Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-2352 July 26, 1910
ELADIO ALONSO, plaintif-appellee,
vs.
TOMAS ILLAMOR, ET AL., defendants-appellants.
Ledesma, Sumulong and Quintos, for appellants.
J. C. Knudson, for appellee.
MORELAND, J.:
This is an action brouht to recover of the defendants the value of certain articles ta!en fro" a Ro"an Catholic Church located in the
"unicipalit# of Placer, and the rental value of the church and its appurtenances, includin the church ce"eter#, fro" the $$th da# of
%ece"ber, $&'$, until the "onth of April, $&'(. After hearin the evidence, the court belo) ave *ud"ent in favor of the plaintif for
the su" of P$,+,$, )ith interest at - per cent fro" the date of the *ud"ent. The said su" of P$,+,$ )as "ade up of t)o ite"s, one
of )hich, P.($, )as for the value of the articles ta!en fro" the church, and the other, P,(', the rental value of the pre"ises durin
the occupations b# defendants. /ro" this *ud"ent the defendants appealed to this court.
0t appears that the defendants )ere on the $$th da# of %ece"ber, $&'$, "e"bers of the "unicipal board of the "unicipalit# of
Placer, and that the# on that date addressed to the plaintif in this case, )ho )as the priest in chare of the church, its
appurtenances and contents, the follo)in letter1
P2ACER, 11th December, 1901.
R. P. E2A%03 A23N43, Benedicto, 4uriao.
E4TEEME% PA%RE1 After salutin #ou, )e ta!e the libert# of )ritin #ou that in the "unicipalit# of )hich )e have chared )e
have received an order fro" the provincial 5scal, dated the +th instant, )hich sa#s1 6The ce"eteries, convents, and the
other buildins erected on land belonin to the to)n at the e7pense of the to)n and preserved b# it belon to the to)n,
and for this reason the "unicipalit# is under the obliation of ad"inisterin the" and of collectin the revenues therefro",
and for this reason )e notif# #ou that fro" this date all of the revenues and products therefro" "ust be turned into the
treasur# of the "unicipalit# in order that the people "a# properl# preserve the".
0n the sa"e )a# )e notif# #ou that the i"ae of 4t. 8icente )hich is no) in the church, as it is an i"ae donated to the
people b# its o)ner, b# virtue of said order is also the propert# of said people, and therefore the al"s )hich are iven it b#
the devotees thereof "ust be also turned into the "unicipal treasur# for the proper preservation of the church and for other
necessar# purposes. 9e hope that #ou )ill vie) in the proper liht and that #ou )ill deliver to the bearer of this letter the
!e# of the al"s bo7 of the said i"ae in order that )e "a# co"pl# )ith our obliation in confor"it# )ith the dispositions of
said order.
9e be to re"ain as al)a#s b# #our spiritual sons. :. B. 4. M.
;4ined< AN%RE4 3=E%A.
T3MA4 8022AM3R.
AN%RE4 CA20NA>AN.
BERNAR%0N3 TAN%3?.
E>4EB03 20R03.
E2E>TER03 M3N%A?A.
MA@0M3 %E232A.
4EA>N%3 BECERR3.
3N3/RE E20MANCE.
3n the $Bth of %ece"ber, $&'$, the defendants too! possession of the church and its appurtenances, and also of all of the personal
propert# contained therein. The plaintif, as priest of the church and the person in chare thereof, protested aainst the occupation
thereof b# the defendants, but his protests received no consideration, and he )as su""aril# re"oved fro" possession of the church,
its appurtenances and contents.
The onl# defense presented b# the defendants, e7cept the one that the plaintif )as not the real part# in interest, )as that the church
and other buildins had been erected b# funds voluntaril# contributed b# the people of that "unicipalit#, and that the articles )ithin
the church had been purchased )ith funds raised in li!e "anner, and that, therefore, the "unicipalit# )as the o)ner thereof.
The Cuestion as to the o)nership of the church and its appurtenances, includin the convent and ce"eter#, )as before this court on
the DBrd da# of 4epte"ber, $&',, in an action entitled 6The Ro"an Catholic Apostolic Church aainst the "unicipalit# of
Placer.6
$
4ubstantiall# the sa"e facts )ere presented on the part of the defendants in that case as are presented b# the defendants
in this. The Cuestion there litiated )as the clai" upon the part of the "unicipalit# of o)nership of said church and its appurtenances
on the round that accordin to 4panish la) the Ro"an Catholic Apostolic Church )as not the o)ner of such propert#, havin onl#
the use thereof for ordinar# ecclesiastical and reliious purposes, and that the true o)ner thereof )as the "unicipalit# or the 4tate b#
reason of the contributions b# the", or b# the people, of the land and of the funds )ith )hich the buildins )ere constructed or
repaired. The court decided in that case that the clai" of the defendants )as not )ell founded and that the propert# beloned to the
Ro"an Catholic Church. The sa"e Cuestion )as discussed and decided in the case of arlin !s. "amire# ;. Phil. Rep., ($<, and the
case of $he %unicipalit& of 'once !s. "oman Catholic (postolic Church in 'orto "ico ;D, 4up. Ct. Rep., .B., - 3f. AaE., $D$B<.
9e have "ade a careful e7a"ination of the record and the evidence in this case and )e have no doubt that the propert# sued for
)as, at the ti"e it )as ta!en b# the defendants, the propert# of the Ro"an Catholic Church, and that the seiEure of the sa"e and
occupation of the church and its appurtenances b# the defendants )ere )ronful and illeal. 9e are also convinced, fro" such
e7a"ination, that the conclusions of the court belo) as to the value of the articles ta!en b# the defendants and of the rent of the
church for the ti"e of its illeal occupation b# the defendants )ere correct and proper. 9hile so"e ob*ection )as "ade on appeal b#
counsel for the defendants that the value of the articles ta!en and of the rent of the church and its appurtenances had not been
proved b# co"petent evidence, no ob*ection to the introduction of the evidence of value )as "ade at the trial and )e can not
consider that Cuestion raised for the 5rst ti"e here.
9e have carefull# e7a"ined the assin"ents of error "ade b# counsel for defendants on this appeal. 9e 5nd none of the" )ell
founded. The onl# one )hich deserves especial attention at our hands is the one )herein the defendants assert that the court belo)
erred in per"ittin the action to be brouht and continued in the na"e of the plaintif instead of in the na"e of the bishop of the
diocese )ithin )hich the church )as located, or in the na"e of the Ro"an Catholic Apostolic Church, as the real part# in interest.
0t is undoubted the bishop of the diocese or the Ro"an Catholic Apostic Church itself is the real part# in interest. The plaintif
personall# has no interest in the cause of action. 4ection $$( of the Code of Civil Procedure reCuires that ever# action "ust be
prosecuted in the na"e of the real part# in interest. The plaintif is not such part#.
4ection $$' of the Code of Civil Procedure, ho)ever, provides1
4EC. $$'. (mendments in general. F The court shall, in furtherance of *ustice, and on such ter"s, if an#, as "a# be proper,
allo) a part# to a"end an# pleadin or proceedin and at an# stae of the action, in either the Court of /irst 0nstance or the
4upre"e Court, b# addin or stri!in out the na"e of an# part#, either plaintif or defendant, or b# correctin a "ista!e in
the na"e of a part#, or a "ista!en or inadeCuate alleation or description in an# other respect so that the actual "erits of
the controvers# "a# speedil# be deter"ined, )ithout reard to technicalities, and in the "ost e7peditious, and ine7pensive
"anner. The court "a# also, upon li!e ter"s, allo) an ans)er or other pleadin to be "ade after the ti"e li"ited b# the
rules of the court for 5lin the sa"e. 3rders of the court upon the "atters provided in this section shall be "ade upon
"otion 5led in court, and after notice to the adverse part#, and an opportunit# to be heard.
4ection +'B of the sa"e code provides1
4EC. +'B. Judgment not to be re!ersed on technical grounds. F No *ud"ent shall be reversed on for"al or technical
rounds, or for such error as has not pre*udiced the real rihts of the e7ceptin part#.
9e are con5dent under these provisions that this court has full po)er, apart fro" that po)er and authorit# )hich is inherent, to
a"end the process, pleadins, proceedins, and decision in this case b# substitutin, as part# plaintif, the real part# in interest. Not
onl# are )e con5dent that )e ma& do so, but )e are convinced that )eshould do so. 4uch an a"end"ent does not constitute, reall#
a chane in the identit# of the parties. The plaintif asserts in his co"plaint, and "aintains that assertion all throuh the record, that
he is enaed in the prosecution of this case, not for hi"self, but for the bishop of the dioceseFnot b# his o)n riht, but b# riht of
another. Ge see!s "erel# to do for the bishop )hat the bishop "iht do for hi"self. Gis o)n personalit# is not involved. Gis o)n
rihts are not presented. Ge clai"s no interest )hatever in the litiation. Ge see!s onl# the )elfare of the reat church )hose servant
he is. Aladl# per"its his identit# to be )holl# s)allo)ed up in that of his superior. The substitution, then, of the na"e of the bishop of
the diocese, or the Ro"an Catholic Apostolic Church, for that of Padre Alonso, as part# plaintif, is not in realit# the substitution of one
identit# for another, of one part# for another, but is si"pl# to "a!e the for" e7press the substance. The substance is there. 0t
appears all throuh the proceedins. No one is deceived for an instant as to )hose interest are at sta!e. The for" of its e7pression is
alone defective. The substitution, then, is not substantial but for"al. %efect in "ere for" can not possibl# so lon as the substantial
is clearl# evident. /or" is a "ethod of speech used to e7press substance and "a!e it clearl# appear. 0t is the "eans b# )hich the
substance reveals itself. 0f the for" be fault# and still the substance sho)s plainl# throuh no, har" can co"e b# "a!in the for"
accuratel# e7pressive of the substance.
No one has been "isled b# the error in the na"e of the part# plaintif. 0f )e should b# reason of this error send this bac! for
a"end"ent and ne) trial, there )ould be on the retrial the sa"e co"plaint, the sa"e ans)er, the sa"e defense, the sa"e interests,
the sa"e )itnesses, and the sa"e evidence. The na"e of the plaintif )ould constitute the onl# diference bet)een the old trial and
the ne). 0n our *ud"ent there is not enouh in a na"e to *ustif# such action.
There is nothin sacred about processes or pleadins, their for"s or contents. Their sole purpose is to facilitate the application of
*ustice to the rival clai"s of contendin parties. The# )ere created, not to hinder and dela#, but to facilitate and pro"ote, the
ad"inistration of *ustice. The# do not constitute the thin itself, )hich courts are al)a#s strivin to secure to litiants. The# are
desined as the "eans best adapted to obtain that thin. 0n other )ords, the# are a "eans to an end. 9hen the# lose the character
of the one and beco"e the other, the ad"inistration of *ustice is at fault and courts are correspondinl# re"iss in the perfor"ance of
their obvious dut#.
The error in this case is purel# technical. To ta!e advantae of it for other purposes than to cure it, does not appeal to a fair sense of
*ustice. 0ts presentation as fatal to the plaintifHs case s"ac!s of s!ill rather than riht. A litiation is not a a"e of technicalities in
)hich one, "ore deepl# schooled and s!illed in the subtle art of "ove"ent and position, entraps and destro#s the other. 0t is, rather,
a contest in )hich each contendin part# full# and fairl# la#s before the court the facts in issue and then, brushin aside as )holl#
trivial and indecisive all i"perfections of for" and technicalities of procedure, as!s that *ustice be done upon the "erits. 2a)suits,
unli!e duels, are not to be )on b# a rapierHs thrust. Technicalit#, )hen it desserts its proper oIce as an aid to *ustice and beco"es its
reat hindrance and chief ene"#, deserves scant consideration fro" courts. There should be no vested rihts in technicalities. No
litiant should be per"itted to challene a record of a court of these 0slands for defect of for" )hen his substantial rihts have not
been pre*udiced thereb#.
0n orderin this substitution, )e are in accord )ith the best *udicial thouht. ;McJeihan !s. Gop!ins, $& Neb., BBK %i7on !s. %i7on, $&
0a., +$DK Godes !s. Ji"ball, (& 0a., +..K 4aner !s. Ne)ton, $B( Mass., B',K Aeore !s. Reed, $'$ Mass., B.,K Bo)den !s. Burnha",
+& /ed. Rep., .+DK Phipps and Co. !s. Gurlburt, .' /ed. Rep., D'DK Mc%onal !s. 4tate, $'$ /ed. Rep., $.$K Morford !s. %ifenboc!er, D'
N. 9., -''K Costelo !s. Costelo !s. Cro)ell, $B( Mass., D,'K 9hita!er !s. Pope, D 9oods, (-B, /ed. Cas. no. $.+D,K Miller !s. Polloc!,
&& Pa. 4t., D'DK 9ilson!s. Presb#terian Church, +- Aa., ++(K 9ood !s. Circuit =ude, ,( Mich., +D$K 0nsurance Co, !s. Mueller, .. 0ll.,
DDK /ar"an !s. %o#le, $D, Mich., -&-K >nion Ban! !s. Mott, $& Go). Pr., $$(K R. R. Co. !s. Aibson, ( 3hio 4t., $(+K Gu"e !s. Jell#, D,
3re., B&,.<
0t is therefore, ordered and decreed that the process, pleadins, proceedins and decision in this action be, and the sa"e are hereb#,
a"ended b# substitutin the Ro"an Catholic Apostolic Church in the place and stead of Eladio Alonso as part# plaintif, that the
co"plaint be considered as thouh oriinall# 5led b# the Catholic Church, the ans)er thereto "ade, the decision rendered and all
proceedins in this case had, as if the said institution )hich /ather Eladio Alonso undertoo! to represent )ere the part# plaintif, and
that said decision of the court belo), so a"ended, is aIr"ed, )ithout special 5ndin as to the costs.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-29155 No!"#$"% 5, 192&
JOSE'INA RU(IO DE LARENA, plaintif-appellant,
vs.
)ERMENEGILDO ILLANUEA, defendant-appellee.
(bad Santos, Camus and Delgado and Jose %ontano for appellant.
Del "osario and Del "osario for appellee.

OSTRAND, J.:
The case at bar is a seCuel to case A. R. No. D$.'-, =ose5na Rubio de 2arena vs. Ger"eneildo 8illanueva, decided on March D-,
$&D(.
$
0n that case )e aIr"ed a decision of the Court of /irst 0nstance orderin the rescission of a lease of the Taca*an 4uar
Plantation and the pa#"ent b# the defendant-lessee of the unpaid balance of the rent for the aricultural #ear $&D'-$&DD in the su"
of P+,&(&.D, )ith interest fro" Auust D-, $&DD, an for P,,''' in rent for the aricultural #ear $&D$-$&DB. The decision also provided
that the possession of the leased land be delivered to the plaintif.
4hortl# after the record )as returned to the court belo), a )rit of e7ecution )as issued, but before lev# )as "ade the parties ca"e
to an aree"ent, under )hich the "one# *ud"ent )as to be satis5ed b# the pa#"ent of P$',+'' in cash and the transfer to the
plaintif of a d)ellin house situated in the "unicipalit# of Bais. The aree"ent )as carried out in accordance )ith its ter"s, and on
4epte"ber B', $&D(, the follo)in docu"ent )as e7ecuted b# the plaintif1
Gabiendo lleado a un convenio entre la Cue subscribe, e*ecutante, en la causa civil No. -. decidida por la Corte 4upre"a, #
el e*ecutado, %on Ger"eneildo 8illanueva, por la presente declaro haber recibido del 4herif Provincial de Neros 3riental, #
"i entera satisfaccion la su"a de dieE "il Cuinientos pesos ;P$',+''<, "as una casa residencial con su solar, situada en la
plaEa del Municipio de Bais, Provincia de Neros 3riental, cu#as descripciones aparecen an un ocu"ento aparte, por el
i"portnte de la e*ecusacion e7pidida por el =usado de Neros 3riental al $( de "a#o de $&D(, en vitud de una decision de
la Corte 4upre"a. Con este Cueda de5nitiva"ente cu"pli"entada esta e*ecucion.
? para Cue asi conste, 5r"o la presente en el Municipio de Bais, Provincia de Neros 3riental, 0. /., ante el 4herif Provincial
de esta Provincia de Neros 3riental # el Notario Publico %on /rancisco Ro"ero, Cue rati5ca este co"pro"iso.
;/da.< =34E/0NA R>B03, 8da. %E 2ARENA
/ir"ado en presencia de1
;/dos.< BRA>203 R>B03
/RANC04C3 P0NER3
;ACJN392E%AMENT<
0n the "eanti"e, the defendant had harvested the suarcane crop produced in the aricultural #ear $&DD-$&D(, and after havin
satis5ed the aforesaid "one# *ud"ent, he also continued in possession of the plantation lon enouh to appropriate to hi"self the
follo)in ratoon cane crop.
The present action )as brouht on April $B, $&D+, but the last a"ended co"plaint, settin forth three causes of action, )as not 5led
until =une $., $&D.. As her 5rst cause of action the plaintif, after a preli"inar# state"ent of the oriin of the controvers#, allees that
)hile case A. R. No. D$.'- )as on appeal to the 4upre"e Court, the defendant !ne) positivel# that the aforesaid lease )as declared
rescinded b# the Court of /irst 0nstance on 4epte"ber ,, $&DB, and that he, the defendant, also !ne) that he thereafter )as not
entitled to the possession of the aforesaid haciendaK that he, nevertheless, in bad faith continued in such possession durin the
aricultural #ear $&DD-$&D( and appropriated to hi"self the cane harvest for that #ear, )hich after deductin the share of the suar
central, produced $,-.&.'D piculs for his o)n bene5t, )hich suar )as sold b# hi" for the su" of P$B a piculK that the plaintif has
de"anded pa#"ent to her of the total value of said $,-.&.'D piculs, a"ountin to PD$,,D..D-, but that the defendant refuses to pa#.
The plaintif, therefore, as!s *ud"ent for the su" of PD$,,D..D- upon the 5rst cause of action.
/or the second cause of action the plaintif allees that under the contract of lease of the Taca*an Gacienda, one of the obliations
assu"ed b# the defendant )as that he )ould use the care of a ood father of the fa"il# in conservin the tools, aricultural
i"ple"ents, draft ani"als, and other efects enu"erated in an inventor# "ade at the ti"e the defendant entered in possession
under the leaseK that he )as further obliated to return said propert# to the plaintif, but that he return said propert# to the plaintif,
but that he returned onl# a part that he returned onl# a part thereof and failed to returned onl# a part thereof and failed to return (
carabaos, ( vacunos, $ corn "ill, ( )aons, $'- steel rails, $( plo)s, $ table, $ scale, an $ telephone, the total value of the propert#
enu"erated bein PB,+&- for )hich a"ount, plus P+'' in da"aes, the plaintif as!s *ud"ent under her second cause of action.
As a third cause of action the plaintif allees that the harvest of suar cane illeall# "ade b# the defendant in $&D( left ratoon suar
cane in the 5elds of the hacienda, )hich suar can )as the propert# of the plaintif, and that durin the #ear $&D+, the defendant
illeall# harvested said ratoon cane toether )ith so"e recentl# planted cane, )hich harvested after deductin the share of the
suar central, produced $,-$B.D+ piculs of suar, )hich the defendant sold for his o)n bene5t at the price of P$B per picul, the total
a"ount received b# hi" bein PD',&-D.D+ for )hich the plaintif de"ands *ud"ent. la)phi1.net
0n his ans)er to the 5rst and third causes of action, the defendants allees that accordin to the pleadins in case A. R. No. D$.'-,
the t)o causes of action )ere included in that case and, therefore, "ust be considered res ad*udicata. 0n reard to the second cause
of action the defendant pleads the eneral issue and sets up as a special defense that assu"in that the propert# referred to in said
cause of action )as "issin, it loss )as due to its total e7tinction b# ordinar# use, for )hich the defendant could not be held
responsible. /or all three causes of action, the defendant sets up as a special defense the docu"ent e7ecuted b# the plaintif on
4epte"ber B', $&D(, ac!no)ledin the satisfaction of the *ud"ent in case A. R. No. D$.'-.
>pon trial the Court of /irst 0nstance sustained the defendantHs special defense and absolved hi" fro" the co"plaint )ith the cost
aainst the plaintif, )hereupon the latter appealed to this court.
9e do not thin! that the court belo) erred in absolvin the defendant fro" liabilit# upon the second cause of action. 0t is not )ithout
sini5cance that in her oriinal co"plaint the plaintif clai"ed onl# + plo)s, - carts, B carabaos an ( vacunos, the total value of )hich
)as alleed to be P$,B-'K in the 5rst a"ended co"plaint 5led over t)o #ears later, the sa"e clai" )as "ade, but in the last
a"ended co"plaint a nu"ber of other articles )ere included, thus increasin the clai" to PB,+&-. The court belo) found that the
)eiht of the evidence sho)ed that the "issin draft ani"als died fro" rinderpest and that the other personal propert# )as turned
over to the provincial sherif for deliver# to the plaintif before the )rit of e7ecution )as returned to the court. 0f so, the action )ould
lie aainst the sherif rather than aainst the defendant.
As to the 5rst cause of action the defendant arues that it )as included in the pra#er of an a"ended co"plaint 5led in case A. R. No.
D$.'- and that, althouh no e7press deter"ination thereof )as "ade in the decision of the case, it "ust, nevertheless, be rearded
as res *udicata. That such is not the case is ver# clear. The Code of Civil Procedure sa#s1
That onl# is dee"ed to have been so ad*uded in a for"er *ud"ent )hich appears upon its face to have been so ad*uded,
or )hich )as actuall# and necessaril# included therein or necessar# thereto. ;4ec. B'., Code of Civil Proc.<
But the defendant "aintains that the plaintif havin had an opportunit# to ventilate the "atter in the for"er case, she cannot no)
enforce the sa"e cause of action in the present case. Properl# spea!in, this aru"ent does not involve the doctrine of res
*udicata but rests on the )ell-!no)n an, in A"erican la), 5r"l# established principle that a part# )ill not be per"itted to split up a
sinle cause of action an "a!e it the basis for several suits. But that is not this case. The rule is )ell established that )hen a lease
provides for the pa#"ent of the rent in separate install"ents, each install"ent is an independent cause of action, thouh it has been
held and is ood la), that in an action upon such a lease for the recover# of rent, the install"ents due at the ti"e the action brouht
"ust be included in the co"plaint an that failure to o so )ill constitute a bar to a subseCuent action for the pa#"ent of that rent. The
aforesaid action, A. R. No. D$.'-, )as brouht on Auust DB, $&DD, the plaintif de"andin pa#"ent of then sue rent in addition to
the rescission of the lease. 3n =ul# D., $&DB, the plaintif 5led a "otion for an a"end"ent to pararaph - of the co"plaint addin to
that pararaph the follo)in sentence1
:ue ta"bien ha vencido #a el tercer ano el arrenda"iento de la 5nca en cuestion # Cue ta"poco ha paado el de"andao el
canon correspondiente a icho ano.
The plaintif also a"ended the pra#er of the co"plaint b# as!in *ud"ent for rent for #ears subseCuent to $&DD. The "otion )as
ranted, and the case ca"e up for trial on =ul# B', $&DB, and on 4epte"ber ,, $&DB, the trial court rendered its decision ivin
*ud"ent for rent up to and includin the rent for the aricultural #ear endin in $&DB. The lease did not provide for pa#"ent of rent
in advance or at an# de5nite ti"e, an it appears plainl# fro" the record that the rent for an aricultural #ear )as not considered due
until the end of the correspondin #ear. 0t follo)s that the rent for the aricultural #ear $&DD-$&D( ha not beco"e sue ti"e of the trial
of the case and that conseCuentl# the trial court could not render *ud"ent therefore. The action referred to is, therefore, no bar to
the 5rst cause of action in the present litiation.
The defendant places "uch )eih upon the docu"ent of 4epte"ber B', $&D(, hereinbefore Cuoted. The docu"ent spea!s for itself,
and it )ill be readil# seen that it is "erel# a receipt for the satisfaction of the "one# *ud"ent in the case A. R. No. 2-D$.'- and has
nothin to )ith the present case.
The onl# Cuestion in reard to the 5rst cause of action relates to the a"ount of the da"aes. The plaintif contends that the
defendant )as a possessor in bad faith, and therefore, "ust pa# the value of the fruits of the land in accordance )ith article (++ of
the Civil Code. >nder the circu"stances of the case, )e cannot so hold. The defendant held possession under the contract of lease
until said contract )as rescinded. The contract contained no special provision for the procedure in efectin the rescission, and it
follo)s that it could onl# be acco"panied b# a 5nal *ud"ent of the court. The *ud"ent in case A. R. No. 2-D$'.'- did not beco"e
5nal until March D., $&D, )hen our decision on appeal )as rendered. As that "ust have been close to the end of the harvest and
"illin of the suar crop for the period to )hich the 5rst cause of action refers, )e do not thin! that the defendant should be reCuired
to pa# "ore than the a"ount of the stipulated rent for the period, i. e., the su" of P,,''' )ith interest rent for that period, i. e., the
su" of P,,''' )ith interest. ;2er"a vs. %e la CruE, . Phil., +,$.<
The action for ter"inatin the lease )as brouht under article $$D( of the Civil Code, an it "a#, perhaps, he said that properl#
spea!in, the sub*ect "atter of the action )as a resolution of the contract an not a rescission. That "a# be true, but it is a distinction
)ithout a diferenceK in their case a *udicial declaration )ould be necessar# for the cancellation of the contract in the absence of a
special aree"ent.
8er# little need be said in reard to the third cause of action. 0t relates to a period subseCuent to the co"plete ter"ination of the
lease b# 5nal *udicial order. The defendant had then no riht )hatever to the possession of the land or to the fruits thereof, and in
re"ovin the fruits, he acted in bad faith. This bein the case, he "ust pa# for the fruits received b# hi", less the necessar#
e7penses of production. ;Arts. (++ and (+B of the Civil Code.< As his bad faith co""ence lon before the fruits in Cuestion )ere
produced, he is not entitled to an# part of the net proceeds of the crop. The evidence sho)s that the net ratoon crop of the #ear
$&D(-$&D+ )as $,-$B.D+ piculs of suar, and accordin to the defendantHs o)n state"ent, the "ar!et value of the suar )as in the
neihborhood of P$$ per picul an the costs of production about P(.+'. The net result is that under the third cause of action, the
defendant "ust pa# to the plaintif the su" of P$',(,-.$B )ith interest.
/or the reason stated, the *ud"ent of the court belo) is aIr"ed in reard to the second cause of action. 0t is reversed as to the 5rst
and third causes of action, and it is hereb# ordered that the plaintif have and recover fro" the defendant the su" of P$,,(,-.$B )ith
interest at the rate of - per cent per annu" fro" April $B, $&D+, the date of the 5lin of the co"plaint. No costs )ill be allo)ed. 4o
ordered.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-3295& No!"#$"% &, 1930
(LOSSOM AND COMPAN*, INC., plaintif-appellant,
vs.
MANILA GAS CORPORATION, defendant-appellee.
+ar!e& and ,-rien for appellant.
"oss, La)rence and Selph and John . %iller for appellee.
4TATEMENT
0n its co"plaint 5led March B, $&D., the plaintif allees that on 4epte"ber $', $&$,, it entered into a contract )ith the defendant in
)hich the plaintif pro"ised and undertoo! to purchase and receive fro" the defendant and the defendant areed to sell and deliver
to the plaintif, for a period of four #ears, three tons of )ater as tar per "onth fro" 4epte"ber to =anuar# $, $&$& and t)ent# tons
per "onth after =anuar# $, $&$&, for the re"ainin period of the contractK one-half ton of coal as tar a "onth fro" 4epte"ber to
=anuar# $, $&$&, and si7 tons per "onth after =anuar# $, $&$&, for the re"ainder of the contract, deliver# to be "ade at the plant of
the defendant in the Cit# of Manila, )ithout containers and at the price of P-+ per ton for each !ind of as tar, it bein areed that
this price should prevail onl# so lon as the ra) "aterials F coal and crude oil Fused b# the defendant in the "anufacture of as
should cost the defendant the sa"e price as that prevailin at the ti"e of the contract, and that in the event of an increase or
decrease in the cost of ra) "aterial there )ould be a correspondin increase or decrease in the price of the tar. That on =anuar# B$,
$&$&, this contract )as a"ended so that it should continue to re"ain in force for a period of ten #ears fro" =anuar# $, $&$&, and it
)as areed that the plaintif should not be oblied to ta!e the Cualities of the tars reCuired durin the #ear $&$&, but that it "iht
purchase tars in such Cuantities as it could use to advantae at the stipulated price. That after the #ear $&$& the plaintif )ould ta!e
at least the Cuantities speci5ed in the contract of 4epte"ber $', $&$,, to be ta!en fro" and after =anuar# $, $&$&, and that at its
option it )ould have the riht to ta!e an# Cuantit# of )ater as tar in e7cess of the "ini"u" Cuantit# speci5ed in that contract and
up to the total a"ount of output of that tar of defendantHs plant and also to ta!e an# Cuantit# of coal as tar in e7cess of the
"ini"u" Cuantit# speci5ed in that contract and up to +' per cent of defendantHs entire output of coal as tar, and that b# ivin the
defendant ninet# da#sH notice, it )ould have the riht at its option to ta!e the entire output of defendantHs coal as tar, e7cept such
as it "iht need for its o)n use in and about its plant. That in consideration of this "odi5cation of the contract of 4epte"ber $',
$&$,, plaintif areed to purchase fro" the defendant of certain piece of land l#in ad*acent to its plant at the price of P+ per sCuare
"eter, the proof of )hich is evidenced b# E7hibit C. That pursuant to E7hibit C, defendant sold and conve#ed the land to the plaintif
)hich in turn e7ecuted a "ortae thereon to the defendant for P$.,$('.D', to secure the pa#"ent of the balance of the purchase
price.
