Rule 3 Sec.9 - 4 (Rules of Court Jurisprudence Digest)

Sec. 9.
Non-joinder of necessary parties to be

pleaded.
Whenever in any pleading in which a claim is
asserted a necessary party is not joined, the
pleader shall set forth his name, if known, and shall
state why he is omitted. Should the court find the
reason for the omission unmeritorious, it may
order the inclusion of the omitted necessary party
if jurisdiction over his person may be obtained.
The failure to comply with the order for his
inclusion, without justifiable cause, shall be
deemed a waiver of the claim against such party.
The non-inclusion of a necessary party does not
prevent the court from proceeding in the action,
and the judgment rendered therein shall be
without prejudice to the rights of such necessary
party.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
CARANDANG
VS.
HEIRS
OF
DE
GUZMAN
FACTS:
Spouses Carandang and the decedent
Quirino de Guzman were stockholders and
corporate officers of Mabuhay Broadcasting
System (MBS). The Carandangs have equities at 54
% while Quirino has 46%. When the capital stock
of MBS was increased on November 26, 1983, the
Carandangs subscribed P345,000 from it, P293,250
from the said amount was loaned by Quirino to
the Carandangs. In the subsequent increase in
MBS capital stock on March 3, 1989, the
Carandangs subscribed again to the increase in the
amount of P93,750. But, P43,125 out of the
mentioned amount was again loaned by
Quirino. When Quirino sent a demand letter to
the Carandangs for the payment of the loan, the
Carandangs refused to pay. They contend that a
pre-incorporation agreement was executed
between Arcadio Carandang and Quirino, whereby
Quirino promised to pay for the stock
subscriptions of the Arcadio without cost, in
consideration for Arcadios technical expertise, his
newly purchased equipment, and his skill in
repairing and upgrading radio/communication

equipment therefore, there is no indebtedness on
the part of the Carandangs. Thereafter, Quirino
filed a complaint seeking to recover the P336,375
total amount of the loan together with damages.
The RTC ruled in favor of Quirino and ordered the
Carandangs to pay the loan plus interest,
attorneys fees, and costs of suit. The Carandangs
appealed the trial courts decision to the CA, but
the CA affirmed the same. The subsequent Motion
for Reconsideration filed by the Carandangs were
also denied. Hence, this appeal to the SC.
SPOUSES CARANDANG: Three of the four checks

used to pay their stock subscriptions were issued
in the name of Milagros de Guzman, the
decedents wife. Thus, Milagros should be
considered as an indispensable party in the
complaint. Being such, the failure to join Milagros
as a party in the case should cause the dismissal of
the action by reason of a jurisprudence stating
that: (i)f a suit is not brought in the name of or
against the real party in interest, a motion to
dismiss may be filed on the ground that the
complaint states no cause of action."
ISSUE: Whether or not the RTC should have
dismissed the case for failure to state a cause of
action, considering that Milagros de Guzman,
allegedly an indispensable party, was not included
as a party-plaintiff.
HELD: No. Although the spouses Carandang were
correct in invoking the aforementioned doctrine,
the ground set forth entails an examination of
whether the parties presently pleaded are
interested in the outcome of the litigation,
and not whether all persons interested in such
outcome are actually pleaded. The first query
seeks to answer the question of whether Milagros
is a real party in interest, while the latter query is
asking if she is an indispensable party. Since the
issue of this case calls for the definition of an
indispensable party, invoking the abovementioned
doctrine is irrelevant to the case because the
doctrine talks about a real party in interest and
not an indispensable party. Although it is
important to take note that an indispensable party

is also a real party in interest.
Sec. 4. Spouses as parties. Husband and wife
shall sue or be sued jointly, except as provided by
law.
Pro-forma parties can either be indispensable,
necessary or neither indispensable nor necessary.
The third case occurs if, for example, a husband
files an action to recover a property which he
claims to be part of his exclusive property. The
wife may have no legal interest in such property,
but the rules nevertheless require that she be
joined as a party.
Quirino and Milagros de Guzman were married
before the effectivity of the Family Code on 3
August 1988. As they did not execute any marriage
settlement, the regime of conjugal partnership of
gains govern their property relations.
All property acquired during the marriage,
whether the acquisition appears to have been
made, contracted or registered in the name of one
or both spouses, is presumed to be conjugal unless
the contrary is proved. Credits are personal
properties, acquired during the time the loan or
other credit transaction was executed. Therefore,
credits loaned during the time of the marriage are
presumed to be conjugal property.
Assuming that the four checks are credits, they are
assumed to be conjugal properties of Quirino and
Milagros. There being no evidence to the contrary,
such presumption subsists. As such, Quirino de
Guzman, being a co-owner of specific partnership
property, is certainly a real party in interest.
Now, with regard to the discussion on the effect of
non-inclusion of parties in the complaint filed: in
indispensable parties, when an indispensable party
is not before the court, the action should be
dismissed. The absence of an indispensable party
renders all subsequent actuations of the court
void, for want of authority to act, not only as to
the absent parties but even as to those present.
For necessary parties, the non-inclusion of a
necessary party does not prevent the court from
proceeding in the action, and the judgment
rendered therein shall be without prejudice to the
rights of such necessary party. Non-compliance

with the order for the inclusion of a necessary
party would not warrant the dismissal of the
complaint. Lastly, for pro-forma parties, the
general rule under Section 11, Rule 3 must be
followed: such non-joinder is not a ground for
dismissal. Hence, in a case concerning an action to
recover a sum of money, we held that the failure
to join the spouse in that case was not a
jurisdictional defect. The non-joinder of a spouse
does not warrant dismissal as it is merely a formal
requirement which may be cured by amendment.
Conversely, in the instances that the pro-forma
parties are also indispensable or necessary parties,
the rules concerning indispensable or necessary
parties, as the case may be, should be applied.
Thus, dismissal is warranted only if the pro-forma
party not joined in the complaint is an
indispensable party.
Under Art. 147 of the Civil Code which was
superceded by Art. 108 of the Family Code, the
conjugal partnership shall be governed by the rules
on the contract of partnership. Thus, Milagros is a
co-owner of the subject personal property in this
case the credit incurred by spouses Carandang.
Being co-owners of the alleged credit, Quirino and
Milagros de Guzman may separately bring an
action for the recovery thereof.
In sum, in suits to recover properties, all coowners are real parties in interest. However,
pursuant to Article 487 of the Civil Code and
relevant jurisprudence, any one of them may bring
an action, any kind of action, for the recovery of
co-owned properties. Therefore, only one of the
co-owners, namely the co-owner who filed the suit
for the recovery of the co-owned property, is an
indispensable party thereto. The other co-owners
are not indispensable parties. They are not even
necessary parties, for a complete relief can be
accorded in the suit even without their
participation, since the suit is presumed to have
been filed for the benefit of all co-owners.
Thus, Milagros de Guzman is not an indispensable
party in the action for the recovery of the allegedly
loaned money to the spouses Carandang. As such,
she need not have been impleaded in said suit,

and dismissal of the suit is not warranted by her
not being a party thereto
Sec. 10. Unwilling co-plaintiff.
If the consent of any party who should be joined as
plaintiff can not be obtained, he may be made a
defendant and the reason therefor shall be stated
in the complaint.
EMATA v. IAC
REMEDIAL LAW; ACTION; THIRDPARTY
COMPLAINT, FILING THEREOF RESTS WITH THE
SOUND DISCRETION OF THE COURT.-For purposes
of Section 14 of Rule 6, above quoted, the court
may authorize the filing of the proper third-party
complaint to implead the other parties not
included in the original complaint, in keeping with
the injunction that all pleadings shall be liberally
construed so as to do substantial justice.
ID.;ID.;ID.; CONSTRUED. A third-party complaint
is a claim that a defending party may, with leave
of court, file against a person not a party to the
action, called the third-party defendant, for
contribution, indemnity, subrogation or any other
relief in respect of his opponents claim.
ID.; ID.; PARTIES; UNAVAILING CO-PLAINTIFF MAY
BE MADE DEFENDANT; PARTY MUST BE A REAL
PARTY IN INTEREST; CASE AT BAR. Petitioner
cannot rely on the provisions of Section 10, Rule 3
which envisages a party who should be joined as a
plaintiff but who does not assent to such joinder.
Obviously and necessarily, such unwilling party
must be real party in interest. In the case at bar,
Filinvests position and the evidence thereon was
that it was not a real party in interest, as it was no
longer entitled to the avails of the suit by reason of
the anterior assignment it made in favor of private
respondent. Hence, at the very least, its capacity
was in issue and it would be a case of procedural
petitio principia for the trial court to have
categorized it as an unwilling co-plaintiff, with the
procedural consequences thereof, although such

operative issue was still unresolved.
ID.; ID.; ID.; ID.; OPTION LIES WITH THE
PLAINTIFF. The option lies with the plaintiff on
whether or not to join an additional party in his
complaint. The original plaintiff cannot be
compelled, on the mere representations of the
defendant, to implead anyone, especially if it does
not appear that such joinder is proper or is
necessary for the complete and expeditious
adjudication of the case.
ID.;ID.; ID.;ADDITION OR DROPPING OF PARTY
ADDRESSED TO THE SOUND DISCRETION OF THE
COURT. Nor can the general rule in Section 11,
Rule 3, on the power to order the addition or
dropping of a party at any stage of action, be of
solace to the petitioner. This is a power addressed
to the sound discretion of the court to be exercised
on such term as are just, and by this is meant that
it must be just to all the other parties.
ID.; COURT; CLOTHED WITH AMPLE AUTHORITY
TO RULE ON PROCEDURAL MATTERS BEFORE
THEM. Petitioner should be reminded that the
courts, as the arbiters of the rights of the parties,
stand in a better position and are clothed with
ample authority to rule on the procedural
measures that are proper in cases before them. If a
party believes that the order of the court is not in
accordance with law, he is not without other
alternative remedial avenues. If, on the other
hand, the order does not suffer from any legal
infirmities, the same is binding on the parties and
to this they must submit with grace. We cannot but
be displeased with petitioners unseemly
motivation and stance when he adopted an
attitude of inaction and uncompletely ignored the
order of the trial court requiring the filing of a
third-party complaint, especially in view of the
factual finding that it was he who manifested on
April 26, 1982.
FACTS:
Petitioner purchased a car on installments from
Violago Motor Sales Corporation (Violago) with a
down payment of P14, 982.00. Petitioner likewise
executed in favor of the seller a promissory note
and a chattel mortgage over the car as security for

the payment of the note.
The total amount that the petitioner was supposed
to pay was P72, 186.00, with P57, 204.00 as the
balance after deducting the down payment. The
total amount payable was P22, 246.00 more than
the list cash price of P49, 940.00 for said vehicle.
After the execution of said documents, Violago

endorsed the promissory note and assigned the
chattel mortgage to Filinvest upon payment by the
latter of P34, 958.00, the unpaid balance of the list
cash price of the car.
Three years later, Filinvest assigned to private
respondent Service Specialists, Inc. the remaining
installment balance due on and corresponding to
the period from February 25, 1981 to August 25,
1981.
Alleging non-payment of five (5) consecutive
installments from February 25 to June 25, 1981,
private respondent initiated the case in the trial
court for a writ of replivin to effect the seizure of
the car or, alternatively, for the payment by
petitioner of the sum of P 1,332.40, with interest
thereon of the 14% per annum from July 10, 1981
until fully paid and, additionally, for attorneys fees
and costs of suit.
Petitioners allegation:
the promissory note does not express the true
intent and agreement of the parties, the same
having been procured through fraud deceit,
trickery and misrepresentation, that the chattel
mortgage was intended to secure the payment of
P34,958.00 which was the unpaid balance of the
purchase price of the Toyota car;
that he was made to sign the note and the
mortgage in blank that he has paid, and even
overpaid, Filivest by P9, 388.22 that the
promissory note by inflating its value and charging
more than the prescribed rates in violation of the
Financing Company Act violates the Usury Law that
the note and the mortgage are null and void; and
that the demand set forth in the complaint has
been long extinguished.
Petitioner filed a Motion to Implead Filinvest

Credit Corporation on the theory that for all
legal purposes the corporation sought to be
impleaded is the real party in interest because it
retained interest over the balance of the
petitioners account in spite of its assignment to
private respondent.
The court held in abeyance the pre-trial hearing of
the case since upon motion of Atty. Emata, said
petitioner was given a period of 15 days to file the
third-party complaint against the third party
defendant (Filinvest). Petitioner, however, did not
file any third-party complaint, hence the trial court
set the case for pre-trial on May 3, 1983, it being
understood that petitioner was no longer
interested in impleading the herein private
respondent as a third-party defendant therein.
Petitioner filed an urgent motion to cancel the
scheduled pre-trial and the trial court reset the
same. Another motion for postponement of the
scheduled pre-trial filed by petitioner was denied
by the lower court, which consequently issued an
order declaring petitioner as in default for failure
to appear at the pre-trial.
The trial court rendered judgment in favor of
plaintiff.
Petitioner raises both procedural and substantive
issues. Initially, he complains that the trial court
erred in requiring him to file a third-party
complaint against Filinvestn instead of impleading
the latter either as party plaintiff or defendant. He
insists that Filinvvest is the real party in interest in
the present case and it should be impleaded under
Rule 3 of the ROC.
Sec. 10. Unwilling co-plaintiff. -If the consent of
any party who should be joined as plaintiff cannot
be obtained, he may be made a defendant and the
reason therefor shall be stated in the complaint.
Sec. 11. Misjoinder and non-joinder of parties. Misjoinder of parties is not ground for dismissal of
an action. Parties may be dropped or added by
order of the court on motion of any party or on its
own initiative at any stage of the action and on
such terms as are just. Any claim against a party
may be severed and proceeded with separately
which he complements with a provision in Rule 6,

to wit:
Sec. 14. Bringing new parties. When the presence
of parties other than those to the original action is
required for the granting of complete relief in the
determination of a counterclaim or cross-claim,
the court shall order them to be brought in as
defendants if jurisdiction over them can be
obtained.
According to petitioner, based on the above
quoted provisions, the court, may authorize the
filing of the proper third-party complaint to
implead the other parties not included in the
original complaint, in keeping with the injunction
that all pleadings shall be liberally construed so as
to do substantial justice.
ISSUES: WON the petitioners allegations correct
RULING: No. The SC rejects petitioners complaint
that the order of the court a quo requiring the
filing of a third-party complaint is improper. A
third- party complaint is "a claim that a defending
party may, with leave of court, file against a
person not a party to the action, called the thirdparty defendant, for contribution, indemnity,
subrogation or any other relief in respect of his
opponent's claim." Obviously, a third-party
complaint against Filinvest, had petitioner filed the
same, would be a claim in respect of the plaintiffs
claim since the former arises from the same
transaction on which the plaintiffs claim is based,
that is, the promissory note which was eventually
assigned to private respondent. Although the
petitioner did not admit in his answer that any
amount is due from the corporation sought to be
impleaded, that is not indicative of nor does it
support his thesis of the alleged impropriety of a
third-party complaint. Apparently, petitioner failed
to take into consideration that the remedy is also
applicable where the defendant seeks "any other
relief in respect of his opponent's claim," a
remedial grant of power broad enough to include
the relief he seeks in the case at bar.
Petitioner cannot rely on the provisions of Section
10, Rule 3 which envisages a party who should be
joined as a plaintiff but who does not assent to
such joinder. Obviously and necessarily, such
unwilling party must be a real party in interest. In

the case at bar, Filinvest's position and the
evidence thereon was that it was not a real party
in interest, as it was no longer entitled to the avails
of the suit by reason of the anterior assignment it
made in favor of private respondent. Hence, at the
very least, its capacity was in issue and it would be
a case of procedural petitio principii for the trial
court to have categorized it as an unwilling coplaintiff, with the procedural consequences
thereof, although such operative issue was still
unresolved. Furthermore, the option lies with the
plaintiff on whether or not to join an additional
party in his complaint. The original plaintiff cannot
be compelled, on the mere representations of the
defendant, to implead anyone, especially if it does
not appear that such joinder is proper or is
necessary for the complete and expeditious
adjudication of the case.
Nor can the general rule in Section 11, Rule 3, on
the power to order the addition or dropping of a
party at any stage of action, be of solace to the
petitioner. This is a power addressed to the sound
discretion of the court to be exercised on such
terms as are just, and by this is meant that it must
be just to all the other parties. Obviously, given the
facts of this case, the trial court wisely exercised its
discretion in refusing to give in to the unjustified
importunings of petitioner.
Petitioner should be reminded that the courts, as
the arbiters of the rights of the parties, stand in a
better position and are clothed with ample
authority to rule on the procedural measures that
are proper in cases before them. If a party believes
that the order of the court is not in accordance
with law, he is not without other alternative
remedial avenues. If, on the other hand, the order
does not suffer from any legal infirmities, the same
is binding on the parties and to this they must
submit with grace. We cannot but be displeased
with petitioner's unseemly motivation and stance
when he "adopted an attitude of inaction and
completely ignored" the order of the trial court
requiring the filing of a third-party complaint,
especially in view of the factual finding that it was
he who manifested on April 26, 1982 that he
would file said third party complaint .
-petition is Denied; the assailed decision on the CA

is affirmed
Sec. 11. Misjoinder and non-joinder of parties.
Neither misjoinder nor non-joinder of parties is
ground for dismissal of an action. Parties may be
dropped or added by order of the court on motion
of any party or on its own initiative at any stage of
the action and on such terms as are just. Any claim
against a misjoined party may be severed and
proceeded with separately.
BOSTON EQUITY vs. CA G.R. No. 173946
FACTS:
On 24 December 1997, petitioner filed a complaint
for sum of money with a prayer for the issuance of
a writ of preliminary attachment against the
spouses Manuel and Lolita Toledo. Herein
respondent filed an Answer dated 19 March 1998
but on 7 May 1998, she filed a Motion for Leave to
Admit Amended Answer in which she alleged,
among others, that her husband and codefendant, Manuel Toledo (Manuel), is already
dead. The death certificate of Manuel states "13
July 1995" as the date of death. As a result,
petitioner filed a motion, dated 5 August 1999, to
require respondent to disclose the heirs of
Manuel. In compliance with the verbal order of the
court during the 11 October 1999 hearing of the
case, respondent submitted the required names
and addresses of the heirs. Petitioner then filed a
Motion for Substitution, dated 18 January 2000,
praying that Manuel be substituted by his children
as party-defendants. It appears that this motion
was granted by the trial court in an Order dated 9
October 2000.
On 26 May 2004, the reception of evidence for
herein respondent was cancelled upon agreement
of the parties. On 24 September 2004, counsel for
herein respondent was given a period of fifteen
days within which to file a demurrer to
evidence. However, on 7 October 2004,
respondent instead filed a motion to dismiss the

complaint, citing the following as grounds: (1) that
the complaint failed to implead an indispensable
party or a real party in interest; hence, the case
must be dismissed for failure to state a cause of
action; (2) that the trial court did not acquire
jurisdiction over the person of Manuel pursuant to
Section 5, Rule 86 of the Revised Rules of Court;
(3) that the trial court erred in ordering the
substitution of the deceased Manuel by his heirs;
and (4) that the court must also dismiss the case
against Lolita Toledo in accordance with Section 6,
Rule 86 of the Rules of Court.
The trial court, in an Order dated 8 November
2004, denied the motion to dismiss for having
been filed out of time, citing Section 1, Rule 16 of
the 1997 Rules of Court which states that: "Within
the time for but before filing the answer to the
complaint or pleading asserting a claim, a motion
to dismiss may be made." Respondents motion for
reconsideration of the order of denial was likewise
denied on the ground that "defendants attack on
the jurisdiction of this Court is now barred by
estoppel by laches" since respondent failed to
raise the issue despite several chances to do so.
Aggrieved, respondent filed a petition for certiorari
with the CA and was granted on the ground that:
The court did not acquire jurisdiction over the
defendant Manuel Toledo (dead).
The court a quos denial of respondents motion
to dismiss was based on its finding that
respondents attack on the jurisdiction of the court
was already barred by laches as respondent failed
to raise the said ground in its amended answer and
during the pre-trial, despite her active
participation in the proceedings.
However, it is well-settled that issue on jurisdiction
may be raised at any stage of the proceeding, even
for the first time on appeal. By timely raising the
issue on jurisdiction in her motion to dismiss
respondent is not estopped from raising the
question on jurisdiction.
Moreover, when issue on jurisdiction was raised
by respondent, the court a quo had not yet
decided the case, hence, there is no basis for the
court a quo to invoke estoppel to justify its denial

of the motion for reconsideration;
It should be stressed that when the complaint was
filed, defendant Manuel S. Toledo was already
dead. The complaint should have impleaded the
estate of Manuel S. Toledo as defendant, not only
the wife, considering that the estate of Manuel S.
Toledo is an indispensable party, which stands to
be benefited or be injured in the outcome of the
case.
Respondents motion to dismiss the complaint
should have been granted by public respondent
judge as the same was in order. Considering that
the obligation of Manuel S. Toledo is solidary with
another debtor, the claim should be filed against
the estate of Manuel S. Toledo, in conformity with
the provision of Section 6, Rule 86 of the Rules of
Court.
The Court of Appeals denied petitioners motion
for reconsideration. Hence, this petition.
ISSUE:
1.
2.
Whether or not Manuel Toledo is an

