowledge of the judgment, order or other
proceeding to be set aside; and (b) within a fixed period of six (6) months from entry of such judgment,
order or other proceeding. Strict compliance with these periods is required because provision for a
petition for relief from judgment is a final act of liberality on the part of the State, which remedy cannot
be allowed to erode any further the fundamental principle that a judgment, order or proceeding must,
at some definite time, attain finality in order at last to put an end to litigation. In Turqueza v. Hernando,
this Court stressed once more that:

. . . the doctrine of finality of judgments is grounded on fundamental considerations of public policy and
sound practice that at the risk of occasional error, the judgments of courts must become final at some
definite date fixed by law. The law gives an exception or ‘last chance’ of a timely petition for relief from
judgment within the reglementary period (within 60 days from knowledge and 6 months from entry of
judgment) under Rule 38, supra, but such grave period must be taken as ‘absolutely fixed, in extendible,
never interrupted and cannot be subjected to any condition or contingency. Because the period fixed is
itself devised to meet a condition or contingency (fraud, accident, mistake or excusable neglect), the
equitable remedy is an act of grace, as it were, designed to give the aggrieved party another and last
chance’ and failure to avail of such last chance within the grace period fixed by the statute or Rules of
Court is fatal . . . .

It should be noted that the 60-day period from knowledge of the decision, and the 6-month period from
entry of judgment, are both inextendible and uninterruptible. We have also time and again held that
because relief from a final and executory judgment is really more of an exception than a rule due to its
equitable character and nature, strict compliance with these periods, which are definitely jurisdictional,
must always be observed.

73. DAVAO LIGHT & POWER CO., INC. VS. THE COURT OF APPEALS
G.R. NO. 93262

FACTS:
The Davao Light and Power Co., Inc. filed a collection suit against Queensland Hotel and
Teodorico Adarna with an ex parte application for a writ of preliminary attachment. On 3 May
1989, the trial court issued an Order of Attachment, and the corresponding Writ of Attachment
on 11 May 1989. On 12 May 1989, the summons, a copy of the complaint, and the writ of
attachment was served upon Queensland and Adarna. Queensland and Adarna filed a motion to
 discharge the attachment on the ground that at the time the Order of Attachment and Writ of
Attachment were issued, the trial court has yet to acquire jurisdiction over the cause of action
and over the persons of the defendants.

ISSUE:
Whether the writ of preliminary attachment was validly issued.

HELD:
Yes. A writ of preliminary attachment may be issued before the court acquires jurisdiction over
the person of the defendant.

DOCTRINE:
The court may validly issue a writ of preliminary injunction prior to the acquisition of jurisdiction
over the person of the defendant. There is an appreciable period of time between the
commencement of the action (takes place upon the filing of an initiatory pleading) and the
service of summons to the defendant. In the meanwhile, there are a number of actions which
the plaintiff or the court may validly take, including the application for and grant of the
provisional remedy of preliminary attachment. There is nothing in the law which prohibits the
court from granting the remedy prior to the acquisition of jurisdiction over the person of the
defendant. In fact, Rule 57 of the Rules of Court allows the granting of a writ of preliminary
injunction at the commencement of the suit.

74. THOMAS YANG VS. THE HONORABLE MARCELINO R. VALDEZ

G.R. NO. 73317

FACTS:

On 4 January 1985, respondent spouses Ricardo and Milagros Morante brought an action in the
Regional Trial Court of GeneralSantos City against petitioner Thomas Yang and Manuel
Yaphockun, to recover possession of two (2) Isuzu cargo trucks. The Morante spouses alleged
that they had actual use and possession of the two cargo trucks, having acquired them during
the period from 1982 to 1984. The trucks were, however, registered in the name of petitioner
Thomas Yang who was the Treasurer in the Morante spouses’ business of buying and selling
corn. The Morante spouses further alleged that they were deprived of possession of the vehicles
in the morning of January 3, 1985, when petitioner Yang had the vehicles taken from where they
were parked in front of the Coca-Cola Plant in General Santos City, to the warehouse of Manuel
Yaphockun and there they were thereafter held. Despite repeated demands, the complaint
alleged, petitioner Yang refused to release the trucks to the spouses. To obtain immediate
possession of the Isuzu trucks, the spouses applied for a writ of replevin and put up a replevin
bond of P560,000.00 executed by respondent Milagros Morante and Atty. Bayani Calonzo.

On January 7, 1985, the respondent judge issued an order of seizure directing the Provincial
Sheriff of South Cotabato to take immediate possession and custody of the vehicles involved.
 The Sheriff carried out the order. On January 10, 1985, defendant Manuel Yaphockun filed a
motion seeking repossession of the cargo trucks, and posted a replevin counter-bond of
P560,000.00 executed by himself and one Narciso Mirabueno. The respondent judge promptly
required the respondent spouses to comment on the counterbond proffered. Yang moved, on
January 21, 1985, for an extension of fifteen days within which to file an answer to the
complaint for replevin. Four days later, petitioner put up a counter-bond in the amount of
P560,000.00 which counter-bond was, however, rejected by the respondent judge for having
been filed out of time.

Yang now argues before us that, firstly, respondent judge had committed a grave abuse of
discretion amounting to lack or excess of jurisdiction in approving the replevin bond of
respondent spouses.

ISSUE:

Whether the judge had committed a grave abuse of discretion amounting to lack or excess of
jurisdiction in rejecting Yang’s counter-bond.

HELD:

No, the judge did not commit a grave abuse of discretion amounting to lack or excess of
jurisdiction.

DOCTRINE:

Under Section 5 of Rule 60, petitioner may "at any time before the delivery of the property to
the plaintiff" require the return of the property; in Section 6, he may do so, "within five (5) days
after the taking of the property by the officer". Both these periods are mandatory in character.
Thus, a lower court which approves a counter-bond filed beyond the statutory periods, acts in
excess of its jurisdiction.

75. AQUINO ET AL VS. QUIAZON

G.R. NO. 201248
FACTS:
On December 16, 2005, a complaint for Annulment and Quieting of Title was filed before the RTC-
Branch 59 by the petitioners, alleged as the heirs of the late Epifanio Makam and Severina Bautista,
who acquired a house and lot situated in Magalang, Pampanga, consisting of 557 square meters, by
virtue of a Deed of Sale; that since then, they and their predecessors-in-interest had been in open,
continuous, adverse, and notorious possession for more than a hundred years, constructing houses
and paying real estate taxes on the property. Sometime in June 2005, they received various demand
letters from the respondents, claiming ownership over the subject property and demanding that
they vacate the same. The Register of Deeds (ROD) of San Fernando, Pampanga thereafter
confirmed that the property had been titled in the name of respondents and declared that the said
title was invalid, ineffective, voidable or unenforceable. The petitioners claim that they were the
 true owners of the said property. Hence, they prayed that the title be cancelled, and a new title be
issued in their favor. In their answer, respondents asserted that they were the absolute owners of
the subject and denied the allegations in the complaint and proffered affirmative defenses with
counterclaims. The RTC dismissed petitioners' complaint. Anent petitioners' argument that only the
complaint may be considered in determining the sufficiency of the cause of action, the RTC ruled
that under Section 2 in relation to Section 6, Rule 16 of the Rules of Court, a preliminary hearing on
the affirmative defense in the answer might be had at the discretion of the court, during which the
parties could present their arguments and their evidence. CA likewise dismissed petitioners' appeal.
It explained that under Section 6, Rule 16 of the Rules of Court, a court is allowed to conduct a
preliminary hearing, motu proprio, on the defendant's affirmative defenses, including the ground of
"lack of cause of action or failure to state a cause of action." The rule speaks of affirmative defenses
that are grounds for a motion to dismiss. Indubitably, lack of cause of action or failure to state a
cause of action, being one of the grounds for a motion to dismiss, is included thereby. To rule
otherwise would render nugatory the provision of Section 6, Rule 16 and would make the holding of
a preliminary hearing a plain exercise in futility.

ISSUE:
Whether the CA erred in affirming the dismissal of petitioners' complaint on the ground of lack of
cause of action or failure to state a cause of action.

HELD:
The Court notes that respondents' arguments made no assertion that the complaint failed to state a
cause of action.
DOCTRINE:
The familiar test for determining whether a complaint did or did not state a cause of action against
the defendants is whether or not, admitting hypothetically the truth of the allegations of fact made
in the complaint, a judge may validly grant the relief demanded in the complaint. It is error for the
court to take cognizance of external facts or hold preliminary hearings to determine their existence.
If the allegation in a complaint furnish sufficient basis by which the complaint may be maintained,
the same should not be dismissed regardless of the defenses that may be assessed by the
defendants.

76. TERLYNGRACE RIVERA VS. FLORENCIO L. VARGAS , G.R. NO. 165895

DOCTRINE: Service of the writ upon the adverse party is mandatory in line with the constitutional
guaranty on procedural due process and as safeguard against unreasonable searches and seizures. If the
writ was not served upon the adverse party but was instead merely handed to a person who is neither
an agent of the adverse party nor a person authorized to receive court processes on his behalf, the
service thereof is erroneous and is, therefore, invalid, running afoul of the statutory and constitutional
requirements. The service is likewise invalid if the writ of replevin was served without the required
documents. Under these circumstances, no right to seize and to detain the property shall pass, the act of
the sheriff being both unlawful and unconstitutional.