0t is then alleed1
8000. That about the last part of =ul#, $&D' the defendant herein, the Manila Aas Corporation )illfull#, and deliberatel#
breached its said contract, E7hibit C, )ith the plaintif b# ceasin to deliver an# coal and )ater as tar to it thereunder solel#
because of the increased price of its tar products and its desire to secure better prices therefor than plaintif )as oblied to
pa# to it, not)ithstandin the freCuent and urent de"ands "ade b# the plaintif upon it to co"pl# )ith its aforesaid
contract b# continuin to deliver the coal and )ater as tar to the plaintif thereunder, but the said defendant Latl# refused
to "a!e an# deliveries under said contract, and 5nall# on Nove"ber DB, $&DB, the plaintif )as forced to co""ence action
aainst the defendant herein in the Court of /irst 0nstance of Manila, bein case No. D+B+D, of that court entitled HBlosso" M
Co., plaintif, !s. Manila Aas Corporation, defendant,H to recover the da"aes )hich it had up to that ti"e sufered b# reason
of such Larant violation of said contract on the part of the defendant herein, and to obtain the speci5c perfor"ance of the
said contract and after due trial of that action, *ud"ent )as entered therein in favor of the plaintif herein and aainst the
said defendant, the Manila Aas Corporation, for the su" of PD-,$$&.',, as the da"aes sufered b# this plaintif b# the
defendantHs breach of said contract fro" =ul#, $&D', up to and includin 4epte"ber, $&DB, )ith leal interest thereon fro"
Nove"ber DB, $&DB, and for the costs but the court refused to order the said defendant to resu"e the deliver# of the coal
and )ater as tar to the plaintif under said contract, but left the plaintif )ith its re"ed# for da"aes aainst said
defendant for the subseCuent breaches of said contract, )hich said decision, as sho)n b# the cop# attached hereto as
E7hibit A, and "ade a part hereof, )as aIr"ed b# our 4upre"e Court on March B, $&D-K
0@. That after the defendant had )illfull# and deliberatel# violated its said contract as herein-before alleed, and the plaintif
sufered reat da"ae b# reason thereof, the plaintif clai"ed the riht to of- set its da"aes aainst the balance due fro"
it to said defendant on account of the purchase of said land fro" the defendant, and i""ediatel# thereupon and
not)ithstandin said defendant )as *ustl# indebted to the plaintif at that ti"e as sho)n b# the *ud"ent of the Court
E7hibit A, in "ore that four ti"es the a"ount due to it fro" the plaintif, the said defendant caused to be presented aainst
the plaintif a foreclosure action, !no)n as the Manila Aas Corporation !ersus Blosso" M Co"pan#, No. D(D-., of the Court
of /irst 0nstance of Manila, and obtained *ud"ent therein orderin that Blosso" M Co"pan# pa# the last install"ent and
interest due on said land or else the land and i"prove"ents placed thereon b# the plaintif )ould be sold as provided b# la)
in such cases to satisf# the sa"e, and the said defendant proceeded )ith the sale of said propert# under said *ud"ent and
did ever#thin in its po)er to sell the sa"e for the sole purpose of crushin and destro#in the plaintifHs business and thus
renderin it i"possible for the plaintif herein to continue )ith its said contract in the event that said defendant "iht in the
future consider it "ore pro5table to resu"e perfor"ance of the sa"e, but fortunatel# the plaintif )as able to redee" its
propert# as )ell as to co"pl# )ith its contract and continued de"andin that the defendant perfor"ed its said contract and
deliver to it the coal and )ater as tar reCuired thereb#.
That the defendant "ade no deliveries under its contract, E7hibit C, fro" =ul#, $&D' to March D-, $&D-, or until after the 4upre"e
Court aIr"ed the *ud"ent of the lo)er court for da"aes in the su" of PD-, $$&.',.
$
0t is then alleed that1
. . . 3n March D-, $&D- the said defendant ofered to resu"e deliver# to the plaintif fro" that date of the "ini"u" "onthl#
Cuantities of tars stated in its contract ,and the plaintif believin that the said defendant )as at least oin to tr# to act in
ood faith in the further perfor"ance of its said contract, co""enced to accept deliveries of said tars fro" it, and at once
ascertained that the said defendant )as deliberatel# charin it prices "uch hiher than the contract price, and )hile the
plaintif accepted deliveries of the "ini"u" Cuantities of tars stated in said contract up to and includin =anuar#, $&D.,
;althouh it had de"anded deliveries of larer Cuantities thereunder, as hereinafter alleed< and paid the increased prices
de"anded b# the defendant, in the belief that it )as its dut# to "ini"iEe the da"aes as "uch as possible )hich the
defendant )ould be reCuired to pa# to it b# reason of its violation of said contract, it has in all cases done so under protest
and )ith the e7press reservation of the riht to de"and fro" the said defendant an ad*ust"ent of the prices chared in
violation of its contract, and the riht to the pa#"ent of the losses )hich it had and )ould sufer b# reason of its refusal to
"a!e additional deliveries under said contract, and it also has continuousl# de"anded that the said defendant furnish to it
state"ents supported b# its invoices sho)in the cost prices if its ra) "aterials F coal and crude oil F upon )hich the
contract price of the tars in Cuestion is 57ed, )hich is the onl# )a# the plaintif has to calculate the true price of said tars,
but said defendant has and still refuses to furnish such infor"ation, and )ill continue to refuse to do so, unless ordered to
furnish such infor"ation to the plaintif b# the court, and the plaintif believes fro" the infor"ation )hich it no) has and so
allees that the said defendant has overchared it on the deliveries of said tars "entioned in the su" of at least P$',''', all
in violation of the rihts of the plaintif under its said contract )ith the defendant.
That on =anuar# B$, $&D- and pursuant to E7hibit C. plaintif noti5ed the defendant in )ritin that co""encin )ith the "onth of
Auust, $&D- it desired to ta!e deliver# of +' per cent of defendantHs coal tar production for that "onth and that on Nove"ber $,
$&D-, it desired to ta!e the entire output of defendantHs coal as tar, but that the defendant refused and still refuses to "a!e such
deliveries unless plaintif )ould ta!e all of its )ater as tar production )ith the desired Cuantit# of coal as tar )hich refusal )as a
plain violation of the contract. That on =anuar# D&, $&D., and in accord )ith E7hibit C, plaintif noti5ed the defendant in )ritin that
)ithin ninet# da#s after the initial deliver# to it of its total coal as tar production or in /ebruar#, $&D., it )ould reCuire +' per cent of
its total )ater as tar production and that in April $&D., it )ould reCuire the total output of the defendant of both coal and )ater as
tars, and that it refused to "a!e either of such deliveries.
0t is then alleed1
@08. That as sho)n b# the foreoin alleations of this co"plaint, it is apparent that not)ithstandin the plaintif in this case
has at all ti"es faithfull# perfor"ed all the ter"s and conditions of said contract, E7hibit C, on its part of be perfor"ed, and
has at all ti"es and is no) read#, able and )illin to accept and pa# for the deliveries of said coal and )ater as tars
reCuired b# said contract and the notices iven pursuant thereto, the said defendant, the Manila Aas Corporation, does not
intend to co"pl# )ith its said contract, E7hibit C, and deliver to the plaintif at the ti"es and under the ter"s and conditions
stated therein the Cuantities of coal and )ater as tars reCuired b# said contract, and the several notices iven pursuant
thereto, and that it is useless for the plaintif to insist further upon its perfor"ance of the said contract, and for that reason
he onl# feasible course for the plaintif to pursue is to as! the court for the rescission of said contract and for the full
da"aes )hich the plaintif has sufered fro" 4epte"ber, $&DB, and )ill sufer for the re"ainder of said contract b# reason
of the defendantHs failure and refusal to perfor" the sa"e, and the plaintif has so noti5ed the said defendant.
That since 4epte"ber, $&DB, b# reason of the bad faith of the defendant, the plaintif has been da"aed in the su" of PB'',''', for
)hich it pra#s a correspondin *ud"ent, and that the contract, E7hibit C, be rescinded and declared void and )ithout force and
efect.
After the 5lin and overrulin of its de"urrer, the defendant 5led an ans)er in the nature of a eneral and speci5c denial and on April
$', $&D,, and upon stipulation of the parties, the court appointed 9. 9. 2ar!in referee, 6to ta!e the evidence and, upon co"pletion of
the trial, to report his 5ndins of la) and fact to the court.6
=ul# $,, $&D,, the defendant 5led an a"ended ans)er in )hich it alleed as an aIr"ative defense, 5rst, that the co"plaint does not
state facts suIcient to constitute cause of action the reason that a prior ad*udication has been had of all the issues involved in this
action, and, second, 6that on or about the $-th da# of =une, $&D+, in an action brouht in the Court of /irst 0nstance of the Cit# on
Manila, Philippine 0slands, before the Gonorable Aeo. R. Garve#, =ude, b# Blosso" M Co"pan#, plaintif, vs. Manila Aas Corporation,
defendant, bein civil case No. D+B+B, of said court, for the sa"e cause of action as that set fourth in the co"plaint herein, said
plaintif recovered *ud"ent upon the "erits thereof, aainst said defendant decreein a breach of the contract sued upon herein,
and a)ardin da"aes therefor in the su" of PD-,$$&.', )ith leal interest fro" Nove"ber DB, $&DB, and costs of suit, )hich
*ud"ent )as upon appeal aIr"ed b# the 4upre"e Court of the Philippine 0slands, in case A. R. No. D(... of said court, on the Bd
da# of March, $&D- and reported in volu"e (, Philippines Reports at pae ,(,,6 and it pra#s that plaintifHs co"plaint be dis"issed
)ith costs.
After the evidence )as ta!en the referee "ade an e7haustive report of si7t#-paes in )hich he found that the plaintif )as entitled to
P+-,&'$.+B da"aes, )ith leal interest fro" the date of the 5lin on the co"plaint, to )hich both parties 5led nu"erous e7ceptions
0n its decision the court sa#s1
0ncidental references have been "ade to the refereeHs report. 0t )as ad"irabl# prepared. 2eavin aside the Cuestion of
da"aes and the facts upon )hich the referee assessed the", the facts are not in dispute F at least not in serious dispute.
The# appear in the docu"entar# evidence and this decision is based upon docu"ents introduced into evidence b# plaintif. 0f
0 could have areed )ith the referee in respect to the Cuestion of la), 0 should have approved his report in toto. 0f defendant
is liable for the da"aes accruin fro" Nove"ber DB, $&DB, the date the 5rst co"plaint )as 5led, to April $st, $&D-, the
date of resu"ption of relationsK and if defendant, after such resu"ption of relations, aain violated the contract, the
da"aes assessed b# the referee, are, to "# )a# of thin!in, as fair as could be esti"ated. Ge )ent to tre"endous pains in
5urin out the details upon )hich he based his decision. >nfortunatel#, 0 cannot aree )ith his leal conclusions and the
report is set aside e7cept )herein speci5call# approved.
0t is unnecessar# to resolve speci5call# the "an# e7ceptions "ade b# both partied to the refereeHs report. 0t )ould ta!e
"uch ti"e to do so. Much ti"e has alread# been spent in preparin this decision. 4ince both parties have infor"ed "e that
in case of adverse *ud"ent ,and appeal )ould be ta!en, 0 desire to conclude the case so that dela# )ill be avoided.
2et *ud"ent be entered a)ardin da"aes to plaintif in the su" of PD,D$&.-', )ith costs.
/ro" )hich plaintif onl# appealed and assins t)ent#-four diferent errors, of )hich the follo)in are "aterial to this opinion1
0. The trial court erred in holdin that this suit in so far as the da"aes fro" Nove"ber, $&DB, to March B$, $&D-, are
concerned , is res ad*udicata.
00. The trial court erred in holdin that the defendant repudiated the contract in Cuestion as a )hole, and that the plaintif
)hen it brouht its 5rst suit to collect da"aes had alread# elected and consented to the dissolution of the contract, and its
choice once "ade, bein 5nal, it )as estopped to clai" that the contract )as alive )hen that suit )as brouht.
7 7 7 7 7 7 7 7 7
800. The trial court erred in refusin to sustain plaintifHs third e7ception to the leal interpretation placed on the contract in
this case b# the referee )ith reference to Cuantit# of tars and his conclusion )ith respect to the ter"s thereof that1
6$. Plaintif "ust ta!e and defendant "ust deliver either the "ini"u" or "a7i"u" Cuantit# of )ater as tar and not an&
.uantit& from the minimum to the ma/imum andNor
6D. Plaintif "ust ta!e either the minimum and an& .uantit& up to 0ft& per cent of entire output of coal as tar.
6B. 9ith ninet# da#sH notice b# plaintif to defendant the for"er "ust ta!e and the latter "ust deliver total output of both
tars, e7cept such as "iht be needed b# defendant for use in and about its plants and not an& .uantit& from the minimum
up to total output of both tars.6 ;See pae (., RefereeHs report.<
And in holdin that the option contained in said contract, ta!in into consideration the purposes of both parties in enterin
into the contract, )as a clai"ed b# defendant1 all the )ater as tar and +' per cent of the coal as tar upon i""ediate
notice and all tars upon ninet# da#Hs notice.
8000. The trial court erred in refusin to sustain plaintifHs fourth e7ception to the 5ndin and conclusion of the referee that
fro" the correspondence bet)een the parties it )as apparent that plaintif did not "a!e a riht use of its option, and that
the letter of =une D+, $&D-, and the subseCuent de"ands, )ith e7ception of the letter of =ul# B$, $&D-, )ere not "ade in
pursuance to the ter"s of the contract, and that defendant had no liabilit# in refusin to co"pl# there)ith, and in allo)in
plaintif da"aes onl# for the failure of the defendant to deliver Cuantities sho)n in E7hibits Ref. D$ and DD. ;See paes +$,
+D, RefereeHs report.<
0@. The trial court erred in 5ndin and holdin that the de"ands of plaintif for additional tars under its contract )ith the
defendant )ere e7travaant and not "ade in ood faith, and that )hen it )rote to defendant that it desired "a7i"u"
Cuantities of coal as tars and onl# "ini"u" of )ater as tars, but )ith the reservation of oin bac! to "ini"u" Cuantities
of both at an# ti"e it chose, it announced its intention f breachin the contract, and defendant )as under no obliation to
deliver "a7i"u" Cuantities of either tars, and since this )as the eIcient cause of the failure of defendant to deliver or
plaintif to accept tars, the bla"e is attribute to plaintif, and it cannot recover for a rescission.
7 7 7 7 7 7 7 7 7
@@000. The trial court erred in refusin to sustain plaintifHs seventeenth e7ception to the 5ndin and conclusion of the referee
that the plaintif is entitled to recover fro" the defendant onl# the follo)in su"s1
9ater as tar ;E7hibit Ref. D$< PB,,$B(.-'
Coal as tar ;E7hibit Ref. DD< $-,+(..BB
3verchares on deliveries ;E7hibit Ref. DB< D,D$&.-'
or a total of +-,&'$.+B
)ith interest, and in not a)ardin to the plaintif as da"aes in this case the su" of PB$&,D+B.(', )ith leal interest thereon
fro" the date of 5lin the co"plaint in this case, in the "anner and for" co"puted but it, and in a)ardin da"aes to the
plaintif for the su" of onl# PD,D$&.-'. )ith costs.
7 7 7 7 7 7 7 7 7

JO)NS, J.:
0n this action plaintif see!s to recover da"aes fro" the defendant )hich it clai"s to have sustained after 4epte"ber, $&DB, arisin
fro", and ro)in out of, its oriinal contract of 4epte"ber $', $&$,, as "odi5ed on =anuar# $, $&$&, to continue for a period of ten
#ears fro" that date.
0n pararaph 8000 of its co"plaint, plaintif allees that about the last part of =ul#, $&D', the defendant 6)illfull# and deliberatel#
breached its said contract,6 and that it 6Latl# refused to "a!e an# deliveries under said contract, and 5nall# on Nove"ber DB, $&DB,6
it )as forced to co""ence action in the Court of /irst 0nstance aainst the defendant !no)n as case No. D+B+D, to recover the
da"aes )hich it had then sustained b# reason of such Larant violation of said contract on the part of the defendant, in )hich
*ud"ent )as rendered in favor of the plaintif and aainst the defendant for PD-,$$$&.',, as da"aes sufered b# this plaintif b#
the defendantHs breach of said contract fro" =ul# $&D', up to and includin 4epte"ber, $&DB, )ith leal interest thereon fro"
Nove"ber DB, $&DB, and for the costs,6 in )hich the court refused to order the defendant to resu"e the deliver# of the coal and
)ater as tar to the plaintif, in accord )ith said contract, but left it )ith its re"ed# for da"aes aainst the defendant for an#
subseCuent breaches of the contract. A cop# of that *ud"ent, )hich )as later aIr"ed b# this court, is attached to, "ar!ed E7hibit
A, and "ade a part of, the co"plaint in this action.
0n their respective briefs, opposin counsel have "uch to sa# about the purpose and intent of the *ud"ent, and it is viorousl#
asserted that it )as never intended that it should be or beco"e a bar to another action b# the plaintif to recover an# da"aes it
"a# have sustained after 4epte"ber, $&DB, durin the re"ainder of the ten-#ear period of that contract. Be that as it "a#, it "ust be
conceded that the Cuestion as to )hat )ould be the leal force and efect of that *ud"ent in that case )as never presented to, or
decided b#, the lo)er court or this court. 0n the ver# nature of thins, neither court in that case )ould have the po)er to pass upon or
decided the leal force and efect of its o)n *ud"ent, for the si"ple reason that it )ould be pre"ature and outside of the issues of
an# pleadin, and could not be raised or presented until after the *ud"ent beca"e 5nal and then onl# b# an appropriate plea, as in
this case.
Plaintif speci5call# allees that the defendant )illfull# and deliveratel# breached the contract and 6Latl# refused to "a!e an#
deliveries under said contract,6 b# reason of. )hich it )as forced to and co""enced its for"er action in )hich it )as a)arded
PD-,$$&.', da"aes aainst the defendant b# reason of its breach of the contract fro" =ul#, $&D', to 4epte"ber, $&DB.
0n the 5nal anal#sis, plaintif in this action see!s to recover da"aes ro)in out of, and arisin fro", other and diferent breaches of
that sa"e contract after Nove"ber, $&DB, for the re"ainder of the ten-#ear period, and the Cuestion is thus sCuarel# presented as to
)hether the rendition of the for"er *ud"ent is a bar to the riht of the plaintif to recover da"aes fro" and after 4epte"ber, $&DB,
arisin fro", and ro)in out of, breaches of the oriinal contract of 4epte"ber $', $&$,, as "odi5ed on =anuar# $, $&$&. That is to
sa#, )hether the plaintif, in a for"er action, havin recovered *ud"ent for the da"aes )hich it sustained b# reason of a breach of
its contract b# the defendant up to 4epte"ber, $&DB, can no) in this action recover da"aes it "a# have sustained after 4epte"ber,
$&DB, arisin fro", and ro)in out of, a breach of the sa"e contract, upon and for )hich it recovered its *ud"ent in the for"er
action.
0n the for"er action in )hich the *ud"ent )as rendered, it is alleed in the co"pliant1
6.. That about the last part of =ul# or the 5rst part of Auust, $&D', the Manila Aas Corporation, the defendant herein,
)ithout an# cause ceased deliverin coal and )ater as tar to the plaintif hereinK and that fro" that ti"e up to the present
date, the plaintif corporation, Blosso" M Co"pan#, has freCuentl# and urentl# de"anded of the defendant, the Manila Aas
Corporation, that it co"pl# )ith its aforesaid contract E7hibit A b# continuin to deliver coal and )ater as tar to this plaintif
F but that the said defendant has refused and still refuses, to deliver to the plaintif an# coal and )ater as tar )hatsoever
under the said contract E7hibit A, since the said "onth of =ul# $&D'.
6&. That o)in to the bad faith of the said Manila Aas Corporation, defendant herein, in not livin up to its said contract
E7hibit A, "ade )ith this plaintif, and refusin no) to carr# out the ter"s of the sa"e, be deliverin to this plaintif the coal
and )ater as tar "entioned in the said E7hibit A, has caused to this plaintif reat and irreparable da"aes a"ountin to
the su" total of one hundred t)ent#- four thousand eiht hundred fort# eiht pesos and sevent# centavos
;P$D(,,(,,.'<Kand that the said defendant corporation has refused, and still refuses, to pa# to this plaintif the )hole or an#
part of the aforesaid su".
6$'. That the said contract E7hibit A, )as to be in force until =anuar# $, $&D&, that is to sa# ten ;$'< #ears counted fro"
=anuar# $, $&D&K and that unless the defendant aain co""ence to furnish and suppl# this plaintif )ith coal and )ater as
tar, as provided for in the said contract E7hibit A, the da"aes alread# sufered b# this plaintif )ill continuall# increase and
beco"e larer and larer in the course of #ears precedin the ter"ination of the said contract on =anuar# $, $&D&.6
0n that action plaintif pra#s for *ud"ent aainst the defendant1
12a3 That upon trial of this this cause *ud"ent be rendered in favor of the plaintif and aainst the defendant for the su" of
P$D(,,(,(..'<, )ith leal interest thereon fro" Nove"ber DB, $&DBK
12b3 That the court speci5call# order the defendant to resu"e the deliver# of the coal and )ater as tar to the plaintif under
the ter"s of the said contract E7hibit A of this co"plaint.6
0n the 5nal anal#sis, plaintif "ust stand or fall on its o)n pleadins, and tested b# that rule it "ust be ad"itted that the plaintifHs
oriinal cause of action, in )hich it recovered *ud"ent for da"aes, )as founded on the ten-#ear contract, and that the da"aes
)hich it then recovered )ere recovered for a breach of that contract.
Both actions are founded on one and the sa"e contract. B# the ter"s of the oriinal contract of 4epte"ber $', $'$,, the defendant
)as to sell and the plaintif )as to purchase three tons of )ater as tar per "onth for" 4epte"ber to =anuar# $, $&$&, and t)ent#
tons of )ater as tar per "onth after =anuar# $, $&$&, one-half ton of coal as tar per "onth fro" 4epte"ber to =anuar# $, $&$&, and
si7 tons of coal as tar per "onth after =anuar# $, $&$&. That fro" and after =anuar# $, $&$&, plaintif )ould ta!e at least the
Cuantities speci5ed in the contract of 4epte"ber $', $&$,, and that at its option, it )ould have the riht to ta!e the total output of
)ater as tar of defendantHs plant and +' per cent of the ross output of its coal as tar, and upon ivin ninet# da#sH notice, it )ould
have the riht to the entire output of coal as tar, e7cept such as the defendant "iht need for its o)n use. That is to sa#, the
contract provided for the deliver# to the plaintif fro" "onth to "onth of the speci5ed a"ounts of the diferent tars as ordered and
reCuested b# the plaintif. 0n other )ords, under plaintifHs o)n theor#, the defendant )as to "a!e deliveries fro" "onth to "onth of
the tars durin the period of ten #ears, and it is alleed in both co"plaints that the defendant bro!e its contract, and in bad faith
refused to "a!e an# "ore deliveries.
0n B( Corpus =uris, p. ,B&, it is said1
As a eneral rule a contract to do several thins at several ti"es in its nature, so as to authoriEe successive actionsK and a
*ud"ent recovered for a sinle breach of a continuin contract or covenant is no bar to a suit for a subseCuent breach
thereof. But )here the covenant or contract is entire, and the breach total, there can be onl# one action, and plaintif "ust
therein recover all his da"aes.
0n the case of Rhoel" vs, Gorst, $., >. >., $K (( 2a). ed., &+B, that court said1
An unCuali5ed and positive refusal to perfor" a contract, thouh the perfor"ance thereof is not #et due, "a#, if the
renunciation oes to the )hole contract, be treated as a co"plete breach )hich )ill entitle the in*ured part# to brin his
action at once.
$+ Rulin Case 2a), &--, &-., sec. (($ sa#s1
4i"ilarl# if there is a breach b# the vendor of a contract for the sale of oods to be delivered and paid for in install"ents,
and the vendee "aintains an action therefor and recovers da"aes, he cannot "aintain a subseCuent action to recover for
the failure to deliver later install"ents.
0n Pa!as !s. Gollinshead, $,( N. ?., D$$K .. N. E., ('K B 2. R. A. ;N. 4.<, $'D(, the s#llabus sa#s1
>pon refusal, b# the seller, after partial perfor"ance, loner to co"pl# )ith his contract to sell and deliver a Cuantit# of
articles in install"ents the bu#er cannot !eep the contract in force and "aintain actions for breaches as the# occur but "ust
recover all his da"aes in one suit.
And on pae $'(( of its opinion, the court sa#1
The learned counsel for the plaintif contends that the for"er *ud"ent did not constitute a bar to the present action but
that the plaintif had the riht to elect to )aive or disreard the breach, !eep the contract in force, and "aintain successive
actions for ti"e to ti"e as the install"ents of oods )ere to be delivered, ho)ever nu"erous these actions "iht be. 0t is
said that this contention is supported in reason and *ustice, and has the sanction of authorit# at least in other *urisdictions.
9e do not thin! that the contention can be "aintained. There is not as it see"s to us an# *udicial authorit# in this state that
ives it an# substantial support. 3n the contrar#, )e thin! that the cases, so far as )e have been able to e7a"ine the", are
all the other )a#, and are to the efect that, inas"uch as there )as a total breach of the contract b# the defendantHs refusal
to deliver, the plaintif cannot split up his de"and and "aintain successive actions, but "ust either recover all his da"aes
in the 5rst suit or )ait until the contract "atured or the ti"e for the deliver# of all the oods had arrived. 0n other )ords,
there can be but one action for da"aes for a total breach of an entire contract to deliver oods, and the fact that the# )ere
to be delivered in install"ent fro" ti"e to ti"e does not chane the eneral rule.
The case of 2. Buc!i M 4on 2u"ber Co. vs. Atlantic 2u"ber Co. ;$'& /ederal, ($$<, of the >nited 4tates Circuit Court of Appeals for the
/ifth Circuit, is ver# si"ilar.
The s#llabus sa#s1
$. C3NTRACT4 F C3N4TR>CT03N FENT0RE C3NTRACT. FA contract )as "ade for the sale of a lare Cuantit# of los to be
delivered in "onthl# install"ents durin a period of eiht #ears, pa#"ents to be "ade also in install"ents at ti"es havin
relation tot he deliveries. 0t contained stipulations as to such pa#"ents, and uaranties as to the averae siEe of the los to
be delivered in each install"ent. +eld, that it )as an entire contract, and not a nu"ber of separate and independent
aree"ents for the sale of the Cuantit# to be delivered and paid for each "onth, althouh there "iht be breaches of the
"inor stipulations and )arranties )ith reference thereto )hich )ould )arrant suits )ithout a ter"ination of the contract.
D. =>%AMENT4 F MATTER4 C3NC2>%E% FACT03N /3R BREACG 3/ 0N%08040B2E C3NTRACT. F The seller declared the
contract ter"inated for alleed breaches b# the purchaser, and brouht suit for eneral and special da"aes the latter
coverin pa#"ents due for install"ents of los delivered. B# )a# of set-of and recoup"ent aainst this de"and, the
purchaser pleaded breaches of the )arrant# as to the siEe of the los delivered durin the "onths for )hich pa#"ent had
not been "ade. +eld, that the *ud"ent in such action )as conclusive as to all clai"s or de"ands or either part# aainst the
other ro)in out of the entire contract, and )as a bar to a subseCuent suit brouht b# the purchaser to recover for other
breaches of the sa"e )arrant# in relation to deliveries "ade in previous "onths.
3n pae ($+ of the opinion, the court sa#s1
9hen the contract )as ended, the clai"s of each part# for alleed breaches and da"aes therefor constituted an indivisible
de"andK and )hen the sa"e, or an# part of the sa"e, )as pleaded, litiation had, and 5nal *ud"ent rendered, such suit
and *ud"ent constitute a bar to subseCuent de"ands )hich )ere or "iht have been litiated ;Baird vs. >. 4., &- >. 4.,
(B'K D( 2. ed., .'B.<
0n 9atts vs. 9eston ;DB, /ederal, $(&<, Circuit Court of Appeals, 4econd Circuit, the s#llabus sa#s1
$. =>%AMENT4 F +&B F =>%AMENT A4 BAR F MATTER4 C3NC2>%E%. F 9here a continuin contract )as ter"inated b# the
absolute refusal of the part# )hose action )as necessar# to further perfor", a clai" for da"aes on account of the breach
constituted as indivisible de"and, and )hen the sa"e or an# part of the sa"e )as pleaded, litiated, and 5nal *ud"ent
rendered, such suit and *ud"ent constitute a bar to subseCuent de"ands )hich )ere or "iht have been litiated therein.
And on pae $+' of the opinion, the court sa#s1
0t is enouh to sho) the lac! of "erit in the present contention to point out as an ine7orable rule of la) that, )hen JnevalHs
contract )as dischared b# his total repudiation thereof, 9attHs clai"s for breaches and da"aes therefor constituted an
indivisible de"and, and )hen the sa"e, or an# part of the sa"e, )as pleaded, litiation had and 5nal *ud"ent rendered,
such suit and *ud"ent constitute a bar to subseCuent de"ands )hich )ere or "iht have been litiated.6 ;Buc!i, etc., Co.
vs. Atlantic, etc., Co., $'& /ed. at pae ($+K (, C. C. A., (+&K Cf. 2andon !s. Bul!le#, &+ /ed., B((K BB. C. C. A., &-.<
The rule is usuall# applied in cases of alleed or supposed successive breaches, and conseCuentl# severable de"ands for
da"aesK but if the contract has been dischared b# breach, if suit for da"aes is all that is left, the rule is applicable, and
ever# de"and arisin for" that contract and possessed b# an# iven plaintif "ust be presented ;at least as aainst an#
iven defendant< in one actionK )hat the plaintif does not advance he foreoes b# conclusive presu"ption.