Whether or not the inclusion of Manuel
Toledo as party-defendant is a misjoinder
of a party warranting the dismissal of the
case.
HELD:
1.
No, Manuel Toledo

is
not
an
Rule 3, Section 7 of the 1997 Rules of Court states:

SEC. 7. Compulsory joinder of indispensable
parties. Parties-in-interest without whom no
final determination can be had of an action shall
be joined either as plaintiffs or defendants.
An indispensable party is one who has such an
interest in the controversy or subject matter of a
case that a final adjudication cannot be made in
his or her absence, without injuring or affecting
that interest. He or she is a party who has not only
an interest in the subject matter of the
controversy, but "an interest of such nature that a
final decree cannot be made without affecting that
interest or leaving the controversy in such a

condition that its final determination may be
wholly inconsistent with equity and good
conscience. It has also been considered that an
indispensable party is a person in whose absence
there cannot be a determination between the
parties already before the court which is effective,
complete or equitable." Further, an indispensable
party is one who must be included in an action
before it may properly proceed.
On the other hand, a "person is not an
indispensable party if his interest in the
controversy or subject matter is separable from
the interest of the other parties, so that it will not
necessarily be directly or injuriously affected by a
decree which does complete justice between
them. Also, a person is not an indispensable party
if his presence would merely permit complete
relief between him or her and those already
parties to the action, or if he or she has no interest
in the subject matter of the action." It is not a
sufficient reason to declare a person to be an
indispensable party simply because his or her
presence will avoid multiple litigations.
Applying the foregoing pronouncements to the
case at bar, it is clear that the estate of Manuel is
not an indispensable party to the collection case,
for the simple reason that the obligation of
Manuel and his wife, respondent herein, is
solidary.
The provisions and stipulations of the contract
were then followed by the respective signatures of
respondent as "MAKER" and her husband as "COMAKER." Thus, pursuant to Article 1216 of the Civil
Code, petitioner may collect the entire amount of
the obligation from respondent only. The
aforementioned provision states: "The creditor
may proceed against any one of the solidary
debtors or some or all of them simultaneously. The
demand made against one of them shall not be an
obstacle to those which may subsequently be
directed against the others, so long as the debt has
not been fully collected."
In other words, the collection case can proceed
and the demands of petitioner can be satisfied by
respondent only, even without impleading the
estate of Manuel. Consequently, the estate of

Manuel is not an indispensable party to
petitioners complaint for sum of money.
It is crystal clear that Article 1216 of the New Civil
Code is the applicable provision in this matter. Said
provision gives the creditor the right to "proceed
against anyone of the solidary debtors or some or
all of them simultaneously." The choice is
undoubtedly left to the solidary creditor to
determine against whom he will enforce
collection. In case of the death of one of the
solidary debtors, he (the creditor) may, if he so
chooses, proceed against the surviving solidary
debtors without necessity of filing a claim in the
estate of the deceased debtors.
2.
No, the inclusion of Manuel Toledo as

party-defendant is not a misjoinder of a
party warranting dismissal of the case.
Section 11 of Rule 3 of the Rules of Court states

that "neither misjoinder nor non-joinder of parties
is ground for dismissal of an action. Parties may be
proceeded with separately."
Based on the last sentence of the afore-quoted
provision of law, a misjoined party must have the
capacity to sue or be sued in the event that the
claim by or against the misjoined party is pursued
in a separate case. In this case, therefore, the
inclusion of Manuel in the complaint cannot be
considered a misjoinder, as in fact, the action
would have proceeded against him had he been
alive at the time the collection case was filed by
petitioner. This being the case, the remedy
provided by Section 11 of Rule 3 does not obtain
here. The name of Manuel as party-defendant
cannot simply be dropped from the case.
LEONIS NAVIGATION vs. VILLAMETER
FACTS:
Private respondent Catalino U. Villamater

(Villamater) was hired as Chief Engineer for the
ship MV Nord Monaco, owned by petitioner World
Marine Panama, S.A., through the services of
petitioner Leonis Navigation Co., Inc. (Leonis), as
the latters local manning agent. Consequent to
this employment, Villamater, on June 4, 2002,
[4]
executed an employment contract, incorporating
the Standard Terms and Conditions Governing the
Employment of Filipino Seafarers on Board OceanGoing Vessels as prescribed by the Philippine
Overseas Employment Administration (POEA).
Prior to his deployment, Villamater underwent the
required Pre-Employment Medical Examination
(PEME). He passed the PEME and was declared
[5]
Fit to Work. Thereafter, Villamater was
deployed on June 26, 2002.
Sometime in October 2002, around four (4)
months after his deployment, Villamater suffered
intestinal bleeding and was given a blood
transfusion. Thereafter, he again felt weak, lost
considerable weight, and suffered intermittent
intestinal pain. He consulted a physician
in Hamburg, Germany, who advised hospital
confinement. Villamater was diagnosed with
Obstructive Adenocarcinoma of the Sigmoid, with
multiple liver metastases, possibly local peritoneal
carcinosis and infiltration of the bladder, possibly
lung metastasis, and anemia; Candida Esophagitis;
and Chronic Gastritis. He was advised to undergo
chemotherapy and continuous supportive
treatment, such as pain-killers and blood
[6]
transfusion.
Villamater was later repatriated, under medical
escort, as soon as he was deemed fit to travel. As
soon as he arrived in the Philippines, Villamater
was referred to company-designated
physicians. The diagnosis and the recommended
treatment abroad were confirmed. He was
advised to undergo six (6) cycles of
chemotherapy. However, Dr. Kelly Siy Salvador,
one of the company-designated physicians, opined
that Villamaters condition appears to be not
work-related, but suggested a disability grading of
1.[7]
In the course of his chemotherapy, when no

noticeable improvement occurred, Villamater filed
[8]
a complaint before the Arbitration Branch of the
National Labor Relations Commission (NLRC) for
payment of permanent and total disability benefits
in the amount of US$80,000.00, reimbursement of
medical and hospitalization expenses in the
amount of P11,393.65, moral damages in the sum
of P1,000,000.00, exemplary damages in the
amount of P1,000,000.00, as well as attorneys
fees.
After the submission of the required position
papers, the Labor Arbiter rendered a
decision[9] dated July 28, 2003 in favor of
Villamater, holding that his illness was
compensable, but denying his claim for moral and
exemplary damages.
On February 4, 2004, the NLRC issued its
resolution,[11] dismissing the respective appeals of
both parties and affirming in toto the decision of
the Labor Arbiter.
Petitioners filed their motion for reconsideration
of the February 4, 2004 resolution, but the NLRC
denied the same in its resolution dated June 15,
2004.
Aggrieved, petitioners filed a petition
for certiorari under Rule 65 of the Rules of Court
before the CA. After the filing of the required
memoranda, the CA rendered its assailed May 3,
2007 Decision, dismissing the petition. The
appellate court, likewise, denied petitioners
motion for reconsideration in its July 23, 2007
Resolution.
ISSUE:
Whether or not the Court of Appeals erred in
holding that non-joinder of indispensable parties
warrant the outright dismissal of the Petition for
Review on Certiorari?
HELD:
The answer is in the Negative.
Villamaters widow stands as an indispensable
party to this case.
Under Rule 3, Section 11 of the Rules of Court,

neither misjoinder nor non-joinder of parties is a
ground for the dismissal of an action, thus:
Sec. 11. Misjoinder and non-joinder of parties.
Neither misjoinder nor non-joinder of parties is
ground for dismissal of an action. Parties may be
proceeded with separately.
The proper remedy is to implead the indispensable
party at any stage of the action. The court,
either motu proprio or upon the motion of a party,
may order the inclusion of the indispensable party
or give the plaintiff an opportunity to amend his
complaint in order to include indispensable
parties. If the plaintiff ordered to include
the indispensable party refuses to comply with the
order of the court, the complaint may be
dismissed upon motion of the defendant or upon
the court's own motion. Only upon unjustified
failure or refusal to obey the order to include or to
amend is the action dismissed.[30]
By reason of Villamaters entitlement to total and
permanent disability benefits, he (or in this case
his widow Sonia) is also entitled to the award of
attorneys fees, not under Article 2208(2) of the
Civil Code, *w+hen the defendants act or
omission has compelled the plaintiff to litigate
with third persons or to incur expenses to protect
his interest, but under Article 2208(8) of the same
Code, involving actions for indemnity under
workmens compensation and employers liability
laws.
Heirs of Mesina v. Heirs of Fian, G.R. No. 201816
April 8, 2013
Facts:
The late spouses Faustino and Genoveva Mesina
(spouses Mesina), during their lifetime, bought
from the spouses Domingo Fian Sr. and Maria Fian
(spouses Fian) two parcels of land on installment.
Both of these spouses eventually died. Upon the

death of the spouses Fian and Mesinas, the heir of
the former whose names do not appear on the
records, claiming ownership of the parcels of land
and taking possession of themrefused to
acknowledge the payments for the lots and denied
that their late parents sold the property to the
spouses Mesina.
This prompted Norman S. Mesina as attorney-infact of his siblings, filed an action for quieting of
title and damages before the Regional Trial Court
(RTC), Branch 14 in Baybay, Leyte against the Heirs
of Fian. Theresa filed a Motion to Dismiss the
complaint, arguing that the complaint states no
cause of action and that the case should be
dismissed for gross violation of
Sections 1 and 2, Rule 3 of the Rules of Court. The
RTC granted the motion and dismissed the
complaint. Motion for reconsideration was also
denied.
Petitioner appealed to CA which affirmed the
lower courts decision and denied the motion for
reconsideration. Thus, the petitioner brought the
case to Supreme Court.
Issue:
The (CA) court erred in affirming the order and the
resolution of RTC dismissing the case on the
ground that the complaint states no cause of
action.
Ruling:
Petition is meritorious and SC reversed CAs
decision.
The dismissal of the case for failure to state a
cause of action is improper. This is not a case
where there is a failure of the complaint to state
cause of action, rather this is properly a nonjoinder of indispensable party (that is, the
indispensable parties who were not included in the
complaint being the other heirs of Fian).
What the trial court should have done is to direct
petitioner Norman Mesina to implead all the heirs
of Domingo Fian, Sr. as defendants within a
reasonable time from notice with a warning that
his failure to do so shall mean dismissal of the

complaint.
By a simple reading of the 3 elements of a failure
to state a cause of action, it can be readily seen
that the inclusion of Theresas co-heirs does not
fall under any of the above elements. The infirmity
is, in fact, not a failure to state a cause of action
but a non-joinder of an indispensable party.
A complaint states a cause of action if it
avers the existence of the 3 essential
elements of a cause of action, namely:
(a) The legal right of the plaintiff;
(b) The correlative obligation of the
defendant; and
(c) The act or omission of the defendant
in violation of said right.
WHEREFORE, premises considered, the petition is
GRANTED. The assailed April 29, 2011 Decision and
April 12, 2012 Resolution of the CA in CA-G.R. CV
No. 01366, and the November 22, 2005 Order and
February 29,2006 Resolution of the RTC, Branch 14
in Baybay, Leyte, dismissing the complaint in Civil
Case No. 8-05-08-20, are hereby REVERSED and
SET ASIDE.
Sec. 12. Class suit.
When the subject matter of the controversy is one
of common or general interest to many persons so
numerous that it is impracticable to join all as
parties, a number of them which the court finds to
be sufficiently numerous and representative as to
fully protect the interests of all concerned may sue
or defend for the benefit of all. Any party in
interest shall have the right to intervene to protect
his individual interest.
Juana Complex v. Fil-Estate Land,
G.R. No. 152272, March 5, 2012
Facts:
Juana
Complex
I
Homeowners
Association, Inc. (JCHA), together with individual
residents of Juana Complex I and other
neighboring subdivisions (collectively referred as
JCHA, et. al.), instituted a complaint for damages,
in its own behalf and as a class suit representing

the regular commuters and motorists of Juana
Complex I and neighboring subdivisions who were
deprived of the use of La Paz Road, against FilEstate Land, Inc. (Fil-Estate), Fil-estate Ecocentrum
Corporation (FEEC),
La
Paz
Housing
&
Development Corporation (La Paz), and Warbird
Security Agency and their respective officers.
The complaint alleged that JCHA, et al.
were regular commuters and motorists who
constantly travelled towards the direction of
Manila and Calamba; that they used the entry and
exit toll gates of South Luzon Expressway (SLEX) by
passing through right-of-way public road known as
La Paz Road; that they had been using La Paz Road
for more than ten (10) years; that in August 1998,
Fil-estate excavated, broke and deliberately ruined
La Paz Road that led to SLEX so JCHA, et al. would
not be able to pass through the said road; that La
Paz Road was restored by the residents to make it
passable but Fil-estate excavated the road again;
that JCHA reported the matter to the Municipal
Government and the Office of the Municipal
Engineer but the latter failed to repair the road to
make it passable and safe to motorists and
pedestrians; that the act of Fil-estate in excavating
La Paz Road caused damage, prejudice,
inconvenience, annoyance, and loss of precious
hours to them, to the commuters and motorists
because traffic was re-routed to narrow streets
that caused terrible traffic congestion and hazard;
and that its permanent closure would not only
prejudice their right to free and unhampered use
of the property but would also cause great damage
and irreparable injury.
Accordingly, JCHA, et al. also prayed for the
immediate issuance of a Temporary Restraining
Order (TRO) or
a
writ
of
preliminary
injunction (WPI) to enjoin Fil-Estate, et al. from
stopping and intimidating them in their use of La
Paz Road. On February 10, 1999, a TRO was issued
ordering Fil-Estate, et al, for a period of twenty
(20) days, to stop preventing, coercing,
intimidating or harassing the commuters and
motorists from using the La Paz Road.
Subsequently, the RTC conducted several hearings
to determine the propriety of the issuance of a
WPI. On February 26, 1999, Fil-Estate, et al. filed a
motion to dismiss arguing that the complaint failed
to state a cause of action and that it was
improperly filed as a class suit. On March 5, 1999,
JCHA, et al. filed their comment on the motion to
dismiss to which respondents filed a reply. FilEstate, et al. filed a petition for certiorari and
prohibition before the CA to annul (1) the Order
dated March 3, 1999 and (2) the Omnibus Order

dated June 16, 2000. They contended that the
complaint failed to state a cause of action and that
it was improperly filed as a class suit. With regard
to the issuance of the WPI, the defendants averred
that JCHA, et al. failed to show that they had a
clear and unmistakable right to the use of La Paz
Road; and further claimed that La Paz Road was a
torrens registered private road and there was
neither a voluntary nor legal easement constituted
over it.
The CA ruled that the complaint sufficiently stated
a cause of action when JCHA, et al. alleged in their
complaint that they had been using La Paz Road
for more than ten (10) years and that their right
was violated when Fil-Estate closed and excavated
the road. It sustained the RTC ruling that the
complaint was properly filed as a class suit as it
was shown that the case was of common interest
and that the individuals sought to be represented
were so numerous that it was impractical to
include all of them as parties. The CA, however,
annulled the WPI for failure of JCHA, et al. to prove
their clear and present right over La Paz Road. The
CA ordered the remand of the case to the RTC for
a full-blown trial on the merits.
Issues:
(1) whether or not the complaint states a cause of
action;
(2) whether the complaint has been properly filed
as a class suit;
(2) whether or not a WPI is warranted.
Ruling:
1. The question of whether the complaint states a
cause of action is determined by its averments
regarding the acts committed by the
defendant. Thus, it must contain a concise
statement of the ultimate or essential facts
constituting the plaintiffs cause of action. To
be taken into account are only the material
allegations in the complaint; extraneous facts
and circumstances or other matters aliunde are
not considered.
The test of sufficiency of facts alleged in
the complaint as constituting a cause of action
is whether or not admitting the facts alleged,
the court could render a valid verdict in
accordance with the prayer of said complaint.
In the present case, the Court finds the
allegations in the complaint sufficient to
establish a cause of action. First, JCHA, et al.s
averments in the complaint show a
demandable right over La Paz Road. These are:
(1) their right to use the road on the basis of

their allegation that they had been using the
road for more than 10 years; and (2) an
easement of a right of way has been
constituted over the said roads. There is no
other road as wide as La Paz Road existing in
the vicinity and it is the shortest, convenient
and safe route towards SLEX Halang that the
commuters and motorists may use. Second,
there is an alleged violation of such right
committed by Fil-Estate, et al. when they
excavated the road and prevented the
commuters and motorists from using the
same. Third, JCHA, et al. consequently suffered
injury and that a valid judgment could have
been rendered in accordance with the relief
sought therein.
NATIONAL FEDERATION OF SUGARCANE

PLANTERS INC., BINALBAGAN-ISABELA PLANTERS
ASSOCIATION, INC., ASOCIACION DE
AGRICULTORES DE LA CARLOTA, LA CASTELLANA
y PONTEVEDRA, INC., DONEDCO PLANTERS
ASSOCIATION INC., ARMANDO GUSTILO,
ENRIQUE ROJAS, ALFREDO MONTELIBANO, JR.,
PABLO SOLA, JOSE MONTALVO, VICENTE
GUSTILO, JOSEPH MARANON, ROBERTO CUENCA,
JOSE SICANGCO, FLORENCIO ALONSO, MIGUEL
GATUSLAO, PEDRO YULO, MARINO RUBIN and
BENJAMIN BAUTISTA, respondents.
FACTS:
2. The necessary elements for the maintenance of

a class suit are: 1) the subject matter of
controversy is one of common or general
interest to many persons; 2) the parties
affected are so numerous that it is
impracticable to bring them all to court; and 3)
the parties bringing the class suit are
sufficiently numerous or representative of the
class and can fully protect the interests of all
concerned.
In this case, the suit is clearly one that
benefits all commuters and motorists who
use La Paz Road.
3.
A writ of preliminary injunction is available to

prevent a threatened or continuous irremediable
injury to parties before their claims can be
thoroughly studied and adjudicated. The requisites
for its issuance are: (1) the existence of a clear and
unmistakable right that must be protected; and (2)
an urgent and paramount necessity for the writ to
prevent serious damage. For the writ to issue, the
right sought to be protected must be a present
right, a legal right which must be shown to be clear
and positive. This means that the persons
applying for the writ must show that they
have an ostensible right to the final relief
prayed for in their complaint.
In the case at bench, JCHA, et al. failed to
establish a prima facie proof of violation of their
right to justify the issuance of a WPI. Their right to
the use of La Paz Road is disputable since they have
no clear legal right therein.
NEWSWEEK, INC., petitioner,
vs.
THE INTERMEDIATE APPELLATE COURT, and
Petitioner, Newsweek, Inc., a foreign corporation

licensed to do business in the Philippines, in this
special action for certiorari, prohibition with
preliminary injunction, seeks to annul the decision
of the Intermediate Appellate Court dated
December 17, 1982 sustaining the Order of the
then Court of First Instance of Bacolod City which
denied petitioner's Motion to Dismiss the
complaint for libel filed by private respondents
(Civil Case No. 15812), and the Resolution dated
March 10, 1983 which denied its Motion for
Reconsideration.
On March 5, 1981, private respondents,
incorporated associations of sugarcane planters in
Negros Occidental claiming to have 8,500
members and several individual sugar planters,
filed Civil case in their own behalf and/or as a class
suit in behalf of all sugarcane planters in the
province of Negros Occidental, against petitioner
and non-resident reporters Fred Bruning and Barry
Came. The complaint alleged that petitioner and
other defendants committed libel against them by
publication of the article An Island of Fear in the
February 23, 1981 of petitioners weekly issue.
The article supposedly portrayed the island
province of Negros Occidental as a place
dominated by big landowners or sugarcane
planters who not only exploited the impoverished
and underpaid sugarcane workers/laborers, but
also brutalized and killed them with imprunity.
Complainants denied what is written in the article
because it would expose them to public ridicule
and humiliation. They prayed for damages of P1M
as actual and compensatory damages, and such
amounts for moral, exemplary and corrective
damages as the court may determine, plus
expenses of litigation, attorneys fees and costs of

suit.
This principle has been recognized to be

of vital importance, especially where a
group or class of persons, as in the case at
bar, claim to have been defamed, for it is
evident that the larger the collectivity, the
more difficult it is for the individual
member to prove that the defamatory
remarks apply to him.
On Nov. 5, 1981, petitioner filed a motion to

dismiss and pointed out that the article is not
libelous and consequently the failure of the
complaint to state a cause of action. However, the
court denied the motion to dismiss as well as
petitioners motion for reconsideration.
On June 18, 1982, petitioner filed a petition for
certiorari with the Intermediate Appellate Court
seeking the annulment of the trial courts order for
having been issued with grave abuse of discretion
amounting to lack of jurisdiction and praying for
the dismissal of the complaint for failure to state a
cause of action. But the court affirmed the
decision of the Trial Court and also petitioners
motion for reconsideration.
In the case of Uy Tioco vs. Yang Shu Wen