FACTS: Florencio Vargas (Vargas) filed a complaint against Terlyngrace Rivera and several John Does
before the Regional Trial Court (RTC) of Tuguegarao City, Cagayan, for the recovery of a 150 T/H rock
crushing plant located in Sariaya, Quezon. The equipment was allegedly entrusted to Rivera’s husband,
Jan T. Rivera, who died sometime in late 2002, as caretaker of Vargas’s construction aggregates business
in Batangas. According to Vargas, Rivera failed to return the said equipment after her husband’s death
despite his repeated demands.. The complaint was accompanied by a prayer for the issuance of a writ of
replevin and the necessary bond amounting to P2,400,000.00.

Summons was served upon Rivera through her personal secretary at her residence. However,
the writ of replevin was served upon and signed by Joseph Rejumo, the security guard on duty in
Rivera’s crushing plant in Sariaya, Quezon, contrary to the sheriff’s return stating that the writ was
served upon Rivera. Rivera filed her answer, manifestation, and motion for the acceptance of her
redelivery bond. In her answer, Rivera countered that the rock-crushing plant was ceded in favor of her
husband as his share following the dissolution of the partnership formed between Jan Rivera and
respondents wife, Iluminada Vargas (Iluminada). Rivera’s redelivery bond application was denied by the
RTC and the CA for her failure to file the application for redelivery bond within five (5) days from the
date of seizure as provided in the Rules of Court.

Rivera now argues in the SC that the RTC committed grave abuse of discretion in denying her
counterbond contending that mandatory five-day period did not even begin to run in this case due to
the improper service of the writ of replevin, contrary to Section 4 of Rule 60.

ISSUE: Whether the seizure of the property was valid?

HELD: No. The process regarding the execution of the writ of replevin in Section 4 of Rule 60 is
unambiguous: the sheriff, upon receipt of the writ of replevin and prior to the taking of the property,
must serve a copy thereof to the adverse party (petitioner, in this case) together with the application,
the affidavit of merit, and the replevin bond.
In the case at bar, Rivera avers that the writ of replevin was served upon the security guard, Joseph
Rejumo, where the rock-crushing plant to be seized was located. The sheriffs return, however,
peremptorily states that both the writ of replevin and the summons were served upon Rivera. On May
8, 2003, or nine (9) days after the writ was served on the security guard, Rivera filed an answer to the
complaint accompanied by a prayer for the approval of her redelivery bond. The RTC, however, denied
the redelivery bond for having been filed beyond the five day mandatory period prescribed in Sections 5
and 6 of Rule 60. But since the writ was invalidly served, Rivera is correct in contending that there is no
reckoning point from which the mandatory five-day period shall commence to run.

The trial court is reminded that not only should the writ or order of replevin comply with all the
requirements as to matters of form or contents prescribed by the Rules of Court.

The writ must also satisfy proper service in order to be valid and effective. Consequently, a trial court is
deemed to have acted without or in excess of its jurisdiction with respect to the ancillary action of
replevin if it seizes and detains a personalty on the basis of a writ that was improperly served, such as
what happened in this case.

77. BP PHILIPPINES v. CLARK TRADING CORPORATION, GR No. 17528

DOCTRINE: The writ of injunction would issue: upon the satisfaction of two requisites, namely: (1) the
existence of a right to be protected; and (2) acts which are violative of said right. In the absence of a
clear legal right, the issuance of the injunctive relief constitutes grave abuse of discretion. Injunction is
not designed to protect contingent or future rights. Where the complainant's right is doubtful or
disputed, injunction is not proper. The possibility of irreparable damage without proof of actual existing
right is not a ground for an injunction.

FACTS: In 1994, BP Philippines (Bp) entered into a Marketing and Technical Assistance Licensing
Agreement and a Marketing and Distribution Agreement (agreements) with Castrol Limited, U.K. to be
the exclusive importer and exclusive distributor of such products. BP claims that Clark Trading
Corporation (Clark) violated the former’s exclusive right by selling Castro products not sourced from it.
Despite a cease and desist letter was sent to Clark, Clark continued to distribute and sell Castro products
in its duty-free shop.
 BP applied for a TRO against the Clark. BP, citing Yu v. Court of Appeals as basis for its claim,
contended that the unauthorized distribution and sale of Castrol products by respondent “will cause
grave and irreparable damage to its goodwill and reputation.” On April 15, 1999, the RTC denied
petitioner’s prayer for the issuance of a writ of preliminary injunction, there being no sufficient
justification for the relief.

Clark answers the complaint by stating that BP has no cause of action against as it was a stranger
to the agreement. Only parties to a contract are bound by it. Thus, could not be held liable to such.
While Clark admitted that it distributed and sold Castrol products, it also posited that it only conducted
its business within the confines of the Clark Special Economic Zone (CSEZ) in accordance with Executive
Order Nos 140, 250 and 250-A. Since BP was not authorized to operate, distribute and sell within the
CSEZ, respondent did not violate the agreements because its efficacy only covers an area where
petitioner is allowed by law to distribute.

The RTC ruled that that Clark cannot be held liable for the violation of the exclusive rights to sell
the products. It noted that “the Castrol products sold by [respondent] therefore [was] legal provided
that they only [sold] the same in their store inside Clark and to customers allowed to make said
purchase and for their consumption.” The CA affirmed the RTC’s ruling.

ISSUE: Whether petitioner is entitled to injunction against third-persons on the basis of its marketing
and distribution agreements?

HELD: No. The main action for injunction is distinct from the provisional or ancillary remedy of
preliminary injunction which cannot exist except only as part or an incident of an independent action or
proceeding. As a matter of course, in an action for injunction, the auxiliary remedy of preliminary
injunction, whether prohibitory or mandatory, may issue. Under the law, the main action for injunction
seeks a judgment embodying a final injunction which is distinct from, and should not be confused with,
the provisional remedy of preliminary injunction, the sole object of which is to preserve the status quo
until the merits can be heard. A preliminary injunction is granted at any stage of an action or proceeding
prior to the judgment or final order. It persists until it is dissolved or until the termination of the action
without the court issuing a final injunction.
In the present case, neither the RTC nor the Court of Appeals found any nefarious scheme by
respondent to induce either party to circumvent, renege on or violate its undertaking under the
marketing and distribution agreements. We note that no allegation was made on the authenticity of the
Castrol GTX products sold by respondent. Thus, there is nothing in this case that shows a ploy of the
character described in the Yu case, so this is clearly distinguishable from that case.

As we have already stated, the writ of injunction would issue:

[U]pon the satisfaction of two requisites, namely: (1) the existence of a right to be protected; and (2)
acts which are violative of said right. In the absence of a clear legal right, the issuance of the injunctive
relief constitutes grave abuse of discretion. Injunction is not designed to protect contingent or future
rights. Where the complainant's right is doubtful or disputed, injunction is not proper. The possibility of
irreparable damage without proof of actual existing right is not a ground for an injunction. Respondent
not being able to prove and establish the existence of a clear and actual right that ought to be
protected, injunction cannot issue as a matter of course.

78. SUSAN LIM-LUA v. DANILO LUA, G.R. Nos. 175279-80

DOCTRINE: Contempt of court is defined as a disobedience to the court by acting in opposition to its
authority, justice, and dignity. It signifies not only a willful disregard or disobedience of the court’s order,
but such conduct which tends to bring the authority of the court and the administration of law into
disrepute or, in some manner, to impede the due administration of justice. 31 To constitute contempt,
the act must be done willfully and for an illegitimate or improper purpose. 32 The good faith, or lack of
it, of the alleged contemnor should be considered. 33

FACTS: On September 3, 2003, Susan Lim-Lua filed an action for the declaration of nullity of her
marriage with respondent Danilo Y. Lua, In her prayer for support pendente lite for herself and her two
children, petitioner sought the amount of ₱500,000.00 as monthly support, citing respondent’s huge
earnings from salaries and dividends in several companies and businesses here and abroad. After due
hearing, the amount of P250,000 was granted aa support. Two motions for reconsideration were filed by
Danilo to the RTF but both were denid.

Respondent filed a petition for certiorari in the CA. The CA found ₱250,000.00 monthly support to
petitioner without evidence to prove his actual income thus decreasing the support to P115,000.
Neither ofnthe parties appealed this decision of the CA. In a Compliance respondent attached a copy of
a check he issued in the amount of ₱162,651.90 payable to petitioner. Respondent explained that, as
decreed in the CA decision, he deducted from the amount of support in arrears (September 3, 2003 to
March 2005) ordered by the CA -- ₱2,185,000.00 -- plus ₱460,000.00 (April, May, June and July 2005),
totaling ₱2,645,000.00, the advances given by him to his children and petitioner in the sum of
₱2,482,348.16 (with attached photocopies of receipts/billings).

In her Comment to Compliance with Motion for Issuance of a Writ of Execution, petitioner asserted that
none of the expenses deducted by respondent may be chargeable as part of the monthly support
contemplated by the CA. On September 27, 2005, the trial court issued an Order granting petitioner’s
motion for issuance of a writ of execution as it rejected respondent’s interpretation of the CA decision.

Since respondent still failed and refused to pay the support in arrears pendente lite, petitioner filed in
the CA a Petition for Contempt of Court with Damages but was dismissed for lack of merit.

ISSUE: Whether Danilo was guilty of indirect contempt?

HELD: No. Contempt of court is defined as a disobedience to the court by acting in opposition to its
authority, justice, and dignity. It signifies not only a willful disregard or disobedience of the court’s order,
but such conduct which tends to bring the authority of the court and the administration of law into
disrepute or, in some manner, to impede the due administration of justice. To constitute contempt, the
act must be done willfully and for an illegitimate or improper purpose. The good faith, or lack of it, of
the alleged contemnor should be considered.