0nn Abbott !s. .- 2and and 9ater Co. ;$$, Pac., (D+K $-$ Cal., (D<, at pae (D,, the court said1
0n /ish !s. /olle#, - Gill ;N. ?.<, +(, it )as held, in accord )ith the rule )e have discussed, that, )here the defendant had
covenanted that plaintif should have a continual suppl# of )ater for his "ill fro" a da", and subseCuentl# totall# failed to
perfor" for nine #ears, and plaintif brouht an action for the breach and recovered da"aes sustained b# hi" to that ti"e,
the *ud"ent )as a bar to a second action arisin fro" subseCuent failure to perfor", on the theor# that, althouh he
covenant )as a continuin one in one sense, it )as an entire contract, and a total breach put an end to it, and ave plaintif
the riht to sue for an eCuivalent in da"aes.
0n such a case it is no )arrant for a second action that the part# "a# not be able to actuall# prove in the 5rst action all the
ite"s of the de"and, or that all the da"ae "a# not then have been actuall# sufered. Ge is bound to prove in the 5rst
action not onl# such da"aes as has been actuall# sufered, but also such prospective da"ae b# reason of the breach as
he "a# be leall# entitled to, for the *ud"ent he recovers in such action )ill be a conclusive ad*udication as to the total
da"ae on account of the breach.
0t )ill thus be seen that, )here there is a co"plete and total breach of a continuous contract for a ter" of #ears, the recover# of a
*ud"ent for da"aes b# reason of the breach is a bar to another action on the sa"e contract for and on account of the continuous
breach.
0n the 5nal anal#sis is, there is no real dispute about an# "aterial fact, and the i"portant and decisive Cuestion is the leal
construction of the pleadins in the for"er case and in this case, and of the contract bet)een the plaintif and the defendant of
=anuar# $, $&D'.
The co"plaint on the for"er case speci5call# allees that the defendant 6has refused and still refuses, to deliver to the plaintif an#
coal and )ater as tar )hatsoever under the said contract E7hibit A, since the said "onth of =ul#, $&D'.6 6 That o)in to the bad faith
of the said Manila Aas Corporation, defendant herein, in not livin up to its said contract E7hibit A, "ade )ith this plaintif, and
refusin no) to carr# out the ter"s of the sa"e.6 That is a speci5c alleation not onl# a breach of the contract since the "onth of
=ul#, $&D', but of the faith of the defendant in its continuous refusal to "a!e deliveries of an# coal and )ater as tar. That a"ended
co"plaint )as 5led on =ul# $$, $&D(, or four #ears after the alleed bad faith in brea!in the contract.
Gavin recovered da"aes aainst it, coverin a period of four #ears, upon the theor# that the defendant bro!e the contract, and in
bad faith refused to "a!e deliveries of either of the tars, ho) can the plaintif no) clai" and assert that the contract is still in 5erce
and efectO 0n the instant case the plaintif allees and relies upon the ten #ear contract on =anuar# $$, $&D', )hich in bad faith )as
bro!en b# the defendant. 0f the contract )as then bro!en, ho) can it be enforced in this actionO
0t is ad"itted that the defendant never "ade an# deliveries of an# tar fro" =ul#, $&D', to April, $&B-. Also that it "ade nine deliveries
to plaintif of the "ini"u" Cuantities of coal and )ater as tar fro" April ., $&D-, to =anuar# +, $&D..
Plaintif contends that such deliveries )ere "ade under and in continuation of the old contract.
March D-, $&D-, after the decision of this court aIr"in the *ud"ent in the oriinal action, plaintif )rote the defendant1
. . . 0t is our desire to ta!e deliveries of at least the "ini"u" Cuantities set forth therein and shall appreciate to have #ou
advise us ho) soon #ou )ill be in a position to "a!e deliveriesK . . .
. . . 0n vie) of the fact that #ou have onl# efected settle"ent up to Nove"ber DB, $&DB, please infor" us )hat ad*ust"ent
#ou are )illin to "a!e for the period of ti"e that has since elapsed )ithout #our co"pl#in )ith the contract.
0n response to )hich on March B$, $&D-, the defendant )rote this letter to the plaintif1
0n repl# to #our letter of March D-th, $&D-, in reard to tar, )e be to advise #ou that )e are prepared to furnish the
"ini"u" Cuantities of coal and )ater as tars as per #our letter, viE1 t)ent# tons of )ater as tar and si7 tons of coal as
tar. The price 5ured on present costs of ra) "aterials is PB&.'$ < Thirt#-nine and '$N$'' Pesos< per ton of )ater as and
PBB.+& ;Thirt#-three and +&N$'' Pesos< per ton of coal tar.
9e shall e7pect #ou to ta!e deliver# and pa# for the above a"ount of tars at our factor# on or before April .th pro7.
Thereafter )e shall be read# to furnish eCual a"ounts on the 5rst of each "onth. Jindl# "a!e #our arrane"ents
accordinl#.
3n =anuar# D&, $&D., the plaintif )rote the defendant that1
3n =ul# B$st last, )e "ade de"and upon #ou, under the ter"s of our tar contract for +' per cent of #our total coal tar
production for that "onth and also served notice on #ou that beinnin &' da#s fro" Auust $st )e )ould reCuire #ou total
output of coal tar "onthl#K this in addition to the D' tons of )ater as tar provided for in the contract to be ta!en "onthl#.
7 7 7 7 7 7 7 7 7
9e are here aain on #our for #our total output of coal tar i""ediatel# and the reular "ini"u" "onthl# Cuantit# of )ater
as tar. 0n this connection )e desire to advise #ou that )ithin &' da#s of #our initial deliver# to us of #our total coal tar
output )e )ill reCuire +' per cent of #our total )ater as tar output, and, further, that t)o "onths thereafter )e )ill reCuire
#our total output of both tars.
/ebruar# D, $&D., the defendant )rote the plaintif1
Repl#in to #our letter of =an. D&, )e )ould sat that )e have alread# returned to #ou the chec! enclosed there )ith. As )e
have repeatedl# infor"ed #ou )e disaree )ith #ou as to the construction of #our contract and insist that #ou ta!e the
)hole output of both tars if #ou )ish to secure the )hole of the coal tar.
9ith reard to #our threat of further suits )e presu"e that #ou )ill act as advised. 0f #ou "a!e it necessar# )e shall do the
sa"e.la)phil.net
/ro" an anal#sis of these letters it clearl# appears that the plaintif then souht to repl# upon and enforce the contract of =anuar# $,
$&D', and that defendant denied plaintifHs construction of the contract, and insisted 6that #ou ta!e the )hole output of both tars if
#ou )ish to secure the )hole of the coal tar.6
/ebruar# D,, $&D., the plaintif )rote the defendant1
0n vie) of #our nu"erous violations of and repeated refusal and failure to co"pl# )ith the ter"s and provisions of our
contract dated =anuar# B'-B$, $&$&, for the deliver# to us of )ater and coal as tars, etc., )e )ill co""ence action,6 )hich
it did.
The record tends to sho) that tars )hich the defendant delivered after April ., $&D-, )ere not delivered under the old contract of
=anuar# $, $&D', and that at all ti"es since =ul# $&D', the defendant has consistentl# refused to "a!e an# deliveries of an# tars under
that contract.
The referee found as a fact that plaintif )as entitled to PD,D$&.-' for and on account of overchares )hich the defendant "ade for
the deliveries of 5ft#-four tons of coal as tar, and one hundred eiht# tons of )ater as tar after April, $&D-, and upon that point the
lo)er sa#s1
The fourth chare that plaintif "a!es is "eritorious. The price )as to be 57ed on the basis of ra) "aterials. The chare for
deliveries durin $&D- )ere too hih. 0n this 0 aree )ith entirel# )ith the referee and adopt his 5ndins of fact and
calculations. ;See RefereeHs report, p. ,B< The referee a)arded for overchare durin the period aforesaid, the su" of
PD,D$&.-'. The defendant )as tr#in to dischare plaintif fro" bu#in tars and "ade the price of ra) "aterial appear as
hih as possible.
That 5ndin is sustained upon the theor# that the defendant bro!e its contract )hich it "ade )ith the plaintif for the sale and
deliver# of the tars on and after April, $&D-.
After careful stud# of the "an# i"portant Cuestions presented on this appeal in the e7haustive brief of the appellant, )e are clearl#
of the opinion that, as found b# the lo)er court, the plea of res *udicata "ust be sustained. The *ud"ent of the lo)er court is
aIr"ed.
0t is so ordered, )ith costs aainst the appellant.
Republic of the Philippines
SUPREME COURT
/0R4T %080403N
G.R. No. 161135. A+%,l &, 2005
S-AGMAN )OTELS AND TRAEL, INC., Petitioners,
vs.
)ON. COURT O' APPEALS, ./0 NEAL (. C)RISTIAN, Respondents.
% E C 0 4 0 3 N
DAIDE, JR., C.J.1
Ma# a co"plaint that lac!s a cause of action at the ti"e it )as 5led be cured b# the accrual of a cause of action durin the pendenc#
of the caseO This is the basic issue raised in this petition for the CourtPs consideration.
4o"eti"e in $&&- and $&&., petitioner 4)a"an Gotels and Travel, 0nc., throuh Att#. 2eonor 2. 0nfante and Rodne# %avid Geert#,
its president and vice-president, respectivel#, obtained fro" private respondent Neal B. Christian loans evidenced b# three
pro"issor# notes dated . Auust $&&-, $( March $&&., and $( =ul# $&&.. Each of the pro"issor# notes is in the a"ount of
>4Q+',''' pa#able after three #ears fro" its date )ith an interest of $+R per annu" pa#able ever# three "onths.
$
0n a letter dated
$- %ece"ber $&&,, Christian infor"ed the petitioner corporation that he )as ter"inatin the loans and de"anded fro" the latter
pa#"ent in the total a"ount of >4Q$+',''' plus unpaid interests in the total a"ount of >4Q$B,+''.
D
3n D /ebruar# $&&&, private respondent Christian 5led )ith the Reional Trial Court of Bauio Cit#, Branch +&, a co"plaint for a su"
of "one# and da"aes aainst the petitioner corporation, Geert#, and Att#. 0nfante. The co"plaint alleed as follo)s1 3n . Auust
$&&-, $( March $&&., and $( =ul# $&&., the petitioner, as )ell as its president and vice-president obtained loans fro" hi" in the total
a"ount of >4Q$+',''' pa#able after three #ears, )ith an interest of $+R per annu" pa#able Cuarterl# or ever# three "onths. /or a
)hile, the# paid an interest of $+R per annu" ever# three "onths in accordance )ith the three pro"issor# notes. Go)ever, startin
=anuar# $&&, until %ece"ber $&&,, the# paid hi" onl# an interest of -R per annu", instead of $+R per annu", in violation of the
ter"s of the three pro"issor# notes. Thus, Christian pra#ed that the trial court order the" to pa# hi" *ointl# and solidaril# the
a"ount of >4Q$+',''' representin the total a"ount of the loansK >4Q$B,+'' representin unpaid interests fro" =anuar# $&&, until
%ece"ber $&&,K P$'',''' for "oral da"aesK P+',''' for attorne#Ps feesK and the cost of the suit.
B
The petitioner corporation, toether )ith its president and vice-president, 5led an Ans)er raisin as defenses lac! of cause of action
and novation of the principal obliations. Accordin to the", Christian had no cause of action because the three pro"issor# notes
)ere not #et due and de"andable. 0n %ece"ber $&&., since the petitioner corporation )as e7periencin hue losses due to the Asian
5nancial crisis, Christian areed ;a< to )aive the interest of $+R per annu", and ;b< accept pa#"ents of the principal loans in
install"ent basis, the a"ount and period of )hich )ould depend on the state of business of the petitioner corporation. Thus, the
petitioner paid Christian capital repa#"ent in the a"ount of >4Q.+' per "onth fro" =anuar# $&&, until the ti"e the co"plaint )as
5led in /ebruar# $&&&. The petitioner and its co-defendants then pra#ed that the co"plaint be dis"issed and that Christian be
ordered to pa# P$ "illion as "oral da"aesK P+'',''' as e7e"plar# da"aesK and P$'',''' as attorne#Ps fees.
(
0n due course and after hearin, the trial court rendered a decision
+
on + Ma# D''' declarin the 5rst t)o pro"issor# notes dated .
Auust $&&- and $( March $&&. as alread# due and de"andable and that the interest on the loans had been reduced b# the parties
fro" $+R to -R per annu". 0t then ordered the petitioner corporation to pa# Christian the a"ount of Q$'',''' representin the
principal obliation covered b# the pro"issor# notes dated . Auust $&&- and $( March $&&., 6plus interest of -R per "onth thereon
until full# paid, )ith all interest pa#"ents alread# paid b# the defendant to the plaintif to be deducted therefro".6
The trial court ratiocinated in this )ise1
;$< There )as no novation of defendantPs obliation to the plaintif. >nder Article $D&D of the Civil Code, there is an i"plied novation
onl# if the old and the ne) obliation be on ever# point inco"patible )ith one another.
The test of inco"patibilit# bet)een the t)o obliations or contracts, accordin to an i""inent author, is )hether the# can stand
toether, each one havin an independent e7istence. 0f the# cannot, the# are inco"patible, and the subseCuent obliation novates
the 5rst ;Tolentino, Civil Code of the Philippines, 8ol. 08, $&&$ ed., p. B,(<. 3ther)ise, the old obliation )ill continue to subsist
sub*ect to the "odi5cations areed upon b# the parties. Thus, it has been )ritten that accidental "odi5cations in an e7istin
obliation do not e7tinuish it b# novation. Mere "odi5cations of the debt areed upon bet)een the parties do not constitute
novation. 9hen the chanes refer to secondar# aree"ent and not to the ob*ect or principal conditions of the contract, there is no
novationK such chanes )ill produce "odi5cations of incidental facts, but )ill not e7tinuish the oriinal obliation. Thus, the
acceptance of partial pa#"ents or a partial re"ission does not involve novation ;id., p. B,.<. Neither does the reduction of the
a"ount of an obliation a"ount to a novation because it onl# "eans a partial re"ission or condonation of the sa"e debt.
0n the instant case, the Court is of the vie) that the parties "erel# intended to chane the rate of interest fro" $+R per annu" to -R
per annu" )hen the defendant started pa#in Q.+' per "onth )hich pa#"ents )ere all accepted b# the plaintif fro" =anuar# $&&,
on)ard. The pa#"ent of the principal obliation, ho)ever, re"ains unafected )hich "eans that the defendant should still pa# the
plaintif Q+',''' on Auust &, $&&&, March $(, D''' and =ul# $(, D'''.
;D< 9hen the instant case )as 5led on /ebruar# D, $&&&, none of the pro"issor# notes )as due and de"andable. As of this date
ho)ever, the 5rst and the second pro"issor# notes have alread# "atured. Gence, pa#"ent is alread# due.
>nder 4ection + of Rule $' of the $&&. Rules of Civil Procedure, a co"plaint )hich states no cause of action "a# be cured b#
evidence presented )ithout ob*ection. Thus, even if the plaintif had no cause of action at the ti"e he 5led the instant co"plaint, as
defendantsP obliation are not #et due and de"andable then, he "a# nevertheless recover on the 5rst t)o pro"issor# notes in vie)
of the introduction of evidence sho)in that the obliations covered b# the t)o pro"issor# notes are no) due and de"andable.
;B< 0ndividual defendants Rodne# Geert# and Att#. 2eonor 2. 0nfante can not be held personall# liable for the obliations contracted
b# the defendant corporation it bein clear that the# "erel# acted in representation of the defendant corporation in their capacit# as
Aeneral Manaer and President, respectivel#, )hen the# sined the pro"issor# notes as evidenced b# Board Resolution No. $;&(<
passed b# the Board of %irectors of the defendant corporation ;E7hibit 6(6<.
-
0n its decision
.
of + 4epte"ber D''B, the Court of Appeals denied petitionerPs appeal and aIr"ed in toto the decision of the trial
court, holdin as follo)s1
0n the case at bench, there is no inco"patibilit# because the chanes referred to b# appellant 4)a"an consist onl# in the "anner of
pa#"ent. . . .
Appellant 4)a"anPs interpretation that the three ;B< pro"issor# notes have been novated b# reason of appellee ChristianPs
acceptance of the "onthl# pa#"ents of >4Q.+'.'' as capital repa#"ents continuousl# even after the 5lin of the instant case is a
little bit strained considerin the stif reCuire"ents of the la) on novation that the intention to novate "ust appear b# e7press
aree"ent of the parties, or b# their acts that are too clear and uneCuivocal to be "ista!en. >nder the circu"stances, the "ore
reasonable interpretation of the act of the appellee Christian in receivin the "onthl# pa#"ents of >4Q.+'.'' is that appellee
Christian "erel# allo)ed appellant 4)a"an to pa# )hatever a"ount the latter is capable of. This interpretation is supported b# the
letter of de"and dated %ece"ber $-, $&&, )herein appellee Christian de"anded fro" appellant 4)a"an to return the principal
loan in the a"ount of >4Q$+',''' plus unpaid interest in the a"ount of >4Q$B,+''.''
. . .
Appellant 4)a"an, li!e)ise, contends that, at the ti"e of the 5lin of the co"plaint, appellee Christian haSdT no cause of action
because none of the pro"issor# notes )as due and de"andable.
Aain, 9e are not persuaded.
. . .
0n the case at bench, )hile it is true that appellant 4)a"an raised in its Ans)er the issue of pre"aturit# in the 5lin of the
co"plaint, appellant 4)a"an nonetheless failed to ob*ect to appellee ChristianPs presentation of evidence to the efect that the
pro"issor# notes have beco"e due and de"andable.
The afore-Cuoted rule allo)s a co"plaint )hich states no cause of action to be cured either b# evidence presented )ithout ob*ection
or, in the event of an ob*ection sustained b# the court, b# an a"end"ent of the co"plaint )ith leave of court ;Gerrera, Re"edial 2a),
8ol. 800, $&&. ed., p. $',<.
,
0ts "otion for reconsideration havin been denied b# the Court of Appeals in its Resolution of ( %ece"ber D''B,
&
the petitioner ca"e
to this Court raisin the follo)in issues1
0. 9GERE TGE %EC0403N 3/ TGE TR0A2 C3>RT %R3PP0NA T93 %E/EN%ANT4 GA4 BEC3ME /0NA2 AN% E@EC>T3R?, MA? TGE
RE4P3N%ENT C3>RT 3/ APPEA24 4T022 4T>BB3RN2? C3N40%ER TGEM A4 APPE22ANT4 9GEN TGE? %0% N3T APPEA2O
ii. 9here there is no cause of action, is the decision of the lo)er court validO
000. MA? TGE RE4P3N%ENT C3>RT 3/ APPEA24 8A20%2? A//0RM A %EC0403N 3/ TGE 239ER C3>RT 9G0CG 04 0N8A20% %>E T3 2ACJ
3/ CA>4E 3/ ACT03NO
08. 9here there is a valid novation, "a# the oriinal ter"s of contract )hich has been novated still prevailO
$'
The petitioner harps on the absence of a cause of action at the ti"e the private respondentPs co"plaint )as 5led )ith the trial court.
0n connection )ith this, the petitioner raises the issue of novation b# aruin that its obliations under the three pro"issor# notes
)ere novated b# the reneotiation that happened in %ece"ber $&&. )herein the private respondent areed to )aive the interest in
each of the three pro"issor# notes and to accept >4Q.+' per "onth as install"ent pa#"ent for the principal loans in the total
a"ount of >4Q$+','''. 2astl#, the petitioner Cuestions the act of the Court of Appeals in considerin Geert# and 0nfante as
appellants )hen the# no loner appealed because the trial court had alread# absolved the" of the liabilit# of the petitioner
corporation.
3n the other hand, the private respondent asserts that this petition is 6a "ere plo# to continue dela#in the pa#"ent of a *ust
obliation.6 Anent the fact that Geert# and Att#. 0nfante )ere considered b# the Court of Appeals as appellants, the private
respondent 5nds it i""aterial because the# are not afected b# the assailed decision an#)a#.
Cause of action, as de5ned in 4ection D, Rule D of the $&&. Rules of Civil Procedure, is the act or o"ission b# )hich a part# violates
the riht of another. 0ts essential ele"ents are as follo)s1
$. A riht in favor of the plaintif b# )hatever "eans and under )hatever la) it arises or is createdK
D. An obliation on the part of the na"ed defendant to respect or not to violate such rihtK and
B. Act or o"ission on the part of such defendant in violation of the riht of the plaintif or constitutin a breach of the obliation of the
defendant to the plaintif for )hich the latter "a# "aintain an action for recover# of da"aes or other appropriate relief.
$$
0t is, thus, onl# upon the occurrence of the last ele"ent that a cause of action arises, ivin the plaintif the riht to "aintain an
action in court for recover# of da"aes or other appropriate relief.
0t is undisputed that the three pro"issor# notes )ere for the a"ount of P+',''' each and unifor"l# provided for ;$< a ter" of three
#earsK ;D< an interest of $+ R per annu", pa#able Cuarterl#K and ;B< the repa#"ent of the principal loans after three #ears fro" their
respective dates. Go)ever, both the Court of Appeals and the trial court found that a reneotiation of the three pro"issor# notes
indeed happened in %ece"ber $&&. bet)een the private respondent and the petitioner resultin in the reduction U not )aiver U of
the interest fro" $+R to -R per annu", )hich fro" then on )as pa#able "onthl#, instead of Cuarterl#. The ter" of the principal
loans re"ained unchaned in that the# )ere still due three #ears fro" the respective dates of the pro"issor# notes. Thus, at the ti"e
the co"plaint )as 5led )ith the trial court on D /ebruar# $&&&, none of the three pro"issor# notes )as due #etK althouh, t)o of the
pro"issor# notes )ith the due dates of . Auust $&&& and $( March D''' "atured durin the pendenc# of the case )ith the trial
court. Both courts also found that the petitioner had been reliiousl# pa#in the private respondent >4Q.+' per "onth fro" =anuar#
$&&, and even durin the pendenc# of the case before the trial court and that the private respondent had accepted all these "onthl#
pa#"ents.
9ith these 5ndins of facts, it has beco"e larinl# obvious that )hen the co"plaint for a su" of "one# and da"aes )as 5led )ith
the trial court on D /ebruar# $&&&, no cause of action has as #et e7isted because the petitioner had not co""itted an# act in
violation of the ter"s of the three pro"issor# notes as "odi5ed b# the reneotiation in %ece"ber $&&.. 9ithout a cause of action,
the private respondent had no riht to "aintain an action in court, and the trial court should have therefore dis"issed his co"plaint.
%espite its 5ndin that the petitioner corporation did not violate the "odi5ed ter"s of the three pro"issor# notes and that the
pa#"ent of the principal loans )ere not #et due )hen the co"plaint )as 5led, the trial court did not dis"iss the co"plaint, citin
4ection +, Rule $' of the $&&. Rules of Civil Procedure, )hich reads1
4ection +. (mendment to conform to or authori#e presentation of e!idence. F 9hen issues not raised b# the pleadins are tried )ith
the e7press or i"plied consent of the parties, the# shall be treated in all respects as if the# had been raised in the pleadins. 4uch
a"end"ent of the pleadins as "a# be necessar# to cause the" to confor" to the evidence and to raise these issues "a# be "ade
upon "otion of an# part# at an# ti"e, even after *ud"entK but failure to a"end does not afect the result of the trial of these issues.
0f evidence is ob*ected to at the trial on the round that it is not )ithin the issues "ade b# the pleadins, the court "a# allo) the
pleadins to be a"ended and shall do so )ith liberalit# if the presentation of the "erits of the action and the ends of substantial
*ustice )ill be subserved thereb#. The court "a# rant a continuance to enable the a"end"ent to be "ade.
Accordin to the trial court, and sustained b# the Court of Appeals, this 4ection allo)s a co"plaint that does not state a cause of
action to be cured b# evidence presented )ithout ob*ection durin the trial. Thus, it ruled that even if the private respondent had no
cause of action )hen he 5led the co"plaint for a su" of "one# and da"aes because none of the three pro"issor# notes )as due
#et, he could nevertheless recover on the 5rst t)o pro"issor# notes dated . Auust $&&- and $( March $&&., )hich beca"e due
durin the pendenc# of the case in vie) of the introduction of evidence of their "aturit# durin the trial.
4uch interpretation of 4ection +, Rule $' of the $&&. Rules of Civil Procedure is erroneous.
A"end"ents of pleadins are allo)ed under Rule $' of the $&&. Rules of Civil Procedure in order that the actual "erits of a case "a#
be deter"ined in the "ost e7peditious and ine7pensive "anner )ithout reard to technicalities, and that all other "atters included in
the case "a# be deter"ined in a sinle proceedin, thereb# avoidin "ultiplicit# of suits.
$D
4ection + thereof applies to situations
)herein evidence not )ithin the issues raised in the pleadins is presented b# the parties durin the trial, and to confor" to such
evidence the pleadins are subseCuentl# a"ended on "otion of a part#. Thus, a co"plaint )hich fails to state a cause of action "a#
be cured b# evidence presented durin the trial.
Go)ever, the curin efect under 4ection + is applicable onl& if a cause of action in fact e/ists at the time the complaint is 0led, but
the complaint is defecti!e for failure to allege the essential facts. /or e7a"ple, if a co"plaint failed to allee the ful5ll"ent of a
condition precedent upon )hich the cause of action depends, evidence sho)in that such condition had alread# been ful5lled )hen
the co"plaint )as 5led "a# be presented durin the trial, and the co"plaint "a# accordinl# be a"ended thereafter.
$B
Thus,
in "oces !. Jalandoni,
$(
this Court upheld the trial court in ta!in coniEance of an other)ise defective co"plaint )hich )as later
cured b# the testi"on# of the plaintif durin the trial. 0n that case, there )as in fact a cause of action and the onl# proble" )as the
insuIcienc# of the alleations in the co"plaint. This rulin )as reiterated in 'ascua !. Court of (ppeals.
$+
0t thus follo)s that a co"plaint )hose cause of action has not #et accrued cannot be cured or re"edied b# an a"ended or
supple"ental pleadin allein the e7istence or accrual of a cause of action )hile the case is pendin.
$-
4uch an action is
pre"aturel# brouht and is, therefore, a roundless suit, )hich should be dis"issed b# the court upon proper "otion seasonabl# 5led
b# the defendant. The underl#in reason for this rule is that a person should not be su""oned before the public tribunals to ans)er
for co"plaints )hich are i""ature. As this Court eloCuentl# said in Surigao %ine 4/ploration Co., 5nc. !. +arris1
$.
0t is a rule of la) to )hich there is, perhaps, no e7ception, either at la) or in eCuit#, that to recover at all 23"%" #u42 $" 4o#"
5.u4" o6 .52,o/ .2 23" 5o##"/5"#"/2 o6 23" 4u,2. As observed b# counsel for appellees, there are reasons of public polic# )h#
there should be no needless haste in brinin up litiation, and )h# people )ho are in no default and aainst )ho" there is #et no
cause of action should not be su""oned before the public tribunals to ans)er co"plaints )hich are roundless. 9e sa# roundless
because if the action is i""ature, it should not be entertained, and an action pre"aturel# brouht is a roundless suit.
0t is true that an a"ended co"plaint and the ans)er thereto ta!e the place of the oriinals )hich are thereb# rearded as abandoned
;Re#nes vs. Co"paVWa Aeneral de Tabacos S$&$DT, D$ Phil. ($-K Ru#"an and /arris vs. %irector of 2ands S$&$-T, B( Phil., (D,< and
that 6the co"plaint and ans)er havin been superseded b# the a"ended co"plaint and ans)er thereto, and the ans)er to the
oriinal co"plaint not havin been presented in evidence as an e7hibit, the trial court )as not authoriEed to ta!e it into account.6
;Bastida vs. MenEi M Co. S$&BBT, +, Phil., $,,.< But in none of these cases or in an# other case have )e held that if a riht of action
did not e7ist )hen the oriinal co"plaint )as 5led, one could be created b# 5lin an a"ended co"plaint. 0n so"e *urisdictions in the
>nited 4tates )hat )as ter"ed an 6i"perfect cause of action6 could be perfected b# suitable a"end"ent ;Bro)n vs. Aalena Minin M
4"eltin Co., BD Jan., +D,K Gooper vs. Cit# of Atlanta, D- Aa. App., DD$< and this is virtuall# per"itted in BanEon and Rosauro vs.
4ellner ;S$&BBT, +, Phil., (+B<K Asiatic Potroleu" SsicT Co. vs. 8eloso ;S$&B+T, -D Phil., -,B<K and recentl# in Ra"os vs. Aibbon ;B, 3f.
AaE., D($<. T3.2, 3o7"!"%, 73,53 ,4 /o 5.u4" o6 .52,o/ 73.24o"!"% 5.//o2 $y .#"/0#"/2 o% 4u++l"#"/2.l +l".0,/8 be
converted into a cause of action1 6ihil de re accrescit ei .ui nihil in re .uando *us accresceret habet.
9e are therefore of the opinion, and so hold, that u/l"44 23" +l.,/2,9 3.4 . !.l,0 ./0 4u$4,42,/8 5.u4" o6 .52,o/ .2 23" 2,#"
3,4 .52,o/ ,4 5o##"/5"0, 23" 0"6"52 5.//o2 $" 5u%"0 o% %"#"0,"0 $y 23" .5:u,4,2,o/ o% .55%u.l o6 o/" 73,l" 23" .52,o/
,4 +"/0,/8, ./0 . 4u++l"#"/2.l 5o#+l.,/2 o% ./ .#"/0#"/2 4"22,/8 u+ 4u53 .62"%-.55%u"0 5.u4" o6 .52,o/ ,4 /o2
+"%#,44,$l". ;E"phasis ours<.
Gence, contrar# to the holdin of the trial court and the Court of Appeals, the defect of lac! of cause of action at the co""ence"ent
of this suit cannot be cured b# the accrual of a cause of action durin the pendenc# of this case arisin fro" the alleed "aturit# of
t)o of the pro"issor# notes on . Auust $&&& and $( March D'''.
Anent the issue of novation, this Court observes that the petitioner corporation arues the e7istence of novation based on its o)n
version of )hat transpired durin the reneotiation of the three pro"issor# notes in %ece"ber $&&.. B# usin its o)n version of
facts, the petitioner is, in a )a#, Cuestionin the 5ndins of facts of the trial court and the Court of Appeals.