, 32 Phil. 624, this Court held as follows:
Defamatory remarks directed at a class or
group of persons in general language
only, are not actionable by individuals
composing the class or group unless the
statements are sweeping; and it is very
probable that even then no action would
lie where the body is composed of so
large a number of persons that common
sense would tell those to whom the
publication was made that there was
room for persons connected with the
body to pursue an upright and law abiding
course and that it would be unreasonable
and absurd to condemn all because of the
actions of a part.
Issue/s:
1.
Whether or not the private respondents'

complaint failed to state a cause of
action; and
2.
Whether or not the case at bar is a class

suit in representation of all the 8,500
sugarcane planters of Negros Occidental.
Held:
1.
Yes, private respondents complaint failed

to state a cause of action.
In the case of Corpus vs. Cuaderno, Sr. (16
SCRA 807) this Court ruled that "in order
to maintain a libel suit, it is essential that
the victim be identifiable (People vs.
Monton, L-16772, November 30, 1962),
although it is not necessary that he be
named (19 A.L.R. 116)." In an earlier case,
this Court declared that" ... defamatory
matter which does not reveal the Identity
of the person upon whom the imputation
is cast, affords no ground of action unless
it be shown that the readers of the libel
could have Identified the personality of
the individual defamed." (Kunkle vs.
Cablenews-American and Lyons 42 Phil.
760).
It is evident from the above ruling that where the

defamation is alleged to have been directed at a
group or class, it is essential that the statement
must be so sweeping or all-embracing as to apply
to every individual in that group or class, or
sufficiently specific so that each individual in the
class or group can prove that the defamatory
statement specifically pointed to him, so that he
can bring the action separately, if need be.
We note that private respondents filed a "class
suit" in representation of all the 8,500 sugarcane
planters of Negros Occidental. Petitioner disagrees
and argues that the absence of any actionable
basis in the complaint cannot be cured by the filing
of a class suit on behalf of the aforesaid sugar
planters.
2.
No, the case at bar is not a class suit.

It is not a case where one or more may
sue for the benefit of all (Mathay vs.
Consolidated Bank and Trust Company, 58
SCRA 559) or where the representation of
class interest affected by the judgment or
decree is indispensable to make each
member of the class an actual party
(Borlaza vs. Polistico, 47 Phil. 348). We
have here a case where each of the

plaintiffs has a separate and distinct
reputation in the community. They do not
have a common or general interest in the
subject matter of the controversy.
The disputed portion of the article which
refers to plaintiff Sola and which was
claimed to be libelous never singled out
plaintiff Sola as a sugar planter. The news
report merely stated that the victim had
been arrested by members of a special
police unit brought into the area by Pablo
Sola, the mayor of Kabankalan. Hence,
the report, referring as it does to an
official act performed by an elective
public official, is within the realm of
privilege and protected by the
constitutional guarantees of free speech
and press.
MATHAY VS CONSOLIDATED BANK
FACTS:
The complaint in this case, filed on December 24,
1963 as a class suit, under Section 12, Rule 3, of
the Rules of Court, contained six causes of action.
first cause action was that plaintiffs-appellants
alleged that they were, on or before March 28,
1962, stockholders in the Consolidated Mines, Inc.
(CMI), a corporation duly organized and existing
under Philippine laws; that the stockholders of the
CMI, including the plaintiffs-appellants, passed, at
a regular stockholders' meeting, a Resolution
providing:
(a) that the CMI be organized with an authorized
capital of P20,000,000.00;
(b) that the organization be undertaken by a Board
of Organizers composed of the President and
Members of the Board of Directors of the CMI;
(c) that all stockholders of the CMI, who were
legally qualified to become stockholders, would be
entitled to subscribe to the capital stock of the
proposed Bank "at par value to the same extent
and in the same amount as said stockholders'
respective share holdings in the CMI," as shown in
its stock books on a date to be fixed by the Board
of Directors [which date was subsequently fixed as

January 15, 1963], provided that the right to
subscribe should be exercised within thirty days
from the date so fixed, and "that if such right to
subscription be not so exercised then the
stockholders concerned shall be deemed to have
thereby waived and released ipso facto their right
to such subscription in favor of the Interim Board
of Organizers of the Defendant Bank or their
assignees;" and
(d) that the Board of Directors of the CMI be
authorized to declare a "special dividend" in an
amount it would fix, which the subscribing
stockholders might authorize to be paid directly to
the treasurer of the proposed Bank in payment of
the subscriptions; On February 7, 1964
defendants-appellees, , filed a motion to dismiss
on the grounds that (a) plaintiffs-appellants had no
legal standing or capacity to institute the alleged
class suit; (b) that the complaint did not state a
sufficient and valid cause of action.
Second cause of action that on or about August 28,
1963, defendants-appellees "falsely certified to the
calling of a special stockholders' meeting allegedly
pursuant to due notice and call of Defendant
Bank" although plaintiffs-appellants and other CMI
stockholders were not notified thereof, and
amended the Articles of Incorporation increasing
the number of Directors from 6 to 7, and had the
illegally created Position of Director filled up by
defendant-appellee Alfonso Juan Olondriz, who
was not competent or qualified to hold such
position.
On March 21, 1964, the trial court granted the
motion to dismiss, holding, among other things,
that the class suit could not be maintained
because of the absence of a showing in the
complaint that the plaintiffs-appellants were
sufficiently numerous and representative, and that
the complaint failed to state a cause of action.
Appellants, plaintiffs interposed this appeal to this
court.
ISSUES:
1. Whether the instant action could be maintained
as a class suit.
2. Whether the complaint stated a cause of action.
RULING:
1. The necessary elements for the maintenance of

a class suit are accordingly: (1) that the subject
matter of the controversy be one of common or
general interest to many persons, and (2) that
such persons be so numerous as to make it
impracticable to bring them all to the court. The
statute also requires, as a prerequisite to a class
suit, (3) that the subject-matter of the
controversy be of common or general interest to
numerous persons.
In the instant case. The interest that appellants,
plaintiffs and intervenors, and the CMI
stockholders had in the subject matter of this suit
the portion of stocks offering of the Bank left
unsubscribed by CMI stockholders who failed to
exercise their right to subscribe on or before
January 15, 1963 was several, not common or
general in the sense required by the statute. Each
one of the appellants and the CMI stockholders
had determinable interest; each one had a right, if
any, only to his respective portion of the stocks.
No one of them had any right to, or any interest in,
the stock to which another was entitled.
2. A cause of action is an act or omission of one
party in violation of the legal right of the other. Its
essential elements are, namely: (1) the existence
of a legal right in the plaintiff, (2) a correlative
legal duty in the defendant, and (3) an act or
omission of the defendant in violation of
plaintiff's right with consequential injury or
damage to the plaintiff for which he may
maintain an action for the recovery of damages
or other appropriate relief. On the other hand,
Section 3 of Rule 6 of the Rules of Court provides
that the complaint must state the ultimate facts
constituting the plaintiff's cause of action. Hence,
where the complaint states ultimate facts that
constitute the three essential elements of a cause
of action, the complaint states a cause of
action; 28 otherwise, the complaint must succumb
to a motion to dismiss on that ground.
The alleged specific facts did not even show that
appellants were entitled to subscribe to the
capital stock of the proposed Bank, for said right
depended on a condition precedent, which was,
that they were qualified under the law to become
stockholders of the Bank, and there was no direct
averment in the complaint of the facts that
qualified them to become stockholders of the
Bank. The allegation of the fact that they
subscribed to the stock did not, by necessary
implication, show that they were possessed of the
necessary qualifications to become stockholders of

the proposed Bank.
Even if it be assumed arguendo that defendantsappellees had the duty to have the waived stocks
subscribed to by the CMI stockholders, this duty
was not owed to all the CMI stockholders, but only
to such CMI stockholders as were qualified to
become stockholders of the proposed Bank.
In the second cause of action that the calling of a
special meeting was "falsely certified", that the
seventh position of Director was "illegally created"
and that defendant Alfonso Juan Olondriz was "not
competent or qualified" to be a director are mere
conclusions of law, the same not being necessarily
inferable from the ultimate facts stated in the first
and second causes of action. It has been held in
this connection that:
An averment that ... an act was 'unlawful' or
'wrongful' is a mere legal conclusion or opinion of
the pleader. The same is true of allegations that an
instrument was 'illegally' certified or ... that an act
was arbitrarily done ..."
The third, fourth, fifth and sixth causes of action
depended on the first cause of action, which, as
has been shown, did not state ultimate facts
sufficient to constitute a cause of action. It stands
to reason, therefore, that said causes of action
would also be fatally defective.
The instant appeal is dismissed.
Sec. 12. Class suit When the subject matter of
the controversy is one of common or general
interest to many persons, and the parties are so
numerous that it is impracticable to bring them all
before the court, one or more may sue or defend
for the benefit of -ill. But in such case the court
shall make sure that the parties actually before it
are sufficiently numerous and representative so
that all interests concerned are fully protected.
Any party in interest shall have a right to intervene
in protection of his individual interest.
Three types of class suits: 1. True 2. Hybrid 3.
Spurious.
These three had only one feature in common, that
is, in each the persons constituting the class must
be so numerous as to make it impracticable to
bring them all before the court.
spurious class action (Rule 23 (a) (3) which

involves a right sought to be enforced, which is
several, and there is a common question of law or
fact affecting the several rights and a common
relief is sought.
VICTORIANO BORLASAS, ET AL., plaintiffsappellants, vs. VICENTE POLISTICO, ET AL.,
defendants-appellees.1925
Jan
282nd
DivisionG.R. No. 22909
The defendants demurred to the

amended complaint on the ground that it showed
on its face a lack of necessary parties and this
demurrer was sustained, with the ultimate result
of the dismissal of the action, as stated in the first
paragraph of this opinion.
Issue:
Whether or not the trial judge erred in
sustaining the demurrer to the amended
complaint which resulted to the dismissal of the
action.
Held:
Facts:
This action was instituted in the Court of
First Instance of Laguna on July 25, 1917, by
Victoriano Borlasa and others against Vicente
Polistico and others, chiefly for the purpose of
securing the dissolution of a voluntary association
named Turnuhan Polistico & Co., and to compel
the defendants to account for and surrender the
money and property of the association in order
that its affairs may be liquidated and its assets
applied according to law. The trial judge having
sustained a demurrer for defect of parties and the
plaintiffs electing not to amend, the cause was
dismissed, and from this order an appeal was
taken by the plaintiffs to this court.
In an amended answer the defendants

raised the question of lack of parties and set out a
list of some hundreds of persons whom they
alleged should be brought in as parties defendant
on the ground, among others, that they were in
default in the payment of their dues to the
association.
On November 28, 1922, the court made
an order requiring the plaintiffs to amend their
complaint within a stated period so as to include
all of the members of the Turnuhan Polistico & Co.
either as plaintiffs or defendants. The plaintiffs
excepted to this order, but acquiesced to the
extent of amending their complaint by adding as
additional parties plaintiff some hundreds of
persons, residents of Lilio, said to be members of
the association and desirous of being joined as
plaintiffs.
Yes. The trial judge is incorrect in

sustaining the demurrer to the amended
complaint.
This trial judge appears to have supposed
that all the members of the Turnuhan Polistico &
Co. should be brought in either plaintiffs or
defendants. This notion is entirely mistaken.
The situation involved is precisely the one
contemplated in section 118 of the Code of Civil
Procedure, where one or more may sue for the
benefit of all. It is evident from the showing made
in the complaint, and from the proceedings in the
court below, that it would be impossible to make
all of the persons in interest parties to the case
and to require all of the members of the
association to be joined as parties would be
tantamount to a denial of justice.
The general rule with reference to the making of
parties in a civil action requires, of course, the
joinder of all necessary parties wherever possible,
and the joinder of all indispensable parties under
any and all conditions, the presence of those
latter being a sine qua non of the exercise of
judicial power. The class suit contemplates an
exceptional situation where there are numerous
persons all in the same plight and all together
constituting a constituency whose presence in the
litigation is absolutely indispensable to the
administration of justice. Here the strict
application of the rule as to indispensable parties
would require that each and every individual in
the class is sufficiently represented to enable the
court to deal properly and justly with that
interest and with all other interests involved in
the suit. In the class suit, then, representation of
a class interest which will be affected by the

judgment is indispensable; but it is not
indispensable to make each member of the class
an actual party.
A common illustration in American procedure of
the situation justifying a class suit is that
presented by the creditors' bill, which is filed by
one party interested in the estate of an insolvent,
to secure the distribution of the assets
distributable among all the creditors. In such
cases the common practice is for one creditor to
sue as plaintiff in behalf of himself and other
creditors. (Johnson vs. Waters, 111 U.S. S., 640;
28 Law. ed., 547.) Another illustration is found in
the case of Smith vs. Swormstedt (16 How., 288;
14 Law. ed., 942), where a limited number of
individuals interested in a trust for the benefit of
superannuated preachers were permitted to
maintain an action in their own names and as
representatives of all other persons in the same
right.
The addition of some hundreds of persons to the
number of the plaintiffs, made in the amendment
to the complaint of December 13, 1922, was
unnecessary, and as the presence of so many
parties is bound to prove embarrassing to the
litigation from death or removal, it is suggested
that upon the return of this record to the lower
court for further proceedings, the plaintiff shall
again amended their complaint by dismissing as
to unnecessary parties plaintiffs, but retaining a
sufficient number of responsible persons to
secure liability for costs and fairly to represent all
the members of the association.
There is another feature of the complaint which
makes a slight amendment desirable, which is,
that the complaint should be made to show on its
face that the action is intended to be litigated as
a class suit. We accordingly recommend that the
plaintiffs further amend by adding after the
names of the parties plaintiffs the words, "in their
own behalf and in behalf of other members of
Turnuhan Polistico & Co."
Ibanez vs. Roman Catholic Church
The case stemmed from a controversy between
the Roman CatholicChurch on one side and the
Independent Filipino Church on the other. That it is
the purpose of the plaintiffs, ifthey secure

possession of the image, to place it in the chapel of
the Independent Church.
There are no other allegations in the complaint as
to the right of the plaintiffs to represent the
inhabitants of Ternate, nor is there any proof
whatever in the case upon this point. The claim of
the plaintiffs is that the persons who were at the
time of the presentation of the complaint the
inhabitants of Ternate were the owners in
common of the image considered as a piece of
personal property. There is no evidence to show
that the present plaintiffs, or any one of the
present inhabitants of Ternate, were the heirs or
in any way related to any of the two hundred
Mardicaswho came to the Philippines nearly two
hundred and fifty years ago. The claim of the
plaintiffs is apparently not rested upon the
proposition that they are entitled to relief because
they are such heirs, but because they live in the
pueblo. Their view seems to be that the heirs of
the Mardicasliving in other pueblos have no
interest in the image.
Passing the question as to whether the Roman
Catholic Church is not the owner of the image, the
question may be asked, whether under these
circumstances it can be said that any one has a
proprietary right in this image who is not a Roman
Catholic? If among the Mardicaswho first came
here there had been on who did not profess that
religion, would he have any participation therein?
Are the Chinese who now live in Ternate part
owners of the image? These are questions which
we do not feel called upon to decide, for the case
must be resolved upon the point made by the
defendant at the very commencement of the
action, to wit, that the thirteen persons named as
plaintiffs have no right to maintain it.
The plaintiffs rely upon article 118 of the Code of
Civil Procedure, which is as follows:
When the subject-matter of the controversy is one
of common or general interest to many persons,
and the parties are so numerous that it is
impracticable to bring them all before the court,
one or more may sue or defend for the benefit of
all. But in such case any party in interest shall have
a right to intervene in protection of his individual
interests, and the court shall make sure that the
parties actually before it are sufficiently numerous

and representative so that all interests concerned
are fully protected.
The judgment of the court below is reversed, and

the defendants are acquitted of the complaint,
Issue/s:
Whether or not the plaintiffs can validly represent
the others so that it could amount to a class suit.
Lianas Supermarket vs National Labor Relations

Commission
GR No. 111014 . May 31, 1996.
Held:
No, the plaintiffs in the case at bar can not validly
represent the others.
It is a well entrenched rule that there is no class
suit if interest of those who filed the action
conflicts with those sought to be represented.
The court is quite emphatic upon citing the case of
In Macon and Birmingham Railroad vs. Gibson,
where it said:
It is true that as only two of the citizens
have become parties, it is rather a small
representation of thewhole community;
but considering the publicity of the case
and of the interest involved in it, and the
factthat the suit is located in Upson
County and will be tried (if tried at all) at
the county town, which is thetown whose
citizens are interested, there can be no
cause to apprehend that the two plaintiffs
on theface of the petition will be
disposed, or if so disposed, allowed to
misrepresent
the
community
in
whosebehalf they have brought this suit.
No doubt it is somewhat discretionary
with a court of equity as tohow many
representatives of a class will, or ought to
be, regarded as a fair representation of
the wholeclass in the given instance.
What number of the inhabitants of the town