Respondent admittedly ceased or suspended the giving of monthly support pendente lite granted by the
trial court, which is immediately executory. However, we agree with the CA that respondent’s act was
not contumacious considering that he had not been remiss in actually providing for the needs of his
children. It is a matter of record that respondent continued shouldering the full cost of their education
and even beyond their basic necessities in keeping with the family’s social status. Moreover, respondent
believed in good faith that the trial and appellate courts, upon equitable grounds, would allow him to
offset the substantial amounts he had spent or paid directly to his children.

79. GORGONIO PANDES VS HON. JOSE TEODORO, SR., GR NO. L-6666, MAY 12, 1954
DOCTRINE: The fact that the mortgaged properties are in the hands of receiver appointed by the court
which tried the foreclosure suit does not prevent the same court from ordering the sale of the aforesaid
mortgaged properties, inasmuch as although the said properties are in custodia legis by virtue of the
judicial receivership, there cannot be any conflict of jurisdiction therein because the court that ordered
the sale thereof is the same which ordered that they be placed under receivership.

Likewise, the Supreme Court held that the court, which ordered the placing of the mortgaged property
in the hands of a receiver in a foreclosure proceeding, has jurisdiction to order the sale of said property
at public auction even before the termination of the receivership.

FACTS:

On December 9, 1952, Uy Tiong Oh instituted in the Court of First Instance of Negros Occidental Civil
Case No. 2562, against Gorgonio Pandes, for the recovery of a sum of money. Upon the posting of the
corresponding bond, a writ of preliminary attachment was issued, on motion of Uy Tiong Oh, "against
the properties of the defendant not exempt from execution".

Then, the provincial sheriff issued a "Notice of Garnishment" upon "whatever right, interest and
participation the defendant Gorgonio Pandes has or might have in " a certain "partnership between Uy
Tiong Oh and Ester Pandes, the wife of the defendant, in connection with the Eden Theater of San
Carlos, Negros Occidental."

Thereafter, Gorgonio Pandes filed an "Answer to Notice of Garnishment of the Provincial Sheriff",
praying that said garnishment "be stayed" upon the ground, among others, that said right, interest and
participation "is involved in Civil Case No. 2371" of the same court, entitled "Uy King Poe vs. Ester
Pandes and Gorgonio Pandes." It would seem, also, that Gorgonio Pandes had never sought any court
action on his aforesaid "answer".

In due course, a decision was, subsequently, rendered in favor of Uy Tiong Oh in case No. 2562. Said
decision having become final, the court ordered, on April 11, 1953, on motion of Uy Tiong Oh, the
issuance of the corresponding writ of execution and directed the provincial sheriff to sell, at public
auction, "whatever rights, interest and participation the defendant may have on the property levied
upon.”

After issuing the corresponding notice of auction sale, the provincial sheriff sold to Uy Tiong Oh for
P500.00, such right , interest and participation as Gorgonio Pandes has or might have in the partnership.
Prior thereto or on April 22, 1953, Gorgonio Pandes had moved for the reconsideration of the order of
April 11, 1953, upon the ground that the partnership in question was under receivership and, being as
such under custodia legis, said partnership and its assets are not subject to garnishment. The motion for
reconsideration having been denied by the court, presided over by Hon. Jose Teodoro, Sr., Judge,
Gorgonio Pandes instituted the present certiorari proceedings.

ISSUE: Whether or not respondent Judge had exceeded his authority when he issued the order of
directing the provincial sheriff "to sell at public auction whatever rights, interest and participation the
defendants may have on the property levied upon . . . the proceeds thereof to be applied in satisfaction
of the judgment rendered in this case.”?
RESOLUTION:

No. The petition is dismissed.

The fact that the mortgaged properties are in the hands of receiver appointed by the court which tried
the foreclosure suit does not prevent the same court from ordering the sale of the aforesaid mortgaged
properties, inasmuch as although the said properties are in custodia legis by virtue of the judicial
receivership, there cannot be any conflict of jurisdiction therein because the court that ordered the sale
thereof is the same which ordered that they be placed under receivership.

Likewise, the Supreme Court held that the court, which ordered the placing of the mortgaged property
in the hands of a receiver in a foreclosure proceeding, has jurisdiction to order the sale of said property
at public auction even before the termination of the receivership.

For this reason, respondents maintain that petitioner is not entitled to the relief sought, the
garnishment and the sale under execution complained of, having been ordered, not only by the same
court of First Instance of Negros Occidental which had jurisdiction over the receivership, but, also, by
the same judge, respondent Jose Teodoro, Sr., who appointed the receiver.

This right, interest or participation, if any, is a property of Gorgonio Pandes, separate and distinct from
the properties of the partnership, which has a personality of its own, distinct from that of its partners,
and, certainly, of said Gorgonio Pandes. Such property, if any, of the latter, is not under receivership.
The receiver had no authority to take it under his custody and, in fact, never had it in his possession or
under his administration. Consequently, it is not in custodia legis and is subject to levy, even without the
permission of the court appointing the receiver.

80. PL UY REALTY CORPORATION VS ALS MANAGEMENT AND DEVELOPMENT CORPORATION, GR NO.

166462, OCTOBER 24, 2012

DOCTRINE: The principle of res judicata may not be evaded by the mere expedient of including an
additional party to the first and second action. Only substantial identity is necessary to warrant the
application of res judicata. The addition or elimination of some parties does not alter the situation.

There is substantial identity of parties when there is a community of interest between a party in the first
case and a party in the second case albeit the latter was not impleaded in the first case.

FACTS:

On September 3, 1980, PLU, as vendor, and ALS, as vendee, executed a Deed of Absolute Sale
with Mortgage covering a registered parcel of land located at F. Blumentritt Street, Mandaluyong, Metro
Manila. The purchase price for the land was set at PhP 8,166,705 payable, as follows:

a. Upon execution of the Contract - P 500,000.00

 b. Within 100 days thereafter, a downpayment equivalent to 24% (P1,960,000.00) of the
principal amount less the advance of P500,000.00 - 1,460,009.20

c. The balance of P6,206,695.80 together with interest of 12% per annum (estimated interest
included) on the diminishing balance shall be payable over a period of four (4) years on or
before the month and day of the first downpayment

The parties also stipulated on the eviction of informal settlers/ existing occupants/squatters, the
removal of which shall be for the sole expenses & responsibilities of the VENDOR & that the VENDEE is
authorized to withhold payment of the 1st 24% installment unless the above-undertaking is done and
completed to the satisfaction of the VENDEE;

Thereafter, the parties entered into an Agreement dated December 23, 1980 that all accruals of
interest as provided for in paragraph 2-c of the Deed of Sale with Mortgage will be deferred and the
subsequent payments of installments will correspondingly be extended to the date the
occupants/squatters will vacate the subject property. In the event the informal settlers do not leave the
property, PLU would reimburse ALS the following amounts:

a. All payments made, including the down payment

b. All costs of temporary/permanent improvements introduced by the SECOND PARTY in the

subject property

c. All damages suffered by the SECOND PARTY due to the refusal of the occupants/squatters to
vacate the premises.

On January 26, 1981, TCT No. 16721 was canceled and a new one, TCT No. 26048, issued in the
name of ALS. Subsequently, the parties executed a Partial Release of Mortgage dated April 3, 1981
attesting to the payment by ALS of the first installment indicated in the underlying deed. The relevant
portion of the Partial Release of Mortgage reads:

1. Upon the execution of this document, the SECOND PARTY shall pay the net sum of THREE HUNDRED
NINETY FIVE THOUSAND PESOS (P395,000.00) after deducting expenses, to complete the full payment of
the first 24% installment.

2. The FIRST PARTY hereby executes a partial release of the mortgage to the extent of TWENTY
THOUSAND SQUARE METERS (20,000 sq.m.) in consideration of the advance payment which would now
amount to a total of P1,960,009.20, of a portion of the said property indicated in the attached
subdivision plan herewith x x x.

ALS, however, failed to pay the 2nd payment despite demands.

Thus, on August 25, 1982, PLU filed a Complaint against ALS for Foreclosure of Mortgage and
Annulment of Documents. In the complaint, PLU alleged having had entered into an oral agreement with
ALS whereby the latter "agreed to take over the task of ejecting the squatters/occupants from the
property covered by TCT No. 26048 issued in its name," adding that, through the efforts of ALS, the
property was already 90% clear of informal settlers.

On May 9, 1986, the Makati RTC rendered a Decision ruling that the obligation of PLU to clear
the property of informal settlers was superseded by an oral agreement between the parties whereby
ALS assumed the responsibility of ejecting said informal settlers. The Makati RTC, however, declared that
the removal of the informal settlers on the property is still a subsisting and valid condition.

The trial court further ruled that because informal settlers still occupied 28% of the property,
the condition, as to their eviction, had not yet been complied with. For this reason, the Makati RTC
found the obligation of ALS to pay the balance of the purchase price has not yet fallen due and
demandable; thus, it dismissed the case for being premature.

ALS appealed the case to this Court primarily questioning the finding of the Makati RTC that it
had assumed the responsibility of ejecting the informal settlers on the property. The Court issued a
Resolution affirming the rulings of the CA and the Makati RTC. The resolution became final and
executory on February 7, 1990.

Sometime thereafter, PLU again filed a Complaint dated November 12, 1990 against ALS for
Judicial Foreclosure of Real Estate Mortgage under Rule 68, before the RTC. In the complaint, PLU
claimed that ALS had not yet completed the agreed 1st payment obligation despite numerous demands.