As a rule, the 5ndins of fact of the trial court and the Court of Appeals are 5nal and conclusive and cannot be revie)ed on appeal to
the 4upre"e Court
$,
as lon as the# are borne out b# the record or are based on substantial evidence.
$&
The 4upre"e Court is not a
trier of facts, its *urisdiction bein li"ited to revie)in onl# errors of la) that "a# have been co""itted b# the lo)er courts. A"on
the e7ceptions is )hen the 5ndin of fact of the trial court or the Court of Appeals is not supported b# the evidence on record or is
based on a "isapprehension of facts. 4uch e7ception obtains in the present case.
D'
This Court 5nds to be contrar# to the evidence on record the 5ndin of both the trial court and the Court of Appeals that the
reneotiation in %ece"ber $&&. resulted in the reduction of the interest fro" $+R to -R per annu" and that the "onthl# pa#"ents
of >4Q.+' "ade b# the petitioner )ere for the reduced interests.
0t is )orth# to note that the cash voucher dated =anuar# $&&,
D$
states that the pa#"ent of >4Q.+' represents 60N8E4TMENT
PA?MENT.6 All the succeedin cash vouchers describe the pa#"ents fro" /ebruar# $&&, to 4epte"ber $&&& as 6CAP0TA2
REPA?MENT.6
DD
All these cash vouchers served as receipts evidencin private respondentPs ac!no)led"ent of the pa#"ents "ade
b# the petitioner1 t)o of )hich )ere sined b# the private respondent hi"self and all the others )ere sined b# his representatives.
The private respondent even identi5ed and con5r"ed the e7istence of these receipts durin the hearin.
DB
4ini5cantl#, coniEant of
these receipts, the private respondent applied these pa#"ents to the three consolidated principal loans in the su""ar# of pa#"ents
he sub"itted to the court.
D(
>nder Article $D+B of the Civil Code, if the debt produces interest, pa#"ent of the principal shall not be dee"ed to have been "ade
until the interest has been covered. 0n this case, the private respondent )ould not have sined the receipts describin the pa#"ents
"ade b# the petitioner as 6capital repa#"ent6 if the obliation to pa# the interest )as still subsistin. The receipts, as )ell as private
respondentPs su""ar# of pa#"ents, lend credence to petitionerPs clai" that the pa#"ents )ere for the principal loans and that the
interests on the three consolidated loans )ere )aived b# the private respondent durin the undisputed reneotiation of the loans on
account of the business reverses sufered b# the petitioner at the ti"e.
There )as therefore a novation of the ter"s of the three pro"issor# notes in that the interest )as )aived and the principal )as
pa#able in "onthl# install"ents of >4Q.+'. Alterations of the ter"s and conditions of the obliation )ould enerall# result onl# in
"odi5cator# novation unless such ter"s and conditions are considered to be the essence of the obliation itself.
D+
The resultin
novation in this case )as, therefore, of the "odi5cator# t#pe, not the e7tinctive t#pe, since the obliation to pa# a su" of "one#
re"ains in force.
Thus, since the petitioner did not renee on its obliation to pa# the "onthl# install"ents confor"abl# )ith their ne) aree"ent and
even continued pa#in durin the pendenc# of the case, the private respondent had no cause of action to 5le the co"plaint. 0t is onl#
upon petitionerPs default in the pa#"ent of the "onthl# a"ortiEations that a cause of action )ould arise and ive the private
respondent a riht to "aintain an action aainst the petitioner.
2astl#, the petitioner contends that the Court of Appeals obstinatel# included its President 0nfante and 8ice-President Geert# as
appellants even if the# did not appeal the trial courtPs decision since the# )ere found to be not personall# liable for the obliation of
the petitioner. 0ndeed, the Court of Appeals erred in referrin to the" as defendants-appellantsK nevertheless, that error is no cause
for alar" because its rulin )as clear that the petitioner corporation )as the one solel# liable for its obliation. 0n fact, the Court of
Appeals aIr"ed in toto the decision of the trial court, )hich "eans that it also upheld the latterPs rulin that Geert# and 0nfante
)ere not personall# liable for the pecuniar# obliations of the petitioner to the private respondent.
0n su", based on our disCuisition on the lac! of cause of action )hen the co"plaint for su" of "one# and da"aes )as 5led b# the
private respondent, the petition in the case at bar is i"pressed )ith "erit.
-)ERE'ORE, the petition is hereb# ARANTE%. The %ecision of + 4epte"ber D''B of the Court of Appeals in CA-A.R. C8 No. -,$'&,
)hich aIr"ed the %ecision of + Ma# D''' of the Reional Trial Court of Bauio, Branch +&, rantin in part private respondentPs
co"plaint for su" of "one# and da"aes, and its Resolution of ( %ece"ber D''B, )hich denied petitionerPs "otion for
reconsideration are hereb# RE8ER4E% and 4ET A40%E. The co"plaint doc!eted as Civil Case No. (D,D-R is hereb# %04M044E% for lac!
of cause of action.
No costs.
43 3R%ERE%.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIISION
G.R. No. 1&2;35 Au8u42 13, 2012
LILIA (. ADA, LU< (. ADAN<A, 'LORA C. (A *LON, REMO (A *LON, JOSE (A *LON, ERIC (A *LON, 'LORENTINO (A *LON,
./0 MA. RU(* (A *LON, Petitioners,
vs.
'LORANTE (A *LON, Respondent.
8022ARAMA, =R.,
X
D E C I S I O N
RE*ES, J.:
Before this Court is a petition for revie) on certiorari under Rule (+ of the Rules of Court see!in to annul and set aside the
%ecision
$
dated 3ctober D-, D''. rendered b# the Court of Appeals ;CA< in CA-A.R. C8 No. '$.(-. The assailed decision partiall#
reversed and set aside the %ecision
D
dated 3ctober D', D''+ issued Y# the Reional Trial Court ;RTC<, Tan *a# Cit#, Neros 3riental,
Branch (B in Civil Case No. $$-+..
T3" A/2"5"0"/2 '.524
This case involves the estate of spouses /lorentino Ba#lon and Ma7i"ina Elnas Ba#lon ;4pouses Ba#lon< )ho died on Nove"ber .,
$&-$ and Ma# +, $&.(, respectivel#.
B
At the ti"e of their death, 4pouses Ba#lon )ere survived b# their leiti"ate children, na"el#,
Rita Ba#lon ;Rita<, 8ictoria Ba#lon ;8ictoria<, %olores Ba#lon ;%olores<, Pan5la Ao"eE ;Pan5la<, Ra"on Ba#lon ;Ra"on< and herein
petitioner 2ilia B. Ada ;2ilia<.
%olores died intestate and )ithout issue on Auust (, $&.-. 8ictoria died on Nove"ber $$, $&,$ and )as survived b# her dauhter,
herein petitioner 2uE B. AdanEa. Ra"on died intestate on =ul# ,, $&,& and )as survived b# herein respondent /lorante Ba#lon
;/lorante<, his child fro" his 5rst "arriae, as )ell as b# petitioner /lora Ba#lon, his second )ife, and their leiti"ate children,
na"el#, Ra"on, =r. and herein petitioners Re"o, =ose, Eric, /lorentino and Ma. Rub#, all surna"ed Ba#lon.
3n =ul# B, $&&-, the petitioners 5led )ith the RTC a Co"plaint
(
for partition, accountin and da"aes aainst /lorante, Rita and
Pan5la. The# alleed therein that 4pouses Ba#lon, durin their lifeti"e, o)ned (B parcels of land
+
all situated in Neros 3riental. After
the death of 4pouses Ba#lon, the# clai"ed that Rita too! possession of the said parcels of land and appropriated for herself the
inco"e fro" the sa"e. >sin the inco"e produced b# the said parcels of land, Rita alleedl# purchased t)o parcels of land, 2ot No.
(.'&
-
and half of 2ot No. (.'-,
.
situated in Canda-ua#, %u"auete Cit#. The petitioners averred that Rita refused to efect a partition
of the said parcels of land.
0n their Ans)er,
,
/lorante, Rita and Pan5la asserted that the# and the petitioners co-o)ned DD
&
out of the (B parcels of land
"entioned in the latterPs co"plaint, )hereas Rita actuall# o)ned $' parcels of land
$'
out of the (B parcels )hich the petitioners
souht to partition, )hile the re"ainin $$ parcels of land are separatel# o)ned b# Petra Ca5no AdanEa,
$$
/lorante,
$D
Meliton
Adalia,
$B
Consorcia AdanEa,
$(
2ilia
$+
and 4antiao MendeE.
$-
/urther, the# clai"ed that 2ot No. (.'& and half of 2ot No. (.'- )ere
acCuired b# Rita usin her o)n "one#. The# denied that Rita appropriated solel# for herself the inco"e of the estate of 4pouses
Ba#lon, and e7pressed no ob*ection to the partition of the estate of 4pouses Ba#lon, but onl# )ith respect to the co-o)ned parcels of
land.
%urin the pendenc# of the case, Rita, throuh a %eed of %onation dated =ul# -, $&&., conve#ed 2ot No. (.'& and half of 2ot No.
(.'- to /lorante. 3n =ul# $-, D''', Rita died intestate and )ithout an# issue. Thereafter, learnin of the said donation inter vivos in
favor of /lorante, the petitioners 5led a 4upple"ental Pleadin
$.
dated /ebruar# -, D''D, pra#in that the said donation in favor of
the respondent be rescinded in accordance )ith Article $B,$;(< of the Civil Code. The# further alleed that Rita )as alread# sic! and
ver# )ea! )hen the said %eed of %onation )as supposedl# e7ecuted and, thus, could not have validl# iven her consent thereto.
/lorante and Pan5la opposed the rescission of the said donation, assertin that Article $B,$;(< of the Civil Code applies onl# )hen
there is alread# a prior *udicial decree on )ho bet)een the contendin parties actuall# o)ned the properties under litiation.
$,
T3" RTC D"5,4,o/
3n 3ctober D', D''+, the RTC rendered a %ecision,
$&
the decretal portion of )hich reads1
9herefore *ud"ent is hereb# rendered1
;$< declarin the e7istence of co-o)nership over parcels nos. $, D, B, +, ., $', $B, $(, $-, $., $,, D-, D&, B', BB, B(, B+, B-,
(' and ($ described in the co"plaintK
;D< directin that the above "entioned parcels of land be partitioned a"on the heirs of /lorentino Ba#lon and Ma7i"ina
Ba#lonK
;B< declarin a co-o)nership on the properties of Rita Ba#lon na"el# parcels noSsT. -, $$, $D, D', D(, D., B$, BD, B& and (D
and directin that it shall be partitioned a"on her heirs )ho are the plaintifs and defendant in this caseK
;(< declarin the donation inter vivos rescinded )ithout pre*udice to the share of /lorante Ba#lon to the estate of Rita Ba#lon
and directin that parcels nos. $ and D pararaph 8 of the co"plaint be included in the division of the propert# as of Rita
Ba#lon a"on her heirs, the parties in this caseK
;+< e7cludin fro" the co-o)nership parcels nos. D', D$, DD, &, (B, (, ,, $& and B..
Considerin that the parties failed to settle this case a"icabl# and could not aree on the partition, the parties are directed to
no"inate a representative to act as co""issioner to "a!e the partition. Ge shall i""ediatel# ta!e ShisT oath of oIce upon ShisT
appoint"ent. The co""issioner shall "a!e a report of all the proceedins as to the partition )ithin 5fteen ;$+< da#s fro" the
co"pletion of this partition. The parties are iven ten ;$'< da#s )ithin )hich to ob*ect to the report after )hich the Court shall act on
the co""issioner report.
43 3R%ERE%.
D'
;E"phasis ours<
The RTC held that the death of Rita durin the pendenc# of the case, havin died intestate and )ithout an# issue, had rendered the
issue of o)nership insofar as parcels of land )hich she clai"s as her o)n "oot since the parties belo) are the heirs to her estate.
Thus, the RTC rearded Rita as the o)ner of the said $' parcels of land and, accordinl#, directed that the sa"e be partitioned
a"on her heirs. Nevertheless, the RTC rescinded the donation inter vivos of 2ot No. (.'& and half of 2ot No. (.'- in favor of
/lorante. 0n rescindin the said donation inter vivos, the RTC e7plained that1
Go)ever, )ith respect to lot nos. (.'& and (.'- )hich SRitaT had conve#ed to /lorante Ba#lon b# )a# of donation inter vivos, the
plaintifs in their supple"ental pleadins ;sic< assailed the sa"e to be rescissible on the round that it )as entered into b# the
defendant Rita Ba#lon )ithout the !no)lede and approval of the litiants SorT of co"petent *udicial authorit#. The sub*ect parcels of
lands are involved in the case for )hich plaintifs have as!ed the Court to partition the sa"e a"on the heirs of /lorentino Ba#lon
and Ma7i"ina Elnas.
Clearl#, the donation inter vivos in favor of /lorante Ba#lon )as e7ecuted to pre*udice the plaintifsP riht to succeed to the estate of
Rita Ba#lon in case of death considerin that as testi5ed b# /lorante Ba#lon, Rita Ba#lon )as ver# )ea! and he tried to ive her
vita"ins 7 7 7. The donation inter vivos e7ecuted b# Rita Ba#lon in favor of /lorante Ba#lon is rescissible for the reason that it refers
to the parcels of land in litiation 7 7 7 )ithout the !no)lede and approval of the plaintifs or of this Court. Go)ever, the rescission
shall not afect the share of /lorante Ba#lon to the estate of Rita Ba#lon.
D$
/lorante souht reconsideration of the %ecision dated 3ctober D', D''+ of the RTC insofar as it rescinded the donation of 2ot No.
(.'& and half of 2ot No. (.'- in his favor.
DD
Ge asserted that, at the ti"e of RitaPs death on =ul# $-, D''', 2ot No. (.'& and half of 2ot
No. (.'- )ere no loner part of her estate as the sa"e had alread# been conve#ed to hi" throuh a donation inter vivos three #ears
earlier. Thus, /lorante "aintained that 2ot No. (.'& and half of 2ot No. (.'- should not be included in the properties that should be
partitioned a"on the heirs of Rita.
3n =ul# D,, D''-, the RTC issued an 3rder
DB
)hich denied the "otion for reconsideration 5led b# /lorante.
T3" CA D"5,4,o/
3n appeal, the CA rendered a %ecision
D(
dated 3ctober D-, D''., the dispositive portion of )hich reads1
-)ERE'ORE, the %ecision dated 3ctober D', D''+ and 3rder dated =ul# D,, D''- are REERSEDand SET ASIDE insofar as the#
decreed the rescission of the %eed of %onation dated =ul# -, $&&. and the inclusion of lot no. (.'& and half of lot no. (.'- in the
estate of Rita Ba#lon. The case isREMANDED to the trial court for the deter"ination of o)nership of lot no. (.'& and half of lot no.
(.'-.
43 3R%ERE%.
D+
The CA held that before the petitioners "a# 5le an action for rescission, the# "ust 5rst obtain a favorable *udicial rulin that 2ot No.
(.'& and half of 2ot No. (.'- actuall# beloned to the estate of 4pouses Ba#lon and not to Rita. >ntil then, the CA asserted, an
action for rescission is pre"ature. /urther, the CA ruled that the petitionersP action for rescission cannot be *oined )ith their action for
partition, accountin and da"aes throuh a "ere supple"ental pleadin. Thus1
0f 2ot No. (.'& and half of 2ot No. (.'- beloned to the 4pousesP estate, then Rita Ba#lonPs donation thereof in favor of /lorante
Ba#lon, in e7cess of her undivided share therein as co-heir, is void. 4urel#, she could not have validl# disposed of so"ethin she did
not o)n. 0n such a case, an action for rescission of the donation "a#, therefore, prosper.
0f the lots, ho)ever, are found to have beloned e7clusivel# to Rita Ba#lon, durin her lifeti"e, her donation thereof in favor of
/lorante Ba#lon is valid. /or then, she "erel# e7ercised her o)nership riht to dispose of )hat leall# beloned to her. >pon her
death, the lots no loner for" part of her estate as their o)nership no) pertains to /lorante Ba#lon. 3n this score, an action for
rescission aainst such donation )ill not prosper. 7 7 7.
8eril#, before plaintifs-appellees "a# 5le an action for rescission, the# "ust 5rst obtain a favorable *udicial rulin that lot no. (.'&
and half of lot no. (.'- actuall# beloned to the estate of 4pouses /lorentino and Ma7i"ina Ba#lon, and not to Rita Ba#lon durin her
lifeti"e. >ntil then, an action for rescission is pre"ature. /or this "atter, the applicabilit# of Article $B,$, pararaph (, of the Ne)
Civil Code "ust li!e)ise a)ait the trial courtPs resolution of the issue of o)nership.
Be that as it "a#, an action for rescission should be 5led b# the parties concerned independent of the proceedins belo). The 5rst
cannot si"pl# be lu"ped up )ith the second throuh a "ere supple"ental pleadin.
D-
;Citation o"itted<
The petitioners souht reconsideration
D.
of the %ecision dated 3ctober D-, D''. but it )as denied b# the CA in its Resolution
D,
dated
March -, D'',.
Gence, this petition.
I44u"
The lone issue to be resolved b# this Court is )hether the CA erred in rulin that the donation inter vivos of 2ot No. (.'& and half of
2ot No. (.'- in favor of /lorante "a# onl# be rescinded if there is alread# a *udicial deter"ination that the sa"e actuall# beloned to
the estate of 4pouses Ba#lon.
T3" Cou%2=4 Rul,/8
The petition is partl# "eritorious.
P%o5"0u%.l M.22"%4
Before resolvin the lone substantive issue in the instant case, this Court dee"s it proper to address certain procedural "atters that
need to be threshed out )hich, b# la7it# or other)ise, )ere not raised b# the parties herein.
M,4>o,/0"% o6 C.u4"4 o6 A52,o/
The co"plaint 5led b# the petitioners )ith the RTC involves t)o separate, distinct and independent actions U partition and rescission.
/irst, the petitioners raised the refusal of their co-heirs, /lorante, Rita and Pan5la, to partition the properties )hich the# inherited fro"
4pouses Ba#lon. 4econd, in their supple"ental pleadin, the petitioners assailed the donation inter vivos of 2ot No. (.'& and half of
2ot No. (.'- "ade b# Rita in favor of /lorante pendente lite.
T3" .52,o/4 o6 +.%2,2,o/ ./0
%"45,44,o/ 5.//o2 $" >o,/"0 ,/ .
4,/8l" .52,o/.
B# a *oinder of actions, or "ore properl#, a *oinder of causes of action is "eant the unitin of t)o or "ore de"ands or rihts of action
in one action, the state"ent of "ore than one cause of action in a declaration. 0t is the union of t)o or "ore civil causes of action,
each of )hich could be "ade the basis of a separate suit, in the sa"e co"plaint, declaration or petition. A plaintif "a# under certain
circu"stances *oin several distinct de"ands, controversies or rihts of action in one declaration, co"plaint or petition.
D&
The ob*ectives of the rule or provision are to avoid a "ultiplicit# of suits )here the sa"e parties and sub*ect "atter are to be dealt
)ith b# efectin in one action a co"plete deter"ination of all "atters in controvers# and litiation bet)een the parties involvin one
sub*ect "atter, and to e7pedite the disposition of litiation at "ini"u" cost. The provision should be construed so as to avoid such
"ultiplicit#, )here possible, )ithout pre*udice to the rihts of the litiants.
B'
Nevertheless, )hile parties to an action "a# assert in one pleadin, in the alternative or other)ise, as "an# causes of action as the#
"a# have aainst an opposin part#, such *oinder of causes of action is sub*ect to the condition, inter alia, that the *oinder shall not
include special civil actions overned b# special rules.
B$
Gere, there )as a "is*oinder of causes of action. The action for partition 5led b# the petitioners could not be *oined )ith the action for
the rescission of the said donation inter vivos in favor of /lorante. 2est it be overloo!ed, an action for partition is a special civil action
overned b# Rule -& of the Rules of Court )hile an action for rescission is an ordinar# civil action overned b# the ordinar# rules of
civil procedure. The variance in the procedure in the special civil action of partition and in the ordinar# civil action of rescission
precludes their *oinder in one co"plaint or their bein tried in a sinle proceedin to avoid confusion in deter"inin )hat rules shall
overn the conduct of the proceedins as )ell as in the deter"ination of the presence of reCuisite ele"ents of each particular cause
of action.
BD
A #,4>o,/"0 5.u4" o6 .52,o/, ,6 /o2
4"!"%"0 u+o/ #o2,o/ o6 . +.%2y o%
$y 23" 5ou%2 4u. 4+o/2", #.y $"
.0>u0,5.2"0 $y 23" 5ou%2 2o8"23"%
7,23 23" o23"% 5.u4"4 o6 .52,o/.
Nevertheless, "is*oinder of causes of action is not a round for dis"issal. 0ndeed, the courts have the po)er, actin upon the "otion
of a part# to the case or sua sponte, to order the severance of the "is*oined cause of action to be proceeded )ith
separatel#.
BB
Go)ever, if there is no ob*ection to the i"proper *oinder or the court did not "otu proprio direct a severance, then there
e7ists no bar in the si"ultaneous ad*udication of all the erroneousl# *oined causes of action. 3n this score, our disCuisition in "epublic
of the 'hilippines !. +erbieto
B(
is instructive, viE1
This Court, ho)ever, disarees )ith petitioner Republic in this reard. This procedural lapse co""itted b# the respondents should not
afect the *urisdiction of the MTC to proceed )ith and hear their application for reistration of the 4ub*ect 2ots.
7 7 7 7
Considerin ever# application for land reistration 5led in strict accordance )ith the Propert# Reistration %ecree as a sinle cause of
action, then the defect in the *oint application for reistration 5led b# the respondents )ith the MTC constitutes a "is*oinder of causes
of action and parties. 0nstead of a sinle or *oint application for reistration, respondents =ere"ias and %avid, "ore appropriatel#,
should have 5led separate applications for reistration of 2ots No. ,(DD and ,(DB, respectivel#.
Mis*oinder of causes of action and parties do not involve a Cuestion of *urisdiction of the court to hear and proceed )ith the case.
The# are not even accepted rounds for dis"issal thereof. 0nstead, under the Rules of Court, the "is*oinder of causes of action and
parties involve an i"plied ad"ission of the courtPs *urisdiction. 0t ac!no)ledes the po)er of the court, actin upon the "otion of a
part# to the case or on its o)n initiative, to order the severance of the "is*oined cause of action, to be proceeded )ith separatel# ;in
case of "is*oinder of causes of action<K andNor the droppin of a part# and the severance of an# clai" aainst said "is*oined part#,
also to be proceeded )ith separatel# ;in case of "is*oinder of parties<.
B+
;Citations o"itted<
0t should be e"phasiEed that the foreoin rule onl# applies if the court tr#in the case has *urisdiction over all of the causes of action
therein not)ithstandin the "is*oinder of the sa"e. 0f the court tr#in the case has no *urisdiction over a "is*oined cause of action,
then such "is*oined cause of action has to be severed fro" the other causes of action, and if not so severed, an# ad*udication
rendered b# the court )ith respect to the sa"e )ould be a nullit#.
Gere, /lorante posed no ob*ection, and neither did the RTC direct the severance of the petitionersP action for rescission fro" their
action for partition. 9hile this "a# be a patent o"ission on the part of the RTC, this does not constitute a round to assail the validit#
and correctness of its decision. The RTC validl# ad*udicated the issues raised in the actions for partition and rescission 5led b# the
petitioners.
A44"%2,/8 . N"7 C.u4" o6 A52,o/ ,/ . Su++l"#"/2.l Pl".0,/8
0n its %ecision dated 3ctober D-, D''., the CA pointed out that the said action for rescission should have been 5led b# the petitioners
independentl# of the proceedins in the action for partition. 0t opined that the action for rescission could not be lu"ped up )ith the
action for partition throuh a "ere supple"ental pleadin.
9e do not aree.
A 4u++l"#"/2.l +l".0,/8 #.y %.,4"
. /"7 5.u4" o6 .52,o/ .4 lo/8 .4 ,2
3.4 4o#" %"l.2,o/ 2o 23" o%,8,/.l
5.u4" o6 .52,o/ 4"2 6o%23 ,/ 23"
o%,8,/.l 5o#+l.,/2.
4ection -, Rule $' of the Rules of Court reads1
4ec. -. 4upple"ental Pleadins. U >pon "otion of a part# the court "a#, upon reasonable notice and upon such ter"s as are *ust,
per"it hi" to serve a supple"ental pleadin settin forth transactions, occurrences or events )hich have happened since the date of
the pleadin souht to be supple"ented. The adverse part# "a# plead thereto )ithin ten ;$'< da#s fro" notice of the order
ad"ittin the supple"ental pleadin.
0n 7oung !. Spouses S&,
B-
this Court had the opportunit# to elucidate on the purpose of a supple"ental pleadin. Thus1
As its ver# na"e denotes, a supple"ental pleadin onl# serves to bolster or add so"ethin to the pri"ar# pleadin. A supple"ent
e7ists side b# side )ith the oriinal. 0t does not replace that )hich it supple"ents. Moreover, a supple"ental pleadin assu"es that
the oriinal pleadin is to stand and that the issues *oined )ith the oriinal pleadin re"ained an issue to be tried in the action. 0t is
but a continuation of the co"plaint. 0ts usual oIce is to set up ne) facts )hich *ustif#, enlare or chane the !ind of relief )ith
respect to the sa"e sub*ect "atter as the controvers# referred to in the oriinal co"plaint.
The purpose of the supple"ental pleadin is to brin into the records ne) facts )hich )ill enlare or chane the !ind of relief to
)hich the plaintif is entitledK hence, an# supple"ental facts )hich further develop the oriinal riht of action, or e7tend to var# the
relief, are available b# )a# of supple"ental co"plaint even thouh the# the"selves constitute a riht of action.
B.
;Citations o"itted
and e"phasis ours<
Thus, a supple"ental pleadin "a# properl# allee transactions, occurrences or events )hich had transpired after the 5lin of the
pleadin souht to be supple"ented, even if the said supple"ental facts constitute another cause of action.
Ad"ittedl#, in Leobrera !. Court of (ppeals,
B,
)e held that a supple"ental pleadin "ust be based on "atters arisin subseCuent to
the oriinal pleadin related to the clai" or defense presented therein, and founded on the sa"e cause of action. 9e further stressed
therein that a supple"ental pleadin "a# not be used to tr# a ne) cause of action.
Go)ever, in 'lanters De!elopment an8 !. L9K +oldings and De!elopment Corp.,
B&
)e clari5ed that, )hile a "atter stated in a
supple"ental co"plaint should have so"e relation to the cause of action set forth in the oriinal pleadin, the fact that the
supple"ental pleadin technicall# states a ne) cause of action should not be a bar to its allo)ance but onl# a "atter that "a# be
considered b# the court in the e7ercise of its discretion. 0n such cases, )e stressed that a broad de5nition of 6cause of action6 should
be applied.
Gere, the issue as to the validit# of the donation inter vivos of 2ot No. (.'& and half of 2ot No. (.'- "ade b# Rita in favor of /lorante
is a ne) cause of action that occurred after the 5lin of the oriinal co"plaint. Go)ever, the petitionersP pra#er for the rescission of
the said donation inter vivos in their supple"ental pleadin is er"ane to, and is in fact, intert)ined )ith the cause of action in the
partition case. 2ot No. (.'& and half of 2ot No. (.'- are included a"on the properties that )ere souht to be partitioned.
The petitionersP supple"ental pleadin "erel# a"pli5ed the oriinal cause of action, on account of the ratuitous conve#ance of 2ot
No. (.'& and half of 2ot No. (.'- after the 5lin of the oriinal co"plaint and pra#ed for additional reliefs, i.e., rescission. 0ndeed, the
petitioners clai" that the said lots for" part of the estate of 4pouses Ba#lon, but cannot be partitioned unless the ratuitous
conve#ance of the sa"e is rescinded. Thus, the principal issue raised b# the petitioners in their oriinal co"plaint re"ained the
sa"e.
M.,/ I44u"1 P%o+%,"2y o6 R"45,44,o/
After havin threshed out the procedural "atters, )e no) proceed to ad*udicate the substantial issue presented b# the instant
petition.
The petitioners assert that the CA erred in re"andin the case to the RTC for the deter"ination of o)nership of 2ot No. (.'& and half
of 2ot No. (.'-. The# "aintain that the RTC aptl# rescinded the said donation inter vivos of 2ot No. (.'& and half of 2ot No. (.'-
pursuant to Article $B,$;(< of the Civil Code.
0n his Co""ent,
('
/lorante asserts that before the petitioners "a# 5le an action for rescission, the# "ust 5rst obtain a favorable
*udicial rulin that 2ot No. (.'& and half of 2ot No. (.'- actuall# beloned to the estate of 4pouses Ba#lon. >ntil then, /lorante avers
that an action for rescission )ould be pre"ature.
The petitionersP contentions are )ell-ta!en.
The resolution of the instant dispute is funda"entall# continent upon a deter"ination of )hether the donation inter vivos of 2ot No.
(.'& and half of 2ot No. (.'- in favor of /lorante "a# be rescinded pursuant to Article $B,$;(< of the Civil Code on the round that
the sa"e )as "ade durin the pendenc# of the action for partition )ith the RTC.
R"45,44,o/ ,4 . %"#"0y 2o .00%"44
23" 0.#.8" o% ,/>u%y 5.u4"0 2o 23"
5o/2%.52,/8 +.%2,"4 o% 23,%0
+"%4o/4.
Rescission is a re"ed# ranted b# la) to the contractin parties and even to third persons, to secure the reparation of da"aes
caused to the" b# a contract, even if it should be valid, b# "eans of the restoration of thins to their condition at the "o"ent prior
to the celebration of said contract.
($
0t is a re"ed# to "a!e inefective a contract, validl# entered into and therefore obliator# under
nor"al conditions, b# reason of e7ternal causes resultin in a pecuniar# pre*udice to one of the contractin parties or their creditors.
(D
Contracts )hich are rescissible are valid contracts havin all the essential reCuisites of a contract, but b# reason of in*ur# or da"ae
caused to either of the parties therein or to third persons are considered defective and, thus, "a# be rescinded.