(2,460 according to the census) are members of
the RomanCatholic Church and what part are
members of the Independent Filipino Church does
not appear. But it is veryapparent that many of the
inhabitants are opposed to the transfer of the
image from the Roman CatholicChurch. Under the
circumstances, the thirteen plaintiffs do not fairly
represent all of the inhabitants of thetown. Their
interest and the interests of some of the others
are diametrically opposed. For this reason
thisaction can not be maintained.itc-alf
FACTSOF THE CASE: Lianas Supermarket, herein
petitioner, employed as sales ladies, cooks
packers, cashiers, electricians, warehousemen,
etc., members of private respondent National
Labor Union. However, in the course of their
employment they were allegedly underpaid and
required to work more than 8 hours a day without
OT pay and deprived of legal holiday pay and
monthly emergency allowance. The employees
aired their grievances to Peter Sy, the
supermarkets Gen. Manager and Rosa Sy,
Consultant, but were only scolded and threatened
with outright dismissal. Consequently, they formed
a labor union and affiliated it with respondent
National Labor Union.
Petitioner entered into a 3-year contract with
Warner Laputt, owner of BAVSPIA Intl Services, to
supply the former with laborers.
Subsequently, Rosa Sy met with the employees
and urged them to quit their membership with the
union and required them to accomplish
information sheets and/or application forms with
BAVSPIA otherwise they be terminated. When
they refused, many were dismissed without any
charges and others were given memo on
concocted offenses and violations.
Respondent Union on behalf of its members filed a
complaint against petitioner and BAVSPIA and
Warner Laputt before the Labor Arbiter fir
underpayment of wages, nonpayment of OT pay,
monthly emergency allowance, legal holiday pay,
th
SIL and 13 month pay.
The complaint was amended since respondent
manifested through its authorized rep. that it was
intended as a class suit.
ISSUE: WON this case falls under the term class

suit.
distinguish the rule on class suits is the

numerousness of parties involved.
SUPREME COURT DECISION: NO. This is a

representative suit as distinguished from class
suit.
The rule is that for a class suit to be allowed, it is

needful inter alia that the parties to so numerous
that it would be impracticable to bring them all
before the court.
Sec. 12 Class Suit. --- When the

subject
matter
of
the
controversy is one of common or
general interest to many
persons, and the parties are so
numerous that is impracticable
to bring them all before the
court, one or more may sue or
defend for the benefit of all. But
in such case the court shall make
sure that the parties actually
before it are
sufficiently
numerous and representative so
that all interests concerned are
fully protected. Any party in
interest shall have a right to
intervene in protection of his
individual interests.
SC has cited In re: Request of the Heirs of the
Passengers of Dona Paz to Set Aside the Order
Dated Jan 4, 1988, the Court had occasion to
explain class suit; --What is contemplated, as will be noted, is that
(a) The subject matter in controversy is of
common or general interest to many
persons, and
(b) Those persons are so numerous as to
make it impracticable to bring them all
before the court.
What makes the situation a proper case for a class
suit is the circumstance that there is only one right
or cause of action pertaining to or belonging in
common to many persons, not separately or
severally to distinct individuals. The object of the
suit is to obtain relief for or against numerous
persons as a group or as an integral entity, and not
as separate, distinct individuals whose rights or
liabilities are separate from and independent of
those of others. The other factor that serves to
In the present case, there are multiple rights or

causes of action pertaining separately to several,
distinct employees who are members of
respondent Union. Therefore, the applicable rule is
that provided in Sec. 3, Rule #, of the ROC on
representative parties --Sec. 3. Representative Parties.
A trustee of an express trust, a
guardian,
executor
or
administrator, or a party
authorized by statute, may sue
or be sued without joining the
party for whose benefit the
action is presented or defended;
but the court may, at any stage
of the proceedings, order such
beneficiary to be made party.
Sec. 13. Alternative defendants.
Where the plaintiff is uncertain against who of
several persons he is entitled to relief, he may join
any or all of them as defendants in the alternative,
although a right to relief against one may be
inconsistent with a right of relief against the other.
Insurance Company vs. US Lines
Sec. 14. Unknown identity or name of defendant.
Whenever the identity or name of a defendant is
unknown, he may be sued as the unknown owner,
heir, devisee, or by such other designation as the
case may require; when his identity or true name is
discovered, the pleading must be amended accord.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Saligumba v. Palanog, G.R. No. 143365
Sec. 15. Entity without juridical personality as

defendant.
When two or more persons not organized as an

entity with juridical personality enter into a
transaction, they may be sued under the name by
which they are generally or commonly known.
In the answer of such defendant, the names and
addresses of the persons composing said entity
must all be revealed.
Sec. 16. Death of party; duty of counsel.
Whenever a party to a pending action dies, and the
claim is not thereby extinguished, it shall be the
duty of his counsel to inform the court within thirty
(30) days after such death of the fact thereof, and
to give the name and address of his legal
representative or representatives. Failure of
counsel to comply with this duty shall be a ground
for disciplinary action.
The heirs of the deceased may be allowed to be
substituted for the deceased, without requiring the
appointment of an executor or administrator and
the court may appoint a guardian ad litem for the
minor heirs.
The court shall forthwith order said legal
representative or representatives to appear and be
substituted within a period of thirty (30) days from
notice.
If no legal representative is named by the counsel
for the deceased party, or if the one so named shall
fail to appear within the specified period, the court
may order the opposing party, within a specified
time, to procure the appointment of an executor or
administrator for the estate of the deceased and
the latter shall immediately appear for and on
behalf of the deceased. The court charges in
procuring such appointment, if defrayed by the
opposing party, may be recovered as costs.
Facts:
Monica Palanog, assisted by her
husband Avelino Palanog (spouses Palanogs), filed
a complaint dated 28 February 1977 for Quieting
of Title with Damages against defendants, spouses
Valeria Saligumba and Eliseo Saligumba,
Sr.
(spouses Saligumbas), before the Regional Trial
Court, Branch 3, Kalibo, Aklan (RTC-Branch 3). In
the complaint, spouses Palanogs alleged that they
have been in actual, open, adverse and continuous
possession as owners for more than 50 years of a
parcel of land located in Solido, Nabas, Aklan. The
spouses Saligumbas allegedly prevented them
from entering and residing on the subject premises
and had destroyed the barbed wires enclosing the
land. Spouses Palanogs prayed that they be
declared the true and rightful owners of the land
in question.
When the case was called for pre-trial on 22
September
1977,
Atty. Edilberto Miralles (Atty. Miralles), counsel for
spouses Saligumbas, verbally moved for the
appointment of a commissioner to delimit the land
in question. Rizalino Go, Deputy Sheriff of Aklan,
was appointed commissioner and was directed to
submit his report and sketch within 30
days.[1] Present during the delimitation were
spouses Palanogs,
spouses Saligumbas, and
Ernesto Saligumba, son of spouses Saligumbas.[2]
Thereafter, trial on the merits ensued. At the
hearing on 1 June 1984, only the counsel for
spouses Palanogs appeared. The trial court issued
an order resetting the hearing to 15 August
1984 and likewise directed spouses Saligumbas to
secure the services of another counsel who should
[4]
be ready on that date. The order sent
to Eliseo Saligumba, Sr. was returned to the
court unserved with
the
notation
Party
Deceased while the order sent to defendant
Valeria Saligumba was returned with the notation
[5]
Party in Manila.
At the hearing on 15 August 1984,
spouses Palanogs direct examination was
suspended and the continuation of the hearing
was set on 25 October 1984. The trial court stated
that Atty. Miralles, who had not withdrawn as
counsel for spouses Saligumbas despite his
appointment as Municipal Circuit Trial Court judge,
would be held responsible for the case of
spouses Saligumbas until he formally withdrew as
counsel. The trial court reminded Atty. Miralles to
secure the consent of spousesSaligumbas for his

withdrawal.[6] A copy of this order was sent to
Valeria Saligumba but
the
same
was
returned unserved with the notation Party
in Manila.[7]
The hearing set on 25 October 1984 was reset
to 25 January 1985 and the trial court directed that
a copy of this order be sent to Eliseo Saligumba, Jr.
at COA, PNB, Manila.[8]
On 3 June 1985, only spouses Palanogs and
counsel appeared. Upon motion of the
spouses Palanogs,
spouses Saligumbas were
deemed to have waived the presentation of their
evidence.
On 3 August 1987, after a lapse of more than
two years, the trial court considered the case
submitted for decision.
On 7 August 1987, RTC-Branch 3 rendered a
judgment in Civil Case No. 2570 declaring
spouses Palanogs the lawful owners of the subject
land and ordering spouses Saligumbas, their
agents, representatives and all persons acting
in privity with them to vacate the premises and
restore possession to spouses Palanogs.
issued and hence, the trial was null and void; and
(3) the court did not acquire jurisdiction over the
heirs of the spouses Saligumbas and therefore, the
judgment was not binding on them.
On 24 May 2000, the RTC-Branch 5 rendered
a decision in favor of respondent ordering the
revival of judgment in Civil Case No. 2570. The trial
court ruled that the non-substitution of the
deceased spouses did not have any legal
significance.
Petitioners elevated the matter directly to
this Court. Hence, the present petition.
Issue: Whether or not the revival of judgment in
this case was proper considering that the
defendants in the action for revival were not the
original contending party in the original case.
Ruling: The instant case is an action for revival of
judgment and the judgment sought to be revived
in this case is the decision in the action for quieting
of title with damages in Civil Case No. 2570. This is
not one for annulment of judgment.
Thus,
on 9
May
1997,
Monica Palanog (respondent), now a widow, filed
a Complaint seeking to revive and enforce the
Decision dated 7 August 1987 in Civil Case No.
2570 which she claimed has not been barred by
the
statute
of
limitations.
She impleaded petitioners Generoso Saligumba an
d Ernesto Saligumba, the heirs and children of the
spouses Saligumbas, as defendants. The case was
docketed as Civil Case No. 5288 before the RTCBranch 5.
An action for revival of judgment is no more

than a procedural means of securing the execution
of a previous judgment which has become
dormant after the passage of five years without it
being executed upon motion of the prevailing
party. It is not intended to re-open any issue
affecting the merits of the judgment debtors case
nor the propriety or correctness of the
first judgment.[13] An action for revival of
judgment is a new and independent action,
different and distinct from either the recovery of
property case or the reconstitution case, wherein
the cause of action is the decision itself and not
the merits of the action upon which the judgment
[14]
sought to be enforced is rendered.
Revival of
judgment is premised on the assumption that the
decision to be revived, either by motion or by
independent
action,
is
already
final
[15]
and executory.
Petitioner Generoso Saligumba, for himself

and in representation of his brother Ernesto
who was out of the country working as a seaman,
engaged the services of the Public Attorneys
Office, Kalibo, Aklan which filed a motion for
time to allow them to file a responsive
pleading. Petitioner Generoso Saligumbafiled his
Answer[10] alleging that:
(1) respondent
had
no
cause
of
action;
(2)
the
spouses Saligumbas died while Civil Case No. 2570
was pending and no order of substitution was
The RTC-Branch 3 Decision dated 7 August

1987 in Civil Case No. 2570 had been rendered
final and executory by the lapse of time with no
motion for reconsideration nor appeal having been
filed. While it may be true that the judgment in
Civil Case No. 2570 may be revived and its
execution may be had, the issue now before us is
whether or not execution of judgment can be
issued against petitioners who claim that they are
not bound by the RTC-Branch 3 Decision dated 7
August 1987 in Civil Case No. 2570.
The trial court, in a separate Order dated 7

August 1987, directed that a copy of the courts
decision be furnished plaintiff Monica Palanog and
defendant Valeria Saligumba.
Civil Case No. 2570 is an action for quieting of

title with damages which is an action involving real
property. It is an action that survives pursuant to
Section 1, Rule 87[16] as the claim is not
extinguished by the death of a party. And when
a party dies in an action that survives, Section 17
of Rule 3 of the Revised Rules of
[17]
Court
provides for the procedure, thus:
Section 17. Death of Party. - After a
party dies and the claim is not thereby
extinguished, the court shall order, upon
proper notice, the legal representative of
the deceased to appear and to be
substituted for the deceased, within a
period of thirty (30) days, or within such
time as may be granted. If the legal
representative fails to appear within said
time, the court may order the opposing
party to procure the appointment of a
legal representative of the deceased
within a time to be specified by the court,
and the representative shall immediately
appear for and on behalf of the interest of
the deceased. The court charges involved
in procuring such appointment, if
defrayed by the opposing party, may be
recovered as costs. The heirs of the
deceased may be allowed to be
substituted for the deceased, without
requiring the appointment of an executor
or administrator and the court may
appoint guardian ad litem for the minor
heirs. (Emphasis supplied)
Under the express terms of Section 17, in
case of death of a party, and upon proper notice, it
is the duty of the court to order the legal
representative or heir of the deceased to appear
for the deceased. In the instant case, it is true that
the trial court, after receiving an informal notice of
death by the mere notation in the envelopes,
failed to order the appearance of the legal
representative or heir of the deceased. There was
no court order for deceaseds legal representative
or heir to appear, nor did any such legal
representative ever appear in court to be
substituted for the deceased. Neither did the
respondent ever procure the appointment of such
legal representative, nor did the heirs ever ask to
be substituted.
It
appears
that Eliseo Saligumba,
Sr.
died on 18
February
1984 while
Valeria Saligumba died on 2 February 1985. No
motion for the substitution of the spouses was
filed nor an order issued for the substitution of the

deceased spouses Saligumbas in Civil Case No.
2570.
Atty. Miralles and
petitioner Eliseo Saligumba, Jr., despite notices
sent to them to appear, never confirmed the death
of Eliseo Saligumba, Sr. and Valeria Saligumba. The
record is bereft of any evidence proving the death
of the spouses, except the mere notations in the
envelopes enclosing the trial courts orders which
were returned unserved.
Section 17 is explicit that the duty of the
court to order the legal representative or heir to
appear arises only upon proper notice. The
notation
Party-Deceased
on
the unserved notices could not be the proper
notice contemplated by the rule. As the trial court
could not be expected to know or take judicial
notice of the death of a party without the proper
manifestation from counsel, the trial court was
well within its jurisdiction to proceed as it did with
the case. Moreover, there is no showing that the
courts
proceedings
were
tainted
with
irregularities.[18]
Likewise, the plaintiff or his attorney or
representative could not be expected to know of
the death of the defendant if the attorney for the
deceased defendant did not notify the plaintiff or
his attorney of such death as required by the
rules.[19] The judge cannot be blamed for sending
copies of the orders and notices to defendants
spouses in the absence of proof of death or
manifestation to that effect from counsel.[20]
Section 16, Rule 3 of the Revised Rules of
Court likewise expressly provides:
SEC. 16. Duty of attorney upon death,
incapacity or incompetency of party. Whenever a party to a pending case dies,
becomes incapacitated or incompetent, it
shall be the duty of his attorney to inform
the court promptly of such death,
incapacity or incompetency, and to give
the name and residence of his executor,
administrator, guardian or other legal
representative.
It is the duty of counsel for the deceased to inform
the court of the death of his client. The failure of
counsel to comply with his duty under Section 16
to
inform the court of the death of his client and the
non-substitution of such party will not invalidate
the proceedings and the judgment thereon if the
action survives the death of such party. The

decision rendered shall bind the partys
[21]
successor-in-interest.
The rules operate on the presumption that
the attorney for the deceased party is in a better
position than the attorney for the adverse party to
know about the death of his client and to inform
the court of the name and address of his legal
representative.[22]
Josefa D. Maglasang was the sister of Menendez

Maglasang Literato. They were two (2) of the six
(6) heirs who inherited equal parts of a property
passed on to them by their parents
Josefa filed with the Regional Trial Court (Civil Case
No. B-1239) for the nullity of the deed of sale of
real property (Lot 1220-D) purportedly executed
between her as vendor and the spouses Diosdidit
and Menendez Literato as vendees.
An attorney must make an application to

the court to withdraw as counsel, for the relation
does not terminate formally until there is a
withdrawal of record; at least, so far as the
opposite party is concerned, the relation
otherwise continues until the end of the
litigation.[28] Unless properly relieved, the counsel
[29]
is responsible for the conduct of the case.
Until
his withdrawal shall have been approved, the
lawyer remains counsel of record who is expected
by his client as well as by the court to do what the
interests of his client require. He must still appear
on the date of hearing for the attorney-client
relation does not terminate formally until there is
a withdrawal of record.[30]
Spouses responded, denying that the deed of sale

was falsified and impleaded Sumaljag with Josefa
as counterclaim defendant. Alleged that the
petitioner, at the instance of Josefa, occupied Lot
1220-D and Lot 1220-E without their authority;
and that Lot 1220-D had been sold to them by
Josefa.
In the present case for revival of judgment, the

other petitioners have not shown much interest in
the case. Petitioners Eliseo Saligumba, Jr. and
EduardoSaligumba were declared in default for
failure to file their answer. Petitioner
Ernesto Saligumba was out of the country working
as
a
seaman.
Only
petitionerGeneroso Saligumba filed an Answer to
the complaint. The petition filed in this Court was
signed only by petitioner Generoso Saligumba as
someone signed on behalf of petitioner
Ernesto Saligumba without the latters authority to
do so.
Josefa died during the pendency of Civil Case Nos.

B-1239 and B-1281
WHEREFORE,
we DENY the
petition.
We AFFIRM the Decision dated 24 May 2000 of the
Regional Trial Court, Branch 5, Kalibo, Aklan in Civil
Case No. 5288. Costs against petitioners.
Menendez also filed a complaint with the RTC

(Civil Case No. 1281) for the declaration of the
inexistence of lease contract, recovery of
possession of land, and damages against the
petitioner and Josefa after the RTC dismissed the
respondent spouses counterclaim in Civil Case No.
1239.
Petitioners and Josefas common counsel, filed

with the RTC a notice of death and substitution of
party, for Josefa to be substituted by the
petitioner, alleging that prior to Josefas death, she
executed a Quitclaim Deed over Lot 1220-D in
favor of a certain person who in turn sold this
property to the petitioner.
Menendez, objected to the proposed substitution,
alleging that the Petitioners counsel filed the
notice of death and substitution of party beyond
the thirty-day period provided under Section 16,
Rule 3 of the 1997 Rules of Civil Procedure, as
amended. She recommended instead that Josefa
be substituted by the latters full-blood sister,
Michaeles Maglasang Rodrigo.
SO ORDERED.
Hon. Sumaljag vs. Spouses Literato
FACTS:
The RTC denied Petitioners motion for

substitution and instead ordered the appearance
of Michaeles as representative of the deceased
Josefa.
The RTC denied the petitioners motion for
reconsideration. Went to the CA on a petition for
certiorarito question the above interlocutory
orders. CA dismissed the petition for lack of merit,
petitioners motion for reconsideration is similarly

denied
ISSUES:
(a) whether or not the notice of death was
seasonably submitted by the counsel of
Josefa to the RTC;
(b) whether or not Civil Case Nos. B-1239 and
B-1281 is terminated by the death of
Josefa; and
(c) whether or not the petitioner can
substitute Josefa pursuant to Rule 3,
Section 16 of the Rules of Court.
RULING:
As to the first issue, pursuant Section 16, Rule 3 of
the Rules of Court, it is the duty of the counsel to
inform the court within thirty (30) days after the
fact of death of his client, and to give the name
and address of the deceaseds legal representative
or representatives. Although filed late, as viewed,
by Court, the counsel has effectively informed the
lower court of the death of litigant and
satisfactorily explained the circumstances of the
late reporting, and the lower court in fact granted
counsel an extended period.
As to the second issue, the Court has provided the
criteria for determining whether an action survives
the death of a plaintiff or petitioner in the case of
Bonilla v. Barcena. The question as to whether an
action survives or not depends on the nature of
the action and the damage sued for. In the causes
of action which survive, the wrong complained [of]
affects primarily and principally property and
property rights, the injuries to the person being
merely incidental, while in the causes of action
which do not survive, the injury complained of is to
the person, the property and rights of property
affected being incidental.... In these cases, since it
involves property and property rights, the actions
survive and so Section 16, Rule 3 must necessarily
apply.
As to the third issue, the Court ruled that
petitioner cannot substitute Josefa. The legal
representatives that Section 16, Rule 3 of the
Rules of Court provides, refers to those authorized
by law. Namely the administrator, executor or
guardian who, under the rule on settlement of
estate of deceased persons, is constituted to take
over the estate of the deceased. Priority is given to
the legal representative of the deceased and that
it is only in case of unreasonable delay in the
appointment of an executor or administrator, or in
cases where the heirs resort to an extra-judicial

settlement of the estate that the court may adopt
the alternative of allowing the heirs of the
deceased to be substituted for the deceased, is no
longer true.
The reason for the Rule is to protect all concerned
who may be affected by the intervening death,
particularly the deceased and her estate. Since the
transfer is in favor of the very same person who is
suggested to the court as the substitute, the
transferee who has his own interest to protect,
cannot at the same time represent and fully
protect the interest of the deceased transferor.
Hence, in this case, since Josefa was single at the
time of her death and no record showing that she
left a will, her surviving sisters (Michaelis, Maria,
Zosima, and Consolacion) and the children of her
deceased sister, Lourdes (Manuel, Cesar, Huros
and Regulo), as heirs, should be her legal
representatives. Menendez, although also a sister,
should be excluded for being one of the adverse
parties in the cases before the RTC.
Carandang vs. Heirs of de Guzman (SUPRA)
Sec. 17. Death or separation of a party who is a
public officer.
When a public officer is a party in an action in his
official capacity and during its pendency dies,
resigns, or otherwise ceases to hold office, the
action may be continued and maintained by or
against his successor if, within thirty (30) days after
the successor takes office or such time as may be
granted by the court, it is satisfactorily shown to
the court by any party that there is a substantial
need for continuing or maintaining it and that the
successor adopts or continues or threatens to
adopt or continue the action of his predecessor.
Before a substitution is made, the party or officer
to be affected, unless expressly assenting thereto,
shall be given reasonable notice of the application
therefor and accorded an opportunity to be heard.
COMMISSIONER V. JARDIN
police report linking Ryoichiro to the Yakuza was

ever presented.[15]
FACTS:
In the evening of May 8, 1999, Edgardo D.
Cabrrera, Gerardo R. Gorrospe and Dorotea T.
Hiyas, intelligence agents of the Bureau of
Immigration (BI), saw respondent Samuel A. Jardin,
chief of the BI's Law and Intelligence Division, with
three unidentified male companions, including a
Japanese national who arrived on board a flight
from Osaka, Japan, at the arrival area of the Ninoy
Aquino International Airport (NAIA). Cabrrera
noticed that the Japanese national's fifth finger on
the left hand was missing. This aroused his
suspicion, mutilation being a common practice
among members of the Yakuza. Hence, the BI
agents closely watched respondent and his
companions.
After identifying the Japanese national as Mizutani
Ryoichiro, an alien declared undesirable in 1999
and prohibited from entering the
Philippines,[5] they immediately apprehended him
and sent him back to Japan pursuant to an
exclusion order.[6]
The following day, the BI agents filed a spot
report[7] (relating the previous night's incident)
with the chief of intelligence of the BI stationed in
NAIA. Acting immigration officer Jude C. Hinolan,
in his memorandum,[8] confirmed the spot report
and relayed the service of the exclusion order on
the airline and the consequent deportation of
Ryoichiro.
Petitioner Rufus Rodriguez, immigration
commissioner at that time, ordered that
respondent Jardin be investigated. Respondent
denied the allegations against him.[11] He averred
that his relatives requested his assistance in
welcoming a niece's fianc, Mizutani
Ryoichiro.[12] Although he was aware that a
Mizutani Ryoichiro had been declared an
undesirable alien, he was informed that the
blacklisted Ryoichiro was born in 1988[13] while his
niece told him that her fianc was in his
[14]
fifties. Furthermore, respondent reasoned
that the accusations against Ryoichiro were
unfounded because neither a conviction nor a
On June 4, 1999, Ylagan-Cortez, as acting