In defense, ALS claims that the installment payments for the balance of the purchase price of
the property are not yet due and demandable, as the removal of the informal settlers, a condition
precedent for such payments to be demandable, is still to be completed. ALS further avers that
respondent Antonio Litonjua (Litonjua) cannot be made personally liable under the Deed of Absolute
Sale with Mortgage, not being a party thereto and as no ground exists for piercing the veil of corporate
fiction to make Litonjua, a corporate officer of ALS, liable. By way of counterclaim, ALS alleged that
because there were still informal settlers on the property, PLU should be directed to reimburse ALS the
payments that it already made, the cost of improvements introduced by ALS on the property and for
other damages.

In a Decision dated November 17, 1993, the Pasig RTC dismissed the case for being premature.
Furthermore, the trial court, citing Art. 1167 of the Civil Code, ruled that the foreclosure of the mortgage
is not the proper remedy, and that PLU should have caused the ejectment of the informal settlers. Also,
the court found no reason to render Litonjua personally liable for the transaction of ALS as there was no
ground to pierce the veil of corporate fiction.

From such Decision, PLU appealed to the CA which rendered the assailed Decision affirming that of the
Pasig RTC. PLU moved for a reconsideration of the CA Decision but was denied in the assailed
Resolution.

Hence, the instant petition.

ISSUE: Whether or not the instant petition is barred by res judicata?

RESOLUTION:

Yes, the petition shall be dismissed.

Res judicata embraces two concepts: (1) bar by prior judgment as enunciated in Rule 39, Section 47(b) of
the Rules of Civil Procedure; and (2) conclusiveness of judgment in Rule 39, Section 47(c).
There is "bar by prior judgment" when, as between the first case where the judgment was rendered and
the second case that is sought to be barred, there is identity of parties, subject matter, and causes of
action. In this instance, the judgment in the first case constitutes an absolute bar to the second action.

But where there is identity of parties in the first and second cases, but no identity of causes of action,
the first judgment is conclusive only as to those matters actually and directly controverted and
determined and not as to matters merely involved therein. This is the concept of res judicata known as
"conclusiveness of judgment." Stated differently, any right, fact or matter in issue directly adjudicated or
necessarily involved in the determination of an action before a competent court in which judgment is
rendered on the merits is conclusively settled by the judgment therein and cannot again be litigated
between the parties and their privies, whether or not the claim, demand, purpose, or subject matter of
the two actions is the same.

Thus, if a particular point or question is in issue in the second action, and the judgment will depend on
the determination of that particular point or question, a former judgment between the same parties or
their privies will be final and conclusive in the second if that same point or question was in issue and
adjudicated in the first suit. Identity of cause of action is not required but merely identity of issue.

In the same Social Security Commission case, the Court enumerated the elements of res judicata, to wit:

The elements of res judicata are: (1) the judgment sought to bar the new action must be final; (2) the
decision must have been rendered by a court having jurisdiction over the subject matter and the parties;
(3) the disposition of the case must be a judgment on the merits; and (4) there must be as between the
first and second action, identity of parties, subject matter, and causes of action. Should identity of
parties, subject matter, and causes of action be shown in the two cases, then res judicata in its aspect as
a "bar by prior judgment" would apply. If as between the two cases, only identity of parties can be
shown, but not identical causes of action, then res judicata as "conclusiveness of judgment" applies.
(Emphasis supplied.)

All the elements of res judicata, as a "bar by prior judgment," are present in the instant case. The
previous complaint for foreclosure of mortgage was dismissed by the trial court for being premature in
Civil Case No. 47438. The dismissal action, when eventually elevated to this Court in G.R. No. 91656, was
affirmed and the affirmatory resolution of the Court becoming final and executory on February 7, 1990.
Further, the element of identity of parties is considered existing even though Litonjua was only
impleaded in Civil Case No. 60221 and not in Civil Case No. 47438. Absolute identity of parties is not
required for res judicata to apply; substantial identity is sufficient. The Court articulated this principle
was raised in Cruz v. Court of Appeals38 in this wise:

The principle of res judicata may not be evaded by the mere expedient of including an additional party
to the first and second action. Only substantial identity is necessary to warrant the application of res
judicata. The addition or elimination of some parties does not alter the situation.

There is substantial identity of parties when there is a community of interest between a party in the first
case and a party in the second case albeit the latter was not impleaded in the first case.
81. ANDREW TAN VS COURT OF APPEALS, GR NO. 142401, AUGUST 20, 2001

DOCTRINE: Under the doctrine of conclusiveness of judgment, which is also known as "preclusion of
issues" or "collateral estoppel" issues actually and directly resolved in a former suit cannot again be
raised in any future case between the same parties involving a different cause of action.

Although the action instituted in this case (collection of a sum of money) is technically different from
that action instituted by Andrew Tan before the Regional Trial Court of Dagupan (for annulment of
document), "the concept of conclusiveness of judgment still applies because under this principle, the
identity of causes of action is not required but merely identity of issues. Simply put, conclusiveness of
judgment bars the relitigation of particular facts or issues in another litigation between the same parties
on a different claim or cause of action."

FACTS:

Wu Sen Woie, a Taiwanese national, and Andrew Tan, a Filipino, first met in Taiwan sometime in August
1987 through Kua Bei Tie. Tan proposed that Sen Woie invest money in the hatchery business he had
started, and Sun Woie parted with the amount of $80,000.00. Repaid only in the amount of $10,000.00,
he lodged a complaint before the National Bureau of Investigation (NBI) to recover the balance of
$70,000.00. Before the NBI, defendant Andrew Tan and his sister Helen Go signed a Joint Affidavit of
Undertaking acknowledging their obligation to pay.

Tan, however, claims that he was coerced into signing the above Undertaking. He then assailed the
validity of said Undertaking in Civil Case No. D-9864 entitled 'Andrew Tan, plaintiff vs. Wu Sen Woei,
which he filed before the Regional Trial Court of Dagupan City. The RTC found Tan's and Go's consent to
the Undertaking as vitiated and rendered judgment declaring the Undertaking as a nullity. The decision
was appealed to this Court in CA-G.R. CV No. 47880 where the court reversed and set aside the
appealed judgment, and dismissed Andrew Tan's complaint.

The Court of Appeals held in its Decision that, based on the doctrine of conclusiveness of judgment,
Tan's claim that the Affidavit of Undertaking had been executed under duress was rendered ineffective
by the ruling in CA-GR CV No. 47880. The CA had ruled therein that the said Affidavit was an admission
against interest, a clear acknowledgment by Tan of his obligation to Wu Sen Woei. Thus, the appellate
court deemed it pointless to determine whether there was, instead, a consummated partnership
between the two parties.

Through a Petition2 for Review under Rule 45 of the Rules of Court, Andrew Tan challenges the
Decision3 rendered by the Court of Appeals 4 in CA-GR CV No. 58086 and its March 8, 2000
Resolution5denying reconsideration.

ISSUE: Whether or not the Court of Appeals committed a grave and serious error of judgment in
applying the doctrine of conclusiveness of judgment?

RESOLUTION:

No. The petition is without merit.

The CA's earlier Decision concerning the validity of Andrew Tan's Affidavit of Undertaking has become
conclusive on the parties, pursuant to Section 47 (c) of Rule 39 of the Rules of Court. The parties are
bound by the matters adjudged and those that are actually and necessarily included therein. Under the
doctrine of conclusiveness of judgment, which is also known as "preclusion of issues" or "collateral
estoppel" issues actually and directly resolved in a former suit cannot again be raised in any future case
between the same parties involving a different cause of action.

The concept clearly applies to the present case, because petitioner again seeks refuge in the alleged
nullity of the same Affidavit of Undertaking which, as earlier mentioned, was already ruled upon with
finality. In other words, the question on the validity of the Affidavit has been settled. The same question,
therefore, cannot be raised again even in a different proceeding involving the same parties.

Although the action instituted in this case (collection of a sum of money) is technically different from
that action instituted by Andrew Tan before the Regional Trial Court of Dagupan (for annulment of
document), "the concept of conclusiveness of judgment still applies because under this principle, the
identity of causes of action is not required but merely identity of issues. Simply put, conclusiveness of
judgment bars the relitigation of particular facts or issues in another litigation between the same parties
on a different claim or cause of action."

Significantly, petitioner no longer questioned the CA Decision in CA-GR CV No. 47880. Thus, it has
become final and executory and no longer subject to review.

Moreover, petitioner's assertion that the Affidavit of Undertaking had been executed under duress is
contradicted by the events that took place following its execution. Petitioner did not immediately
question its validity. In fact, of the $70,000 that he undertook to pay Wu Sen Woei, the former has been
able to make payments in the amount of $25,000, pursuant to the terms of the Affidavit. His counsel
even executed a letter requesting an extension of time and a reduction of the monthly These
circumstances clearly negate any infirmity in the Affidavit as well as the absence of any obligation on the
part of petitioner to fulfill his liability therein.

82. FLEXO MANUFACTURING CORPORATION vs. COLUMBUS FOODS, INCORPORATED and PACIFIC
MEAT COMPANY, INCORPORATED

Facts:

On February 6, 2002, Flexo Manufacturing Corporation (Flexo) filed a complaint against Columbus Foods
Incorporated (Columbus) and Pacific Meat Company Incorporated (Pacific) for sum of money with
preliminary attachment. Flexo alleged that on August 27, 1999 and September 28, 1999, it executed
Contract Nos. 6150 and 6288 with Columbus for the manufacture of 48 million and 6 million foil
pouches, respectively.