The !inds of rescissible contracts, accordin to the reason for their susceptibilit# to rescission, are the follo)in1 5rst, those )hich are
rescissible because of lesion or pre*udiceK
(B
second, those )hich are rescissible on account of fraud or bad faithK
((
and third, those
)hich, b# special provisions of la),
(+
are susceptible to rescission.
(-
Co/2%.524 73,53 %"6"% 2o 23,/84
4u$>"52 o6 l,2,8.2,o/ ,4 %"45,44,$l"
+u%4u./2 2o A%2,5l" 13&1?;@ o6 23"
C,!,l Co0".
Contracts )hich are rescissible due to fraud or bad faith include those )hich involve thins under litiation, if the# have been entered
into b# the defendant )ithout the !no)lede and approval of the litiants or of co"petent *udicial authorit#. Thus, Article $B,$;(< of
the Civil Code provides1
Art. $B,$. The follo)in contracts are rescissible1
7 7 7 7
;(< Those )hich refer to thins under litiation if the# have been entered into b# the defendant )ithout the !no)lede and approval
of the litiants or of co"petent *udicial authorit#.
The rescission of a contract under Article $B,$;(< of the Civil Code onl# reCuires the concurrence of the follo)in1 5rst, the defendant,
durin the pendenc# of the case, enters into a contract )hich refers to the thin sub*ect of litiationK and second, the said contract
)as entered into )ithout the !no)lede and approval of the litiants or of a co"petent *udicial authorit#. As lon as the foreoin
reCuisites concur, it beco"es the dut# of the court to order the rescission of the said contract.
The reason for this is si"ple. Article $B,$;(< see!s to re"ed# the presence of bad faith a"on the parties to a case andNor an#
fraudulent act )hich the# "a# co""it )ith respect to the thin sub*ect of litiation.
9hen a thin is the sub*ect of a *udicial controvers#, it should ulti"atel# be bound b# )hatever disposition the court shall render. The
parties to the case are therefore e7pected, in deference to the courtPs e7ercise of *urisdiction over the case, to refrain fro" doin acts
)hich )ould dissipate or debase the thin sub*ect of the litiation or other)ise render the i"pendin decision therein inefectual.
There is, then, a restriction on the disposition b# the parties of the thin that is the sub*ect of the litiation. Article $B,$;(< of the Civil
Code reCuires that an# contract entered into b# a defendant in a case )hich refers to thins under litiation should be )ith the
!no)lede and approval of the litiants or of a co"petent *udicial authorit#.
/urther, an# disposition of the thin sub*ect of litiation or an# act )hich tends to render inutile the courtPs i"pendin disposition in
such case, sans the !no)lede and approval of the litiants or of the court, is un"ista!abl# and irrefutabl# indicative of bad faith.
4uch acts under"ine the authorit# of the court to la# do)n the respective rihts of the parties in a case relative to the thin sub*ect
of litiation and bind the" to such deter"ination.
0t should be stressed, thouh, that the defendant in such a case is not absolutel# proscribed fro" enterin into a contract )hich refer
to thins under litiation. 0f, for instance, a defendant enters into a contract )hich conve#s the thin under litiation durin the
pendenc# of the case, the conve#ance )ould be valid, there bein no de5nite disposition #et co"in fro" the court )ith respect to
the thin sub*ect of litiation. After all, not)ithstandin that the sub*ect thereof is a thin under litiation, such conve#ance is but
"erel# an e7ercise of o)nership.
This is true even if the defendant efected the conve#ance )ithout the !no)lede and approval of the litiants or of a co"petent
*udicial authorit#. The absence of such !no)lede or approval )ould not precipitate the invalidit# of an other)ise valid contract.
Nevertheless, such contract, thouh considered valid, "a# be rescinded at the instance of the other litiants pursuant to Article
$B,$;(< of the Civil Code.
Gere, contrar# to the CAPs disposition, the RTC aptl# ordered the rescission of the donation inter vivos of 2ot No. (.'& and half of 2ot
No. (.'- in favor of /lorante. The petitioners had suIcientl# established the presence of the reCuisites for the rescission of a contract
pursuant to Article $B,$;(< of the Civil Code. 0t is undisputed that, at the ti"e the# )ere ratuitousl# conve#ed b# Rita, 2ot No. (.'&
and half of 2ot No. (.'- are a"on the properties that )ere the sub*ect of the partition case then pendin )ith the RTC. 0t is also
undisputed that Rita, then one of the defendants in the partition case )ith the RTC, did not infor" nor souht the approval fro" the
petitioners or of the RTC )ith reard to the donation inter vivos of the said parcels of land to /lorante.
Althouh the ratuitous conve#ance of the said parcels of land in favor of /lorante )as valid, the donation inter vivos of the sa"e
bein "erel# an e7ercise of o)nership, RitaPs failure to infor" and see! the approval of the petitioners or the RTC reardin the
conve#ance ave the petitioners the riht to have the said donation rescinded pursuant to Article $B,$;(< of the Civil Code.
R"45,44,o/ u/0"% A%2,5l" 13&1?;@ o6
23" C,!,l Co0" ,4 /o2 +%"5o/0,2,o/"0
u+o/ 23" >u0,5,.l 0"2"%#,/.2,o/ .4
2o 23" o7/"%43,+ o6 23" 23,/8
4u$>"52 o6 l,2,8.2,o/.
0n this reard, )e also 5nd the assertion that rescission "a# onl# be had after the RTC had 5nall# deter"ined that the parcels of land
beloned to the estate of 4pouses Ba#lon intrinsicall# a"iss. The petitionersP riht to institute the action for rescission pursuant to
Article $B,$;(< of the Civil Code is not preconditioned upon the RTCPs deter"ination as to the o)nership of the said parcels of land.
0t bears stressin that the riht to as! for the rescission of a contract under Article $B,$;(< of the Civil Code is not continent upon
the 5nal deter"ination of the o)nership of the thin sub*ect of litiation. The pri"ordial purpose of Article $B,$;(< of the Civil Code is
to secure the possible efectivit# of the i"pendin *ud"ent b# a court )ith respect to the thin sub*ect of litiation. 0t see!s to
protect the bindin efect of a courtPs i"pendin ad*udication vis-Z-vis the thin sub*ect of litiation reardless of )hich a"on the
contendin clai"s therein )ould subseCuentl# be upheld. Accordinl#, a de5nitive *udicial deter"ination )ith respect to the thin
sub*ect of litiation is not a condition sine Cua non before the rescissor# action conte"plated under Article $B,$;(< of the Civil Code
"a# be instituted.
Moreover, concedin that the riht to brin the rescissor# action pursuant to Article $B,$;(< of the Civil Code is preconditioned upon
a *udicial deter"ination )ith reard to the thin sub*ect litiation, this )ould onl# brin about the ver# predica"ent that the said
provision of la) see!s to obviate. Assu"in aruendo that a rescissor# action under Article $B,$;(< of the Civil Code could onl# be
instituted after the dispute )ith respect to the thin sub*ect of litiation is *udiciall# deter"ined, there is the possibilit# that the sa"e
"a# had alread# been conve#ed to third persons actin in ood faith, renderin an# *udicial deter"ination )ith reard to the thin
sub*ect of litiation illusor#. 4urel#, this parado7ical eventualit# is not )hat the la) had envisioned.
E!"/ ,6 23" 0o/.2,o/ ,/2"% !,!o4 ,4
!.l,0ly %"45,/0"0, . 0"2"%#,/.2,o/
.4 2o 23" o7/"%43,+ o6 23" 4u$>"52
+.%5"l4 o6 l./0 ,4 42,ll /"5"44.%y.
Gavin established that the RTC had aptl# ordered the rescission of the said donation inter vivos in favor of /lorante, the issue that
has to be resolved b# this Court is )hether there is still a need to deter"ine the o)nership of 2ot No. (.'& and half of 2ot No. (.'-.
0n optin not to "a!e a deter"ination as to the o)nership of 2ot No. (.'& and half of 2ot No. (.'-, the RTC reasoned that the parties
in the proceedins before it constitute not onl# the survivin heirs of 4pouses Ba#lon but the survivin heirs of Rita as )ell. As
inti"ated earlier, Rita died intestate durin the pendenc# of the proceedins )ith the RTC )ithout an# issue, leavin the parties in
the proceedins before the RTC as her survivin heirs. Thus, the RTC insinuated, a de5nitive deter"ination as to the o)nership of the
said parcels of land is unnecessar# since, in an# case, the said parcels of land )ould ulti"atel# be ad*udicated to the parties in the
proceedins before it.
9e do not aree.
Ad"ittedl#, )hoever "a# be ad*udicated as the o)ner of 2ot No. (.'& and half of 2ot No. (.'-, be it Rita or 4pouses Ba#lon, the
sa"e )ould ulti"atel# be trans"itted to the parties in the proceedins before the RTC as the# are the onl# survivin heirs of both
4pouses Ba#lon and Rita. Go)ever, the RTC failed to realiEe that a de5nitive ad*udication as to the o)nership of 2ot No. (.'& and half
of 2ot No. (.'- is essential in this case as it afects the authorit# of the RTC to direct the partition of the said parcels of land. 4i"pl#
put, the RTC cannot properl# direct the partition of 2ot No. (.'& and half of 2ot No. (.'- until and unless it deter"ines that the said
parcels of land indeed for" part of the estate of 4pouses Ba#lon.
0t should be stressed that the partition proceedins before the RTC onl# covers the properties co-o)ned b# the parties therein in their
respective capacit# as the survivin heirs of 4pouses Ba#lon. Gence, the authorit# of the RTC to issue an order of partition in the
proceedins before it onl# afects those properties )hich actuall# beloned to the estate of 4pouses Ba#lon.
0n this reard, if 2ot No. (.'& and half of 2ot No. (.'-, as un)averinl# clai"ed b# /lorante, are indeed e7clusivel# o)ned b# Rita,
then the said parcels of land "a# not be partitioned si"ultaneousl# )ith the other properties sub*ect of the partition case before the
RTC. 0n such case, althouh the parties in the case before the RTC are still co-o)ners of the said parcels of land, the RTC )ould not
have the authorit# to direct the partition of the said parcels of land as the proceedins before it is onl# concerned )ith the estate of
4pouses Ba#lon.
-)ERE'ORE, in consideration of the foreoin disCuisitions, the petition is PARTIALL* GRANTED. The %ecision dated 3ctober D-,
D''. issued b# the Court of Appeals in CA-A.R. C8 No. '$.(- is MODI'IED in that the %ecision dated 3ctober D', D''+ issued b# the
Reional Trial Court, Tan*a# Cit#, Neros 3riental, Branch (B in Civil Case No. $$-+., insofar as it decreed the rescission of the %eed
of %onation dated =ul# -, $&&. is hereb#REINSTATED. The case is REMANDED to the trial court for the deter"ination of the
o)nership of 2ot No. (.'& and half of 2ot No. (.'- in accordance )ith this %ecision.
43 3R%ERE%.
Republic of the Philippines
SUPREME COURT
Bauio Cit#
EN BANC
G.R. No. 166620 A+%,l 20, 2010
ATT*. S*LIA (ANDA, CONSORICIA O. PENSON, RADITO . PADRIGANO, JEAN R. DE MESA, LEA) P. DELA CRU<, AND* .
MACASAAUIT, SENEN (. CORDO(A, AL(ERT (RILLANTES, GLORIA (ISDA, JOITA . CONCEPCION, TERESITA G.
CARAJAL, ROSANNA T. MALI-ANAG, RIC)ARD ODERON, CECILIA ESTERNON, (ENEDICTO CA(RAL, MA. ICTORIA E.
LAROCO, CESAR ANDRA, 'ELICISIMO GALACIO, ELSA R. CALMA, 'ILOMENA A. GALANG, JEAN PAUL MELEGRITO, CLARO
G. SANTIAGO, JR., EDUARDO 'RIAS, RE*NALDO O. ANDAL, NEP)TALIE IMPERIO, RUEL (ALAGTAS, ICTOR R. ORTI<,
'RANCISCO P. RE*ES, JR., ELISEO M. (ALAGOT, JR., JOSE C. MONSALE, JR., ARTURO ADSUARA, '.C. LADRERO, JR.,
NELSON PADUA, MARCELA C. SA*AO, ANGELITO MALABAS, GLORIA RAMENTO, JULIANA SUPLEO, MANUEL MENDRIAUE,
E. TA*LAN, CARMELA (O(IS, DANILO ARGAS, RO*-LEO C. PA(LO, ALLAN ILLANUEA, ICENTE R. ELASCO, JR.,
IMELDA ERENO, 'LORI<A M. CATIIS, RANIEL R. (ASCO, E. JALIJALI, MARIO C. CARAAN, DOLORES M. AIADO, MIC)AEL P.
LAPLANA, GUILLERMO G. SORIANO, ALICE E. SOJO, ART)UR G. NARNE, LETICIA SORIANO, 'EDERICO RAMOS, JR.,
PETERSON CAAMPUED, RODELIO L. GOME<, ANTONIO D. GARCIA, JR., ANTONIO GALO, A. SANC)E<, SOL E. TAMA*O,
JOSEP)INE A.M. COCJIN, DAMIAN AUINTO, JR., EDL*N MARIANO, M.A. MALANUM, AL'REDO S. ESTRELLA, ./0 JESUS MEL
SA*O,Petitioners,
vs.
EDUARDO R. ERMITA, ,/ 3,4 5.+.5,2y .4 EC"5u2,!" S"5%"2.%y, T3" D,%"52o% G"/"%.l o6 23" P3,l,++,/" I/6o%#.2,o/ A8"/5y
./0 T3" N.2,o/.l T%".4u%"%, Respondents.
% E C 0 4 0 3 N
LEONARDO-DE CASTRO, J.:
The present controvers# arose fro" a Petition for Certiorari and prohibition challenin the constitutionalit# of E7ecutive 3rder No.
B., dated 3ctober D+, D''(, issued b# President Aloria Macapaal Arro#o ;President Arro#o<. Petitioners characteriEe their action as a
class suit 5led on their o)n behalf and on behalf of all their co-e"plo#ees at the National Printin 3Ice ;NP3<.
The NP3 )as for"ed on =ul# D+, $&,., durin the ter" of for"er President CoraEon C. ACuino ;President ACuino<, b# virtue of
E7ecutive 3rder No. D,+
$
)hich provided, a"on others, the creation of the NP3 fro" the "erer of the Aovern"ent Printin 3Ice
and the relevant printin units of the Philippine 0nfor"ation Aenc# ;P0A<. 4ection - of E7ecutive 3rder No. D,+ reads1
4ECT03N -. Creation of the National Printin 3Ice. U There is hereb# created a National Printin 3Ice out of the "erer of the
Aovern"ent Printin 3Ice and the relevant printin units of the Philippine 0nfor"ation Aenc#. The 3Ice shall have e7clusive
printin *urisdiction over the follo)in1
a. Printin, bindin and distribution of all standard and accountable for"s of national, provincial, cit# and "unicipal
overn"ents, includin overn"ent corporationsK
b. Printin of oIcials ballotsK
c. Printin of public docu"ents such as the 3Icial AaEette, Aeneral Appropriations Act, Philippine Reports, and develop"ent
infor"ation "aterials of the Philippine 0nfor"ation Aenc#.
The 3Ice "a# also accept other overn"ent printin *obs, includin overn"ent publications, aside fro" those enu"erated above,
but not in an e7clusive basis.
The details of the oraniEation, po)ers, functions, authorities, and related "anae"ent aspects of the 3Ice shall be provided in the
i"ple"entin details )hich shall be prepared and pro"ulated in accordance )ith 4ection 00 of this E7ecutive 3rder.
The 3Ice shall be attached to the Philippine 0nfor"ation Aenc#.
3n 3ctober D+, D''(, President Arro#o issued the herein assailed E7ecutive 3rder No. B.,, a"endin 4ection - of E7ecutive 3rder
No. D,+ b#, inter alia, re"ovin the e7clusive *urisdiction of the NP3 over the printin services reCuire"ents of overn"ent aencies
and instru"entalities. The pertinent portions of E7ecutive 3rder No. B.,, in turn, provide1
4ECT03N $. The NP3 shall continue to provide printin services to overn"ent aencies and instru"entalities as "andated b# la).
Go)ever, it shall no loner en*o# e7clusive *urisdiction over the printin services reCuire"ents of the overn"ent over standard and
accountable for"s. 0t shall have to co"pete )ith the private sector, e7cept in the printin of election paraphernalia )hich could be
shared )ith the Ban!o 4entral n Pilipinas, upon the discretion of the Co""ission on Elections consistent )ith the provisions of the
Election Code of $&,..
4ECT03N D. Aovern"ent aenciesNinstru"entalities "a# source printin services outside NP3 provided that1
D.$ The printin services to be provided b# the private sector is superior in Cualit# and at a lo)er cost than )hat is ofered
b# the NP3K and
D.D The private printin provider is Le7ible in ter"s of "eetin the taret co"pletion ti"e of the overn"ent aenc#.
4ECT03N B. 0n the e7ercise of its functions, the a"ount to be appropriated for the prora"s, pro*ects and activities of the NP3 in the
Aeneral Appropriations Act ;AAA< shall be li"ited to its inco"e )ithout additional 5nancial support fro" the overn"ent. ;E"phases
and underscorin supplied.<
Pursuant to E7ecutive 3rder No. B.,, overn"ent aencies and instru"entalities are allo)ed to source their printin services fro"
the private sector throuh co"petitive biddin, sub*ect to the condition that the services ofered b# the private supplier be of superior
Cualit# and lo)er in cost co"pared to )hat )as ofered b# the NP3. E7ecutive 3rder No. B., also li"ited NP3Ps appropriation in the
Aeneral Appropriations Act to its inco"e.
Perceivin E7ecutive 3rder No. B., as a threat to their securit# of tenure as e"plo#ees of the NP3, petitioners no) challene its
constitutionalit#, contendin that1 ;$< it is be#ond the e7ecutive po)ers of President Arro#o to a"end or repeal E7ecutive 3rder No.
D,+ issued b# for"er President ACuino )hen the latter still e7ercised leislative po)ersK and ;D< E7ecutive 3rder No. B., violates
petitionersP securit# of tenure, because it paves the )a# for the radual abolition of the NP3.
9e dis"iss the petition.
Before proceedin to resolve the substantive issues, the Court "ust 5rst delve into a procedural "atter. 4ince petitioners instituted
this case as a class suit, the Court, thus, "ust 5rst deter"ine if the petition indeed Cuali5es as one. 0n Board of 3pto"etr# v.
Colet,
D
)e held that 6ScTourts "ust e7ercise ut"ost caution before allo)in a class suit, )hich is the e7ception to the reCuire"ent of
*oinder of all indispensable parties. /or )hile no diIcult# "a# arise if the decision secured is favorable to the plaintifs, a Cuandar#
)ould result if the decision )ere other)ise as those )ho )ere dee"ed i"pleaded b# their self-appointed representatives )ould
certainl# clai" denial of due process.6
4ection $D, Rule B of the Rules of Court de5nes a class suit, as follo)s1
4ec. $D. Class suit. U 9hen the sub*ect "atter of the controvers# is one of co""on or eneral interest to "an# persons so nu"erous
that it is i"practicable to *oin all as parties, a nu"ber of the" )hich the court 5nds to be suIcientl# nu"erous and representative as
to full# protect the interests of all concerned "a# sue or defend for the bene5t of all. An# part# in interest shall have the riht to
intervene to protect his individual interest.
/ro" the foreoin de5nition, the reCuisites of a class suit are1 $< the sub*ect "atter of controvers# is one of co""on or eneral
interest to "an# personsK D< the parties afected are so nu"erous that it is i"practicable to brin the" all to courtK and B< the parties
brinin the class suit are suIcientl# nu"erous or representative of the class and can full# protect the interests of all concerned.
0n Matha# v. The Consolidated Ban! and Trust Co"pan#,
B
the Court held that1
An action does not beco"e a class suit "erel# because it is desinated as such in the pleadins. 9hether the suit is or is not a class
suit depends upon the attendin facts, and the co"plaint, or other pleadin initiatin the class action should allee the e7istence of
the necessar# facts, to )it, the e7istence of a sub*ect "atter of co""on interest, and the e7istence of a class and the nu"ber of
persons in the alleed class,

in order that the court "iht be enabled to deter"ine )hether the "e"bers of the class are so
nu"erous as to "a!e it i"practicable to brin the" all before the court, to contrast the nu"ber appearin on the record )ith the
nu"ber in the class and to deter"ine )hether clai"ants on record adeCuatel# represent the class and the sub*ect "atter of eneral
or co""on interest. ;E"phases ours.<
Gere, the petition failed to state the nu"ber of NP3 e"plo#ees )ho )ould be afected b# the assailed E7ecutive 3rder and )ho )ere
alleedl# represented b# petitioners. 0t )as the 4olicitor Aeneral, as counsel for respondents, )ho pointed out that there )ere about
+(& e"plo#ees in the NP3.
(
The -. petitioners undeniabl# co"prised a s"all fraction of the NP3 e"plo#ees )ho" the# clai"ed to
represent. 4ubseCuentl#, BD of the oriinal petitioners e7ecuted an AIdavit of %esistance, )hile one sined a letter den#in ever
sinin the petition,
+
ostensibl# reducin the nu"ber of petitioners to B(. 9e note that counsel for the petitioners challened the
validit# of the desistance or )ithdra)al of so"e of the petitioners and insinuated that such desistance )as due to pressure fro"
people 6close to the seat of po)er.6
-
4till, even if )e )ere to disreard the aIdavit of desistance 5led b# so"e of the petitioners, it is
hihl# doubtful that a suIcient, representative nu"ber of NP3 e"plo#ees have instituted this purported class suit. A perusal of the
petition itself )ould sho) that of the -. petitioners )ho sined the 8eri5cationNCerti5cation of Non-/oru" 4hoppin, onl# D'
petitioners )ere in fact "entioned in the *urat as havin dul# subscribed the petition before the notar# public. 0n other )ords, onl# D'
petitioners efectivel# instituted the present case.
0ndeed, in M8R4 Publications, 0nc. v. 0sla"ic %aP)ah Council of the Philippines, 0nc.,
.
)e observed that an ele"ent of a class suit or
representative suit is the adeCuac# of representation. 0n deter"inin the Cuestion of fair and adeCuate representation of "e"bers of
a class, the court "ust consider ;a< )hether the interest of the na"ed part# is coe7tensive )ith the interest of the other "e"bers of
the classK ;b< the proportion of those "ade a part#, as it so bears, to the total "e"bership of the classK and ;c< an# other factor
bearin on the abilit# of the na"ed part# to spea! for the rest of the class.
Previousl#, )e held in 0baVes v. Ro"an Catholic Church
,
that )here the interests of the plaintifs and the other "e"bers of the class
the# see! to represent are dia"etricall# opposed, the class suit )ill not prosper.
0t is )orth "entionin that a Manifestation of %esistance,
&
to )hich the previousl# "entioned AIdavit of %esistance
$'
)as attached,
)as 5led b# the President of the National Printin 3Ice 9or!ers Association ;NAP39A<. The said "anifestation e7pressed NAP39APs
opposition to the 5lin of the instant petition in an# court. Even if )e ta!e into account the contention of petitionersP counsel that the
NAP39A President had no leal standin to 5le such "anifestation, the said pleadin is a clear indication that there is a diverence of
opinions and vie)s a"on the "e"bers of the class souht to be represented, and not all are in favor of 5lin the present suit. There
is here an apparent conLict bet)een petitionersP interests and those of the persons )ho" the# clai" to represent. 4ince it cannot be
said that petitioners suIcientl# represent the interests of the entire class, the instant case cannot be properl# treated as a class suit.
As to the "erits of the case, the petition raises t)o "ain rounds to assail the constitutionalit# of E7ecutive 3rder No. B.,1
/irst, it is contended that President Arro#o cannot a"end or repeal E7ecutive 3rder No. D,+ b# the "ere issuance of another
e7ecutive order ;E7ecutive 3rder No. B.,<. Petitioners "aintain that for"er President ACuinoPs E7ecutive 3rder No. D,+ is a leislative
enact"ent, as the sa"e )as issued )hile President ACuino still had leislative po)ers under the /reedo" ConstitutionK
$$
thus, onl#
Conress throuh leislation can validl# a"end E7ecutive 3rder No. D,+.
4econd, petitioners "aintain that the issuance of E7ecutive 3rder No. B., )ould lead to the eventual abolition of the NP3 and )ould
violate the securit# of tenure of NP3 e"plo#ees.
Anent the 5rst round raised in the petition, )e 5nd the sa"e patentl# )ithout "erit.
0t is a )ell-settled principle in *urisprudence that the President has the po)er to reoraniEe the oIces and aencies in the e7ecutive
depart"ent in line )ith the PresidentPs constitutionall# ranted po)er of control over e7ecutive oIces and b# virtue of previous
deleation of the leislative po)er to reoraniEe e7ecutive oIces under e7istin statutes.
0n Bu!lod n Ja)anin E00B v. [a"ora,
$D
the Court pointed out that E7ecutive 3rder No. D&D or the Ad"inistrative Code of $&,. ives
the President continuin authorit# to reoraniEe and rede5ne the functions of the 3Ice of the President. 4ection B$, Chapter $', Title
000, Boo! 000 of the said Code, is e7plicit1
4ec. B$. Continuin Authorit# of the President to ReoraniEe his 3Ice. U The President, sub*ect to the polic# in the E7ecutive 3Ice
and in order to achieve si"plicit#, econo"# and eIcienc#, shall have continuin authorit# to reoraniEe the ad"inistrative structure
of the 3Ice of the President. /or this purpose, he "a# ta!e an# of the follo)in actions1
;$< Restructure the internal oraniEation of the 3Ice of the President Proper, includin the i""ediate 3Ices, the President
4pecial AssistantsNAdvisers 4#ste" and the Co""on 4taf 4upport 4#ste", b# abolishin, consolidatin or "erin units
thereof or transferrin functions fro" one unit to anotherK
;D< Transfer an# function under the 3Ice of the President to an# other %epart"ent or Aenc# as )ell as transfer functions to
the 3Ice of the President fro" other %epart"ents and AenciesK and
;B< Transfer an# aenc# under the 3Ice of the President to an# other depart"ent or aenc# as )ell as transfer aencies to
the 3Ice of the President fro" other %epart"ents or aencies. ;E"phases ours.<
0nterpretin the foreoin provision, )e held in Bu!lod n Ja)anin E00B, thus1
But of course, the list of leal basis authoriEin the President to reoraniEe an# depart"ent or aenc# in the e7ecutive branch does
not have to end here. 9e "ust not lose siht of the ver# source of the po)er U that )hich constitutes an e7press rant of po)er.
>nder 4ection B$, Boo! 000 of E7ecutive 3rder No. D&D ;other)ise !no)n as the Ad"inistrative Code of $&,.<, 6the President, sub*ect
to the polic# in the E7ecutive 3Ice and in order to achieve si"plicit#, econo"# and eIcienc#, shall have the continuin authorit# to
reoraniEe the ad"inistrative structure of the 3Ice of the President.6 /or this purpose, he "a# transfer the functions of other
%epart"ents or Aencies to the 3Ice of the President. 0n CanoniEado v. Auirre SBDB 4CRA B$D ;D'''<T, )e ruled that reoraniEation
6involves the reduction of personnel, consolidation of oIces, or abolition thereof b# reason of econo"# or redundanc# of functions.6
0t ta!es place )hen there is an alteration of the e7istin structure of overn"ent oIces or units therein, includin the lines of control,
authorit# and responsibilit# bet)een the". The E00B is a bureau attached to the %epart"ent of /inance. 0t falls under the 3Ice of the
President. Gence, it is sub*ect to the PresidentPs continuin authorit# to reoraniEe.
$B
;E"phasis ours.<
0t is undisputed that the NP3, as an aenc# that is part of the 3Ice of the Press 4ecretar# ;)hich in various ti"es has been an
aenc# directl# attached to the 3Ice of the Press 4ecretar# or as an aenc# under the Philippine 0nfor"ation Aenc#<, is part of the
3Ice of the President.
$(
Pertinent to the case at bar, 4ection B$ of the Ad"inistrative Code of $&,. Cuoted above authoriEes the President ;a< to restructure
the internal oraniEation of the 3Ice of the President Proper, includin the i""ediate 3Ices, the President 4pecial
AssistantsNAdvisers 4#ste" and the Co""on 4taf 4upport 4#ste", b# abolishin, consolidatin or "erin units thereof or
transferrin functions fro" one unit to another, and ;b< to transfer functions or oIces fro" the 3Ice of the President to an# other
%epart"ent or Aenc# in the E7ecutive Branch, and vice versa.
Conco"itant to such po)er to abolish, "ere or consolidate oIces in the 3Ice of the President Proper and to transfer
functionsNoIces not onl# a"on the oIces in the 3Ice of President Proper but also the rest of the 3Ice of the President and the
E7ecutive Branch, the President i"plicitl# has the po)er to efect less radical or less substantive chanes to the functional and
internal structure of the 3Ice of the President, includin the "odi5cation of functions of such e7ecutive aencies as the e7iencies of
the service "a# reCuire.
0n the case at bar, there )as neither an abolition of the NP3 nor a re"oval of an# of its functions to be transferred to another aenc#.
>nder the assailed E7ecutive 3rder No. B.,, the NP3 re"ains the "ain printin ar" of the overn"ent for all !inds of overn"ent
for"s and publications but in the interest of reater econo"# and encourain eIcienc# and pro5tabilit#, it "ust no) co"pete )ith
the private sector for certain overn"ent printin *obs, )ith the e7ception of election paraphernalia )hich re"ains the e7clusive
responsibilit# of the NP3, toether )ith the Ban!o 4entral n Pilipinas, as the Co""ission on Elections "a# deter"ine. At "ost,
there )as a "ere alteration of the "ain function of the NP3 b# li"itin the e7clusivit# of its printin responsibilit# to election for"s.