[16]
immigration commissioner, ordered the
preventive suspension of respondent for 90 days.
On July 8, 1999, respondent sought the review of
the June 4, 1999 order by the Secretary of Justice.
Despite the lapse of his preventive suspension on
September 4, 1999 and pending the resolution of
his appeal with the Secretary of Justice,
respondent filed a special civil action for
certiorari[22] with the CA, assailing the June 4,
1999 order in which the CA nullified the assailed
order and ordered the reinstatement of
respondent.
On February 21, 2000, petitioners in their official
capacities filed this appeal.
ISSUE:
Whether or not the petition is considered moot
due to petitioners failure to effect a substitution
pursuant to Sec. 17, Rule 3.
RULING:
Respondent moved to declare the petition moot.
He averred that petitioner Rodriguez had in the
meantime been replaced by Andrea D. Domingo as
immigration commissioner while petitioner Yap
had been appointed to the Office of the
Government Corporate Counsel.[27] Despite the
lapse of 30 days, no substitution was effected
pursuant to Section 17, Rule 3 of the Rules of
Court which provides:
Sec. 17. Death or separation of a party who is a

public officer. When a public officer is a party
in an action in his official capacity and during its
pendency dies, resigns, or otherwise ceases to
hold office, the action may be continued and
maintained by or against his successor if within
thirty (30) days after the successor takes office or
such time as may be granted by the court, it is
satisfactorily shown to the court by any party that
there is a substantial need for continuing or
maintaining it and that the successor adopts or
continues or threatens to continue or adopt the
action of his predecessor. Before a substitution is
made, the party or officer affected, unless

expressly assenting thereto, shall be given
reasonable notice of the application therefor and
accorded an opportunity to be heard.
On April 30, 2003, the Office of the Solicitor

General (OSG) manifested that Andrea D.
Domingo had indeed been appointed the new
immigration commissioner replacing petitioner
Rodriguez. The OSG also stated that
Commissioner Domingo was not adopting the
position of her predecessor, petitioner
[28]
Rodriguez.
Despite serious misgivings, we agree with
respondent but purely on technicality.
Well-settled is the rule that failure to make
a substitution pursuant to Section 17, Rule 3 of
the Rules of Court is a ground for the dismissal of
an action.[29] For the valid substitution of a public
officer who has sued or has been sued in his or
her official capacity, the following requisites must
be satisfied:
1.
satisfactory proof by any party that
there is substantial need for continuing or
maintaining the action;
2.
the successor adopts or continues or
threatens to adopt or continue the acts of his or
her predecessor;
3.
the substitution must be effected
within 30 days after the successor assumes office
or within the time granted by the court; and,
4.
party.
notice of the application to the other
Here, petitioner Rodriguez's successor

categorically expressed her lack of interest in
pursuing this appeal, hence, the failure to effect
a substitution.
Sec. 18. Incompetency or incapacity.
If a party becomes incompetent or incapacitated,
the court, upon motion with notice, may allow the
action to be continued by or against the
incompetent or incapacitated person assisted by
his legal guardian or guardian ad litem.
Sec. 19. Transfer of interest.
In case of any transfer of interest, the action may
be continued by or against the original party,
unless the court upon motion directs the person to
whom the interest is transferred to be substituted
in the action or joined with the original party.
Associated Bank v. Spouses Pronstroller, G.R. No.
148444, September 3, 2009
FACTS:
The controversy stems from the Motion for Leave
to Intervene filed by Spouses Eduardo and Ma.
Pilar Vaca who owned a foreclosed property and
the bidding of which was subsequently won by the
Associated Bank. The latter then sold the property
to spouses Rafael and Monaliza Pronstroller for
P7.5M with 10% as downpayment. Associated
Bank, through Atty Soluta then executed a letteragreement setting forth the terms and conditions
of the sale.
Prior to the expiration of the 90-day period within
which to make the escrow deposit, in view of the
pendency of the case filed by spouses Vaca who
commenced an action for the nullification of the
real estate mortgage and the foreclosure sale, the
Pronstrollers requested that the balance be
payable upon service on them of a final decision
affirming Associated's right to possess the
property. Respondents proposal was referred to
petitioners Asset Recovery and Remedial
Management Committee (ARRMC). Because the
Board of Directors deferred action on the
respondents request, a month after the request
was made and after the payment deadline had
lapsed, respondents and Atty. Soluta, acting for
the petitioner, executed another LetterAgreement allowing the former to pay the balance
of the purchase price upon receipt of a final order.
However, after one year and after the banks
reorganization, the board rejected respondents
request and respondents were asked to submit
their new proposal if they were still interested.
The Pronstrollers showed the letter-agreement
which granted them an extension but they were
informed that Atty. Soluta was not authorized to
give such extension. The proposal that the

Pronstrollers also submitted was disapproved by
the Asssociated Banks President. After the
Associated Banks right to posses the subject
property was upheld by the court in the case
commenced by the spouses Vaca, the Pronstrollers
filed a Complaint for Specific Performance before
the RTC and they likewise caused the annotation
of a notice of lis pendens in the petitioners title.
While the case was pending, the Associated Bank
sold the subject property back to the spouses
Vaca. Both the RTC and the CA ruled in favor of the
Pronstrollers.
Hence,
this
petition
for
Reconsideration by the Associated Bank and
Motion for Leave to Intervene by the spouses Vaca
who alleged that they are the registered owners of
the subject property and are thus real parties-ininterest.
ISSUE:
Whether or not the spouses Vaca be allowed to
intervene.
HELD:
No, because to allow the intervention would
unduly delay and prejudice the rights especially of
respondents who have been deprived of the
subject property for so long. Furthermore, the
motion for leave to intervene before this Court
was belatedly filed in view of Section 2, Rule 19 of
the Rules of Court which provides;
SEC. 2. Time to intervene. The motion
to intervene may be filed at any time
before rendition of judgment by the
trial court. A copy of the pleading-inintervention shall be attached to the
motion and served on the original
parties.
The court also stressed that the purpose of
intervention is to enable a stranger to an action to
become a party to protect his interest, and the
court, incidentally, to settle all conflicting
claims. The spouses Vaca are not strangers to the
action. Their legal interest in the litigation springs
from the sale of the subject property by petitioner
in their favor during the pendency of this case. As
transferee pendente lite, the spouses Vaca are the
successors-in-interest of the transferor, the
petitioner, who is already a party to the
action. Thus, the applicable provision is Section
19, Rule 3 of the Rules of Court, governing
transfers of interest pendente lite. It provides:
SEC.
19. Transfer
of
interest. In case of any transfer
of interest, the action may be
continued by or against the
original party, unless the court
upon motion directs the person
to whom the interest is
transferred to be substituted in
the action or joined with the
original party.
The SC then reiterated the ruling in Santiago Land
Development Corporation v. Court of Appeals, as
cited in Natalia Realty, Inc. v. Court of Appeals case
which ruled that:
A transferee pendente lite of the
property in litigation does not
have a right to intervene. We
held that a transferee stands
exactly in the shoes of his
predecessor-in-interest, bound
by
the
proceedings
and
judgment in the case before the
rights were assigned to him. It is
not legally tenable for a
transferee pendente lite to still
intervene. Essentially, the law
already considers the transferee
joined or substituted in the
pending action, commencing at
the exact moment when the
transfer of interest is perfected
between the original partytransferor
and
the
transferee pendente lite.
Lastly, it is noteworthy that a notice of lis

pendens was timely annotated on petitioners title.
This was done prior to the sale of the property to
the spouses Vaca, the cancellation of petitioners
title, and the issuance of the new Transfer
Certificate of Title in the name of the spouses. By
virtue of the notice of lis pendens, the spouses
Vaca are bound by the outcome of the litigation
subject of the lis pendens. Their interest is subject
to the incidents or results of the pending suit, and
their Certificate of Title will afford them no special
protection
With regards to the MR, it was denied and the
court affirmed the factual findings of the CA
because they were amply supported by the
evidence on record. Well-established is the rule
that if there is no showing of error in the
appreciation of facts by the CA, the Supreme Court

treats them as conclusive.
4.
On March 17, 1997 the LA handed down

his decision declaring the illegality of
respondents dismissal and ordered the
petitioner to pay the respondents.

Sec. 20. Action on contractual money claims.
5.
When the action is for recovery of money arising

from contract, express or implied, and the
defendant dies before entry of final judgment in
the court in which the action was pending at the
time of such death, it shall not be dismissed but
shall instead be allowed to continue until entry of
final judgment. A favorable judgment obtained by
the plaintiff therein shall be enforced in the
manner especially provided in these Rules for
prosecuting claims against the estate of a
deceased person.
Incidentally, on April 4, 1997, petitioner

passed away.
6.
On April 18, 1997, a copy of the decision

was delivered personally to petitioners
house.
According
to
respondents,
petitioners surviving spouse, and their

daughter, after reading the contents of
the decision and after they had spoken to
their counsel, refused to receive the
same. Nevertheless the bailiff left a copy
of the decision with petitioners wife and
her daughter but they both refused to
sign and acknowledge receipt of the

decision.
GABRIEL VS. PAGAYGAY
7.
LAs decision was subsequently served by

registered mail at petitioners residence
and the same was received on May 28,

TOPIC: RULE 3, SEC 20(An action on contractual
money claims), in relation to RULE 86, SEC.
5(Claims which must be filed under notice. If not
filed, barred; exception) and RULE 38, SEC. 7
(Execution in case of death of party)
1997.
8.
On May 16, 1997, counsel for the

petitioner filed an entry of appearance
with motion to dismiss the case for the
reason that the petitioner passed away
CITATION: GR NO. 146989, February 7, 2007
last April 4, 1997.

9.
Facts:
On June 5, 1997, the petitioner filed an

appeal with the NLRC. The NLRC granted
1.
On November 15, 1995, the respondents

filed their separate complaints for illegal
dismissal,
illegal
deductions,
and
petitioners appeal,
10. Respondents filed an MR which was
denied by the NLRC as follows:
separation pay against petitioner with the

NLRC.
2.
The respondents alleged that they were

regular drivers of the petitioner Gabriel
Jeepney, under a boundary system of
P400 per day from 1990, 194, and 1991
up to April 30, 1995 respectively.
3.
On April 30, 1995, petitioner told them

not to drive anymore and when they went
to the garage to report for work the next
day, they were not given a unit to drive.
A decision was rendered by the

Labor Arbiter a quo on March 17,
1997 while Mr. Gabriel passed
away on April 4, 1997 without
having received a copy thereof
during his lifetime. The decision
was only served on April 18,
1997 when he was no longer
around to receive the same. His
surviving spouse and daughter
cannot automatically substitute
themselves
as
party
respondents. Thus, when the
bailiff tendered a copy of the
decision to them, they were not

in a position to receive them.
The requirement of leaving a
copy at the partys residence is
not applicable in the instant case
because this presupposes that
the party is still living and is just
not available to receive the
decision
The preceding considered, the
decision of the labor arbiter has
not become final because there
was no proper service of copy
thereof to *petitioner+ .
Did the money claims of the respondents survive

irrespective of the death of the petitioner who
died after rendering the decision of LA but before
receipt of such.
HELD:
YES. The money claims survived and must
be filed against the estate of petitioner Melencio
Gabriel.
The Supreme Court briefly discussed the
reason for its decision as follows:
With regard to respondents monetary
Undoubtedly, this case is

for recovery of money which
does
not
survive,
and
considering that the decision has
not become final, the case
should have been dismissed and
the
appeal
no
longer
entertained.
11. The
respondents
appealed to the CA
which reversed the
NLRC
decision
as
follows;
The NLRC ostensibly
tried to redeem itself by vacating
the decision April 28, 1998. By so
doing, however, it did not
actually resolve the matter
definitively. It merely relieved
itself of such burden by
suggesting that the petitioners
pursue their claim against the
proceedings for the settlement
of
the
estate
of
the
deceased Melencio Gabriel.
In the instant case, the
decision (dated March 17, 1997)
of the Labor Arbiter became final
and executory on account of the
failure of the private respondent
to perfect his appeal on time.
12. Hence this petition.
ISSUE:
claim, the same shall be governed by Section 20

(then Section 21), Rule 3 of the Rules of Court
which provides:
SEC.
20. Action
on
contractual money claims.
When the action is for recovery
of money arising from contract,
express or implied, and the
defendant dies before entry of
final judgment in the court in
which the action was pending at
the time of such death, it shall
not be dismissed but shall
instead be allowed to continue
until entry of final judgment. A
favorable judgment obtained by
the plaintiff therein shall be
enforced in the manner provided
in these Rules for prosecuting
claims against the estate of a
deceased person. (21a)
In relation to this, Section 5, Rule 86 of the
Rules of Court states:
SEC. 5. Claims which must
be filed under the notice. If not
filed, barred ; exceptions. All
claims for money against the
decedent arising from contract,
express or implied, whether the
same be due, not due, or
contingent, ... and judgment for
money against the decedent,
must be filed within the time
limited in the notice; otherwise
they are barred forever, except
that they may be set forth as

counterclaims in any action that
the executor or administrator
may
bring
against
the
claimants.
Thus, in accordance with the above Rules,
the money claims of respondents must be filed
against the estate of petitioner Melencio Gabriel
Sec. 21. Indigent party.
A party may be authorized to litigate his action,
claim or defense as an indigent if the court, upon
an ex parte application and hearing, is satisfied
that the party is one who has no money or
property sufficient and available for food, shelter
and basic necessities for himself and his family.
Such authority shall include an exemption from
payment of docket and other lawful fees, and of
transcripts of stenographic notes which the court
may order to be furnished him. The amount of the
docket and other lawful fees which the indigent
was exempted from paying shall be a lien on any
judgment rendered in the case favorable to the
indigent, unless the court otherwise provides.
Any adverse party may contest the grant of such
authority at any time before judgment is rendered
by the trial court. If the court should determine
after hearing that the party declared as an
indigent is in fact a person with sufficient income
or property, the proper docket and other lawful
fees shall be assessed and collected by the clerk of
court. If payment is not made within the time fixed
by the court, execution shall issue for the payment
thereof, without prejudice to such other sanctions
as the court may impose.
Sec. 22. Notice to the Solicitor General.
In any action involving the validity of any treaty,
law, ordinance, executive order, presidential
decree, rules or regulations, the court, in its
discretion, may require the appearance of the
Solicitor General who may be heard in person or
through a representative duly designated by him.
RULE 4
VENUE OF ACTIONS
Section 1. Venue of real actions.
Actions affecting title to or possession of real
property, or interest therein, shall be commenced
and tried in the proper court which has jurisdiction
over the area wherein the real property involved,
or a portion thereof, is situated.
Forcible entry and detainer actions shall be
commenced and tried in the municipal trial court of
the municipality or city wherein the real property
involved, or a portion thereof, is situated.
FORTUNE MOTORS VS CA
FACTS:
On March 29,1982 up to January 6,1984, private
respondent Metropolitan Bank extended various
loans to petitioner Fortune Motors in the total
sum of P32,500,000.00 which loan was secured by
a real estate mortgage on the Fortune building and
lot in Makati, Rizal.
Due to financial difficulties and the onslaught of
economic recession, the petitioner was not able to
pay the loan which became dueBank initiated
extrajudicial foreclosure proceedings. the
mortgaged property was sold at public auction for
the price of P47,899,264.91 to mortgagee Bank as
the highest bidder.
Sheriff's certificate of sale was registered on
October 24, 1984 with the one-year redemption
period to expire on October 24,1985.
On October 21, 1985, three days before the
expiration of the redemption period, petitioner
Fortune Motors filed a complaint for annulment of
the extrajudicial foreclosure sale alleging that the
foreclosure was premature because its obligation
to the Bank was not yet due, the publication of the
notice of sale was incomplete, there was no public
auction, and the price for which the property was
sold was "shockingly low".
Respondent Bank filed a motion to dismiss the

complaint on the ground that the venue of the
action was improperly laid in Manila for the realty
covered by the real estate mortgage is situated in
Makati, therefore the action to annul the
foreclosure sale should be filed in the Regional
Trial Court of Makati.
Fortune Motors alleging that its action "is a
personal action" and that "the issue is the validity
of the extrajudicial foreclosure proceedings" so
that it may have a new one year period to redeem.
the lower court reserved the resolution of the
Bank's motion to dismiss until after the trial on the
merits as the grounds relied upon by the
defendant were not clear and indubitable
Bank filed a motion for reconsideration which was
denied by the lower court Respondent Bank
filed a petition for certiorari and prohibition in the
Court of Appeals which was granted.
ISSUE:
Whether petitioner's action for annulment of the
real estate mortgage extrajudicial foreclosure sale
of Fortune Building is a personal action or a real
action for venue purposes.
SC RULING:
It is a real action. (Respondent bank was right that
the action should be instituted in Makati)
In a real action, the plaintiff seeks the recovery of
real property, or as indicated in Sec. 2 (a) of Rule 4,
a real action is an action affecting title to real
property, or for the recovery of possession, or for
the partition or condemnation of, or foreclosure of
a mortgage on real property
Real actions or actions affecting title to, or for the
recovery of possession, or for the partition or
condemnation of, or foreclosure of mortgage on
real property, must be instituted in the Court of
First Instance of the province where the property
or any part thereof lies. Personal actions upon the
other hand, may be instituted in the Court of First
Instance where the defendant or any of the
defendants resides or may be found, or where the
plaintiff or any of the plaintiffs resides, at the
election of the plaintiff
A prayer for annulment or rescission of contract
does not operate to efface the true objectives and
nature of the action which is to recover real

property. An action for the annulment or
rescission of a sale of real property is a real action.
Its prime objective is to recover said real property.
An action to annul a real estate mortgage
foreclosure sale is no different from an action to
annul a private sale of real property.
While it is true that petitioner does not directly
seek the recovery of title or possession of the
property in question, his action for annulment of
sale and his claim for damages are closely
intertwined with the issue of ownership of the
building which, under the law, is considered
immovable property, the recovery of which is
petitioner's primary objective. The prevalent
doctrine is that an action for the annulment or
rescission of a sale of real property does not
operate to efface the fundamental and prime
objective and nature of the case, which is to
recover said real property. It is a real action.
Respondent Court, therefore, did not err in
dismissing the case on the ground of improper
venue
Since an extrajudicial foreclosure of real property
results in a conveyance of the title of the property
sold to the highest bidder at the sale, an action to
annul the foreclosure sale is necessarily an
action affecting the title of the property sold. It is
therefore a real action which should be
commenced and tried in the province where the
property or part thereof lies.
Petition of Fortune motors was DENIED. (Bank
won!)
PAGLAUM MANAGEMENT & DEVELOPMENT
CORPORATION and HEALTH MARKETING
TECHNOLOGIES
vs
UNION BANK OF THE PHILIPPINES,
Facts:
Petitioner Paglaum was the registered
owner of three parcels of land located in Cebu, coowned by Benjamin Dy, the president of Health
Marketing Technologies.
Sometime in 1994, respondent bank