Flexo made partial deliveries which were paid by Pacific. Subsequently, Flexo demanded the payment of
manufactured but undelivered foil pouches amounting to P2,957,270.00 but both respondents denied
any liability. Thus, the complaint where Flexo sought for the payment of the foil pouches valued at
P2,957,270.00 with 24% interest per annum from April 2000 until fully paid, as well as 25% of the
obligation as attorney’s fees and cost of suit.

In their answer with counterclaim, respondents claimed that Flexo had no cause of action against them.
They alleged that the two contracts executed by them were general agreements subject to specific
instructions and confirmation to be relayed periodically to Flexo. On March 31, 2000, they informed
Flexo to deliver all outstanding orders by April 14, 2000. Since the latter was unable to deliver the
outstanding orders on time, respondents argued that they had been relieved from the obligation.

The RTC ruled in favor of Flexo, granting the reliefs prayed for. On December 27, 2002, Columbus and
Pacific appealed to the Court of Appeals. On the same day, Flexo filed a motion for execution pending
appeal which the trial court granted considering the deteriorating condition of the pouches and the
insolvency of Columbus as valid grounds for execution.

Thus, the respondents filed a petition for certiorari with the Court of Appeals which granted the petition
and set aside the order of the RTC of Caloocan City dated February 19, 2003.

The Court of Appeals held that no good reasons or superior circumstances demanding urgency justified
the grant of the motion for execution pending appeal. It noted that when the complaint was filed, the
foil pouches which had a shelf life of six months, had already deteriorated. In effect, the foil pouches
had become unfit and there is no more right to be protected by the execution pending appeal.
Furthermore, Columbus alleged insolvency was not duly established. Notwithstanding, it observed that
Flexo could still collect from Pacific as the latter was a solidary debtor.

Issue:

Whether there was a good reason existing to justify the grant of execution pending appeal.

Ruling:

In the present case, there was no good reason for the trial court to grant the motion for execution
pending appeal. Absent any such good reason, the special order of execution must be struck down for
having been issued with grave abuse of discretion.

In the instant case, the first demand letter for the undelivered goods was sent on June 6, 2000.
Therefore, it can be assumed that the foil pouches have been processed prior to this date. Since the
lifetime of the product is one year after which they start to deteriorate, the foil pouches had
deteriorated when Flexo filed the complaint on February 6, 2002. When the trial court promulgated its
decision on December 11, 2002, two and a half years had already elapsed. As such, the foil pouches
were over and beyond its shelf life and unfit to be utilized.

Jurisprudence:
As a general rule, the execution of a judgment should not be had until and unless the judgment has
become final and executory, i.e., the period of appeal has lapsed without an appeal having been taken,
or appeal having been taken, the appeal has been resolved and the records of the case have been
returned to the court of origin, in which event, execution shall issue as a matter of right. Execution
pending appeal in accordance with Section 2 of Rule 39 of the Rules of Court is, therefore, the exception.

Execution pending appeal requires the observance of the following requisites:

(a) There must be a motion therefor by the prevailing party;
(b) There must be a good reason for issuing the writ of execution; and
(c) The good reason must be stated in a special order.

Since the execution of a judgment pending appeal is an exception to the general rule, the existence of
good reasons is essential. Good reasons has been held to consist of compelling circumstances justifying
the immediate execution lest judgment becomes illusory. Such reasons must constitute superior
circumstances demanding urgency which will outweigh the injury or damages should the losing party
secure a reversal of the judgment. The rules do not specify the good reasons to justify execution
pending appeal, thus, it is the discretion of the court to determine what may be considered as such.

83. ROSENDO T. UY, MEDRING SIOCO, BOBBY BERNARD S. UY and LUISA T. UY, v. HONORABLE PEDRO
T. SANTIAGO, as Judge of Branch 101, Regional Trial Court of Quezon City; BENITO PALOMADO, PIO
BERMEJO and SANTOS NGALIO

Facts:

On December 19, 1996, the Metropolitan Trial Court of Quezon City, Branch 43, rendered a Decision 1 in
favor of petitioners in four consolidated ejectment cases.

Three of the cases involving private respondents were appealed and raffled to Branch 101 of the Quezon
City Regional Trial Courts, presided by respondent Judge. On July 15, 1997, respondent Judge rendered a
Decision affirming in toto the decision of the court a quo. A week thereafter, petitioners filed a Motion
for Issuance of Writ of Execution Pending Appeal, to which private respondents filed their Opposition.

Meanwhile, on August 6, 1997, private respondents filed a Petition for Review with the Court of Appeals
assailing the Decision of respondent Judge in the ejectment cases.

On August 12, 1997, respondent Judge issued an Order denying petitioners’ Motion for Execution
Pending Appeal. A Motion for Reconsideration was filed on August 22, 1997, to which an Opposition
was filed by private respondents.

On October 7, 1997, respondent Judge issued an Order denying petitioners’ Motion for Reconsideration.

Hence, the instant Petition for Mandamus for the issuance of a writ of execution pending appeal, which
according to petitioners is the mandatory duty of respondent Judge.chanrob1es virtua1 1aw 1ibrary
As basis for denying petitioners’ Motion for Execution Pending Appeal, respondent Judge cited private
respondents’ compliance with the requirements to stay immediate execution of judgment, namely: (1)
perfection of appeal; (2) filing of a supersedeas bond; and (3) periodic deposit of the rentals falling due
during the pendency of the appeal.

Petitioners contend that Rule 70, Section 10, which enumerated the above-mentioned requirements,
has already been expressly repealed by Rule 70, Section 21 of the Revised Rules of Civil Procedure and
that the execution of appealed ejectment decisions with the Regional Trial Courts cannot now be stayed.

Issue:

Whether or not decisions of Regional Trial Courts in appealed ejectment cases pending appeal with the
Court of Appeals are immediately executory and cannot be stayed

Ruling/jurisprudence:

it is only execution of the Metropolitan or Municipal Trial Courts’ judgment pending appeal with the
Regional Trial Court which may be stayed by a compliance with the requisites provided in Rule 70,
Section 19 of the 1997 Rules on Civil Procedure. On the other hand, once the Regional Trial Court has
rendered a decision in its appellate jurisdiction, such decision shall, under Rule 70, Section 21 of the
1997 Rules on Civil Procedure, be immediately executory, without prejudice to an appeal, via a Petition
for Review, before the Court of Appeals and/or Supreme Court.

84. Douglas F. Anama vs Court of Appeals

Facts:

Petitioner Anama, and the Respondent, (PSB), entered into a “Contract to Buy,” on an installment basis,
the real property owned and covered by Transfer Certificate of Title (TCT) No. 301276 in the latter’s
name. However, Anama defaulted in paying his obligations thereunder, thus, PSB rescinded the said
contract and title to the property remained with the latter.

Subsequently, the property was sold by PSB to the Spouses Co who, after paying the purchase price in
full, caused the registration of the same in their names. Anama filed before the Respondent Court a
complaint for declaration of nullity of the deed of sale, cancellation of the transfer certificate of title,
and specific performance with damages against PSB, the Co Spouses, and the Register of Deeds of Metro
Manila, District II.

The Respondent Court dismissed Anama’s complaint and upheld the validity of the sale between PSB
and the Co Spouses. Anama appealed, at first, to this Court, and after failing to obtain a favorable
decision, to the Supreme Court.

The Supreme Court rendered judgment denying Anama’s petition and sustaining the validity of the sale
between PSB and the Co Spouses. Its decision became final and executory. Pursuant thereto, the Co
Spouses moved for execution, which was granted by the Respondent Court per its Order, dated
November 25, 2005.

Anama filed a motion for reconsideration, however, the Respondent Court, denied his motion(s) for
reconsideration. The Decision of this Court became final and executory on July 12, 2004. Hence, the
execution was already a matter of right on the part of the respondents and the RTC had the ministerial
duty to issue a writ of execution enforcing a final and executory decision.

Not satisfied with the CA’s unfavorable disposition, petitioner filed this petition praying for the reversal
thereof: The respondents failed to substantially comply with the rule on notice and hearing when they
filed their motion for the issuance of a writ of execution with the RTC.

Issue: WoN the respondents failed to substantially comply with the rule on notice and hearing when
they filed their motion for the issuance of a writ of execution with the RTC.

Ruling: No, respondents did not violate the Rules of the Court.

The Court has consistently held that a motion that fails to comply with the requirements is considered a
worthless piece of paper which should not be acted upon. The rule, however, is not absolute.  There are
motions that can be acted upon by the court ex parte if these would not cause prejudice to the other
party. They are not strictly covered by the rigid requirement of the rules on notice and hearing of
motions.

In this case, it is not true that the petitioner was not notified of the motion for execution of the Spouses
Co. The records clearly show that the motion for execution was duly served upon, and received by,
petitioner’s counsel-of-record, the Quasha Ancheta Pena Nolasco Law Offices, as evidenced by a “signed
stamped received a mark” appearing on said pleading. The said law office, as a matter of fact, did not
present any written denial of its valid receipt on behalf of its client, neither is there proof that the
Quasha Ancheta Pena Nolasco Offices has formally withdrawn its appearance as petitioner’s counsel-of-
record. Thus, there was compliance with the rules.

The three-day notice rule is not absolute. A liberal construction of the procedural rules is proper where
the lapse in the literal observance of a rule of procedure has not prejudiced the adverse party and has
not deprived the court of its authority.