$+
There is a vie) that the reoraniEation actions that the President "a# ta!e )ith respect to aencies in the 3Ice of the President are
strictl# li"ited to transfer of functions and oIces as see"inl# provided in 4ection B$ of the Ad"inistrative Code of $&,..
Go)ever, 4ection D', Chapter ., Title 0, Boo! 000 of the sa"e Code sini5cantl# provides1
4ec. D'. Residual Po)ers. U >nless Conress provides other)ise, the President shall e7ercise such other po)ers and functions vested
in the President )hich are provided for under the la)s and )hich are not speci5call# enu"erated above, or )hich are not deleated
b# the President in accordance )ith la). ;E"phasis ours.<
Pursuant to 4ection D', the po)er of the President to reoraniEe the E7ecutive Branch under 4ection B$ includes such po)ers and
functions that "a# be provided for under other la)s. To be sure, an inclusive and broad interpretation of the PresidentPs po)er to
reoraniEe e7ecutive oIces has been consistentl# supported b# speci5c provisions in eneral appropriations la)s.
0n the oft-cited 2arin v. E7ecutive 4ecretar#,
$-
the Court li!e)ise adverted to certain provisions of Republic Act No. .-(+, the eneral
appropriations la) for $&&B, as a"on the statutor# bases for the PresidentPs po)er to reoraniEe e7ecutive aencies, to )it1
4ection (, of R.A. .-(+ provides that1
64ec. (,. 4calin %o)n and Phase 3ut of Activities of Aencies 9ithin the E7ecutive Branch. F The heads of depart"ents, bureaus
and oIces and aencies are hereb# directed to identif# their respective activities )hich are no loner essential in the deliver# of
public services and )hich "a# be scaled do)n, phased out or abolished, sub*ect to civil SserviceT rules and reulations. 7 7 7. Actual
scalin do)n, phasin out or abolition of the activities shall be efected pursuant to Circulars or 3rders issued for the purpose b# the
3Ice of the President.6
4aid provision clearl# "entions the acts of 6scalin do)n, phasin out and abolition6 of oIces onl# and does not cover the creation of
oIces or transfer of functions. Nevertheless, the act of creatin and decentraliEin is included in the subseCuent provision of 4ection
-D, )hich provides that1
64ec. -D. >nauthoriEed oraniEational chanes. F >nless other)ise created b# la) or directed b# the President of the Philippines, no
oraniEational unit or chanes in !e# positions in an# depart"ent or aenc# shall be authoriEed in their respective oraniEation
structures and be funded fro" appropriations b# this Act.6
The foreoin provision evidentl# sho)s that the President is authoriEed to efect oraniEational chanes includin the creation of
oIces in the depart"ent or aenc# concerned.
The contention of petitioner that the t)o provisions are riders deserves scant consideration. 9ell settled is the rule that ever# la) has
in its favor the presu"ption of constitutionalit#. >nless and until a speci5c provision of the la) is declared invalid and
unconstitutional, the sa"e is valid and bindin for all intents and purposes.
$.
;E"phases ours<
Bu!lod n Ja)anin E00B v. [a"ora,
$,
)here the Court upheld as valid then President =oseph EstradaPs E7ecutive 3rder No. $&$
6deactivatin6 the Econo"ic 0ntellience and 0nvestiation Bureau ;E00B< of the %epart"ent of /inance, he)ed closel# to the
reasonin in 2arin. The Court, a"on others, also traced fro" the Aeneral Appropriations Act
$&
the PresidentPs authorit# to efect
oraniEational chanes in the depart"ent or aenc# under the e7ecutive structure, thus1
9e adhere to the precedent or rulin in 2arin that this provision reconiEes the authorit# of the President to efect oraniEational
chanes in the depart"ent or aenc# under the e7ecutive structure. 4uch a rulin further 5nds support in 4ection ., of Republic Act
No. ,.-'. >nder this la), the heads of depart"ents, bureaus, oIces and aencies and other entities in the E7ecutive Branch are
directed ;a< to conduct a co"prehensive revie) of their respective "andates, "issions, ob*ectives, functions, prora"s, pro*ects,
activities and s#ste"s and proceduresK ;b< identif# activities )hich are no loner essential in the deliver# of public services and )hich
"a# be scaled do)n, phased-out or abolishedK and ;c< adopt "easures that )ill result in the strea"lined oraniEation and i"proved
overall perfor"ance of their respective aencies. 4ection ., ends up )ith the "andate that the actual strea"linin and productivit#
i"prove"ent in aenc# oraniEation and operation shall be efected pursuant to Circulars or 3rders issued for the purpose b# the
3Ice of the President. 7 7 7.
D'
;E"phasis ours<
Notabl#, in the present case, the D''B Aeneral Appropriations Act, )hich )as reenacted in D''( ;the #ear of the issuance of
E7ecutive 3rder No. B.,<, li!e)ise ave the President the authorit# to efect a )ide variet# of oraniEational chanes in an#
depart"ent or aenc# in the E7ecutive Branch. 4ections .. and ., of said Act provides1
4ection ... 3raniEed Chanes. U >nless other)ise provided b# la) or directed b# the President of the Philippines, no chanes in !e#
positions or oraniEational units in an# depart"ent or aenc# shall be authoriEed in their respective oraniEational structures and
funded fro" appropriations provided b# this Act.
4ection .,. 0nstitutional 4trenthenin and Productivit# 0"prove"ent in Aenc# 3raniEation and 3perations and 0"ple"entation of
3raniEationNReoraniEation Mandated b# 2a). The Aovern"ent shall adopt institutional strenthenin and productivit# i"prove"ent
"easures to i"prove service deliver# and enhance productivit# in the overn"ent, as directed b# the President of the Philippines.
The heads of depart"ents, bureaus, oIces, aencies, and other entities of the E7ecutive Branch shall accordinl# conduct a
co"prehensive revie) of their respective "andates, "issions, ob*ectives, functions, prora"s, pro*ects, activities and s#ste"s and
proceduresK identif# areas )here i"prove"ents are necessar#K and i"ple"ent correspondin structural, functional and operational
ad*ust"ents that )ill result in strea"lined oraniEation and operations and i"proved perfor"ance and productivit#1 PR380%E%, That
actual strea"linin and productivit# i"prove"ents in aenc# oraniEation and operations, as authoriEed b# the President of the
Philippines for the purpose, includin the utiliEation of savins enerated fro" such activities, shall be in accordance )ith the rules
and reulations to be issued b# the %BM, upon consultation )ith the Presidential Co""ittee on Efective Aovernance1 PR380%E%,
/>RTGER, That in the i"ple"entation of oraniEationsNreoraniEations, or speci5c chanes in aenc# structure, functions and
operations as a result of institutional strenthenin or as "andated b# la), the appropriation, includin the functions, pro*ects,
purposes and activities of aencies concerned "a# be realined as "a# be necessar#1 PR380%E%, /0NA22?, That an# une7pended
balances or savins in appropriations "a# be "ade available for pa#"ent of retire"ent ratuities and separation bene5ts to afected
personnel, as authoriEed under e7istin la)s. ;E"phases and underscorin ours.<
0"plicitl#, the aforeCuoted provisions in the appropriations la) reconiEe the po)er of the President to reoraniEe even e7ecutive
oIces alread# funded b# the said appropriations act, includin the po)er to i"ple"ent structural, functional, and operational
ad*ust"ents in the e7ecutive bureaucrac# and, in so doin, "odif# or realin appropriations of funds as "a# be necessar# under such
reoraniEation. Thus, insofar as petitioners protest the li"itation of the NP3Ps appropriations to its o)n inco"e under E7ecutive 3rder
No. B.,, the sa"e is statutoril# authoriEed b# the above provisions.
0n the D''B case of Baaoisan v. National Tobacco Ad"inistration,
D$
)e upheld the 6strea"linin6 of the National Tobacco
Ad"inistration throuh a reduction of its personnel and dee"ed the sa"e as included in the po)er of the President to reoraniEe
e7ecutive oIces ranted under the la)s, not)ithstandin that such strea"linin neither involved an abolition nor a transfer of
functions of an oIce. To Cuote the relevant portion of that decision1
0n the recent case of "osa Liga&a C. Domingo, et al. !s. +on. "onaldo D. 9amora, in his capacit& as the 4/ecuti!e Secretar&, et
al., this Court has had occasion to also delve on the PresidentPs po)er to reoraniEe the 3Ice of the President under 4ection B$;D<
and ;B< of E7ecutive 3rder No. D&D and the po)er to reoraniEe the 3Ice of the President 'roper. 7 7 7
7 7 7 7
The 5rst sentence of the la) is an e7press rant to the President of a continuin authorit# to reoraniEe the ad"inistrative structure
of the 3Ice of the President. The succeedin nu"bered pararaphs are not in the nature of pro!isos that undul# li"it the ai" and
scope of the rant to the President of the po)er to reoraniEe but are to be vie)ed in consonance there)ith. 4ection B$;$< of
E7ecutive 3rder No. D&D speci5call# refers to the PresidentPs po)er to restructure the internal oraniEation of the 3Ice of the
President 'roper, b# abolishin, consolidatin or "erin units hereof or transferrin functions fro" one unit to another, )hile 4ection
B$;D< and ;B< concern e7ecutive oIces outside the 3Ice of the President 'roper allo)in the President to transfer an# function under
the 3Ice of the President to an# other %epart"ent or Aenc# and !ice:!ersa, and the transfer of an# aenc# under the 3Ice of the
President to an# other depart"ent or aenc# and !ice:!ersa.
0n the present instance, involvin neither an abolition nor transfer of oIces, the assailed action is a "ere reoraniEation under the
eneral provisions of the la) consistin "ainl# of strea"linin the NTA in the interest of si"plicit#, econo"# and eIcienc#. 0t is an
act )ell )ithin the authorit# of the President "otivated and carried out, accordin to the 5ndins of the appellate court, in ood faith,
a factual assess"ent that this Court could onl# but accept.
DD
;E"phases and underscorin supplied.<
0n the "ore recent case of Tondo Medical Center E"plo#ees Association v. Court of Appeals,
DB
)hich involved a structural and
functional reoraniEation of the %epart"ent of Gealth under an e7ecutive order, )e reiterated the principle that the po)er of the
President to reoraniEe aencies under the e7ecutive depart"ent b# e7ecutive or ad"inistrative order is constitutionall# and
statutoril# reconiEed. 9e held in that case1
This Court has alread# ruled in a nu"ber of cases that the President "a#, b# e7ecutive or ad"inistrative order, direct the
reoraniEation of overn"ent entities under the E7ecutive %epart"ent. This is also sanctioned under the Constitution, as )ell as
other statutes.
4ection $., Article 800 of the $&,. Constitution, clearl# states1 6STThe president shall have control of all e7ecutive depart"ents,
bureaus and oIces.6 4ection B$, Boo! 000, Chapter $' of E7ecutive 3rder No. D&D, also !no)n as the Ad"inistrative Code of $&,.
reads1
4EC. B$. Continuin Authorit# of the President to ReoraniEe his 3Ice - The President, sub*ect to the polic# in the E7ecutive 3Ice
and in order to achieve si"plicit#, econo"# and eIcienc#, shall have continuin authorit# to reoraniEe the ad"inistrative structure
of the 3Ice of the President. /or this purpose, he "a# ta!e an# of the follo)in actions1
7 7 7 7
0n Domingo !. 9amora S((+ Phil. . ;D''B<T, this Court e7plained the rationale behind the PresidentPs continuin authorit# under the
Ad"inistrative Code to reoraniEe the ad"inistrative structure of the 3Ice of the President. The la) rants the President the po)er
to reoraniEe the 3Ice of the President in reconition of the recurrin need of ever# President to reoraniEe his or her oIce 6to
achieve si"plicit#, econo"# and eIcienc#.6 To re"ain efective and eIcient, it "ust be capable of bein shaped and reshaped b#
the President in the "anner the Chief E7ecutive dee"s 5t to carr# out presidential directives and policies.
The Ad"inistrative Code provides that the 3Ice of the President consists of the 3Ice of the President Proper and the aencies under
it. The aencies under the 3Ice of the President are identi5ed in 4ection DB, Chapter ,, Title 00 of the Ad"inistrative Code1
4ec. DB. $he (gencies under the ,;ce of the 'resident.<The aencies under the 3Ice of the President refer to those oIces placed
under the chair"anship of the President, 23o4" u/0"% 23" 4u+"%!,4,o/ ./0 5o/2%ol o6 23" P%"4,0"/2, those under the
ad"inistrative supervision of the 3Ice of the President, those attached to it for polic# and prora" coordination, and those that are
not placed b# la) or order creatin the" under an# speci5c depart"ent.
7 7 7 7
The po)er of the President to reoraniEe the e7ecutive depart"ent is li!e)ise reconiEed in eneral appropriations la)s. 7 7 7.
7 7 7 7
Clearl#, E7ecutive 3rder No. $'D is )ell )ithin the constitutional po)er of the President to issue. The President did not usurp an#
leislative preroative in issuin E7ecutive 3rder No. $'D. 0t is an e7ercise of the PresidentPs constitutional po)er of control over the
e7ecutive depart"ent, supported b# the provisions of the Ad"inistrative Code, reconiEed b# other statutes, and consistentl#
aIr"ed b# this Court.
D(
;E"phases supplied.<
4ubseCuentl#, )e ruled in Ana! Mindanao Part#-2ist Aroup v. E7ecutive 4ecretar#
D+
that1
The ConstitutionPs e7press rant of the po)er of control in the President *usti5es an e7ecutive action to carr# out reoraniEation
"easures under a broad authorit# of la).
0n enactin a statute, the leislature is presu"ed to have deliberated )ith full !no)lede of all e7istin la)s and *urisprudence on the
sub*ect. 0t is thus reasonable to conclude that in passin a statute )hich places an aenc# under the 3Ice of the President, it )as in
accordance )ith e7istin la)s and *urisprudence on the PresidentPs po)er to reoraniEe.
0n establishin an e7ecutive depart"ent, bureau or oIce, the leislature necessaril# ordains an e7ecutive aenc#Ps position in the
sche"e of ad"inistrative structure. 4uch deter"ination is pri"ar#, but sub*ect to the PresidentPs continuin authorit# to reoraniEe
the ad"inistrative structure. As far as bureaus, aencies or oIces in the e7ecutive depart"ent are concerned, the po)er of control
"a# *ustif# the President to deactivate the functions of a particular oIce. 3r a la) "a# e7pressl# rant the President the broad
authorit# to carr# out reoraniEation "easures. The Ad"inistrative Code of $&,. is one such la).
D-
The issuance of E7ecutive 3rder No. B., b# President Arro#o is an e7ercise of a deleated leislative po)er ranted b# the
afore"entioned 4ection B$, Chapter $', Title 000, Boo! 000 of the Ad"inistrative Code of $&,., )hich provides for the continuin
authorit# of the President to reoraniEe the 3Ice of the President, 6in order to achieve si"plicit#, econo"# and eIcienc#.6 This is a
"atter alread# )ell-entrenched in *urisprudence. The reoraniEation of such an oIce throuh e7ecutive or ad"inistrative order is
also reconiEed in the Ad"inistrative Code of $&,.. 4ections D and B, Chapter D, Title 0, Boo! 000 of the said Code provide1
4ec. D. E7ecutive 3rders. - Acts of the President providin for rules of a eneral or per"anent character in i"ple"entation or
e7ecution of constitutional or statutor# po)ers shall be pro"ulated in e7ecutive o%0"%4.
4ec. B. Ad"inistrative 3rders. - Acts of the President )hich relate to particular aspects of overn"ental operations in pursuance of his
duties as ad"inistrative head shall be pro"ulated in ad"inistrative o%0"%4. ;E"phases supplied.<
To reiterate, )e 5nd nothin ob*ectionable in the provision in E7ecutive 3rder No. B., li"itin the appropriation of the NP3 to its o)n
inco"e. Beinnin )ith 2arin and in subseCuent cases, the Court has noted certain provisions in the 8"/"%.l .++%o+%,.2,o/4
l.74 as li!e)ise reLectin the po)er of the President to reoraniEe e7ecutive oIces or aencies even to the e7tent of "odif#in and
realinin appropriations for that purpose.
PetitionersP contention that the issuance of E7ecutive 3rder No. B., is an invalid e7ercise of leislative po)er on the part of the
President has no leal le to stand on.
0n all, E7ecutive 3rder No. B.,, )hich purports to institute necessar# refor"s in overn"ent in order to i"prove and uprade
eIcienc# in the deliver# of public services b# rede5nin the functions of the NP3 and li"itin its fundin to its o)n inco"e and to
transfor" it into a self-reliant aenc# able to co"pete )ith the private sector, is )ell )ithin the preroative of President Arro#o under
her continuin deleated leislative po)er to reoraniEe her o)n oIce. As pointed out in the separate concurrin opinion of our
learned colleaue, Associate =ustice Antonio T. Carpio, the ob*ective behind E7ecutive 3rder No. B., is )holl# consistent )ith the
state polic# contained in Republic Act No. &$,( or the Aovern"ent Procure"ent Refor" Act to encourae co"petitiveness b#
e7tendin eCual opportunit# to private contractin parties )ho are eliible and Cuali5ed.
D.
1a!!phi1
To be ver# clear, this deleated leislative po)er to reoraniEe pertains onl# to the 3Ice of the President and the depart"ents,
oIces and aencies of the e7ecutive branch and does not include the =udiciar#, the 2eislature or the constitutionall#-created or
"andated bodies. Moreover, it "ust be stressed that the e7ercise b# the President of the po)er to reoraniEe the e7ecutive
depart"ent "ust be in accordance )ith the Constitution, relevant la)s and prevailin *urisprudence.
0n this reard, )e are "indful of the previous pronounce"ent of this Court in %ario v. Mison
D,
that1
ReoraniEations in this *urisdiction have been rearded as valid provided the# are pursued in ood faith. As a eneral rule, a
reoraniEation is carried out in 6ood faith6 if it is for the purpose of econo"# or to "a!e bureaucrac# "ore eIcient. 0n that event, no
dis"issal ;in case of a dis"issal< or separation actuall# occurs because the position itself ceases to e7ist. And in that case, securit# of
tenure )ould not be a Chinese )all. Be that as it "a#, if the 6abolition,6 )hich is nothin else but a separation or re"oval, is done for
political reasons or purposel# to defeat securit# of tenure, or other)ise not in ood faith, no valid 6abolition6 ta!es place and
)hatever 6abolition6 is done, is void ab initio. There is an invalid 6abolition6 as )here there is "erel# a chane of no"enclature of
positions, or )here clai"s of econo"# are belied b# the e7istence of a"ple funds. ;E"phasis ours.<
4tated alternativel#, the presidential po)er to reoraniEe aencies and oIces in the e7ecutive branch of overn"ent is sub*ect to the
condition that such reoraniEation is carried out in ood faith.
0f the reoraniEation is done in ood faith, the abolition of positions, )hich results in loss of securit# of tenure of afected overn"ent
e"plo#ees, )ould be valid. 0n Bu!lod n Ja)anin E00B v. [a"ora,
D&
)e even observed that there )as no such thin as an absolute
riht to hold oIce. E7cept those )ho hold constitutional oIces, )hich provide for special i""unit# as reards salar# and tenure, no
one can be said to have an# vested riht to an oIce or salar#.
B'
This brins us to the second round raised in the petition U that E7ecutive 3rder No. B.,, in allo)in overn"ent aencies to secure
their printin reCuire"ents fro" the private sector and in li"itin the budet of the NP3 to its inco"e, )ill purportedl# lead to the
radual abolition of the NP3 and the loss of securit# of tenure of its present e"plo#ees. 0n other )ords, petitioners avo) that the
reoraniEation of the NP3 under E7ecutive 3rder No. B., is tainted )ith bad faith. The basic evidentiar# rule is that he )ho asserts a
fact or the aIr"ative of an issue has the burden of provin it.
B$
A careful revie) of the records )ill sho) that petitioners utterl# failed to substantiate their clai". The# failed to allee, "uch less
prove, suIcient facts to sho) that the li"itation of the NP3Ps budet to its o)n inco"e )ould indeed lead to the abolition of the
position, or re"oval fro" oIce, of an# e"plo#ee. Neither did petitioners present an# shred of proof of their assertion that the
chanes in the functions of the NP3 )ere for political considerations that had nothin to do )ith i"provin the eIcienc# of, or
encourain operational econo"# in, the said aenc#.
0n su", the Court 5nds that the petition failed to sho) an# constitutional in5r"it# or rave abuse of discretion a"ountin to lac! or
e7cess of *urisdiction in President Arro#oPs issuance of E7ecutive 3rder No. B.,.
9GERE/3RE, the petition is hereb# %04M044E% and the pra#er for a Te"porar# Restrainin 3rder andNor a 9rit of Preli"inar#
0n*unction is hereb# %EN0E%. No costs.
43 3R%ERE%.
Republic of the Philippines
SUPREME COURT
Manila
G.R. No. 153D&& No!"#$"% 2D, 2009
ROGER . NAARRO, Petitioner,
vs.
)ON. JOSE L. ESCO(IDO, P%"4,0,/8 Ju08", RTC (%./53 3D, C.8.y./ 0" O%o C,2y, ./0 BAREN T. GO, 0o,/8 $u4,/"44 u/0"%
23" /.#" BARGO ENTERPRISES, Respondents.
% E C 0 4 0 3 N
(RION, J.:
This is a petition for revie) on certiorari
$
that see!s to set aside the Court of Appeals ;CA< %ecision
D
dated 3ctober $-, D''$ and
Resolution
B
dated Ma# D&, D''D in CA-A.R. 4P. No. -(.'$. These CA rulins aIr"ed the =ul# D-, D'''
(
and March ., D''$
+
orders of
the Reional Trial Court ;RTC<, Misa"is 3riental, Caa#an de 3ro Cit#, den#in petitioner Roer 8. NavarroPs ;Navarro< "otion to
dis"iss.
BACJAR3>N% /ACT4
3n 4epte"ber $D, $&&,, respondent Jaren T. Ao 5led t)o co"plaints, doc!eted as Civil Case Nos. &,-+&& ;5rst co"plaint<
-
and &,-
+&, ;second co"plaint<,
.
before the RTC for replevin andNor su" of "one# )ith da"aes aainst Navarro. 0n these co"plaints, Jaren
Ao pra#ed that the RTC issue )rits of replevin for the seiEure of t)o ;D< "otor vehicles in NavarroPs possession.
The 5rst co"plaint stated1
$. That plaintif JAREN T. A3 is a /ilipino, of leal ae, "arried to A2ENN 3. A3, a resident of Caa#an de 3ro Cit# and doin
business under the trade na"e JARA3 ENTERPR04E4, an entit# dul# reistered and e7istin under and b# virtue of the la)s
of the Republic of the Philippines, )hich has its business address at Bulua, Caa#an de 3ro Cit#K that defendant R3AER
NA8ARR3 is a /ilipino, of leal ae, a resident of -D %olores 4treet, NaEareth, Caa#an de 3ro Cit#, )here he "a# be served
)ith su""ons and other processes of the Gonorable CourtK that defendant 6=3GN %3E6 )hose real na"e and address are at
present un!no)n to plaintif is hereb# *oined as part# defendant as he "a# be the person in )hose possession and custod#
the personal propert# sub*ect "atter of this suit "a# be found if the sa"e is not in the possession of defendant R3AER
NA8ARR3K
D. That JARA3 ENTERPR04E4 is in the business of, a"on others, bu#in and sellin "otor vehicles, includin haulin truc!s
and other heav# eCuip"entK
B. That for the cause of action aainst defendant R3AER NA8ARR3, it is hereb# stated that on Auust ,, $&&., the said
defendant leased Sfro"T plaintif a certain "otor vehicle )hich is "ore particularl# described as follo)s U
Ma!eNT#pe />43 90TG M3>NTE% CRANE
4erial No. /J($-J-+$-,'
Motor No. -%$+-BB,.B+
Plate No. AGJ-B.,
as evidenced b# a 2EA4E AAREEMENT 90TG 3PT03N T3 P>RCGA4E entered into b# and bet)een JARA3 ENTERPR04E4, then
represented b# its Manaer, the afore"entioned A2ENN 3. A3, and defendant R3AER NA8ARR3 777K that in accordance )ith the
provisions of the above 2EA4E AAREEMENT 90TG 3PT03N T3 P>RCGA4E, defendant R3AER NA8ARR3 delivered unto plaintif si7 ;-<
post-dated chec!s each in the a"ount of 40@T?-40@ TG3>4AN% TGREE G>N%RE% TG0RT?-TGREE M BBN$'' PE434 ;P--,BBB.BB< )hich
)ere supposedl# in pa#"ent of the areed rentalsK that )hen the 5fth and si7th chec!s, i.e. PG020PP0NE BANJ 3/ C3MM>N0CAT03N4 U
CAAA?AN %E 3R3 BRANCG CGECJ4 N34. '$.$$D and '$.$$B, respectivel# dated =anuar# ,, $&&, and /ebruar# ,, $&&,, )ere
presented for pa#"ent andNor credit, the sa"e )ere dishonored andNor returned b# the dra)ee ban! for the co""on reason that the
current deposit account aainst )hich the said chec!s )ere issued did not have suIcient funds to cover the a"ounts thereofK that
the total a"ount of the t)o ;D< chec!s, i.e. the su" of 3NE G>N%RE% TG0RT?-T93 TG3>4AN% 40@ G>N%RE% 40@T?-40@ M --N$''
PE434 ;P$BD,---.--< therefore represents the principal liabilit# of defendant R3AER NA8ARR3 unto plaintif on the basis of the
provisions of the above 2EA4E AAREEMENT 90TG R0AGT T3 P>RCGA4EK that de"ands, )ritten and oral, )ere "ade of defendant
R3AER NA8ARR3 to pa# the a"ount of 3NE G>N%RE% TG0RT?-T93 TG3>4AN% 40@ G>N%RE% 40@T?-40@ M --N$'' PE434
;P$BD,---.--<, or to return the sub*ect "otor vehicle as also provided for in the 2EA4E AAREEMENT 90TG R0AGT T3 P>RCGA4E, but
said de"ands )ere, and still are, in vain to the reat da"ae and in*ur# of herein plaintifK 777
(. That the aforedescribed "otor vehicle has not been the sub*ect of an# ta7 assess"ent andNor 5ne pursuant to la), or seiEed under
an e7ecution or an attach"ent as aainst herein plaintifK
777
,. That plaintif hereb# respectfull# applies for an order of the Gonorable Court for the i""ediate deliver# of the above-described
"otor vehicle fro" defendants unto plaintif pendin the 5nal deter"ination of this case on the "erits and, for that purpose, there is
attached hereto an aIdavit dul# e7ecuted and bond double the value of the personal propert# sub*ect "atter hereof to ans)er for
da"aes and costs )hich defendants "a# sufer in the event that the order for replevin pra#ed for "a# be found out to havin not
been properl# issued.
The second co"plaint contained essentiall# the sa"e alleations as the 5rst co"plaint, e7cept that the 2ease Aree"ent )ith 3ption
to Purchase involved is dated 3ctober $, $&&. and the "otor vehicle leased is described as follo)s1
Ma!eNT#pe />43 90TG M3>NTE% CRANE
4erial No. /J($-J-+$'+D,
Motor No. -%$(-(DB('B
The second co"plaint also alleed that Navarro delivered three post-dated chec!s, each for the a"ount of P$'','''.'', to Jaren Ao
in pa#"ent of the areed rentalsK ho)ever, the third chec! )as dishonored )hen presented for pa#"ent.
,
3n 3ctober $D, $&&,
&
and 3ctober $(, $&&,,
$'
the RTC issued )rits of replevin for both casesK as a result, the 4herif seiEed the t)o
vehicles and delivered the" to the possession of Jaren Ao.
0n his Ans)ers, Navarro alleed as a special aIr"ative defense that the t)o co"plaints stated no cause of action, since Jaren Ao
)as not a part# to the 2ease Aree"ents )ith 3ption to Purchase ;collectivel#, the lease aree"ents< U the actionable docu"ents on
)hich the co"plaints )ere based.
3n NavarroPs "otion, both cases )ere dul# consolidated on %ece"ber $B, $&&&.
0n its Ma# ,, D''' order, the RTC dis"issed the case on the round that the co"plaints did not state a cause of action.
0n response to the "otion for reconsideration Jaren Ao 5led dated Ma# D-, D''',
$$
the RTC issued another order dated =ul# D-, D'''
settin aside the order of dis"issal. Actin on the presu"ption that Alenn AoPs leasin business is a con*ual propert#, the RTC held
that Jaren Ao had suIcient interest in his leasin business to 5le the action aainst Navarro. Go)ever, the RTC held that Jaren Ao
should have included her husband, Alenn Ao, in the co"plaint based on 4ection (, Rule B of the Rules of Court ;Rules<.
$D
Thus, the
lo)er court ordered Jaren Ao to 5le a "otion for the inclusion of Alenn Ao as co-plaintif.1a!!phi1
9hen the RTC denied NavarroPs "otion for reconsideration on March ., D''$, Navarro 5led a petition for certiorari )ith the CA,
essentiall# contendin that the RTC co""itted rave abuse of discretion )hen it reconsidered the dis"issal of the case and directed
Jaren Ao to a"end her co"plaints b# includin her husband Alenn Ao as co-plaintif. Accordin to Navarro, a co"plaint )hich failed
to state a cause of action could not be converted into one )ith a cause of action b# "ere a"end"ent or supple"ental pleadin.
3n 3ctober $-, D''$, the CA denied NavarroPs petition and aIr"ed the RTCPs order.
$B
The CA also denied NavarroPs "otion for
reconsideration in its resolution of Ma# D&, D''D,
$(
leadin to the 5lin of the present petition.
TGE PET0T03N
Navarro allees that even if the lease aree"ents )ere in the na"e of Jaro Enterprises, since it did not have the reCuisite *uridical
personalit# to sue, the actual parties to the aree"ent are hi"self and Alenn Ao. 4ince it )as Jaren Ao )ho 5led the co"plaints and
not Alenn Ao, she )as not a real part#-in-interest and the co"plaints failed to state a cause of action.