extended a credit line to HealthTech worth Php 10
million. To secure such obligation, Paglaum
executed a Real Estate Mortgage in behalf of
HealthTech in favor of Union Bank. The REM
contained a provision on the venue of any action
arising from the mortgage which originally states
that:
Section 9. Venue.
The venue of all suits
and actions arising
out
of
or
in
connection with this
Mortgage shall be in
Makati,
Metro
Manila or in the place
where any of the
Mortgaged Properties
is located, at the
absolute option of
the Mortgagee, the
parties
hereto
waiving any other
venue.
However, succeeding REMs, had
different provisions, the other in Cebu and the
other left in blank. Despite such inconsistencies,
both respondent and petitioner agreed to
subsequent renewals and increases in the credit
line. Eventually, petitioner HealthTech defaulted in
its payment to Union Bank. In 1998, both parties
entered into a Restructuring Agreement, which
states that any action or proceeding arising out of
or in connection therewith shall be commenced
in Makati City, with both parties waiving any
other venue.
Despite the Restructuring Agreement,
HealthTech failed to pay its obligation, hence,
Union Bank executed an extrajudicial foreclosure
on the mortgaged properties sometime in 2001.
Consequently, HealthTech filed a
Complaint for Annulment of Sale and Titles with
Damages and Application for Temporary
Restraining Order and Writ of Injunction Regional
Trial Court, National Capital Judicial Region, Makati
City, Branch 134 (RTC Br. 134), which then granted
petitioners prayers. However, respondent filed a

motion to dismiss on the ground of improper
venue, which was granted by RTC Br. 134.
Hence, the instant petition. Petitioners
contend that it is the Restructuring Agreement
that governs the choice of venue between the
parties.
Issue:
Whether or not Makati City is the proper
venue to assail the foreclosure of the subject real
estate mortgage?
Ruling:
Yes.
A case seeking to annul a foreclosure of a
real estate mortgage is a real action, viz:
An action to annul a real estate
mortgage foreclosure sale is no
different from an action to
annul a private sale of real
property.
Being a real action, the filing and trial of the Civil
Case No. 01-1567 should be governed by the
following relevant provisions of the Rules of Court
(the Rules):
Rule 4
VENUE OF ACTIONS
Section 1. Venue of real
actions. Actions affecting title
to or possession of real
property, or interest therein,
shall be commenced and tried
in the proper court which has
jurisdiction over the area
wherein the real property
involved, or a portion thereof,
is situated.
Forcible entry and detainer
actions shall be commenced
and tried in the municipal trial
court of the municipality or city
wherein the real property

involved, or a portion thereof,
is situated.
Sec. 3. When Rule not
applicable. This Rule shall not
apply (a) In those cases
where a specific rule or law
provides otherwise; or
(b) Where the parties have
validly agreed in writing before
the filing of the action on the
exclusive venue thereof.
The SC in the case Sps. Lantin v. Lantion held that,
The parties must be able to show that such
stipulation is exclusive. In the absence of
qualifying or restrictive words, the stipulation
should be deemed as merely an agreement on an
additional forum, not as limiting venue to the
specified place.
All three mortgage contracts contain a dragnet

clause, which secures succeeding obligations,
including renewals, extensions, amendments or
novations thereof, incurred by HealthTech from
Union Bank.
G.R. No. 192877
March 23, 2011
SPOUSES HERMES P. OCHOA and ARACELI D.
OCHOA, Petitioners,
vs.
CHINA BANKING CORPORATION, Respondent.
FACTS:
For resolution is petitioners motion for
1
reconsideration of our January 17, 2011
Resolution denying their petition for review on
certiorari for failing to sufficiently show any
reversible error in the assailed judgment of the
Court of Appeals (CA).
In application to the case:

Real actions shall be commenced and tried in the
court that has jurisdiction over the area where the
property is situated. In this case, all the mortgaged
properties are located in the Province of Cebu.
Thus, following the general rule, PAGLAUM and
HealthTech should have filed their case in Cebu,
and not in Makati.
However, the Rules provide an exception, in that
real actions can be commenced and tried in a
court other than where the property is situated in
instances where the parties have previously and
validly agreed in writing on the exclusive venue
thereof. In the case at bar, the parties claim that
such an agreement exists. The only dispute is
whether the venue that should be followed is that
contained in the Real Estate Mortgages, as
contended by Union Bank, or that in the
Restructuring Agreement, as posited by PAGLAUM
and HealthTech. This Court rules that the venue
stipulation in the Restructuring Agreement
should be controlling.
The Real Estate Mortgages were executed by
PAGLAUM in favor of Union Bank to secure the
credit line extended by the latter to HealthTech.
Petitioners insist that it was error for the CA to

rule that the stipulated exclusive venue of Makati
City is binding only on petitioners complaint for
Annulment of Foreclosure, Sale, and Damages filed
before the Regional Trial Court of Paraaque City,
but not on respondent banks Petition for
Extrajudicial Foreclosure of Mortgage, which was
filed with the same court.
ISSUE:
Whether or not the CA commit error in ruling that
the stipulated exlusive venue of Makati City is
binding only Petitioners complaint for Annulment
of Foreclosure, Sale and Damages before the RTC
of Paranaque City and not of the Banks petition
for Extrajudicial Foreclosure of Mortgage.
RULING:
We disagree.
The extrajudicial foreclosure sale of a real estate
mortgage is governed by Act No. 3135, as
amended by Act No. 4118, otherwise known as
"An Act to Regulate the Sale of Property Under
Special Powers Inserted In or Annexed to RealEstate Mortgages." Sections 1 and 2 thereof clearly
state:
Section 1. When a sale is made under a special

power inserted in or attached to any real-estate
mortgage hereafter made as security for the
payment of money or the fulfillment of any other
obligation, the provisions of the following sections
shall govern as to the manner in which the sale and
redemption shall be effected, whether or not
provision for the same is made in the power.
Sec. 2. Said sale cannot be made legally outside of
the province in which the property sold is
situated; and in case the place within said province
in which the sale is to be made is the subject of
stipulation, such sale shall be made in said place or
in the municipal building of the municipality in
5
which the property or part thereof is situated.
The case at bar involves petitioners mortgaged
real property located in Paraaque City over which
respondent bank was granted a special power to
foreclose extra-judicially. Thus, by express
provision of Section 2, the sale can only be made
in Paraaque City.
The exclusive venue of Makati City, as stipulated
by the parties and sanctioned by Section 4, Rule 4
of the Rules of Court, cannot be made to apply to
the Petition for Extrajudicial Foreclosure filed by
respondent bank because the provisions of Rule 4
pertain to venue of actions, which an extrajudicial
foreclosure is not.
Pertinent are the following disquisitions in Supena
v. De la Rosa:
Section 1, Rule 2 [of the Rules of Court] defines
an action in this wise:
"Action means an ordinary suit in a court of justice,
by which one party prosecutes another for the
enforcement or protection of a right, or the
prevention or redress of a wrong."
Hagans v. Wislizenus does not depart from this
definition when it states that "[A]n action is a
formal demand of one's legal rights in a court of
justice in the manner prescribed by the court or by
the law. x x x." It is clear that the determinative or
operative fact which converts a claim into an
"action or suit" is the filing of the same with a
"court of justice." Filed elsewhere, as with some
other body or office not a court of justice, the
claim may not be categorized under either term.
Unlike an action, an extrajudicial foreclosure of
real estate mortgage is initiated by filing a petition
not with any court of justice but with the office of
the sheriff of the province where the sale is to be

made.1avvphi1 By no stretch of the imagination
can the office of the sheriff come under the
category of a court of justice. And as aptly
observed by the complainant, if ever the executive
judge comes into the picture, it is only because he
exercises administrative supervision over the
sheriff. But this administrative supervision,
however, does not change the fact that
extrajudicial foreclosures are not judicial
proceedings, actions or suits.9
These pronouncements were confirmed on August
7, 2001 through A.M. No. 99-10-05-0, entitled
"Procedure in Extra-Judicial Foreclosure of
Mortgage," the significant portions of which
provide:
In line with the responsibility of an Executive Judge
under Administrative Order No. 6, date[d] June 30,
1975, for the management of courts within his
administrative area, included in which is the task
of supervising directly the work of the Clerk of
Court, who is also the Ex-Office Sheriff, and his
staff, and the issuance of commissions to notaries
public and enforcement of their duties under the
law, the following procedures are hereby
prescribed in extra-judicial foreclosure of
mortgages:
1. All applications for extrajudicial foreclosure of
mortgage whether under the direction of the
sheriff or a notary public, pursuant to Act 3135, as
amended by Act 4118, and Act 1508, as amended,
shall be filed with the Executive Judge, through the
Clerk of Court who is also the Ex-Officio Sheriff.
Verily then, with respect to the venue of
extrajudicial foreclosure sales, Act No. 3135, as
amended, applies, it being a special law dealing
particularly with extrajudicial foreclosure sales of
real estate mortgages, and not the general
provisions of the Rules of Court on Venue of
Actions.
Consequently, the stipulated exclusive venue of
Makati City is relevant only to actions arising from
or related to the mortgage, such as petitioners
complaint for Annulment of Foreclosure, Sale, and
Damages.
The other arguments raised in the motion are a
mere reiteration of those already raised in the
petition for review. As declared in this Courts
Resolution on January 17, 2011, the same failed to
show any sufficient ground to warrant the exercise

of our appellate jurisdiction.
WHEREFORE, premises considered, the motion for
reconsideration is hereby DENIED.
SO ORDERED.
Sec. 2. Venue of personal actions.
All other actions may be commenced and tried
where the plaintiff or any of the principal plaintiffs
resides, or where the defendant or any of the
principal defendants resides, or in the case of a
non-resident defendant where he may be found, at
the election of the plaintiff.
G.R. No. 186993
August 22, 2012
THEODORE and NANCY ANG, represented by

ELDRIGE MARVIN B. ACERON, Petitioners,
vs.
SPOUSES ALAN and EM ANG
Facts:
On September 2, 1992, spouses Alan and Em Ang
(respondents) obtained a loan in the amount of
Three Hundred Thousand U.S. Dollars
(US$300,000.00) from Theodore and Nancy Ang
(petitioners). On even date, the respondents
executed a promissory note in favor of the
petitioners wherein they promised to pay the
latter the said amount, with interest at the rate of
ten percent (10%) per annum, upon demand.
However, despite repeated demands, the
respondents failed to pay the petitioners.
Thus, on August 28, 2006, the petitioners sent the
respondents a demand letter asking them to pay
their outstanding debt which, at that time, already
amounted to Seven Hundred Nineteen Thousand,
Six Hundred Seventy-One U.S. Dollars and TwentyThree Cents (US$719,671.23), inclusive of the ten
percent (10%) annual interest that had
accumulated over the years. Notwithstanding the
receipt of the said demand letter, the respondents
still failed to settle their loan obligation.
On August 6, 2006, the petitioners, who were then

residing in Los Angeles, California, United States of
America (USA), executed their respective Special
Powers of Attorney in favor of Attorney Eldrige
Marvin B. Aceron (Atty. Aceron) for the purpose of
filing an action in court against the respondents.
On September 15, 2006, Atty. Aceron, in behalf of
the petitioners, filed a Complaint for collection of
sum of money with the RTC of Quezon City against
the respondents.
On November 21, 2006, the respondents moved
for the dismissal of the complaint filed by the
petitioners on the grounds of improper venue and
prescription. Insisting that the venue of the
petitioners action was improperly laid, the
respondents asserted that the complaint against
them may only be filed in the court of the place
where either they or the petitioners reside. They
averred that they reside in Bacolod City while the
petitioners reside in Los Angeles, California, USA.
Thus, the respondents maintain, the filing of the
complaint against them in the RTC of Quezon City
was improper.
On April 12, 2007, the RTC of Quezon City issued
an Order which, inter alia, denied the respondents
motion to dismiss.
On August 28, 2008, the CA rendered the herein
Decision, which annulled and set aside the Orders
dated April 12, 2007 and August 27, 2007 of the
RTC of Quezon City and, accordingly, directed the
dismissal of the complaint filed by the petitioners.
Hence this petition.
Issue:
Whether or not RTC of Quezon City is the
proper venue. And the CA erred in setting
aside the RTC decision.
Ruling:
It is a legal truism that the rules on the venue of
personal actions are fixed for the convenience of
the plaintiffs and their witnesses. Equally settled,
however, is the principle that choosing the venue
of an action is not left to a plaintiffs caprice; the
matter is regulated by the Rules of Court.
The petitioners complaint for collection of sum of
money against the respondents is a personal
action as it primarily seeks the enforcement of a
contract. The Rules give the plaintiff the option of

choosing where to file his complaint. He can file it
in the place (1) where he himself or any of them
resides, or (2) where the defendant or any of the
defendants resides or may be found. The plaintiff
or the defendant must be residents of the place
where the action has been instituted at the time
the action is commenced.
However, if the plaintiff does not reside in the
Philippines, the complaint in such case may only
be filed in the court of the place where the
defendant resides. In Cohen and Cohen v. Benguet
Commercial Co., Ltd., this Court held that there
can be no election as to the venue of the filing of a
complaint when the plaintiff has no residence in
the Philippines. In such case, the complaint may
only be filed in the court of the place where the
defendant resides. Thus:
Section 377 provides that actions of this character
"may be brought in any province where the
defendant or any necessary party defendant may
reside or be found, or in any province where the
plaintiff or one of the plaintiffs resides, at the
election of the plaintiff." The plaintiff in this action
has no residence in the Philippine Islands. Only
one of the parties to the action resides here. There
can be, therefore, no election by plaintiff as to the
place of trial. It must be in the province where the
defendant resides. x x x.
Here, the petitioners are residents of Los Angeles,
California, USA while the respondents reside in
Bacolod City. Applying the foregoing principles,
the petitioners complaint against the
respondents may only be filed in the RTC of
Bacolod City the court of the place where the
respondents reside. The petitioners, being
residents of Los Angeles, California, USA, are not
given the choice as to the venue of the filing of
their complaint.
Thus, the CA did not commit any reversible error
when it annulled and set aside the orders of the
RTC of Quezon City and consequently dismissed
the petitioners complaint against the respondents
on the ground of improper venue.
In this regard, it bears stressing that the situs for
bringing real and personal civil actions is fixed by
the Rules of Court to attain the greatest
convenience possible to the litigants and their
witnesses by affording them maximum
accessibility to the courts. And even as the
regulation of venue is primarily for the
convenience of the plaintiff, as attested by the fact

that the choice of venue is given to him, it should
not be construed to unduly deprive a resident
defendant of the rights conferred upon him by the
Rules of Court.
RENE MARCOS-ARANETA, DANIEL RUBIO,
ORLANDO G. RESLIN, and JOSE G. RESLIN,
Petitioners,
- versus COURT OF APPEALS, JULITA C. BENEDICTO, and
FRANCISCA
BENEDICTO-PAULINO
Facts:
Sometime in 1968 and 1972, Ambassador
Roberto S. Benedicto, now deceased, and his
business associates (Benedicto Group) organized
Far East Managers and Investors, Inc. (FEMII) and
Universal Equity Corporation (UEC), respectively.
As petitioner Irene Marcos-Araneta would later
allege, both corporations were organized pursuant
to a contract or arrangement whereby Benedicto,
as trustor, placed in his name and in the name of
his associates, as trustees, the shares of stocks of
FEMII and UEC with the obligation to hold those
shares and their fruits in trust and for the benefit
of Irene to the extent of 65% of such shares.
Several years after, Irene, through her trusteehusband, Gregorio Ma. Araneta III, demanded the
reconveyance of said 65% stockholdings, but the
Benedicto Group refused to oblige.
In March 2000, Irene thereupon
instituted before the RTC two similar complaints
for conveyance of shares of stock, accounting and
receivership against the Benedicto Group with
prayer for the issuance of a temporary restraining
order (TRO). The first, docketed as Civil Case No.
3341-17, covered the UEC shares and named
Benedicto, his daughter, and at least 20 other
individuals as defendants. The second, docketed as
Civil Case No. 3342-17, sought the recovery to the
extent of 65% of FEMII shares held by Benedicto

and the other defendants named therein.
different Motions to Dismiss x x x moot and

academic.
Respondent
Francisca
BenedictoPaulino, Benedictos daughter, filed a Motion to
Dismiss Civil Case No. 3341-17, followed later by
an Amended Motion to Dismiss. Benedicto, on the
other hand, moved to dismiss Civil Case No. 334217, adopting in toto the five (5) grounds raised by
Francisca in her amended motion to dismiss.
Among these were: (1) the cases involved an intracorporate dispute over which the Securities and
Exchange Commission, not the RTC, has
jurisdiction; (2) venue was improperly laid; and (3)
the complaint failed to state a cause of action, as
there was no allegation therein that plaintiff, as
beneficiary of the purported trust, has accepted
the trust created in her favor.
During the preliminary proceedings on their
motions to dismiss, Benedicto and Francisca, by
way of bolstering their contentions on improper
venue, presented the Joint Affidavit of Gilmia B.
Valdez, Catalino A. Bactat, and Conchita R. Rasco
who all attested being employed as household
staff at the Marcos Mansion in Brgy. Lacub, Batac,
Ilocos Norte and that Irene did not maintain
residence in said place as she in fact only visited
the mansion twice in 1999; that she did not vote in
Batac in the 1998 national elections; and that she
was staying at her husbands house in MakatiCity.
Against the aforesaid unrebutted joint
affidavit, Irene presented her PhP 5 community tax
certificate(CTC) issued on 11/07/99 in Curimao,
Ilocos Norte to support her claimed residency in
Batac, Ilocos Norte.
In the meantime, on May 15, 2000,
Benedicto died and was substituted by his wife,
Julita C. Benedicto, and Francisca.
ISSUE:
W/n the respondents did not waive improper
venue?
w/n the that petitioner Irene was not a resident of
Batac, Ilocos Norte and that none of the principal
parties are residents of Ilocos Norte?
Ruling:
Petitioners maintain that Julita and
Francisca were effectively precluded from raising
the matter of improper venue by their subsequent
acts of filing numerous pleadings. To petitioners,
these pleadings, taken together, signify a waiver of
private respondents initial objection to improper
venue. This contention is without basis and, at
best, tenuous. Venue essentially concerns a rule
of procedure which, in personal actions, is fixed for
the greatest convenience possible of the plaintiff
and his witnesses. The ground of improperly laid
venue must be raised seasonably, else it is deemed
waived. Where the defendant failed to either file a
motion to dismiss on the ground of improper
venue or include the same as an affirmative
defense, he is deemed to have waived his right to
object to improper venue. In the case at bench,
Benedicto and Francisca raised at the earliest time
possible, meaning within the time for but before
filing the answer to the complaint, the matter of
improper venue. They would thereafter reiterate
and pursue their objection on venue, first, in their
answer to the amended complaints and then in
their petition for certiorari before the CA. Any
suggestion, therefore, that Francisca and
Benedicto or his substitutes abandoned along the
way improper venue as ground to defeat Irenes
claim before the RTC has to be rejected.
On June 29, 2000, the RTC dismissed both

complaints, stating that these partly constituted
real action, and that Irene did not actually reside
in Ilocos Norte, and, therefore, venue was
[7]
improperly laid. In its dismissal order, the court

also declared all the other issues raised in the
It is the posture of Julita and Francisca

that the venue was in this case improperly laid
since the suit in question partakes of a real action
involving real properties located outside the
territorial jurisdiction of the RTC in Batac.
This contention is not well-taken. In a

personal action, the plaintiff seeks the recovery of
personal property, the enforcement of a contract,
or the recovery of damages. Real actions, on the
other hand, are those affecting title to or
possession of real property, or interest therein. In
accordance with the wordings of Sec. 1 of Rule 4,
the venue of real actions shall be the proper court
which has territorial jurisdiction over the area
wherein the real property involved, or a portion
thereof, is situated. The venue of personal actions
is the court where the plaintiff or any of the
principal plaintiffs resides, or where the defendant
or any of the principal defendants resides, or in
the case of a non-resident defendant where he
may be found, at the election of the plaintiff.
In the instant case, petitioners are
basically asking Benedicto and his Group, as
defendants a quo, to acknowledge holding in trust
Irenes purported 65% stockownership of UEC and
FEMII, inclusive of the fruits of the trust, and to
execute in Irenes favor the necessary conveying
deed over the said 65% shareholdings. In other
words, Irene seeks to compel recognition of the
trust arrangement she has with the Benedicto
Group. The fact that FEMIIs assets include real
properties does not materially change the nature
of the action, for the ownership interest of a
stockholder over corporate assets is only inchoate
as the corporation, as a juridical person, solely
owns such assets. It is only upon the liquidation of
the corporation that the stockholders, depending
on the type and nature of their stockownership,
may have a real inchoate right over the corporate
assets, but then only to the extent of their
stockownership.
On January 18, 1996, Traders Royal Bank (TRB

for brevity) sold in favor of petitioner Emergency
Loan Pawnshop Incorporated (ELPI for brevity) a
parcel of land located at Km. 3 Asin, Baguio City for
Five Hundred Thousand Pesos (P500,000.00).[2]
At the time of the sale, TRB misrepresented
to Emergency Loan Pawnshop Inc (ELPI). that the
subject property was a vacant residential lot.
(when it
truth
the
subject
property was
dominantly a public road with only 140 square

meters usable area).
ELPI demanded from TRB the rescission and
cancellation of the sale of the property.
TRB refused, hence, on April 16, 1996, ELPI
filed with the Regional Trial Court, Davao, Branch
17, a complaint for annulment of sale and
damages against TRB.
TRB filed
[3]
a Motion to Dismiss[4] the
complaint on the ground of improper venue but

the trial court denied the motion to dismiss. TRB
filed a motion for reconsideration but trial court
denied the motion.[7]
TRB elevated the case to the Court of Appeals
by petition for certiorari and prohibition with
preliminary injunction or temporary restraining
order, contending that the trial court committed a
grave abuse of discretion in denying its motion to
EMERGENCY LOAN PAWNSHOP INCORPORATED
and DANILO R. NAPALA, petitioners, vs.
THE COURT OF APPEALS (Tenth Division)
and TRADERS ROYAL BANK, respondents.
J. PARDO
FACTS:
dismiss the complaint on the ground of improper

venue.
[8]
The Court of Appeals ruled in favor of TRB

dismissing the case on the ground of improper
venue.
ISSUES:
1. Whether or not the Court of Appeals erred in
protracted trial and clogging the court
entertaining the petition for certiorari and
dockets by another futile case."
prohibition, for lack of jurisdiction;
[13]
(THIS IS THE ANSWER ON THE FIRST ISSUE)
2. Whether or not the Court of Appeals erred in
In the case at bar, we agree with the Court
ruling that the Regional Trial Court erred in not
of Appeals that the trial court erred grievously
dismissing the complaint for improper venue.
amounting to ousting itself of jurisdiction.