Indeed, Section 6, Rule 1 of the Rules of Court provides that the Rules should be liberally construed in
order to promote their objective of securing a just, speedy and inexpensive disposition of every action
and proceeding. Rules of procedure are tools designed to facilitate the attainment of justice, and courts
must avoid their strict and rigid application which would result in technicalities that tend to frustrate
rather than promote substantial justice. Through such notice, the adverse party is given time to study
and answer the arguments in the motion.

Walang 85-87, 88-90

91. WACK WACK GOLF & COUNTRY CLUB v. LEE E. WON
G.R. No. L-23851 MARCH 26, 1976

FACTS:

Wack Wack Golf & Country Club, Inc alleged that Lee E. Won claims ownership of its
membership fee certificate 201-1478 by virtue of a decision rendered in a civil case. Bienvenido A. Tan
claims to be lawful owner pursuant to an assignment made in his favor by the original owner and holder
of membership fee certificate 201-1199. It alleged that  the membership fee certificate 201-1478 issued
in behalf of the Corporation is null and void because issued in violation of its by-laws, which require the
surrender and cancellation of the outstanding membership fee certificate 201 before issuance may be
made to the transferee of a new certificate duly signed by its president and secretary and from the fact
that the decision from the previous civil case is binding upon Tan; that Tan is made a party because of
his refusal to join it in this action or bring a separate action to protect his rights despite the fact that he
has a legal and beneficial interest in the subject matter of this litigation; and that he is made a part so
that complete relief may be accorded. The defendants moved to dismiss the complaint upon the
grounds of res judicata, failure of the complaint to state a cause of action, and bar by prescription.

ISSUE:

Whether the findings in the decision of the previous civil case constitutes res judicata and bars
its present action.

HELD:

Although res judicata or bar by a prior judgment was the principal ground availed of by the
appellees in moving for the dismissal of the complaint and upon which the trial court actually dismissed
the complaint, the determinative issue, as can be gleaned from the pleadings of the parties, relates to
the propriety and timeliness of the remedy of interpleader.

It has been held that a stakeholder's action of interpleader is too late when filed after judgment
has been rendered against him in favor of one of the contending claimants, especially where he had
notice of the conflicting claims prior to the rendition of the judgment and neglected the opportunity to
implead the adverse claimants in the suit where judgment was entered. This must be so, because once
judgment is obtained against him by one claimant he becomes liable to the latter.

To now permit the Corporation to bring Lee to court after the latter's successful establishment
of his rights to the membership fee certificate 201, is to increase instead of to diminish the number of
suits, which is one of the purposes of an action of interpleader, with the possibility that the latter would
lose the benefits of the favorable judgment. This cannot be done because having elected to take its
chances of success, with full knowledge of all the fact, the Corporation must submit to the consequences
of defeat.
DOCTRINE:

The Action of Interpleader - remedy whereby a person who has personal property in his
possession, or an obligation to render wholly or partially, without claiming any right to either, comes to
court and asks that the persons who claim the said personal property or who consider themselves
entitled to demand compliance with the obligation, be required to litigate among themselves in order to
determine finally who is entitled to tone or the one thing. 

92. ARTURO SARTE FLORES v. SPOUSES ENRICO and EDNA LINDO

G.R. No. 183984 APRIL 13, 2011

FACTS:

Edna obtained a loan from Arturo and to secure the loan, Edna executed a Deed of Real Estate
Mortgage covering a property in the name of Edna and her husband Enrico. Edna also signed a
Promissory Note and the Deed for herself and for Enrico as his attorney-in-fact. Edna issued three checks
as partial payments for the loan. All checks were dishonored for insufficiency of funds, prompting
petitioner to file a Complaint for Foreclosure of Mortgage with Damages against respondents. The RTC
ruled that petitioner was not entitled to judicial foreclosure of the mortgage. Furthermore, the RTC
ruled that petitioner was not precluded from recovering the loan from Edna as he could file a personal
action against her. However, the RTC ruled that it had no jurisdiction over the personal action which
should be filed in the place where the plaintiff or the defendant resides in accordance with Section 2,
Rule 4 of the Revised Rules on Civil Procedure.

Petitioner filed a Complaint for Sum of Money with Damages against respondents. Respondents
alleged that Enrico was not a party to the loan because it was contracted by Edna without Enrico’s
signature. Respondents prayed for the dismissal of the case on the grounds of improper venue, res
judicata and forum-shopping, invoking the previous decision. The motion were dismissed by the Trial
Court. The Court of Appeals ruled that while the general rule is that a motion to dismiss is interlocutory
and not appealable, the rule admits of exceptions. The Court of Appeals ruled that the RTC acted with
grave abuse of discretion in denying respondents’ motion to dismiss.

ISSUE:

Whether the Court of Appeals committed a reversible error in dismissing the complaint for
collection of sum of money on the ground of multiplicity of suits.

HELD:

Yes, the rule is that a mortgage-creditor has a single cause of action against a mortgagor-debtor,
that is, to recover the debt. The mortgage-creditor has the option of either filing a personal action for
collection of sum of money or instituting a real action to foreclose on the mortgage security. An election
of the first bars recourse to the second, otherwise there would be multiplicity of suits in which the
debtor would be tossed from one venue to another depending on the location of the mortgaged
properties and the residence of the parties. The two remedies are alternative and each remedy is
complete by itself. If the mortgagee opts to foreclose the real estate mortgage, he waives the action for
the collection of the debt, and vice versa.

The liability of Edna Lindo on the principal contract of the loan however subsists
notwithstanding the illegality of the mortgage. Indeed, where a mortgage is not valid, the principal
obligation which it guarantees is not thereby rendered null and void. That obligation matures and
becomes demandable in accordance with the stipulation pertaining to it. Under the foregoing
circumstances, what is lost is merely the right to foreclose the mortgage as a special remedy for
satisfying or settling the indebtedness which is the principal obligation. In case of nullity, the mortgage
deed remains as evidence or proof of a personal obligation of the debtor and the amount due to the
creditor may be enforced in an ordinary action.

DOCTRINE:

 Principle of Unjust Enrichment - every person who through an act of performance by another,
or any other means, acquires or comes into possession of something at the expense of the latter without
just or legal ground, shall return the same to him.

93. CAPITOL HILLS GOLD & COUNTRY CLUB v. MANUEL SANCHEZ

G.R. No. 182738 FEBRUARY 24, 2014

FACTS:

Respondent, a stockholder of petitioner Capitol Hills Golf & Country Club, Inc. filed a petition for
the nullification of the annual meeting of stockholders of May 21, 2002 and the special meeting of
stockholders of April 23, 2002. On August 12, 2002, respondent filed a Motion for Production and
Inspection of Documents, which the court granted in an Order dated September 10, 2002.

On December 9, 2002, then Presiding Judge Bruselas issued an Order for the immediate implementation
of the September 10, 2002 Order. On several occasions, petitioners failed to comply with the directive to
produce documents for inspection. On September 3, 2007, the trial court issued an order directing the
defendants to strictly comply with this September 10, 2002 order. Failure of the defendants to comply
with all the requirements of the order dated September 10, 2002 will result in this court citing all the
defendants in contempt of court. This Court shall order defendants solidarily to pay a fine of P10,000.00
for every day of delay to comply with the order of September 10, 2002 until the defendants shall have
fully and completely complied with the said order.

Further sanctions shall be meted upon defendants should the Court find that defendants have
been in bad faith in complying with the order of September 10, 2002 despite the order of this Court.
Petitioners questioned the aforesaid Resolution via Petition for Certiorari. Petitioners claim that the
threatened citation for contempt is not in line with the policy that there should be willfulness or that the
contumacious act be done deliberately in disregard of the authority of the court. CA ruled that there is
no indication that the RTC committed grave abuse of discretion amounting to lack or excess of
jurisdiction.

ISSUE:

Whether or not an order of the court stating that failure to strictly comply with it will result to
the persons being directed thereby to be cited for contempt constitutes a final order in an indirect
contempt proceeding. Hence it violates due process

HELD:

The answer is in the negative. The September 3, 2007 Resolution could be treated as a mere
reiteration of the September 10, 2002 Order. It is not yet a "judgment or final order of a court in a case
of indirect contempt" as contemplated under the Rules. The penalty mentioned therein only serves as a
reminder to caution petitioners of the consequence of possible non-observance of the long-overdue
order to produce and make available for inspection and photocopying of the requested
records/documents. In case of another failure or refusal to comply with the directive, the court or
respondent could formally initiate the indirect contempt proceedings pursuant to the mandatory
requirements of the Rules and existing jurisprudence.

DOCTRINE:

Charges for Indirect Contempt shall be commenced by a verified petition with supporting
particulars and certified true copies of documents or papers involved therein, and upon full compliance
with the requirements for filing initiatory pleadings for civil actions in the court concerned. If the
contempt charges arose out of or are related to a principal action pending in the court, the petition for
contempt shall allege that fact but said petition shall be docketed, heard and decided separately, unless
the court in its discretion orders the consolidation of the contempt charge and the principal action for
joint hearing and decision.