Navarro posits that the RTC erred )hen it ordered the a"end"ent of the co"plaint to include Alenn Ao as a co-plaintif, instead of
dis"issin the co"plaint outriht because a co"plaint )hich does not state a cause of action cannot be converted into one )ith a
cause of action b# a "ere a"end"ent or a supple"ental pleadin. 0n efect, the lo)er court created a cause of action for Jaren Ao
)hen there )as none at the ti"e she 5led the co"plaints.
Even )orse, accordin to Navarro, the inclusion of Alenn Ao as co-plaintif drasticall# chaned the theor# of the co"plaints, to his
reat pre*udice. Navarro clai"s that the lo)er court ravel# abused its discretion )hen it assu"ed that the leased vehicles are part of
the con*ual propert# of Alenn and Jaren Ao. 4ince Jaren Ao is the reistered o)ner of Jaro Enterprises, the vehicles sub*ect of the
co"plaint are her paraphernal properties and the RTC ravel# erred )hen it ordered the inclusion of Alenn Ao as a co-plaintif.
Navarro li!e)ise faults the lo)er court for settin the trial of the case in the sa"e order that reCuired Jaren Ao to a"end her
co"plaints, clai"in that b# issuin this order, the trial court violated Rule $' of the Rules.
Even assu"in the co"plaints stated a cause of action aainst hi", Navarro "aintains that the co"plaints )ere pre"ature because
no prior de"and )as "ade on hi" to co"pl# )ith the provisions of the lease aree"ents before the co"plaints for replevin )ere
5led.
2astl#, Navarro posits that since the t)o )rits of replevin )ere issued based on La)ed co"plaints, the vehicles )ere illeall# seiEed
fro" his possession and should be returned to hi" i""ediatel#.
Jaren Ao, on the other hand, clai"s that it is "isleadin for Navarro to state that she has no real interest in the sub*ect of the
co"plaint, even if the lease aree"ents )ere sined onl# b# her husband, Alenn AoK she is the o)ner of Jaro Enterprises and Alenn
Ao sined the lease aree"ents "erel# as the "anaer of Jaro Enterprises. Moreover, Jaren Ao "aintains that NavarroPs insistence
that Jaro Enterprises is Jaren AoPs paraphernal propert# is )ithout basis. Based on the la) and *urisprudence on the "atter, all
propert# acCuired durin the "arriae is presu"ed to be con*ual propert#. /inall#, Jaren Ao insists that her co"plaints suIcientl#
established a cause of action aainst Navarro. Thus, )hen the RTC ordered her to include her husband as co-plaintif, this )as "erel#
to co"pl# )ith the rule that spouses should sue *ointl#, and )as not "eant to cure the co"plaintsP lac! of cause of action.
TGE C3>RTP4 R>20NA
9e 5nd the petition devoid of "erit.
Karen =o is the real part&:in:interest
The $&&. Rules of Civil Procedure reCuires that ever# action "ust be prosecuted or defended in the na"e of the real part#-in-
interest, i.e., the part# )ho stands to be bene5ted or in*ured b# the *ud"ent in the suit, or the part# entitled to the avails of the
suit.
$+
0nterestinl#, althouh Navarro ad"its that Jaren Ao is the reistered o)ner of the business na"e Jaro Enterprises, he still insists
that Jaren Ao is not a real part#-in-interest in the case. Accordin to Navarro, )hile the lease contracts )ere in Jaro EnterprisesP
na"e, this )as "erel# a trade na"e )ithout a *uridical personalit#, so the actual parties to the lease aree"ents )ere Navarro and
Alenn Ao, to the e7clusion of Jaren Ao.
As a corollar#, Navarro contends that the RTC acted )ith rave abuse of discretion )hen it ordered the inclusion of Alenn Ao as co-
plaintif, since this in efect created a cause of action for the co"plaints )hen in truth, there )as none.
9e do not 5nd NavarroPs aru"ents persuasive.
The central factor in appreciatin the issues presented in this case is the business na"e Jaro Enterprises. The na"e appears in the
title of the Co"plaint )here the plaintif )as identi5ed as 6JAREN T. A3 doin business under the na"e JARA3 ENTERPR04E4,6 and
this identi5cation )as repeated in the 5rst pararaph of the Co"plaint. Pararaph D de5ned the business JARA3 ENTERPR04E4
underta!es. Pararaph B continued )ith the alleation that the defendant 6leased fro" plaintif a certain "otor vehicle6 that )as
thereafter described. 4ini5cantl#, the Co"plaint speci5es and attaches as its interal part the 2ease Aree"ent that underlies the
transaction bet)een the plaintif and the defendant. Aain, the na"e JARA3 ENTERPR04E4 entered the picture as this 2ease
Aree"ent provides1
This aree"ent, "ade and entered into b# and bet)een1
A2ENN 3. A3, of leal ae, "arried, )ith post oIce address at 777, herein referred to as the 2E443R-4E22ERK representin JARA3
ENTERPR04E4 as its Manaer,
777
thus, e7pressl# pointin to JARA3 ENTERPR04E4 as the principal that Alenn 3. Ao represented. 0n other )ords, b# the e7press ter"s
of this 2ease Aree"ent, Alenn Ao did sin the aree"ent onl# as the "anaer of Jaro Enterprises and the latter is clearl# the real
part# to the lease aree"ents.
As Navarro correctl# points out, Jaro Enterprises is a sole proprietorship, )hich is neither a natural person, nor a *uridical person, as
de5ned b# Article (( of the Civil Code1
Art. ((. The follo)in are *uridical persons1
;$< The 4tate and its political subdivisionsK
;D< 3ther corporations, institutions and entities for public interest or purpose, created b# la)K their personalit# beins as
soon as the# have been constituted accordin to la)K
;B< Corporations, partnerships and associations for private interest or purpose to )hich the la) rants a *uridical personalit#,
separate and distinct fro" that of each shareholder, partner or "e"ber.
Thus, pursuant to 4ection $, Rule B of the Rules,
$-
Jaro Enterprises cannot be a part# to a civil action. This leal realit# leads to the
Cuestion1 )ho then is the proper part# to 5le an action based on a contract in the na"e of Jaro EnterprisesO
9e faced a si"ilar Cuestion in =uasin Gard)are v. MendoEa,
$.
)here )e said1
/inall#, there is no la) authoriEin sole proprietorships li!e petitioner to brin suit in court. The la) "erel# reconiEes the e7istence of
a sole proprietorship as a for" of business oraniEation conducted for pro5t b# a sinle individual, and reCuires the proprietor or
o)ner thereof to secure licenses and per"its, reister the business na"e, and pa# ta7es to the national overn"ent. 0t does not vest
*uridical or leal personalit# upon the sole proprietorship nor e"po)er it to 5le or defend an action in court.
Thus, the co"plaint in the court belo) should have been 5led in the na"e of the o)ner of =uasin Gard)are. The alleation in the
bod# of the co"plaint )ould sho) that the suit is brouht b# such person as proprietor or o)ner of the business conducted under the
na"e and st#le =uasin Gard)are. The descriptive )ords 6doin business as =uasin Gard)are6 "a# be added to the title of the case,
as is custo"aril# done.
$,
SE"phasis supplied.T
This conclusion should be read in relation )ith 4ection D, Rule B of the Rules, )hich states1
4EC. D. 'arties in interest. U A real part# in interest is the part# )ho stands to be bene5ted or in*ured b# the *ud"ent in the suit, or
the part# entitled to the avails of the suit. >nless other)ise authoriEed b# la) or these Rules, ever# action "ust be prosecuted or
defended in the na"e of the real part# in interest.
As the reistered o)ner of Jaro Enterprises, Jaren Ao is the part# )ho )ill directl# bene5t fro" or be in*ured b# a *ud"ent in this
case. Thus, contrar# to NavarroPs contention, Jaren Ao is the real part#-in-interest, and it is leall# incorrect to sa# that her Co"plaint
does not state a cause of action because her na"e did not appear in the 2ease Aree"ent that her husband sined in behalf of Jaro
Enterprises. 9hether Alenn Ao can leall# sin the 2ease Aree"ent in his capacit# as a "anaer of Jaro Enterprises, a sole
proprietorship, is a Cuestion )e do not decide, as this is a "atter for the trial court to consider in a trial on the "erits.
Alenn AoPs Role in the Case
9e 5nd it sini5cant that the business na"e Jaro Enterprises is in the na"e of Jaren T. Ao,
$&
)ho described herself in the
Co"plaints to be 6a /ilipino, of leal ae, "arried to A2ENN 3. A3, a resident of Caa#an de 3ro Cit#, and doin business under the
trade na"e JARA3 ENTERPR04E4.6
D'
That Alenn Ao and Jaren Ao are "arried to each other is a fact never brouht in issue in the
case. Thus, the business na"e JARA3 ENTERPR04E4 is reistered in the na"e of a "arried )o"an, a fact "aterial to the side issue
of )hether Jaro Enterprises and its properties are paraphernal or con*ual properties. To restate the partiesP positions, Navarro
allees that Jaro Enterprises is Jaren AoPs paraphernal propert#, e"phasiEin the fact that the business is reistered solel# in Jaren
AoPs na"e. 3n the other hand, Jaren Ao contends that )hile the business is reistered in her na"e, it is in fact part of their con*ual
propert#.
The reistration of the trade na"e in the na"e of one person U a )o"an U does not necessaril# lead to the conclusion that the trade
na"e as a propert# is hers alone, particularl# )hen the )o"an is "arried. B# la), all propert# acCuired durin the "arriae, )hether
the acCuisition appears to have been "ade, contracted or reistered in the na"e of one or both spouses, is presu"ed to be con*ual
unless the contrar# is proved.
D$
3ur e7a"ination of the records of the case does not sho) an# proof that Jaro Enterprises and the
properties or contracts in its na"e are con*ual. 0f at all, onl# the bare alleation of Navarro to this efect e7ists in the records of the
case. As )e e"phasiEed in Castro !. %iat1
DD
Petitioners also overloo! Article $-' of the Ne) Civil Code. 0t provides that 6all propert# of the "arriae is presu"ed to be con*ual
partnership, unless it be proveSnT that it pertains e7clusivel# to the husband or to the )ife.6 This article 0o"4 /o2 %":u,%" +%oo6
23.2 23" +%o+"%2y 7.4 .5:u,%"0 7,23 6u/04 o6 23" +.%2/"%43,+.The presu"ption applies even )hen the "anner in )hich the
propert# )as acCuired does not appear.
DB
SE"phasis supplied.T
Thus, for purposes solel# of this case and of resolvin the issue of )hether Jaro Enterprises as a sole proprietorship is con*ual or
paraphernal propert#, )e hold that it is con*ual propert#.
Article $D( of the /a"il# Code, on the ad"inistration of the con*ual propert#, provides1
Art. $D(. T3" .0#,/,42%.2,o/ ./0 "/>oy#"/2 o6 23" 5o/>u8.l +.%2/"%43,+ +%o+"%2y 43.ll $"lo/8 2o $o23 4+ou4"4 >o,/2ly. 0n
case of disaree"ent, the husbandPs decision shall prevail, sub*ect to recourse to the court b# the )ife for proper re"ed#, )hich "ust
be availed of )ithin 5ve #ears fro" the date of the contract i"ple"entin such decision.
777
This provision, b# its ter"s, allo)s either Jaren or Alenn Ao to spea! and act )ith authorit# in "anain their con*ual
propert#, i.e., Jaro Enterprises. No need e7ists, therefore, for one to obtain the consent of the other before perfor"in an act of
ad"inistration or an# act that does not dispose of or encu"ber their con*ual propert#.
>nder Article $', of the /a"il# Code, the con*ual partnership is overned b# the rules on the contract of partnership in all that is not
in conLict )ith )hat is e7pressl# deter"ined in this Chapter or b# the spouses in their "arriae settle"ents. 0n other )ords, the
propert# relations of the husband and )ife shall be overned pri"aril# b# Chapter ( on Con*ual Partnership of Aains of the /a"il#
Code and, suppletoril#, b# the spousesP "arriae settle"ent and b# the rules on partnership under the Civil Code. 0n the absence of
an# evidence of a "arriae settle"ent bet)een the spouses Ao, )e loo! at the Civil Code provision on partnership for uidance.
A rule on partnership applicable to the spousesP circu"stances is Article $,$$ of the Civil Code, )hich states1
Art. $,$$. A partner is a co-o)ner )ith the other partners of speci5c partnership propert#.
The incidents of this co-o)nership are such that1
;$< A partner, sub*ect to the provisions of this Title and to an# aree"ent bet)een the partners, 3.4 ./ ":u.l %,832 7,23 3,4
+.%2/"%4 2o +o44"44 4+"5,E5 +.%2/"%43,+ +%o+"%2y for partnership purposesK 777
>nder this provision, Alenn and Jaren Ao are efectivel# co-o)ners of Jaro Enterprises and the properties reistered under this
na"eK hence, both have an eCual riht to see! possession of these properties. Appl#in Article (,( of the Civil Code, )hich states
that 6in default of contracts, or special provisions, co-o)nership shall be overned b# the provisions of this Title,6 )e 5nd further
support in Article (,. of the Civil Code that allo)s an# of the co-o)ners to brin an action in e*ect"ent )ith respect to the co-o)ned
propert#.
9hile e*ect"ent is nor"all# associated )ith actions involvin real propert#, )e 5nd that this rule can be applied to the circu"stances
of the present case, follo)in our rulin in Carandan v. Geirs of %e AuE"an.
D(
0n this case, one spouse 5led an action for the
recover# of credit, a personal propert# considered con*ual propert#, )ithout includin the other spouse in the action. 0n resolvin the
issue of )hether the other spouse )as reCuired to be included as a co-plaintif in the action for the recover# of the credit, )e said1
Milaros de AuE"an, bein presu"ed to be a co-o)ner of the credits alleedl# e7tended to the spouses Carandan, see"s to be
either an indispensable or a necessar# part#. 0f she is an indispensable part#, dis"issal )ould be proper. 0f she is "erel# a necessar#
part#, dis"issal is not )arranted, )hether or not there )as an order for her inclusion in the co"plaint pursuant to 4ection &, Rule B.
Article $', of the /a"il# Code provides1
Art. $',. The con*ual partnership shall be overned b# the rules on the contract of partnership in all that is not in conLict )ith )hat
is e7pressl# deter"ined in this Chapter or b# the spouses in their "arriae settle"ents.
This provision is practicall# the sa"e as the Civil Code provision it superseded1
Art. $(.. The con*ual partnership shall be overned b# the rules on the contract of partnership in all that is not in conLict )ith )hat
is e7pressl# deter"ined in this Chapter.
0n this connection, Article $,$$ of the Civil Code provides that 6SaT partner is a co-o)ner )ith the other partners of speci5c
partnership propert#.6 Ta!en )ith the presu"ption of the con*ual nature of the funds used to 5nance the four chec!s used to pa# for
petitionersP stoc! subscriptions, and )ith the presu"ption that the credits the"selves are part of con*ual funds, Article $,$$ "a!es
:uirino and Milaros de AuE"an co-o)ners of the alleed credit.
Bein co-o)ners of the alleed credit, :uirino and Milaros de AuE"an "a# separatel# brin an action for the recover# thereof. 0n the
fairl# recent cases of alolo& !. +ular and (dla)an !. (dla)an, )e held that, in a co-o)nership, co-o)ners "a# brin actions for the
recover# of co-o)ned propert# )ithout the necessit# of *oinin all the other co-o)ners as co-plaintifs because the suit is presu"ed to
have been 5led for the bene5t of his co-o)ners. 0n the latter case and in that of De =uia !. Court of (ppeals, )e also held that Article
(,. of the Civil Code, )hich provides that an# of the co-o)ners "a# brin an action for e*ect"ent, covers all !inds of action for the
recover# of possession.
0n su", in suits to recover properties, all co-o)ners are real parties in interest. Go)ever, pursuant to Article (,. of the Civil Code and
relevant *urisprudence, an# one of the" "a# brin an action, an# !ind of action, for the recover# of co-o)ned properties. Therefore,
onl# one of the co-o)ners, na"el# the co-o)ner )ho 5led the suit for the recover# of the co-o)ned propert#, is an indispensable
part# thereto. The other co-o)ners are not indispensable parties. The# are not even necessar# parties, for a co"plete relief can be
accorded in the suit even )ithout their participation, since the suit is presu"ed to have been 5led for the bene5t of all co-
o)ners.
D+
SE"phasis supplied.T
>nder this rulin, either of the spouses Ao "a# brin an action aainst Navarro to recover possession of the Jaro Enterprises-leased
vehicles )hich the# co-o)n. This conclusion is consistent )ith Article $D( of the /a"il# Code, supportin as it does the position that
either spouse "a# act on behalf of the con*ual partnership, so lon as the# do not dispose of or encu"ber the propert# in Cuestion
)ithout the other spousePs consent.
3n this basis, )e hold that since Alenn Ao is not strictl# an indispensable part# in the action to recover possession of the leased
vehicles, he onl# needs to be i"pleaded as a pro-for"a part# to the suit, based on 4ection (, Rule ( of the Rules, )hich states1
4ection (. 4pouses as parties. U Gusband and )ife shall sue or be sued *ointl#, e7cept as provided b# la).
Non-*oinder of indispensable parties not round to dis"iss action
Even assu"in that Alenn Ao is an indispensable part# to the action, )e have held in a nu"ber of cases
D-
that the "is*oinder or non-
*oinder of indispensable parties in a co"plaint is not a round for dis"issal of action. As )e stated in Macababbad v. Masira1
D.
Rule B, 4ection $$ of the Rules of Court provides that neither "is*oinder nor non*oinder of parties is a round for the dis"issal of an
action, thus1
4ec. $$. Mis*oinder and non-*oinder of parties. Neither "is*oinder nor non-*oinder of parties is round for dis"issal of an action.
Parties "a# be dropped or added b# order of the court on "otion of an# part# or on its o)n initiative at an# stae of the action and
on such ter"s as are *ust. An# clai" aainst a "is*oined part# "a# be severed and proceeded )ith separatel#.
0n %o"ino v. 4cheer, this Court held that the proper re"ed# )hen a part# is left out is to i"plead the indispensable part# at an#
stae of the action. The court, either "otu proprio or upon the "otion of a part#, "a# order the inclusion of the indispensable part#
or ive the plaintif opportunit# to a"end his co"plaint in order to include indispensable parties. 0f the plaintif to )ho" the order to
include the indispensable part# is directed refuses to co"pl# )ith the order of the court, the co"plaint "a# be dis"issed upon
"otion of the defendant or upon the courtHs o)n "otion. 3nl# upon un*usti5ed failure or refusal to obe# the order to include or to
a"end is the action dis"issed.
0n these lihts, the RTC 3rder of =ul# D-, D''' reCuirin plaintif Jaren Ao to *oin her husband as a part# plaintif is full# in order.
%e"and not reCuired prior
to 5lin of replevin action
0n aruin that prior de"and is reCuired before an action for a )rit of replevin is 5led, Navarro apparentl# li!ens a replevin action to
an unla)ful detainer.
/or a )rit of replevin to issue, all that the applicant "ust do is to 5le an aIdavit and bond, pursuant to 4ection D, Rule -' of the
Rules, )hich states1
4ec. D. AIdavit and bond.
The applicant "ust sho) b# his o)n aIdavit or that of so"e other person )ho personall# !no)s the facts1
;a< That the .++l,5./2 ,4 23" o7/"% o6 23" +%o+"%2y clai"ed, particularl# describin it, o% ,4 "/2,2l"0 2o 23"
+o44"44,o/ thereofK
;b< That the propert# is 7%o/86ully 0"2.,/"0 $y 23" .0!"%4" +.%2y, allein the cause of detention thereof accordin to
the best of his !no)lede, infor"ation, and beliefK
;c< That the propert# has not been distrained or ta!en for a ta7 assess"ent or a 5ne pursuant to la), or seiEed under a )rit
of e7ecution or preli"inar# attach"ent, or other)ise placed under custodia legis, or if so seiEed, that it is e7e"pt fro" such
seiEure or custod#K and
;d< The actual "ar!et value of the propert#.
The applicant "ust also ive a bond, e7ecuted to the adverse part# in double the value of the propert# as stated in the aIdavit
afore"entioned, for the return of the propert# to the adverse part# if such return be ad*uded, and for the pa#"ent to the adverse
part# of such su" as he "a# recover fro" the applicant in the action.
9e see nothin in these provisions )hich reCuires the applicant to "a!e a prior de"and on the possessor of the propert# before he
can 5le an action for a )rit of replevin. Thus, prior de"and is not a condition precedent to an action for a )rit of replevin.
More i"portantl#, Navarro is no loner in the position to clai" that a prior de"and is necessar#, as he has alread# ad"itted in his
Ans)ers that he had received the letters that Jaren Ao sent hi", de"andin that he either pa# his unpaid obliations or return the
leased "otor vehicles. NavarroPs position that a de"and is necessar# and has not been "ade is therefore totall# un"eritorious.
-)ERE'ORE, pre"ises considered, )e %EN? the petition for revie) for lac! of "erit. Costs aainst petitioner Roer 8. Navarro.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIISION
G.R. No. 1D3192 A+%,l 1;, 200&
ROSENDO (ACALSO, RODRIGO (ACALSO, MARCILIANA (. DO(LAS, TEROLIO (ACALSO, ALIPIO (ACALSO, JR., MARIO
(ACALSO, -ILLIAM (ACALSO, ALIPIO (ACALSO III ./0 CRISTITA (. (AFES,petitioners,
vs.
MAGIMO PADIGOS, 'LAIANO MA(U*O, GAUDENCIO PADIGOS, DOMINGO PADIGOS, ICTORIA P. A(ARAUE<, LILIA P.
GA(ISON, TIMOTEO PADIGOS, PER'ECTO PADIGOS, PRISCA SALARDA, 'LORA GUINTO, (ENITA TEMPLA, SOTERO
PADIGOS, ANDRES PADIGOS, EMILIO PADIGOS, DEMETRIO PADIGOS, JR., -ENCESLAO PADIGOS, NELL* PADIGOS,
EGPEDITO PADIGOS, )ENR* PADIGOS ./0 ENRIAUE P. MALA<ARTE, respondents.
D E C I S I O N
CARPIO MORALES, J.1
The case at bar involves a parcel of land identi5ed as 2ot No. B.,$ ;the lot< located in 0na#a)an, Cebu, covered b# 3riinal Certi5cate
of Title No. R3-D-(& ;'-&'&D<
$
in the na"e of the follo)in $B co-o)ners, their respective shares of )hich are indicated opposite their
na"es1
/ortunata Padios ;/ortunata< $N,
/eli7 Padios ;/eli7< $N,
9enceslao Padios ;9enceslao< $N,
Ma7i"iano Padios ;Ma7i"iano< $N,
Aeroni"o Padios ;Aeroni"o< $N,
Macaria Padios $N,
4i"plicio Padios ;4i"plicio< $N,
0nacio Padios ;0nacio< $N(,
Matilde Padios $N(,
Marcelo Padios $N(,
Rustica Padios $N(,
Ra#"unda Padios $N(,
Antonino Padios $N(,
Ma7i"o Padios ;Ma7i"o<, /laviano Mabu#o ;/laviano<, Aaudencio Padios ;Aaudencio<, %o"ino Padios ;%o"ino<, and 8ictoria P.
AbarCueE ;8ictoria<, )ho are a"on the herein respondents, 5led on April $., $&&+, before the Reional Trial Court ;RTC< of Cebu Cit#,
a Co"plaint,
D
doc!eted as Civil Case No. CEB-$.BD-, aainst Rosendo Bacalso ;Rosendo< and Rodrio Bacalso ;Rodrio< )ho are
a"on the herein petitioners, for Cuietin of title, declaration of nullit# of docu"ents, recover# of possession, and da"aes.
The therein plaintifs-herein respondents Ma7i"o and /laviano clai"ed that the# are children of the deceased co-o)ner 4i"plicioK
that respondents Aaudencio and %o"ino are children of the deceased co-o)ner 0nacioK and that respondent 8ictoria and
respondent 2ilia P. Aabison ;2ilia< are randchildren of the late co-o)ner /ortunata.
B
Respondents also alleed that the therein defendants-petitioners Rosendo and Rodrio are heirs of Alipio Bacalso, 4r. ;Alipio, 4r.< )ho,
durin his lifeti"e, secured Ta7 %eclaration Nos. 2-'.,-'DDDB and 2-'.,-'DDD( coverin the lot )ithout an# leal basisK that Rosendo
and Rodrio have been leasin portions of the lot to persons )ho built houses thereon, and Rosendo has been livin in a house built
on a portion of the lotK
(
and that de"ands to vacate and eforts at conciliation proved futile,
+
pro"ptin the" to 5le the co"plaint at
the RTC.
0n their Ans)er
-
to the co"plaint, petitioners Rosendo and Rodrio clai"ed that their father Alipio, 4r. purchased via deeds of sale the
shares in the lot of /ortunata, 4i"plicio, 9enceslao, Aeroni"o, and /eli7 fro" their respective heirs, and that Alipio, 4r. acCuired the
shares of the other co-o)ners of the lot b# e7traordinar# acCuisitive prescription throuh continuous, open, peaceful, and adverse
possession thereof in the concept of an o)ner since $&(&.
.
B# )a# of Repl# and Ans)er to the %efendantsH Counterclai",
,
herein respondents Aaudencio, Ma7i"o, /laviano, %o"ino, and
8ictoria alleed that the deeds of sale on )hich Rosendo and Rodrio base their clai" of o)nership of portions of the lot are spurious,
but assu"in that the# are not, laches had set in aainst Alipio, 4r.K and that the shares of the other co-o)ners of the lot cannot be
acCuired throuh laches or prescription.
Aaudencio, Ma7i"o, /laviano, %o"ino, and 8ictoria, )ith leave of court,
&
5led an A"ended Co"plaint
$'
i"pleadin as additional
defendants Alipio, 4r.Hs other heirs, na"el#, petitioners Marceliana
$$
%oblas, Terolio Bacalso, Alipio Bacalso, =r., Mario Bacalso, 9illia"
Bacalso, Alipio Bacalso 000, and Christine B. BaVes.
$D
4till later, Aaudencio et al. 5led a 4econd A"ended Co"plaint
$B
)ith leave of
court,
$(
i"pleadin as additional plaintifs the other heirs of reistered co-o)ner Ma7i"iano, na"el#, herein respondents Ti"oteo
Padios, Perfecto Padios, /risca
$+
4alarda, /lora :uinto ;so"eti"es rendered as 6Auinto6<, Benita Te"pla, 4otero Padios, Andres
Padios, and E"ilio Padios.
$-
0n their Ans)er to the 4econd A"ended Co"plaint,
$.
petitioners contended that the 4econd A"ended Co"plaint should be dis"issed
in vie) of the failure to i"plead other heirs of the other reistered o)ners of the lot )ho are indispensable parties.
$,
A Third A"ended Co"plaint
$&
)as thereafter 5led )ith leave of court
D'
i"pleadin as additional plaintifs the heirs of 9enceslao,
na"el#, herein respondents %e"etrio Padios, =r., 9enceslao Padios, and Nell# Padios, and the heirs of /eli7, na"el#, herein
respondents E7pedito Padios ;E7pedito<, Genr# Padios, and EnriCue P. MalaEarte.
D$
After trial, Branch $- of the Cebu Cit# RTC decided
DD
in favor in the therein plaintifs-herein respondents, disposin as follo)s1
-)ERE'ORE, pre"ises considered, *ud"ent is hereb# rendered in favor of the plaintifs and aainst the defendants.
$. %eclarin the plaintifs to be entitled to the o)nership and possession of the lot in litiationK
D. %eclarin as null and void the %eeds of Absolute 4ale in CuestionK
B. 3rderin the defendants to pa# plaintifs the su" of P+','''.'' as actual and co"pensator# da"aesS,T the su" of
PD','''.'' as attorne#Hs fees, and P$','''.'' as litiation e7penses.
(. 3rderin the defendants to pa# the costs of suit.
SO ORDERED.
DB
;E"phasis in the oriinalK underscorin supplied<
The defendants-herein petitioners Bacalsos appealed.
D(
Mean)hile, the trial court, on respondentsH Motion for E7ecution Pendin
Appeal,
D+
issued a )rit of e7ecution )hich )as i"ple"ented b#, a"on other thins, de"olishin the houses constructed on the lot.
D-
B# %ecision
D.
of 4epte"ber -, D''+, the Court of Appeals aIr"ed the trial courtHs decision. Their Motion for Reconsideration
D,
havin
been denied,
D&
petitioners 5led the present Petition for Revie) on Certiorari,
B'
faultin the Court of Appeals1
. . . )hen it ruled that the 4econd A"ended Co"plaint is valid and leal, even if not all indispensable parties are i"pleaded
or *oined . . .
. . . )hen SitT )ittinl# overloo!ed the "ost potent, unescapable and indubitable fact or circu"stance )hich proved the
continuous possession of 2ot No. B.,$ b# the defendants and their predecessors in interest, Alipio Bacalso S4r.T andNor )hen
it sanctioned i"pliedl# the larin arbitrar# RTC order of the 0"#ol,2,o/ o6 23" o!"% ;0 y".%4 ol0 3ou4"4, situated on 2ot
No. B.,$ Cebu Cad., belonin to the old lessees, lon allo)ed to lease or sta# thereat 6o% #./y y".%4, b# Alipio Bacalso
S4r.T, father and SpredecessorT in interest of the defendants, no) the herein Petitioners. The said lessees )ere not even
*oined as parties in this case, "uch less )ere the# iven a chance to air their side before their houses )ere de"olished, in
ross violation of the due process clause provided for in 4ec. $S,T Art. 000 of the Constitution . . .
. . . in upholding as gospel truth the report and conclusion of 6imrod >a?o, the supposed hand)riting e/pert S,T that
sinatures and thu"b "ar!s appearin on all docu"ents of sale presented b# the defendants are foreries, and not "indful
that Ni"rod 8aVo )as not cross-e7a"ined thorouhl# b# the defense counsel as he )as prevented fro" doin so b# the trial
*ude, in violation of the la) "ore particularl# 4ec. -, Rule $BD, Rules of Court andNor the accepted and usual course of
*udicial proceedins and is therefore not ad"issible in evidence.