The venue of such action is unquestionably
REASONING OF THE COURT
within the territorial jurisdiction of the proper

THE GENERAL RULE is that the denial of a
motion to dismiss a complaint is an interlocutory
court where the real property or part thereof

lies.[14]
order and, hence, cannot be appealed or

questioned via a
special
civil
action
of certiorari until a final judgment on the merits
An action affecting title to real property, or

for recovery of, or foreclosure of mortgage on
real property, shall be commenced and tried in
of the case is rendered.[12]
the proper court having jurisdiction over the area

The remedy of the aggrieved party is to file
an answer to the complaint and to interpose as
where the real property or any part thereof

lies.[15]
defenses the objections raised in his motion to

dismiss, proceed to trial, and in case of an
adverse decision, to elevate the entire case by
appeal in due course.
exceptions to the rule.

(THIS IS THE ANSWER TO THE SECOND
ISSUE)
(EXCEPTIONS)
Under
Hence, the case at bar clearly falls within the
certain
situations,
to certiorari or mandamus is
recourse
considered
The Regional Trial Court has committed a

palpable and grievous error amounting to lack or
excess of jurisdiction in denying the motion to
appropriate, that is,
dismiss the complaint on the ground of improper

(a) when the trial court issued the order
venue.
without or in excess of jurisdiction;

(b) where there is patent grave abuse of
Hyatt Elevators v. Goldstar, G.R. No. 161026
discretion by the trial court; or,

(c) appeal would not prove to be a speedy
and adequate remedy as when an appeal

would not promptly relieve a defendant
from the injurious effects of the patently
mistaken
order
maintaining
the
plaintiffs baseless action and compelling

the defendant needlessly to go through a
Facts:
(Note: This case if filed by petitioner in
the RTC of MANDALUYONG, instead of Makati.)
Petitioner *herein Respondent+ Goldstar
Elevator Philippines, Inc. (GOLDSTAR for brevity) is
a domestic corporation primarily engaged in the
business of marketing, distributing, selling,

importing, installing, and maintaining elevators
th
and escalators, with address at 6 Floor, Jacinta II
Building, 64 EDSA, Guadalupe, Makati City.
On the other hand, private respondent
[herein petitioner] Hyatt Elevators and Escalators
Company (HYATT for brevity) is a domestic
corporation similarly engaged in the business of
selling, installing and maintaining/servicing
elevators, escalators and parking equipment, with
th
address at the 6 Floor, Dao I Condominium,
Salcedo St., Legaspi Village, Makati, as stated in its
Articles of Incorporation.
On February 23, 1999, HYATT filed a
Complaint for unfair trade practices and damages
under Articles 19, 20 and 21 of the Civil Code of
the Philippines against LG Industrial Systems Co.
Ltd. (LGISC) and LG International Corporation
(LGIC), alleging among others, that: in 1988, it was
appointed by LGIC and LGISC as the exclusive
distributor of LG elevators and escalators in the
Philippines under a Distributorship Agreement; x
x x LGISC, in the latter part of 1996, made a
proposal to change the exclusive distributorship
agency to that of a joint venture partnership; while
it looked forward to a healthy and fruitful
negotiation for a joint venture, however, the
various meetings it had with LGISC and LGIC,
through the latters representatives, were
conducted in utmost bad faith and with
malevolent intentions; in the middle of the
negotiations, in order to put pressures upon it,
LGISC and LGIC terminated the Exclusive
Distributorship Agreement;
x x x [A]s a
consequence, [HYATT] suffered P120,000,000.00
as actual damages, representing loss of earnings
and business opportunities, P20,000,000.00 as
damages
for
its
reputation
and
goodwill, P1,000,000.00 as and by way of
exemplary damages, and P500,000.00 as and by
way of attorneys fees.
On March 17, 1999, LGISC and LGIC filed
a Motion to Dismiss raising the following grounds:
(1) lack of jurisdiction over the persons of
defendants, summons not having been served on
its resident agent; (2) improper venue; and (3)
failure to state a cause of action. The [trial] court
denied the said motion in an Order dated January
7, 2000.
On December 4, 2000, HYATT filed a
motion for leave of court to amend the complaint,
alleging that subsequent to the filing of the
complaint, it learned that LGISC transferred all its
organization, assets and goodwill, as a

consequence of a joint venture agreement with
Otis Elevator Company of the USA, to LG Otis
Elevator Company (LG OTIS, for brevity). Thus,
LGISC was to be substituted or changed to LG OTIS,
its successor-in-interest. Likewise, the motion
averred that x x x GOLDSTAR was being utilized by
LG OTIS and LGIC in perpetrating their unlawful
and unjustified acts against HYATT. Consequently,
in order to afford complete relief, GOLDSTAR was
to be additionally impleaded as a party-defendant.
Hence, in the Amended Complaint, HYATT
impleaded x x x GOLDSTAR as a party-defendant,
and all references to LGISC were correspondingly
replaced with LG OTIS.
On April 12, 2002, x x x GOLDSTAR filed a
Motion to Dismiss the amended complaint, raising
the following grounds: (1) the venue was
improperly laid, as neither HYATT nor defendants
reside in Mandaluyong City, where the original
case was filed; and (2) failure to state a cause of
action against [respondent], since the amended
complaint fails to allege with certainty what
specific ultimate acts x x x Goldstar performed in
violation of x x x Hyatts rights.
The trial court dismissed the
motion to dismiss.
The CA ruled that the trial court had
committed palpable error amounting to grave
abuse of discretion when the latter denied
respondents Motion to Dismiss. The appellate
court held that the venue was clearly improper,
because none of the litigants resided in
Mandaluyong City, where the case was filed.
Issue:
Whether or not the Court of Appeals, in
reversing the ruling of the Regional Trial Court,
erred as a matter of law and jurisprudence, as well
as committed grave abuse of discretion, in holding
that in the light of the peculiar facts of this case,
venue was improper.
Ruling:
The Court of Appeals is correct in
reversing the ruling or RTC because the venue was
improper.
The resolution of this case rests upon a
proper understanding of Section 2 of Rule 4 of the
1997 Revised Rules of Court:
Sec.
2. Venue
of
personal actions. All other
actions may be commenced and

tried where the plaintiff or any of
the principal plaintiff resides, or
where the defendant or any of
the principal defendant resides,
or in the case of a non-resident
defendant where he may be
found, at the election of the
plaintiff.
Since both parties to this case are
corporations, there is a need to clarify the
meaning of residence. The law recognizes two
types of persons: (1) natural and (2)
juridical. Corporations come under the latter in
accordance with Article 44(3) of the Civil Code. [8]
Residence is the permanent home -- the place to
which, whenever absent for business or pleasure,
[9]
one intends to return. Residence is vital when
[10]
dealing with venue.
A corporation, however,
has no residence in the same sense in which this
term is applied to a natural person. This is
precisely the reason why the Court in Young Auto
Supply Company v. Court of Appeals[11] ruled that
for practical purposes, a corporation is in a
metaphysical sense a resident of the place where
its principal office is located as stated in the
articles of incorporation.[12] Even before this
ruling, it has already been established that the
residence of a corporation is the place where its
principal office is established.[13]
This Court has also definitively ruled that
for purposes of venue, the term residence is
synonymous with domicile.[14] Correspondingly,
the Civil Code provides:
Art. 51. When the law
creating or recognizing them, or
any other provision does not fix
the domicile of juridical persons,
the same shall be understood to
be the place where their legal
representation is established or
where they exercise their
[15]
principal functions.
It now becomes apparent that the

residence or domicile of a juridical person is fixed
by the law creating or recognizing it. Under
Section 14(3) of the Corporation Code, the place
where the principal office of the corporation is to
be located is one of the required contents of the
articles of incorporation, which shall be filed with
the Securities and Exchange Commission (SEC).
In the present case, there is no question

as to the residence of respondent. What needs to
be
examined
is
that
of
petitioner. Admittedly,[16] the latters principal
place of business is Makati, as indicated in its
Articles of Incorporation. Since the principal place
of business of a corporation determines its
residence or domicile, then the place indicated in
petitioners articles of incorporation becomes
controlling in determining the venue for this case.
Petitioner argues that the Rules of Court
do not provide that when the plaintiff is a
corporation, the complaint should be filed in the
location of its principal office as indicated in its
articles of incorporation.[17] Jurisprudence has,
however, settled that the place where the
principal office of a corporation is located, as
stated in the articles, indeed establishes its
residence.[18] This ruling is important in
determining the venue of an action by or against a
corporation,[19] as in the present case.
Without merit is the argument of
petitioner that the locality stated in its Articles of
Incorporation does not conclusively indicate that
its principal office is still in the same place. We
agree with the appellate court in its observation
that the requirement to state in the articles the
place where the principal office of the corporation
is to be located is not a meaningless
requirement. That proviso would be rendered
nugatory if corporations were to be allowed to
simply disregard what is expressly stated in their
Articles of Incorporation.[20]
Inconclusive are the bare allegations of
petitioner that it had closed its Makati office and
relocated to Mandaluyong City, and that
respondent was well aware of those
circumstances.
Assuming arguendo that they
transacted business with each other in the
Mandaluyong office of petitioner, the fact remains
that, in law, the latters residence was still the
place
indicated
in
its
Articles
of
Incorporation. Further unacceptable is its faulty
reasoning that the ground for the CAs dismissal of
its Complaint was its failure to amend its Articles
of Incorporation so as to reflect its actual and
present principal office. The appellate court was
clear enough in its ruling that the Complaint was
dismissed because the venue had been improperly
laid, not because of the failure of petitioner to
amend the latters Articles of Incorporation.
Indeed, it is a legal truism that the rules
on the venue of personal actions are fixed for the
convenience of the plaintiffs and their

witnesses. Equally settled, however, is the
principle that choosing the venue of an action is
not left to a plaintiffs caprice; the matter is
regulated by the Rules of Court.[21] Allowing
petitioners arguments may lead precisely to what
this Court was trying to avoid in Young Auto Supply
Company v. CA:[22] the creation of confusion and
untold inconveniences to party litigants. Thus
enunciated the CA:
x x x. To insist that the
proper venue is the actual
principal office and not that
stated in its Articles of
Incorporation would indeed
create confusion and work
untold
inconvenience.
Enterprising
litigants may, out of some
ulterior
motives,
easily
circumvent the rules on venue by
the simple expedient of closing
old offices and opening new
ones in another place that they
may find well to suit their
[23]
needs.
We find it necessary to remind party
litigants, especially corporations, as follows:
The rules on venue,
like the other procedural rules,
are designed to insure a just and
orderly administration of justice
or the impartial and evenhanded
determination of every action
and proceeding. Obviously, this
objective will not be attained if
the plaintiff is given unrestricted
freedom to choose the court
where he may file his complaint
or petition.
The choice of venue
should not be left to the
plaintiffs whim or caprice. He
may be impelled by some
ulterior motivation in choosing
to file a case in a particular court
even if not allowed by the rules
on venue.[24]
According to the appellate court, since
Makati was the principal place of business of both
respondent and petitioner, as stated in the latters
Articles of Incorporation, that place was
controlling for purposes of determining the proper

venue. The fact that petitioner had abandoned its
principal office in Makati years prior to the filing of
the original case did not affect the venue where
personal actions could be commenced and tried.
Sec. 3. Venue of actions against non-residents.
If any of the defendants does not reside and is not
found in the Philippines, and the action affects the
personal status of the plaintiff, or any property of
said defendant located in the Philippines, the
action may be commenced and tried in the court of
the place where the plaintiff resides, or where the
property or any portion thereof is situated or
found.
TIME, INC. VS. HON. ANDRES REYES
GR No. L 28882, May 31, 1971
Facts:
Private respondents Antonio Villegas and Juan
Ponce Enrile are the Mayor of Manila, and the
Undersecretary of Finance, respectively.
Petitioner Time, Inc. is an American corporation
with principal offices at Rockefeller Center, New
York City, N.Y. and is the publisher of Time
Magazine.
Antonio J. Villegas and Juan Ponce Enrile seek to
recover from the herein petitioner damages upon
an alleged libel arising from a publication of Time
(Asia Edition) magazine, in its issue of 18 August
1967, of an essay, entitled "Corruption in Asia".
The civil case was filed in the CFI of Rizal, which, in
part, reads, as follows:
The problem of Manila's mayor, ANTONIO
VILLEGAS, is a case in point. When it was
discovered last year that the mayor's
coffers contained far more pesos than
seemed reasonable in the light of his
income, an investigation was launched.
Witnesses who had helped him out under
curious circumstance were asked to
explain in court. One government official

admitted lending Villegas P30,000 pesos
($7,700) without interest because he was
the mayor's compadre. An assistant
declared he had given Villegas loans
without collateral because he regarded
the boss as my own son. A wealthy
Manila businessman testified that he had
lent Villegas' wife 15,000 pesos because
the mayor was like a brother to me. With
that, Villegas denounced the investigation
as an invasion of his family's privacy. The
case was dismissed on a technicality, and
Villegas is still mayor
More specifically, the plaintiffs complaint alleges,
inet alia that:
(4)
Defendants,
conspiring
and
confederating, published a libelous
article, publicly, falsely and maliciously
imputing to Plaintiffs the commission of
the crimes of graft, corruption and
nepotism;
that
said
publication
particularly referred to Plaintiff Mayor
Antonio J. Villegas as a case in point in
connection with graft, corruption and
nepotism in Asia; that said publication
without any doubt referred to co-plaintiff
Juan Ponce Enrile as the high government
official who helped under curious
circumstances Plaintiff Mayor Antonio J.
Villegas
in
lending
the
latter
approximately P30,000.00 ($7,700.00)
without interest because he was the
Mayor's compadre; that the purpose of
said Publications is to cause the dishonor,
discredit and put in public contempt the
Plaintiffs, particularly Plaintiff Mayor
Antonio J. Villegas.
Thereafter, petitioner received the summons and a
copy of the complaint at its offices in New York on
13 December 1967 and, on 27 December 1967, it
filed a motion to dismiss the complaint for lack of
jurisdiction and improper venue, relying upon the
provisions of Republic Act 4363. Private
respondents opposed the motion.
In an order dated 26 February 1968, respondent
court deferred the determination of the motion to
dismiss until after trial of the case on the merits,
the court having considered that the grounds
relied upon in the motion do not appear to be
indubitable.
Failing in its efforts to discontinue the taking of the

depositions, previously adverted to, and to have
action taken, before trial, on its motion to dismiss,
petitioner filed the instant petition for certiorari
and prohibition.
ISSUE:
WON the CFI of Rizal has jurisdiction over
the case.
HELD:
NO. THE CFI OF RIZAL HAS NO JURISDICTION OVER
THE CASE.
Provisions of Republic Act No. 4363, which are
relevant to the resolution of the foregoing issues,
read, as follows:
Section 1. Article three hundred sixty of the
Revised Penal Code, as amended by Republic Act
Numbered Twelve hundred and eighty-nine, is
further amended to read as follows:
'ART. 360. Persons responsible. Any
person who shall publish, exhibit, or
cause the publication or exhibition of any
defamation in writing or by similar means,
shall be responsible for the same.
The author or editor of a book or
pamphlet, or the editor or business
manager of a daily newspaper, magazine
or serial publication, shall be responsible
for the defamations contained therein to
the extent as if he were the author
thereof.
The criminal and civil action for damages
in cases of written defamations as
provided for in this chapter, shall be filed
simultaneously or separately with the
court of first instance of the province or
city where the libelous article is printed
and first published or where any of the
offended parties actually resides at the
time of the commission of the
offense; Provided, however, That where
one of the offended parties is a public
officer whose office is in the City of
Manila at the time of the commission of
the offense, the action shall be filed in the
Court of First Instance of the City of
Manila or of the city or province where
the libelous article is printed and first

published, and in case such public officer
does not hold office in the City of Manila,
the action shall be filed in the Court of
First Instance of the province or city
where he held office at the time of the
commission of the offense or where the
libelous article is printed and first
published and in case one of the offended
parties is a private individual, the action
shall be filed in the Court of First Instance
of the province or city where he actually
resides at the time of the commission of
the offense or where the libelous matter
is
printed
and
first
published; Provided, further, That the civil
action shall be filed in the same court
where the criminal action is filed and vice
versa; Provided, furthermore, That the
court where the criminal action or civil
action for damages is first filed, shall
acquire jurisdiction to the exclusion of
other courts; And provided finally, That
this amendment shall not apply to cases
of written defamations, the civil and/or
criminal actions which have been filed in
court at the time of the effectivity of the
law
Under the first proviso in section 1, the venue of a
civil action for damages in cases of written
defamations is localized upon the basis of, first,
whether the offended party or plaintiff is a public
officer or a private individual; and second, if he is a
public officer, whether his office is in Manila or not
in Manila, at the time of the commission of the
offense. If the offended party is a public officer in
the office in the City of Manila, the proviso limits
him to two (2) choices of venue, namely, in the
Court of First instance of the City of Manila or in
the city or province where the libelous article is
printed and first published ..."
"to minimize or limit the filing of out-of-town libel

suits" to protect an alleged offender from
"hardships, inconveniences and harassments" and,
furthermore, to protect "the interest of the public
service" where one of the offended parties is a
public officer." 4 The intent, of the law is clear: a
libeled public official might sue in the court of the
locality where he holds office, in order that the
prosecution of the action should interfere as little
as possible with the discharge of his official duties
and labors. The only alternative allowed him by
law is to prosecute those responsible for the libel
in the place where the offending article was
printed and first published. Here, the law tolerates
the interference with the libeled officer's duties
only for the sake of avoiding unnecessary
harassment of the accused. Since the offending
publication was not printed in the Philippines, the
alternative venue was not open to respondent
Mayor Villegas of Manila and Undersecretary of
Finance Enrile, who were the offended parties.
Sec. 4. When Rule not applicable.
This Rule shall not apply:
(a) In those cases where a specific rule or law
provides otherwise; or
(b) Where the parties have validly agreed in writing
before the filing of the action on the exclusive
venue thereof.
Union Bank of the Philippines vs. Maunlad
Homes, et al.,
G.R. No. 190071, August 15, 2012
Penned by: Justice Brion
The complaint lodged in the court of Rizal by