94. Mangaser v. Ugay

Gr no. 204926

December 03, 2014

Doctrine: Possession can be acquired by juridical acts. These are acts to which the law gives the force of
acts of possession. Examples of these are donations, succession, execution and registration of public
instruments, inscription of possessory information titles and the like. The reason for this exceptional rule
is that possession in the eyes of the law does not mean that a man has to have his feet on every square
meter of ground before it can be said that he is in possession. It is sufficient that petitioner was able to
subject the property to the action of his will. (ANACLETO C. MANGASER, REPRESENTED BY HIS
ATTORNEY-IN- FACT EUSTAQUIO DUGENIA vs. DIONISIO UGAY, G.R. No. 204926, December 03, 2014, J.
Mendoza)

Facts: On October 30, 2007, petitioner Anacleto Mangaser, represented by his attorney-in-fact,
Eustaquio Dugenia (petitioner), tiled a complaint for Forcible Entry with Damages against respondent
Dionisio Ugay (respondent) before the Municipal Trial Court of Caba, La Union (MTC). In his complaint,
petitioner alleged that he was the registered owner and possessor of a parcel of land situated in
Santiago Sur, Caba, La Union, with an area of 10,632 square meters and covered by OCT No. RP-174 (FP-
13787) and Tax Declaration No. 014-00707; that on October 31, 2006, petitioner, discovered that
respondent stealthy intruded and occupied a portion of his property by constructing a residential house
thereon without his knowledge and consent; that he referred the matter to the Office of Lupong
Tagapamayapa for conciliation, but no settlement was reached, hence, a certification to file action was
issued by the Lupon; and that demand letters were sent to respondent but he still refused to vacate the
premises, thus, he was constrained to seek judicial remedy. Respondent denied the material allegations
of the complaint and put up the following defenses, to wit: that he had been a resident of Samara,
Aringay, La Union, since birth and when he reached the age of reason, he started occupying a parcel of
land in that place then known as Sta. Lucia, Aringay, La Union; that years later, this parcel of land was
designated as part of Santiago Sur, Caba, La Union due to a survey made by the government; that he
introduced more improvements on the property by cultivating the land, and in March 2006, he put up a
"bahay kubo"; that in October 2006, he installed a fence made of "bolo" to secure the property; that in
installing the fence, he was guided by the concrete monuments which he knew to be indicators of the
boundaries of petitioner's property; that while he could not locate some of the monuments, he based
the boundaries on his recollection since he was around when these were installed; that he knew the
boundaries of petitioner's property because he knew the extent of the "iron mining" activities done by a
company on the said property; that petitioner was never in actual possession of the property occupied
by him, and it was only on October 31, 2006 when he discovered the alleged intrusion; that it was not
correct to say that be refused to vacate and surrender the premises despite receipt of the demand
letters because in his letter-reply, he assured petitioner that he would voluntarily vacate the premises if
he would only be shown to have intruded into petitioner's titled lot after the boundaries were pointed
out to him; and that instead of showing the boundaries to him, petitioner filed an action for forcible
entry before the MTC.

Issue: Whether or not the court of appeals failed to consider the evidence of 0wnership of petitioner
which may establish prior possession over the property by herein petitioner.

Ruling: The Court finds the petition meritorious.

For a forcible entry suit to prosper, the plaintiffs must allege and prove: (a) that they have prior physical
possession of the property; (b) that they were deprived of possession either by force, intimidation,
threat. strategy or stealth; and, (c) that the action was filed within one (1) year from the time the
owners or legal possessors learned of their deprivation of the physical possession of the property. There
is only one issue in ejectment proceedings: who is entitled to physical or material possession of the
premises, that is, to possession de facto, not possession de jure? Issues as to the right of possession or
ownership are not involved in the action; evidence thereon is not admissible, except only for the
purpose of determining the issue of possession. As a rule, the word "possession" in forcible entry suits
indeed refers to nothing more than prior physical possession or possession de facto, not possession de
jure or legal possession in the sense contemplated in civil law. Title is not the issue, and the absence of it
"is not a ground for the courts to withhold relief from the parties in an ejectment case." The Court,
however, has consistently ruled in a number of cases that while prior physical possession is an
indispensable requirement in forcible entry cases, the dearth of merit in respondent's position is evident
from the principle that possession can be acquired not only by material occupation, but also by the fact
that a thing is subject to the action of one's will or by the proper acts and legal formalities established
for acquiring such right. The case of Quizon v. Juan which surprisingly was relied on by the CA, also
stressed this doctrine.

Possession can be acquired by juridical acts. These are acts to which the law gives the force of acts of
possession. Examples of these are donations, succession, execution and registration of public
instruments, inscription of possessory information titles and the like. The reason for this exceptional rule
is that possession in the eyes of the law does not mean that a man has to have his feet on every square
meter of ground before it can be said that he is in possession. It is sufficient that petitioner was able to
subject the property to the action of his will. Here, respondent failed to show that he falls under any of
these circumstances. He could not even say that the subject property was leased to him except that he
promised that he would vacate it if petitioner would be able to show the boundaries of the titled lot.

95. Herminia Acbang v. Hon. Jimmy Luczon, Jr., et al.,

G.R. No. 164246

January 15, 2014.

Doctrine: In short, a judgment in favor of the plaintiff in an ejectment suit is immediately executory, but
the defendant, to stay its immediate execution, must: (1) perfect an appeal; (2) file a supersedeas bond;
and (3) periodically deposit the rentals becoming due during the pendency of the appeal. (Herminia
Acbang v. Hon. Jimmy Luczon, Jr., et al., G.R. No. 164246, January 15, 2014.)
Facts: Respondent Spouses Maximo and Heidi Lopez (Spouses Lopez) commenced an ejectment suit
against the petitioner, her son Benjamin Acbang, Jr. and his wife Jean (Acbangs) in the MTC of Alcala,
Cagayan. When the defendants did not file their answer, the MTC rendered its decision in favor of the
Spouses Lopez. Hence, the petitioner appealed to the RTC. In the meantime, the Spouses Lopez moved
for the execution of the decision pending appeal in the RTC, alleging that the defendants had not filed a
supersedeas bond to stay the execution. The Acbangs opposed the motion for execution pending
appeal, insisting that the failure of the Spouses Lopez to move for the execution in the MTC constituted
a waiver of their right to the immediate execution; therefore, there was nothing to stay, rendering the
filing of the supersedeas bond unnecessary. In his assailed order, Judge Luczon granted the motion for
immediate execution. The opposition of the spouses Lopez on the appeal taken by the Acbangs is hereby
denied because under the rules the losing party may appeal the case even if they did not post their
supercedeas bond. The spouses Lopez then are given 15 days from today within which to file their
memorandum and the Acbangs are also given similar period to file their reply on the memorandum of
the spouses Lopez. After which, the case shall be submitted for decision with or without the
memorandum from the parties. In the petition, the petitioner insists that the Spouses Lopez’s motion for
execution pending appeal should be filed before she posted a supersedeas bond. She argues that even if
the MTC’s decision was immediately executory, it did not mean that a motion for execution was
dispensable; and that the Spouses Lopez waived their right to the immediate execution when they did
not file a motion for execution in the MTC.

On the other hand, the Spouses Lopez claim that the issuance of a writ of execution was ministerial
because of the defendants’ failure to file a supersedeas bond prior to or at the time of the filing of their
notice of appeal in the MTC.

Issue: Whether Judge Luczon thereby committed grave error in granting the motion for immediate
execution of the Spouses Lopez without first fixing the supersedeas bond as prayed for by the Acbangs.

Ruling: As a general rule, a judgment in favor of the plaintiff in an ejectment suit is immediately
executory, in order to prevent further damage to him arising from the loss of possession of the property
in question. To stay the immediate execution of the said judgment while the appeal is pending the
foregoing provision requires that the following requisites must concur: (1) the defendant perfects his
appeal; (2) he files a supersedeas bond; and (3) he periodically deposits the rentals which become due
during the pendency of the appeal. The failure of the defendant to comply with any of these conditions
is a ground for the outright execution of the judgment, the duty of the court in this respect being
"ministerial and imperative." Hence, if the defendant-appellant perfected the appeal but failed to file a
supersedeas bond, the immediate execution of the judgment would automatically follow. Conversely,
the filing of a supersedeas bond will not stay the execution of the judgment if the appeal is not
perfected. Necessarily then, the supersedeas bond should be filed within the period for the perfection of
the appeal.

In short, a judgment in favor of the plaintiff in an ejectment suit is immediately executory, but the
defendant, to stay its immediate execution, must: (1) perfect an appeal; (2) file a supersede s bond; and
(3) periodically deposit the rentals becoming due during the pendency of the appeal. Although the
petitioner correctly states that the Spouses Lopez should file a motion for execution pending appeal
before the court may issue an order for the immediate execution of the judgment, the spouses Lopez
are equally correct in pointing out that they were entitled to the immediate execution of the judgment
in view of the Ac bangs failure to comply with all of the three abovementioned requisites for staying the
immediate execution. The filing of the notice of appeal alone perfected the appeal but did not suffice to
stay the immediate execution without the filing of the sufficient supersede s bond and the deposit of the
accruing rentals.

The foregoing notwithstanding, the decision of the R TC favored the petitioner because it declared the
judgment of the MTC void as far as she was concerned for lack of jurisdiction over her person. The RTC
thus directed the MTC to cause the service of the summons on her and to conduct further proceedings
without any delay. In effect, the supervening declaration of the nullity of the judgment being sought to
be executed against her has rendered moot and academic the issue in this special civil action as far as
she was concerned.