. . . S)hen itT . . . )ittinl# or un)ittinl#, aain o!"%looH"0 the vital facts, the circu"stances, the la)s and rulins of the
4upre"e Court, )hich are of "uch )eiht, substance and inLuence )hich, if considered carefull#, undoubtedl# uphold that
the defendants and their predecessors in interests, have lon been in continuous, open, peaceful and adverse, and notorious
possession aainst the )hole )orld of 2ot No. B.,$, Cebu Cad., in concept of absolute o)ners for (- #ears, a period "ore
than suIcient to sustain or uphold the defense of prescription, provided for in Art. $$B. of the Civil Code even )ithout ood
faith.
B$
;E"phasis and underscorin in the oriinalK italics supplied<
Respondents ad"it that Teodulfo Padios ;Teodulfo<, an heir of 4i"plicio, )as not i"pleaded.
BD
The# contend, ho)ever, that the
o"ission did not deprive the trial court of *urisdiction because Article (,. of the Civil Code states that 6SaTn# of the co-o)ners "a#
brin an action in e*ect"ent.6
BB
RespondentsH contention does not lie. The action is for Cuietin of title, declaration of nullit# of docu"ents, recover# of possession
and o)nership, and da"aes. (rcelona !. Court of (ppeals
B(
de5nes indispensable parties under 4ection . of Rule B, Rules of Court as
follo)s1
SPTarties-in-interest )ithout )ho" there can be no 5nal deter"ination of an action. As such, the# "ust be *oined either as
plaintifs or as defendants. The eneral rule )ith reference to the "a!in of parties in a civil action reCuires, of course, the
*oinder of all necessar# parties )here possible, and the *oinder of all indispensable parties under an# and all conditions, their
presence bein a sine .ua non for the e7ercise of *udicial po)er. 0t is precisel# 6)hen an indispensable part# is not before the
court ;that< the action should be dis"issed.6 The absence of an indispensable part# renders all subseCuent actions of the
court null and voidfor )ant of authorit# to act, not onl# as to the absent parties but even as to those present.
Petitioners are co-o)ners of a 5shpond . . . The 5shpond is undividedK it is i"possible to pinpoint )hich speci5c portion of the
propert# is o)ned b# 3landa#, et. al. and )hich portion belons to petitioners. 7 7 7 0ndeed, petitioners should have been
properl# i"pleaded as indispensable parties. 7 7 7
7 7 7 7
B+
;>nderscorin supplied<
The absence then of an indispensable part# renders all subseCuent actions of a court null and void for )ant of authorit# to act, not
onl# as to the absent part# but even as to those present.
B-
/ailure to i"plead indispensable parties aside, the resolution of the case hines on a deter"ination of the authenticit# of the
docu"ents on )hich petitioners in part anchor their clai" to o)nership of the lot. The Cuestioned docu"ents are1
$. E7hibit 6B6 U a notariEed %eed of 4ale e7ecuted b# Aaudencio, %o"ino, a certain Ger"eneilda Padios, and the heirs of
/ortunata, in favor of Alipio, 4r. on =une ,, $&+&K
D. E7hibit 6(6 U a notariEed %eed of 4ale e7ecuted on 4epte"ber &, $&+. b# Aavino Padios ;Aavino<, alleed son of /eli7, in
favor of Alipio AadianoK
B. E7hibit 6+6 U a private deed of sale e7ecuted in =une $&+. b# Macaria Bonalan, Marciano Padios, and %o"ina Padios,
supposed heirs of 9enceslao, in favor of Alipio, 4r.K
(. E7hibit 6-6 U a notariEed deed of sale e7ecuted on 4epte"ber &, $&+. b# Aavino and Rodulfo Padios, heirs of Aeroni"o,
in favor of Alipio AadianoK
+. E7hibit 6.6 U a notariEed deed of sale e7ecuted on March $&, $&(& b# 0renea Mabu#o, Teodulfo and Ma7i"o, heirs of
4i"plicioK
-. E7hibit 6,6 U a private deed of sale e7ecuted on Ma# B, $&+' b# Candido Padios, one of 4i"plicioHs children, in favor of
Alipio, 4r.K and
.. E7hibit 6&6 U a notariEed deed of sale e7ecuted on Ma# $., $&+. b# Alipio Aadiano in favor of Alipio, 4r.
E7hibits 6B,6 6(,6 6-,6 6.,6 and 6,,6 )hich are notariEed docu"ents, have in their favor the presu"ption of reularit#.
B.
/orer#, as an# other "echanis" of fraud, "ust be proved clearl# and convincinl#, and the burden of proof lies on the part# allein
forer#.
B,
The trial court and the Court of Appeals relied on the 5ndins of Ni"rod Bernabe 8aVo ;8aVo<, e7pert )itness for respondents, that
AaudencioHs sinature on E7hibit 6B6 ;%eed of Absolute 4ale coverin /ortunataHs share in the lot< and Ma7i"oHs thu"bprint on E7hibit
6.6 ;%eed of 4ale coverin 4i"plicioHs share in the lot< are spurious.
B&
8aVoHs 5ndins )ere presented b# respondents to rebut those of
9ilfredo Espina ;Espina<, e7pert )itness for petitioners, that AaudencioHs sinature and Ma7i"oHs thu"bprint are enuine.
('
E7pert opinions are not ordinaril# conclusive. The# are enerall# rearded as purel# advisor# in character.
($
The courts "a# place
)hatever )eiht the# choose upon and "a# re*ect the", if the# 5nd the" inconsistent )ith the facts in the case or other)ise
unreasonable.
(D
9hen faced )ith conLictin e7pert opinions, courts ive "ore )eiht and credence to that )hich is "ore co"plete,
thorouh, and scienti5c.
(B
The Court observes that in e7a"inin the Cuestioned sinatures of respondent Aaudencio, petitionersH e7pert )itness Espina used as
standards $+ speci"en sinatures )hich have been established to be AaudencioHs,
((
and that after identif#in si"ilarities bet)een
the Cuestioned sinatures and the standard sinatures, he concluded that the Cuestioned sinatures are enuine. 3n the other hand,
respondentsH e7pert )itness 8aVo used, as standards, the Cuestioned sinatures the"selves.
(+
Ge identi5ed characteristics of the
sinatures indicatin that the# "a# have been fored. 8aVoHs state"ent of the purpose of the e7a"ination is revealin1
7 7 7 StTo 7 7 7 discover, classif# and deter"ine the authenticit# of ever# docu"ent that for an# reason reCuires e7a"ination
be SsicT scrutiniEed in ever# particular that #.y +o44,$ly thro) an# liht upon its oriin, its ae or upon Cualit# ele"ent or
condition that #.y have a bearin upons SsicT its enuineness or spuriousness.
(-
;E"phasis supplied<
The Court also notes that 8aVo also anal#Eed the sinatures of the )itnesses to the Cuestioned docu"ents, the absence of standard
speci"ens )ith )hich those sinatures could be co"pared not)ithstandin.
(.
3n the other hand, Espina refrained fro" "a!in
conclusions on sinatures )hich could not be co"pared )ith established enuine speci"ens.
(,
4peci5call# )ith respect to 8aVoHs 5ndin that Ma7i"oHs thu"bprint on E7hibit 6.6 is spurious, the Court is not persuaded, no
co"parison havin been "ade of such thu"bprint )ith a enuine thu"bprint established to be Ma7i"oHs.
(&
8aVoHs testi"on# should be received )ith caution, the trial court havin abruptl# cut short his cross-e7a"ination conducted b#
petitionersH counsel,
+'
thus1
C3>RT1
?ou are *ust dela#in the proceedins in this case if #ou are oin to as! hi" about the docu"ents one b# one. =ust
leave it to the Court to deter"ine )hether or not he is a Cuali5ed e7pert )itness. The Court )ill *ust o over the
Report of the )itness. ?ou do not have to as! the )itness one b# one on the docu"ent,
+$
thereb# deprivin this Court of the opportunit# to deter"ine his credibilit#. Espina, on the other hand, )ithstood thorouh cross-
e7a"ination, re-direct and re-cross e7a"ination.
+D
The value of the opinion of a hand)ritin e7pert depends not upon his "ere state"ents of )hether a )ritin is enuine or false, but
upon the assistance he "a# aford in pointin out distinuishin "ar!s, characteristics and discrepancies in and bet)een enuine
and false speci"ens of )ritin )hich )ould ordinaril# escape notice or detection fro" an unpracticed observer.
+B
9hile diferences
e7ist bet)een AaudencioHs sinatures appearin on E7hibits 6B6-6B-%6 and his sinatures appearin on the aIdavits acco"pan#in
the pleadins in this case,
+(
the ap of "ore than B' #ears fro" the ti"e he aI7ed his sinatures on the Cuestioned docu"ent to the
ti"e he aI7ed his sinatures on the pleadins in the case could e7plain the diference. Thus Espina observed1
7 7 7 7
(. Both Cuestioned and standard sinatures e7hibited the sa"e st#le and for" of the "ove"ent i"pulses in its e7ecutionK
+. Personal habits of the )riter )ere established in both Cuestioned and standard sinatures such as "isalin"ent of the
)hole structure of the sinature, heav# penpressure SsicT of stro!es fro" initial to the ter"inal, for"ation of the loops and
ovals, poor line Cualit# and spacin bet)een letters are all repeatedK
-. Both Cuestioned and standard sinatures Ssho)T no radical chane in the stro!es and letter for"ation in spite oSfT their
)ide diference in dates of e7ecution considerin the earl# )ritin "aturit# of the )riterK
.. 8ariations in both )ritins Cuestioned and standards )ere considered and properl# evaluated.
7 7 7 7
/unda"ental si"ilarities are observed in the follo)in characteristics to )it1
7 7 7 7
SIGNATURES
$. 3vals of 6a6 either rounded or anular at the baseK
D. 3vals of 6d6 either narro), rounded, or anular at the baseK
B. 2oop ste"s of 6d6 consistentl# tall and retraced in both speci"ens Cuestioned and standardsK
(. Base alin"ent of 6e6 and 6i6 are repeated )ith sa"enessK
+. Top of 6c6 either )ith a retrace, anular for"ation or an e#eletK
-. Ter"inal endin of 6o6 heav# )ith a short taperin for"ationK
.. 2oop ste" of 6P6 )ith )ide space and anularK
,. 3val of 6P6 either rounded or "ulti-anularK
&. Base loop of 66 consistentl# short either a retrace, a blind loop or narro) space disproportionate to the top ovalK
$'. Anular top of 6s6 are repeated )ith sa"enessK
$$. Ter"inal endin of 6s6 short and heav# )ith blind loop or retrace at the base.
++
And Espina concluded
7 7 7 7
StThat the four ;(< Cuestioned sinatures over and above the t#pe)ritten na"e and )ord AA>%ENC03 PA%0A34 8endor on
four copies of a %EE% 3/ AB432>TE 4A2E ;oriinal and carbon< dated =une ,, $&+& )ere )ritten, sined, and prepared b#
the hand )ho )rote the standard speci"ens E7h. 6A6 and other speci"en "aterials collected fro" the records of this case
that )ere sub"itted or co"parisonK a product of one Mind and Brain hence GENUINE and AUT)ENTIC.
+-
;E"phasis in the
oriinalK underscorin supplied<
Respondents brand Ma7i"oHs thu"b"ar! on E7hibit 6.6 as spurious because, so the# clai", Ma7i"o did not aI7 his sinature thru a
thu"b"ar!, he !no)in ho) to )rite.
+.
4uch conclusion is a non se.uitur, ho)ever, for a person )ho !no)s ho) to )rite is not
precluded fro" sinin b# thu"b"ar!.
0n aIr"in the nulli5cation b# the trial court of E7hibits 6B,6 6(,6 6+,6 6-,6 6.,6 and 6,,6 the Court of Appeals held1
7 7 7 7
/irst of all, facts about pediree of the reistered o)ners and their la)ful heirs )ere convincinl# testi5ed to b# plaintif-
appellant Aaudencio Padios and his testi"on# re"ained uncontroverted.
7 7 7 7
Aivin due )eiht to his testi"on#, )e 5nd that 7 7 7 the vendors in the aforesaid %eeds of 4ale 7 7 7 )ere not the leal
heirs of the reistered o)ners of the disputed land. 7 7 7
7 7 7 7
As for 4/hibit 6@,6 the vendor Aavino Padios is not a leal heir of the reistered o)ner /eli7 Padios. The latterHs heirs are
plaintif-appellants E7pedito Padios, Genr# Padios and EnriCue P. MalaEarte. Accordinl#, 4/hibit 6@6 is a patent nullit# and
did not vest title of /eli7 PadiosH share of 2ot B.,$ to Alipio SAadianoT.
(s for 4/hibit 6A,6 the vendors Aavino and Rodulfo Padios are not the leal heirs of the reistered o)nerAeroni"o Padios.
Therefore, these 5ctitious heirs could not validl# conve# o)nership in favor of Alipio SAadianoT.
7 7 7 7
As for 4/hibit 6B,6 the vendor Candido Padios is not a leal heir of 4i"plicio Padios. Therefore, the for"er could not vest
title of the land to Alipio Bacalso.
(s for 4/hibit 6C,6 the vendors Aaudencio Padios, Ger"eneilda Padios and %o"ino Padios are not the leal heirs of
reistered o)ner /ortunata Padios. Ger"eneilda Padios is not a !no)n heir of an# of the other reistered o)ners of the
propert#.
3n the other hand, plaintifs-appellants Aaudencio and %o"ino Padios are onl# so"e of the collateral randchildren of
/ortunata Padios. The# could not b# the"selves dispose of the share of /ortunata Padios.
7 7 7 7
(s for 4/hibit 6D,6 the vendors in 4/hibit 6 D 6 are not the leal heirs of 9enceslao Padios. The children of reistered o)ner
9enceslao Padios are1 9enceslao Padios, %e"etrio Padios and Nell# Padios. Therefore, 4/hibit 6D6 is null and void and
could not conve# the shares of the reistered o)ner 9enceslao Padios in favor of Alipio Bacalso.
(s for 4/hibit 69,6 the %eed of 4ale e7ecuted b# Alipio SAadianoT in favor of Alipio Bacalso is also void because the shares of
the reistered o)ners /eli7 and Aeroni"o Padios )ere not validl# conve#ed to Alipio SAadianoT because 4/hibit 6 @ 6 and
6-6 )ere !oid contracts. Thus, 4/hibit 696 is also null and void.
+,
;0talics in the oriinalK underscorin supplied<
The evidence reardin the 6facts of pediree of the reistered o)ners and their heirs6 does not, ho)ever, satisf# this Court. Not onl#
is AaudencioHs self-servin testi"on# uncorroboratedK it contradicts itself on "aterial points. /or instance, on direct e7a"ination, he
testi5ed that 0nacio is his father and /ortunata is his rand"other.
+&
3n cross-e7a"ination, ho)ever, he declared that his father
0nacio is the brother of /ortunata.
-'
3n direct e7a"ination, he testi5ed that his co-plaintifs 8ictoria and 2ilia are alread# dead.
-$
3n
cross-e7a"ination, ho)ever, he denied !no)lede )hether the t)o are alread# dead.
-D
Also on direct e7a"ination, he identi5ed
E7pedito, Genr#, and EnriCue as the children of /eli7.
-B
E7pedito hi"self testi5ed, ho)ever, that he is the son of a certain Ma"erto
Padios, the son of a certain Apolonio Padios )ho is in turn the son of /eli7.
-(
At all events, respondents are uilt# of laches U the nelience or o"ission to assert a riht )ithin a reasonable ti"e, )arrantin a
presu"ption that the part# entitled to assert it has either abandoned it or declined to assert it.
-+
9hile, b# e7press provision of la), no
title to reistered land in deroation of that of the reistered o)ner shall be acCuired b# prescription or adverse possession, it is an
enshrined rule that even a reistered o)ner "a# be barred fro" recoverin possession of propert# b# virtue of laches.
--
Respondents insist, ho)ever, that the# onl# learned of the deeds of sale in $&&(, the #ear that Alipio, 4r. alleedl# co""enced
possession of the propert#.
-.
The record sho)s, ho)ever, that althouh petitioners started rentin out the land in $&&(, the# have
been tillin it since the $&+'s,
-,
and RosendoHs house )as constructed in about $&,+.
-&
These acts of possession could not have
escaped respondentsH notice iven the follo)in unassailed considerations, inter alia1 Aaudencio testi5ed that he lived on the lot fro"
childhood until $&,+, after )hich he "oved to a place three !ilo"eters a)a#, and after he "oved, a certain 8icente %ebelos lived on
the lot )ith his per"ission.
.'
PetitionersH )itness Marina Alcoseba, their e"plo#ee,
.$
testi5ed that Aaudencio and %o"ino used to
cut 8umpa& planted b# petitionersH tenant on the lot.
.D
The ta7 declarations in Alipio, 4r.Hs na"e for the #ears $&-.-$&,' coverin a
portion of the lot indicate /ortunataHs share to be the north and east boundaries of Alipio, 4r.HsK
.B
hence, respondents could not have
been una)are of the acts of possession that petitioners e7ercised over the lot.
>pon the other hand, petitioners have been viilant in protectin their rihts over the lot, )hich their predecessor-in-interest Alipio,
4r. had declared in his na"e for ta7 purposes as earl# as $&-', and for )hich he had been pa#in ta7es until his death in $&&(, b#
continuin to pa# the ta7es thereon.
.(
Respondents havin failed to establish their clai" b# preponderance of evidence, their action for Cuietin of title, declaration of
nullit# of docu"ents, recover# of possession, and da"aes "ust fail.
A 5nal )ord. 9hile petitionersH attribution of error to the appellate courtHs 6i"plied sanction6 of the trial courtHs order for the
de"olition pendin appeal of the houses of their lessees is )ell ta!en, the Court "a# not consider an# rant of relief to the", the#
not bein parties to the case.
-)ERE'ORE, the petition is GRANTED. The 4epte"ber -, D''+ decision of the Court of Appeals is REERSEDand SET ASIDE. Civil
Case No. CEB-$.BD- of Branch $- of the Reional Trial Court of Cebu Cit# is DISMISSED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
4EC3N% %080403N
G.R. No. 1DD;29 No!"#$"% 2;, 2009
ANICIA ALDE<-TALLORIN, Petitioner,
vs.
)EIRS O' JUANITO TARONA, R"+%"4"/2"0 $y CARLOS TARONA, ROGELIO TARONA ./0 LOURDES TARONA, Respondents.
% E C 0 4 0 3 N
A(AD, J.:
This case is about a courtPs annul"ent of a ta7 declaration in the na"es of three persons, t)o of )ho" had not been i"pleaded in
the case, for the reason that the docu"ent )as illeall# issued to the".
The /acts and the Case
3n /ebruar# &, $&&, respondents Carlos, Roelio, and 2ourdes Tarona ;the Taronas< 5led an action before the Reional Trial Court
;RTC< of Balana, Bataan,
$
aainst petitioner Anicia 8aldeE-Tallorin ;Tallorin< for the cancellation of her and t)o other )o"enPs ta7
declaration over a parcel of land.
The Taronas alleed in their co"plaint that, un!no)n to the", in $&,$, the AssessorPs 3Ice of Moron in Bataan cancelled Ta7
%eclaration (-B in the na"e of their father, =uanito Tarona ;=uanito<, coverin -,$,- sCuare "eters of land in Moron, Bataan. The
cancellation )as said to be based on an unsined thouh notariEed aIdavit that =uanito alleedl# e7ecuted in favor of petitioner
Tallorin and t)o others, na"el#, Mararita Pastelero 8da. de 8aldeE and %olores 8aldeE, )ho )ere not i"pleaded in the action. 0n
place of the cancelled one, the AssessorPs 3Ice issued Ta7 %eclaration -$-( in the na"es of the latter three persons. The old "an
TaronaPs aIdavit had been "issin and no cop# could be found a"on the records of the AssessorPs 3Ice.
D
The Taronas further alleed that, )ithout their fatherPs aIdavit on 5le, it follo)ed that his ta7 declaration had been illeall# cancelled
and a ne) one illeall# issued in favor of Tallorin and the others )ith her. The une7plained disappearance of the aIdavit fro" oIcial
5les, the Taronas concluded, covered-up the falsi5cation or forer# that caused the substitution.
B
The Taronas as!ed the RTC to annul
Ta7 %eclaration -$-(, reinstate Ta7 %eclaration (-B, and issue a ne) one in the na"e of =uanitoPs heirs.
3n March -, $&&, the Taronas 5led a "otion to declare petitioner Tallorin in default for failin to ans)er their co"plaint )ithin the
allo)ed ti"e.
(
But, before the RTC could act on the "otion, Tallorin 5led a belated ans)er, allein a"on others that she held a cop#
of the supposedl# "issin aIdavit of =uanito )ho )as "erel# an aricultural tenant of the land covered b# Ta7 %eclaration (-B. Ge
surrendered and )aived in that aIdavit his occupation and tenanc# rihts to Tallorin and the others in consideration of PD&,D('.''.
Tallorin also put up the aIr"ative defenses of non-co"pliance )ith the reCuire"ent of conciliation proceedins and prescription.
3n March $D, $&&, the RTC set TallorinPs aIr"ative defenses for hearin
+
but the Taronas souht reconsideration, pointin out that
the trial court should have instead declared Tallorin in default based on their earlier "otion.
-
3n =une D, $&&, the RTC denied the
TaronasP "otion for reconsideration
.
for the reasons that it received TallorinPs ans)er before it could issue a default order and that the
Taronas failed to sho) proof that Tallorin )as noti5ed of the "otion three da#s before the scheduled hearin. Althouh the presidin
*ude inhibited hi"self fro" the case on "otion of the Taronas, the ne) *ude to )ho" the case )as re-ra\ed stood b# his
predecessorPs previous orders.
B# a special civil action for certiorari before the Court of Appeals ;CA<,
,
ho)ever, the Taronas succeeded in ettin the latter court to
annul the RTCPs March $D and =une D, $&&, orders.
&
The CA ruled that the RTC ravel# abused its discretion in ad"ittin TallorinPs late
ans)er in the absence of a "otion to ad"it it. Even if petitioner Tallorin had alread# 5led her late ans)er, said the CA, the RTC should
have heard the TaronasP "otion to declare Tallorin in default.
>pon re"and of the case, the RTC heard the TaronasP "otion to declare Tallorin in default,
$'
ranted the sa"e, and directed the
Taronas to present evidence e7 parte.
$$
3n =anuar# B', D''D the RTC rendered *ud"ent, a< annullin the ta7 declaration in the na"es of Tallorin, Mararita Pastelero 8da. de
8aldeE, and %olores 8aldeEK b< reinstatin the ta7 declaration in the na"e of =uanitoK and c< orderin the issuance in its place of a ne)
ta7 declaration in the na"es of =uanitoPs heirs. The trial court also ruled that =uanitoPs aIdavit authoriEin the transfer of the ta7
declaration had no bindin force since he did not sin it.1a!!phi1
Tallorin appealed the above decision to the CA,
$D
pointin out $< that the land covered b# the ta7 declaration in Cuestion )as titled in
her na"e and in those of her t)o co-o)nersK D< that =uanitoPs aIdavit onl# dealt )ith the surrender of his tenanc# rihts and did not
serve as basis for cancelin Ta7 %eclaration (-B in his na"eK B< that, althouh =uanito did not sin the aIdavit, he thu"b"ar!ed and
ac!no)leded the sa"e before a notar# publicK and (< that the trial court erred in not dis"issin the co"plaint for failure to i"plead
Mararita Pastelero 8da. de 8aldeE and %olores 8aldeE )ho )ere indispensable parties in the action to annul =uanitoPs aIdavit and
the ta7 declaration in their favor.
$B
3n Ma# DD, D''- the CA rendered *ud"ent, aIr"in the trial courtPs decision.
$(
The CA re*ected all of TallorinPs aru"ents. 4ince
she did not assin as error the order declarin her in default and since she too! no part at the trial, the CA pointed out that her clai"s
)ere in efect "ere con*ectures, not based on evidence of record.
$+
Notabl#, the CA did not address the issue Tallorin raised reardin
the TaronasP failure to i"plead Mararita Pastelero 8da. de 8aldeE and %olores 8aldeE as indispensable part#-defendants, their
interest in the cancelled ta7 declarations havin been afected b# the RTC *ud"ent.
:uestions Presented
The petition presents the follo)in Cuestions for resolution b# this Court1
$. 9hether or not the CA erred in failin to dis"iss the TaronasP co"plaint for not i"pleadin Mararita Pastelero 8da. de
8aldeE and %olores 8aldeE in )hose na"es, li!e their co-o)ner Tallorin, the annulled ta7 declaration had been issuedK
D. 9hether or not the CA erred in not rulin that the TaronasP co"plaint )as barred b# prescriptionK and
B. 9hether or not the CA erred in aIr"in the RTCPs 5ndin that =uanitoPs aIdavit had no leal efect because it )as
unsinedK )hen at the hearin of the "otion to declare Tallorin in default, it )as sho)n that the aIdavit bore =uanitoPs
thu"b"ar!.
The CourtPs Rulins
The 5rst Cuestion, )hether or not the CA erred in failin to dis"iss the TaronasP co"plaint for not i"pleadin Mararita Pastelero 8da.
de 8aldeE and %olores 8aldeE in )hose na"es, li!e their co-o)ner Tallorin, the annulled ta7 declaration had been issued, is a tellin
Cuestion.
The rules "andate the *oinder of indispensable parties. Thus1
4ec. .. Co"pulsor# *oinder of indispensable parties. U Parties in interest )ithout )ho" no 5nal deter"ination can be had of an action
shall be *oined either as plaintifs and defendants.
$-
0ndispensable parties are those )ith such an interest in the controvers# that a 5nal decree )ould necessaril# afect their rihts, so
that the courts cannot proceed )ithout their presence.
$.
=oinin indispensable parties into an action is "andator#, bein a
reCuire"ent of due process. 9ithout their presence, the *ud"ent of the court cannot attain real 5nalit#.
=ud"ents do not bind straners to the suit. The absence of an indispensable part# renders all subseCuent actions of the court null
and void. 0ndeed, it )ould have no authorit# to act, not onl# as to the absent part#, but as to those present as )ell. And )here does
the responsibilit# for i"pleadin all indispensable parties lieO 0t lies in the plaintif.
$,
Gere, the Taronas souht the annul"ent of the ta7 declaration in the na"es of defendant Tallorin and t)o others, na"el#, Mararita
Pastelero 8da. de 8aldeE and %olores 8aldeE and, in its place, the reinstate"ent of the previous declaration in their father =uanitoPs
na"e. /urther, the Taronas souht to stri!e do)n as void the aIdavit in )hich =uanito renounced his tenanc# riht in favor of the
sa"e three persons. 0t is inevitable that an# decision rantin )hat the Taronas )anted )ould necessaril# afect the rihts of such
persons to the propert# covered b# the ta7 declaration.
The Court cannot discount the i"portance of ta7 declarations to the persons in )hose na"es the# are issued. Their cancellation
adversel# afects the rihts and interests of such persons over the properties that the docu"ents cover. The reason is si"ple1 a ta7
declaration is a pri"ar# evidence, if not the source, of the riht to clai" title of o)nership over real propert#, a riht enforceable
aainst another person. The Court held in >riarte v. People
$&
that, althouh not conclusive, a ta7 declaration is a tellin evidence of
the declarantPs possession )hich could ripen into o)nership.
0n %irector of 2ands v. Court of Appeals,
D'
the Court said that no one in his riht "ind )ould pa# ta7es for a propert# that he did not
have in his possession. This honest sense of obliation proves that the holder clai"s title over the propert# aainst the 4tate and
other persons, puttin the" on notice that he )ould eventuall# see! the issuance of a certi5cate of title in his na"e. /urther, the ta7
declaration e7presses his intent to contribute needed revenues to the Aovern"ent, a circu"stance that strenthens his bona 5de
clai" to o)nership.
D$
Gere, the RTC and the CA annulled Ta7 %eclaration -$-( that beloned not onl# to defendant Tallorin but also to Mararita Pastelero
8da. de 8aldeE and %olores 8aldeE, )hich t)o persons had no opportunit# to be heard as the# )ere never i"pleaded. The RTC and
the CA had no authorit# to annul that ta7 declaration )ithout seein to it that all three persons )ere i"pleaded in the case.
But the TaronasP action cannot be dis"issed outriht. As the Court held in Plasabas v. Court of Appeals,
DD
the non-*oinder of
indispensable parties is not a round for dis"issal. 4ection $$, Rule B of the $&&. Rules of Civil Procedure prohibits the dis"issal of a
suit on the round of non-*oinder or "is*oinder of parties and allo)s the a"end"ent of the co"plaint at an# stae of the
proceedins, throuh "otion or on order of the court on its o)n initiative. 3nl# if plaintif refuses to i"plead an indispensable part#,
despite the order of the court, "a# it dis"iss the action.
There is a need, therefore, to re"and the case to the RTC )ith an order to i"plead Mararita Pastelero 8da. de 8aldeE and %olores
8aldeE as defendants so the# "a#, if the# so desire, be heard.
0n vie) of the CourtPs resolution of the 5rst Cuestion, it )ould serve no purpose to consider the other Cuestions that the petition
presents. The resolution of those Cuestions see"s to depend on the co"plete evidence in the case. This )ill not #et happen until all
the indispensable part#-defendants are i"pleaded and heard on their evidence.
9GERE/3RE, the Court ARANT4 the petition and 4ET4 A40%E the decision of the Reional Trial Court of Balana, Bataan in Civil Case
-.B& dated =anuar# B', D''D and the decision of the Court of Appeals in CA-A.R. C8 .(.-D dated Ma# DD, D''-. The Court REMAN%4
the case to the Reional Trial Court of Balana, Bataan )hich is %0RECTE% to have Mararita Pastelero 8da. de 8aldeE and %olores
8aldeE i"pleaded b# the plaintifs as part#-defendants and, after)ards, to hear the case in the "anner prescribed b# the rules.
43 3R%ERE%.