96. Fairland Knitcraft Corporation V. Arturo Loo Po

Gr No 217694

Doctrine: A complaint sufficiently alleges a cause of action for unlawful detainer if it recites the
following: (1) initially, possession of the property by the defendant was by contract with or by tolerance
of the plaintiff; (2) eventually, such possession became illegal upon notice by the plaintiff to the
defendant of the termination of the latter's right of possession; (3) thereafter, the defendant remained
in possession of the property, and deprived the plaintiff of the enjoyment thereof; and (4) within one (1)
year from the last demand on defendant to vacate the property, the plaintiff instituted the complaint for
ejectment.(Fairland Knitcraft Corporation V. Artuto Loo Po

Gr No 217694)
Facts: Fairland alleged it was the owner of a condominium unit in Cedar Mansion II in Pasig City. The said
unit was leased by Fairland to Po by verbal agreement, with a rental fee of P20,000 a month. Po
continuously failed to pay rent. Thus, Fairland opted not to renew the lease agreement anymore.
Fairland sent a formal letter to Po demanding he pay P220,000, representing the rental arrears, and that
he vacate the leased premises within 15 days from receipt of the letter. Despite receipt and the lapse of
the said 15-day period, Po neither tendered payment nor vacated the premises. Thus, Fairland filed the
complaint for unlawful detainer before the MeTC. Po failed to file an answer within the reglementary
period (within 10 days from service of summons). Thus, Fairland filed a motion to render judgment and
the MeTC considered the case submitted for decision. The MeTC dismissed the complaint for lack of
merit due to Fairland’s failure to prove its claim by preponderance of evidence. Fairland appealed,
claiming that an unlawful detainer case was a special civil action governed by summary procedure. Thus,
in cases where a defendant failed to file his answer, judgment should be based on the facts alleged in
the complaint, and there was no requirement that judgment must be based on facts proved by
preponderance of evidence. The RTC and CA affirmed. Hence, this petition.

Issues:

1. Whether or not Fairland’s complaint sufficiently alleges a cause of action for unlawful detainer

2. Whether or not the MeTC correctly rendered judgment, upon Po’s failure to

file an answer on time, based solely on the complaint without the need to consider the weight of
evidence

Ruling: Yes on both questions.

1. A complaint sufficiently alleges a cause of action for unlawful detainer if it recites the following: (1)
initially, possession of the property by the defendant was by contract with or by tolerance of the
plaintiff; (2) eventually, such possession became illegal upon notice by the plaintiff to the defendant of
the termination of the latter’s right of possession; (3) thereafter, the defendant remained in possession
of the property, and deprived the plaintiff of the enjoyment thereof; and (4) within 1 year from the last
demand on defendant to vacate the property, the plaintiff instituted the complaint for ejectment. There
is no question that the complaint filed by Fairland adequately alleged a cause of action for unlawful
detainer. The above-cited portions of the complaint sufficiently alleged that Fairland was the owner of
the subject property being leased to Po by virtue of an oral agreement. There was a demand by Fairland
for Po to pay rent and vacate before the complaint for unlawful detainer was instituted. The complaint
was seasonably filed within the one-year period prescribed by law. With all the elements present, there
was clearly a cause of action in the complaint for unlawful detainer.

2. Under the Rules of Summary Procedure, the weight of evidence is not considered when a judgment is
rendered based on the complaint. Section 6 of the Rules on Summary Procedure provide: Sec. 6. Effect
of failure to answer. Should the defendant fail to answer the complaint within the period. Above
provided, the court, motu proprio or on motion of the plaintiff, shall render judgment as may be
warranted by the facts alleged in the complaint and limited to what is prayed for therein. Section 6 is
clear that in case the defendant failed to file his answer, the court shall render judgment, either motu
proprio or upon plaintiff’s motion, based solely on the facts alleged in the complaint and limited to what
is prayed for. The failure of the defendant to timely file his answer and to controvert the claim against
him constitutes his acquiescence to every allegation stated in the complaint. Similarly, under Section 7,
Rule 70, if the defendant fails to answer the complaint within the period provided, the court has no
authority to declare the defendant in default. Instead, the court, motu proprio or on motion of the
plaintiff, shall render judgment as may be warranted by the facts alleged in the complaint and limited to
what is prayed for. In this case, Po failed to file his answer to the complaint despite proper service of
summons. He also failed to provide a sufficient justification to excuse his lapses. Thus, as no answer was
filed, judgment must be rendered by the court as may be warranted by the facts alleged in the
complaint. To recapitulate, as Po failed to file his answer on time, judgment shall be rendered based
only on the complaint of Fairland without the need to consider the weight of evidence. Consequently,
there is no more need to present evidence to establish the allegation of Fairland of its ownership and
superior right of possession over the subject property. Po’s failure to file an answer constitutes an
admission of his illegal occupation due to his non-payment of rentals, and of Fairland’s rightful claim of
material possession. Thus, judgment must be rendered finding that Fairland has the right to eject Po
from the subject property.

97. ELSA DEGAYO v. CECILIA MAGBANUA-DINGLASAN, et al

G.R. No. 173148 APRIL 6, 2015

FACTS:

Degayo and the tenants claims ownership on the belief that the area was an accretion to Lot No.
861. The respondents, on the other hand, argued that the disputed property was an abandoned
riverbed, which should rightfully belong to them to compensate for the erstwhile portion of Lot No.
7328, over which the Jalaud River presently runs.

Magbanua-Dinglasan filed a complaint for ownership and damages against the tenants with the
RTC (Civil Case 16047). Degayo sought to intervene but her motion was denies. Notably, Degayo never
bothered to question the interlocutory order denying her motion for intervention by filing a petition for
certiorari. Instead, Degayo initiated the present suit against the respondents for declaration of
ownership with damages involving the disputed parcel of land. The RTC rendered in favor of the
respondents which became final and executory. In another civil case (Civil Case 18328), the court, found
in favor of Degayo and declared the property in question as an accretion to Lot No. 861.

The CA granted the respondents’ appeal and reversed and set aside the decision of the RTC (Civil
Case 18328). The CA likewise noted that the previous decision (Civil Case 16047) is conclusive to the title
of the thing, being an aspect of the rule on conclusiveness of judgment. Degayo sought for
reconsideration but was denied.

ISSUE:

Whether the decision in Civil Case No. 16047 constitute res judicata.

HELD:

Yes, Res judicataliterally means "a matter adjudged; a thing judicially acted upon or decided; a
thing or matter settled by judgment." It also refers to the "rule that a final judgment or decree on the
merits by a court of competent jurisdiction is conclusive of the rights of the parties or their privies in all
later suits on points and matters determined in the former suit. It rests on the principle that parties
should not to be permitted to litigate the same issue more than once; that, when a right or fact has been
judicially tried and determined by a court of competent jurisdiction, or an opportunity for such trial has
been given, the judgment of the court, so long as it remains unreversed, should be conclusive upon the
parties and those in privity with them in law or estate.

It is beyond dispute that the judgment in Civil Case No. 16047 has attained finality in view of the
tenant’s abandonment of their appeal to the CA. Moreover, records show that that decision was
adjudicated on the merits, i.e., it was rendered after a consideration of the evidence or stipulations
submitted by the parties at the trial of the case by a court which had jurisdiction over the subject matter
and the parties.

DOCTRINE:

Doctrine of Res Judicata - rule that a final judgment or decree on the merits by a court of
competent jurisdiction is conclusive of the rights of the parties or their privies in all later suits on points
and matters determined in the former suit.

98. LORENZO SHIPPING CORPORATION v. DISTRIBUTION MANAGEMENT ASSOCIATION OF THE

PHILIPPINES
G.R. No. 155849 AUGUST 31, 2011

FACTS:

Maritime Industry Authority (MARINA) issued a Letter-Resolution, advising respondent

Distribution Management Association of the Philippines (DMAP) that a computation of the required
freight rate adjustment by MARINA was no longer required for freight rates officially considered or
declared deregulated in accordance with MARINA Memorandum Circular No. 153 (MC 153). For clarity,
MARINA issued MC 153 pursuant to Executive Order No. 213 (EO 213) entitled Deregulating Domestic
Shipping Rates promulgated by President Fidel V. Ramos on November 24, 1994. DMAP challenged the
constitutionality of EO 213 and commenced in CA a special civil action for certiorari and prohibition, with
prayer for preliminary mandatory injunction or temporary restraining order; these actions were
subsequently dismissed and such decision was upheld by the Court on appeal. DMAP then held a
general membership meeting where it reproduced the Sea Transport update wherein it was averred
among others that The Motion for Reconsideration filed with the Supreme Court was denied based on
technicalities and not on the legal issue DMAP presented and Supreme Court ruling issued in one month
only, normal lead time is at least 3 to 6 months. Lorenzo Shipping Corp, et al, alleges that such
publication constitutes indirect contempt.

ISSUE:

Whether the publication of the Sea Transport Update constitutes indirect contempt.

HELD:

No, the right of a lawyer, or of any other person, for that matter, to be critical of the courts and
their judges as long as the criticism is made in respectful terms and through legitimate channels have
long recognized and respected. The test for criticizing a judge’s decision is, therefore, whether or not the
criticism is bona fide or dine in good faith, and does not spill over the walls of decency and propriety.
Viewed through the prism of the test, the Sea Transport Update was not disrespectful, abusive, or
slanderous, and did not spill over the walls of decency and propriety. Thereby, the respondents were
not guilty of indirect contempt of court. In this regard, then, we need to remind that the power to
punish for contempt of court is exercised on preservative and not on the vindictive principle, and only
occasionally should a court invoke its inherent power in order to retain that respect without which the
administration of justice must falter or fail.

DOCTRINE:

Contempt of Court - a willful disregard or disobedience of a public authority. In its broad sense,
contempt is a disregard of, or disobedience to, the rules or orders of a legislative or judicial body or an
interruption of its proceedings by disorderly behavior or insolent language in its presence or so near
thereto as to disturb its proceedings or to impair the respect due to such a body. In its restricted and
more usual sense, contempt comprehends a despising of the authority, justice, or dignity of a court.