respondents does not allege that the libelous
article was printed and first published in the
province of Rizal and, since the respondentsplaintiffs are public officers with offices in Manila
at the time of the commission of the alleged
offense, it is clear that the only place left for them
wherein to file their action, is the Court of First
Instance of Manila.
The limitation of the choices of venue, as
introduced into the Penal Code through its
amendments by Republic Act 4363, was intended
Facts:
Union Bank is the owner of Maunlad
Shopping Mall located in Malolos Bulacan.
Petitioner and Respondent executed a contract to
sell on August 2002 wherein the former is the
seller and the latter is the buyer. The contract set
the purchase price at P 151 million, P 2.4 million of
which was to be paid by Maunlad Homes as down
payment payable on or before July 5, 2002, with
the balance to be amortized over the succeeding
180-month period. Under the contract, Union
Bank authorized Maunlad Homes to take
possession of the property and to build or

introduce improvements thereon. The parties also
agreed that if Maunlad Homes violates any of the
provisions of the contract, all payments made will
be applied as rentals for the use and possession
of the property, and all improvements introduced
on the land will accrue in favor of Union Bank. In
the event of rescission due to failure to pay or to
comply with the terms of the contract, Maunlad
Homes will be required to immediately vacate the
property and must voluntarily turn possession over
to Union Bank.
contract; the propriety of the rescission, however,

is a question that is within the RTCs jurisdiction.
Hence, Maunlad Homes contended that the
dismissal of the ejectment action was proper.
Maunlad failed to pay on what was

stipulated in the contract. Petitioner sent demand
letters to the respondent for payment, recission of
contract and to vacate peacefully the property.
Respondent failed to abide the demands, hence,
Union Bank instituted an ejectment suit before
the Metropolitan Trial Court (MeTC) of Makati
City, Branch 64, on February 19, 2004.
RULING OF THE COURT:
The METC dismissed the case of

ejectment on the basis that such action must be
based on accsion reindivicatoria and the latter
court has no jurisdiction over the case. UBP
appealed to the RTC unto the Court of Appeals but
the decision of the court a quo was affirmed by the
following courts. On appeal to the Supreme Court,
first, it was dismissed but on the filing of motion
for reconsideration, the Highest Tribunal gave due
course of the case.
Petitioner averred the Honorable Court of
Appeals was in error in ruling that the claiming
ownership over the property through the
ejectment action. It claimed that it never lost
ownership over the property despite the execution
of the contract, since only the right to possess was
conceded to Maunlad Homes under the contract;
Union Bank never transferred ownership of the
property to Maunlad Homes. Because of Maunlad
Homes failure to comply with the terms of the
contract, Union Bank believes that it rightfully
rescinded the sale, which rescission terminated
Maunlad Homes right to possess the subject
property. Since Maunlad Homes failed to turn over
the possession of the subject property, Union Bank
believes that it correctly instituted the ejectment
suit.
While Respondents argued that invoking
the rulings of the lower courts. It considered Union
Banks action as based on the propriety of the
rescission of the contract, which, in turn, is based
on a determination of whether Maunlad Homes
indeed failed to comply with the terms of the
ISSUE:
A. WHETHER OR NOT METC
JURISDICTION OVER THE CASE?
HAS
B. WHETHER OR NOT METC IN MAKATI CITY

IS THE PROPER VENUE OF THE CASE?
On the first issue:

The answer is in the affirmative. The
MeTC has jurisdiction over the case. The court is
guided that the jurisdiction of a court is
determined by the nature of the action pleaded by
the litigant through the allegation in the
complaint. Such action is based on unlawful
detainer. The all the requisites established by the
rules of court on unlawful detainer cases (Rule 70
Section 1) were attendant in this case.
`The authority granted to the MeTC to
preliminarily resolve the issue of ownership to
determine the issue of possession ultimately
allows it to interpret and enforce the contract or
agreement between the plaintiff and the
defendant. To deny the MeTC jurisdiction over a
complaint merely because the issue of possession
requires the interpretation of a contract will
effectively rule out unlawful detainer as a remedy.
As stated, in an action for unlawful detainer, the
defendants right to possess the property may be
by virtue of a contract, express or implied;
corollarily, the termination of the defendants right
to possess would be governed by the terms of the
same contract. Interpretation of the contract
between the plaintiff and the defendant is
inevitable because it is the contract that initially
granted the defendant the right to possess the
property; it is this same contract that the plaintiff
subsequently claims was violated or extinguished,
terminating the defendants right to possess.
On the Second Issue:
The answer is in the affirmative. Maunlad
Homes questioned the venue of Union Banks
unlawful detainer action which was filed in Makati
City while the contested property is located in
Malolos, Bulacan. Citing Section 1, Rule 4 of the
Rules of Court, Maunlad Homes claimed that the
unlawful detainer action should have been filed

with the municipal trial court of the municipality
or city where the real property involved is
situated. Union Bank, on the other hand, justified
the filing of the complaint with the MeTC of
Makati City on the venue stipulation in the
contract which states that "the venue of all suits
and actions arising out of or in connection with
this Contract to Sell shall be at Makati City."30
While Section 1, Rule 4 of the Rules of
Court states that ejectment actions shall be filed in
"the municipal trial court of the municipality or
city wherein the real property involved x x x is
situated," Section 4 of the same Rule provides
that the rule shall not apply "where the parties
have validly agreed in writing before the filing of
the action on the exclusive venue thereof."
Precisely, in this case, the parties provided for a
different venue. In Villanueva v. Judge Mosqueda,
etc., et al.,31 the Court upheld the validity of a
stipulation in a contract providing for a venue for
ejectment actions other than that stated in the
Rules of Court. Since the unlawful detainer action
is connected with the contract, Union Bank
rightfully filed the complaint with the MeTC of
Makati City.
MAKATI DEVELOPMENT CORPORATION VS.

TANJUATCO and CONCRETE AGGREGATES
G.R. NO. L-26443, March 25, 1969
Penned by: Chief Justice Conception
FACTS:
Appeal by plaintiff Makati Development
Corporation from an order of dismissal of the
Court of First Instance of Rizal (Pasig), predicated
upon lack of jurisdiction.
On February 21, 1963, said plaintiff and
defendant Pedro C. Tanjuatco entered into a
contract whereby the latter bound himself to
construct a reinforced concrete covered water
reservoir, office and pump house and water main
at Forbes Park, Makati, Rizal, furnishing, inter alia,
the materials necessary therefor. Before making
the final payment of the consideration agreed
upon, plaintiff inquired from the suppliers of
materials, who had called its attention to unpaid
bills therefor of Tanjuatco, whether the latter had
settled his accounts with them. In response to this
inquiry, Concrete Aggregates, Inc. made a claim
in the sum of P5,198.75, representing the cost of
transit-mixed concrete allegedly delivered to
Tanjuatco. With his consent, plaintiff withheld said
amount from the final payment made to him and,

in view of his subsequent failure to settle the issue
thereon with the Supplier, on September 16, 1955,
plaintiff instituted the present action, in the Court
of First Instance of Rizal, against Tanjuatco and
the Supplier, to compel them "to interplead their
conflicting claims."
On October 4, 1965, Tanjuatco moved to
dismiss the case, upon the ground that the court
had no jurisdiction over the subject-matter of the
litigation, the amount involved therein being less
than P10,000.00. 1 Finding this motion "to be welltaken", the lower court granted the same, over
plaintiffs opposition thereto, and, accordingly,
issued an order, dated November 16, 1965,
dismissing the case, without costs.
ISSUE
WHETHER OR NOT THE DISMISSAL WAS PROPER?
RULING:
In the affirmative. There is no question in
this case that plaintiff may compel the defendants
to interplead among themselves, concerning the
aforementioned sum of P5,198.75. The only issue
is who among the defendants is entitled to collect
the same. This is the object of the action, which is
not within the jurisdiction of the lower court.
the jurisdiction of our courts over the
subject-matter of justiciable controversies is
governed by Rep. Act No. 296, as amended,
pursuant to which municipal courts shall have
exclusive original jurisdiction in all civil cases "in
which the demand, exclusive of interest, or the
value of the property in controversy", amounts to
not more than "ten thousand pesos." Secondly,
"the power to define, prescribe, and apportion the
jurisdiction of the various courts" belongs to
Congress and is beyond the rule-making power of
the Supreme Court, which is limited to matters
concerning pleading, practice, and procedure in all
courts, and the admission to the practice of law. 4
Thirdly, the failure of said section 19 of Rule 5 of
the present Rules of Court to make its Rule 63, on
interpleading, applicable to inferior courts, merely
implies that the same are not bound to follow Rule
63 in dealing with cases of interpleading, but may
apply thereto the general rules on procedure
applicable to ordinary civil action in said courts.
PILIPINO TELEPHONE CORP. VS. TECSON

FACTS:
On 05 April 2001, respondent filed with the
Regional Trial Court of Iligan City, Lanao Del Norte,
a complaint against petitioner for a "Sum of
Money and Damages." Petitioner moved for the
dismissal of the complaint on the ground of
improper venue, citing a common provision in the
mobiline service agreements to the effect that "Venue of all suits arising from this Agreement or
any other suit directly or indirectly arising from the
relationship between PILTEL and subscriber shall
be in the proper courts of Makati, Metro Manila.
Subscriber hereby expressly waives any other
venues."1
In an order, dated 15 August 2001, the Regional
Trial Court of Iligan City, Lanao del Norte, denied
petitioners motion to dismiss and required it to
file an answer within 15 days from receipt thereof.
Petitioner PILTEL filed a motion for the
reconsideration, through registered mail, court
denied the motion for reconsideration. Petitioner
appealed before the CA but CA affirmed the
decision of the lower court.
ISSUE:
Whether or not stipulation of venue in the
contract of adhesion is binding upon the
respondent.
RILING:
Section 4, Rule 4, of the Revised Rules of Civil
Procedure allows the parties to agree and
stipulate in writing, before the filing of an action,
on the exclusive venue of any litigation between
them. Such an agreement would be valid and
binding provided that the stipulation on the
chosen venue is exclusive in nature or in intent,
that it is expressed in writing by the parties
thereto, and that it is entered into before the filing
of the suit.
The provision contained in paragraph 22 of the
"Mobile Service Agreement," a standard contract
made out by petitioner PILTEL to its subscribers,
apparently accepted and signed by respondent,
states that the venue of all suits arising from the

agreement, or any other suit directly or indirectly
arising from the relationship between PILTEL and
subscriber, "shall be in the proper courts of
Makati, Metro Manila. The added stipulation that
the subscriber "expressly waives any other venue
should indicate, clearly enough, the intent of the
parties to consider the venue stipulation as being
preclusive in character.
The contract herein involved is a contract of

adhesion. But such an agreement is not per
se inefficacious. The rule instead is that, should
there be ambiguities in a contract of adhesion,
such ambiguities are to be construed against the
party that prepared it. If, however, the stipulations
are not obscure, but are clear and leave no doubt
on the intention of the parties, the literal meaning
4
of its stipulations must be held controlling.
A contract of adhesion is just as binding as
ordinary contracts. It is true that this Court has, on
occasion, struck down such contracts as being
assailable when the weaker party is left with no
choice by the dominant bargaining party and is
thus completely deprived of an opportunity to
bargain effectively. Nevertheless, contracts of
adhesion are not prohibited even as the courts
remain careful in scrutinizing the factual
circumstances underlying each case to determine
the respective claims of contending parties on
their efficacy.
In the case at bar, respondent secured six (6)
subscription contracts for cellular phones on
various dates. It would be difficult to assume that,
during each of those times, respondent had no
sufficient opportunity to read and go over the
terms and conditions embodied in the
agreements. Respondent continued, in fact, to
acquire in the pursuit of his business subsequent
subscriptions and remained a subscriber of
petitioner for quite sometime.
In Development Bank of the Philippines vs.
5
National Merchandising Corporation, the
contracting parties, being of age and businessmen
of experience, were presumed to have acted with
due care and to have signed the assailed
documents with full knowledge of their import.
The situation would be no less true than that
which obtains in the instant suit. The
circumstances in Sweet Lines, Inc. vs.
Teves,6 wherein this Court invalidated the venue
stipulation contained in the passage ticket, would

appear to be rather peculiar to that case. There,
the Court took note of an acute shortage in interisland vessels that left passengers literally
scrambling to secure accommodations and tickets
from crowded and congested counters. Hardly,
therefore, were the passengers accorded a real
opportunity to examine the fine prints contained
in the tickets, let alone reject them.
A contract duly executed is the law between the
parties, and they are obliged to comply fully and
not selectively with its terms. A contract of
adhesion is no exception.
The instant petition is GRANTED.
SPOUSES HERMES P. OCHOA and ARACELI D.
OCHOA, Petitioners,
vs.
CHINA BANKING CORPORATION, Respondent.
G.R. No. 192877
March 23, 2011
Facts:
For resolution is petitioners motion for
reconsideration of our January 17, 2011
Resolution denying their petition for review on
certiorari for failing to sufficiently show any
reversible error in the assailed judgment of the
Court of Appeals (CA).
Petitioners insist that it was error for the CA to
rule that the stipulated exclusive venue of Makati
City is binding only on petitioners complaint for
Annulment of Foreclosure, Sale, and Damages filed
before the Regional Trial Court of Paraaque City,
but not on respondent banks Petition for
Extrajudicial Foreclosure of Mortgage, which was
filed with the same court.
We disagree.
The extrajudicial foreclosure sale of a real estate
mortgage is governed by Act No. 3135, as
amended by Act No. 4118, otherwise known as
"An Act to Regulate the Sale of Property Under
Special Powers Inserted In or Annexed to RealEstate Mortgages." Sections 1 and 2 thereof clearly
state:
Section 1. When a sale is made under a

special power inserted in or attached to
any real-estate mortgage hereafter made
as security for the payment of money or
the fulfillment of any other obligation, the
provisions of the following sections shall
govern as to the manner in which the sale
and redemption shall be effected, whether
or not provision for the same is made in
the power.
Sec. 2. Said sale cannot be made legally
outside of the province in which the
property sold is situated; and in case the
place within said province in which the
sale is to be made is the subject of
stipulation, such sale shall be made in said
place or in the municipal building of the
municipality in which the property or part
thereof is situated.
The case at bar involves petitioners mortgaged
real property located in Paraaque City over which
respondent bank was granted a special power to
foreclose extra-judicially. Thus, by express
provision of Section 2, the sale can only be made
in Paraaque City.
The exclusive venue of Makati City, as stipulated
by the parties and sanctioned by Section 4, Rule 4
of the Rules of Court, cannot be made to apply to
the Petition for Extrajudicial Foreclosure filed by
respondent bank because the provisions of Rule 4
pertain to venue of actions, which an extrajudicial
foreclosure is not.
Pertinent are the following disquisitions in Supena
v. De la Rosa:
Section 1, Rule 2 [of the Rules of Court] defines
an action in this wise:
"Action means an ordinary suit in a court of justice,
by which one party prosecutes another for the
enforcement or protection of a right, or the
prevention or redress of a wrong."
Hagans v. Wislizenus does not depart from this
definition when it states that "[A]n action is a
formal demand of one's legal rights in a court of
justice in the manner prescribed by the court or by
the law. x x x." It is clear that the determinative or
operative fact which converts a claim into an
"action or suit" is the filing of the same with a
"court of justice." Filed elsewhere, as with some
other body or office not a court of justice, the
claim may not be categorized under either term.

Unlike an action, an extrajudicial foreclosure of
real estate mortgage is initiated by filing a petition
not with any court of justice but with the office of
the sheriff of the province where the sale is to be
made. By no stretch of the imagination can the
office of the sheriff come under the category of a
court of justice. And as aptly observed by the
complainant, if ever the executive judge comes
into the picture, it is only because he exercises
administrative supervision over the sheriff. But this
administrative supervision, however, does not
change the fact that extrajudicial foreclosures are
not judicial proceedings, actions or suits.
These pronouncements were confirmed on August
7, 2001 through A.M. No. 99-10-05-0, entitled
"Procedure in Extra-Judicial Foreclosure of
Mortgage," the significant portions of which
provide:
In line with the responsibility of an
Executive Judge under Administrative
Order No. 6, date[d] June 30, 1975, for
the management of courts within his
administrative area, included in which is
the task of supervising directly the work
of the Clerk of Court, who is also the ExOffice Sheriff, and his staff, and the
issuance of commissions to notaries
public and enforcement of their duties
under the law, the following procedures
are hereby prescribed in extra-judicial
foreclosure of mortgages:
1. All applications for
extrajudicial foreclosure of
mortgage whether under the
direction of the sheriff or a
notary public, pursuant to Act
3135, as amended by Act 4118,
and Act 1508, as amended, shall
be filed with the Executive Judge,
through the Clerk of Court who is
also the Ex-Officio Sheriff.
Verily then, with respect to the venue of
extrajudicial foreclosure sales, Act No. 3135, as
amended, applies, it being a special law dealing
particularly with extrajudicial foreclosure sales of
real estate mortgages, and not the general
provisions of the Rules of Court on Venue of
Actions.
Consequently, the stipulated exclusive venue of
Makati City is relevant only to actions arising from
or related to the mortgage, such as petitioners

complaint for Annulment of Foreclosure, Sale, and
Damages.
WHEREFORE, premises considered, the motion for
reconsideration is hereby DENIED.
G.R. No. 170281
January 18, 2008
REPUBLIC OF THE PHILIPPINES, represented by

the ANTI-MONEY LAUNDERING
COUNCIL, petitioner,
vs.
GLASGOW CREDIT AND COLLECTION SERVICES,
INC. and CITYSTATE SAVINGS BANK,
INC., respondents.
FACTS:
On July 18, 2003, the Republic filed a

complaint in the RTC Manila for civil
forfeiture of assets (with urgent plea for
issuance of temporary restraining order
[TRO] and/or writ of preliminary
injunction) against the bank deposits in
account number CA-005-10-000121-5
maintained by Glasgow in CSBI. The case,
filed pursuant to RA 9160 (the AntiMoney Laundering Act of 2001), as
amended, was docketed as Civil Case No.
03-107319.
The Executive Judge of the RTC
Manila issued a 72-hour TRO and the
case was thereafter raffled to Branch 47
and the hearing on the application for
issuance of a writ of preliminary
injunction was set on August 4, 2003.
After hearing, the trial court (through
then Presiding Judge Marivic T. BalisiUmali) issued an order granting the
issuance of a writ of preliminary
injunction.
Meanwhile, summons to Glasgow was
returned "unserved" as it could no
longer be found at its last known
address.
On October 8, 2003, the Republic filed a
verified omnibus motion for (a) issuance
of alias summons and (b) leave of court to
serve summons by publication. This was
archived by the court for failure of the

Republic to serve the alias summons.
The case was however reinstated with the
same omnibus motion, again the trial
court directed the Republic to serve
the alias summons on Glasgow and CSBI
within 15 days.
On July 12, 2004, the Republic (through
the Office of the Solicitor General [OSG])
received a copy of the sheriffs return
dated June 30, 2004 stating that
the alias summons
was
returned
"unserved" as Glasgow was no longer
holding office at the given address since
July 2002 and left no forwarding address.
Thus, on August 11, 2005, the Republic
filed a manifestation and ex parte motion
to resolve its motion for leave of court to
serve summons by publication.
On August 12, 2005, the OSG received a
copy of Glasgows "Motion to Dismiss (By
Way of Special Appearance) alleging that
(1) the court had no jurisdiction over its
person as summons had not yet been
served on it; (2) the complaint was
premature and stated no cause of action
as there was still no conviction for estafa
or other criminal violations implicating
Glasgow and (3) there was failure to
prosecute on the part of the Republic.
This was opposed by the Republic It
contended that its suit was an
action quasi in rem where jurisdiction
over the person of the defendant was
not a prerequisite to confer jurisdiction
on the court. It asserted that prior
conviction for unlawful activity was not a
precondition to the filing of a civil
forfeiture case and that its complaint
alleged ultimate facts sufficient to
establish a cause of action. It denied that
it failed to prosecute the case.
The trial court ruled in favour of Glasgow.
Raising questions of law, the Republic
filed this petition before SC.
ISSUE:
WHETHER the complaint for civil forfeiture was
correctly dismissed on grounds of improper venue,
insufficiency in form and substance and failure to
prosecute.
RULING:
The Court agrees with the Republic.
The Complaint Was Filed

In The Proper Venue
On November 15, 2005, this Court issued A.M. No.
05-11-04-SC, the Rule of Procedure in Cases of Civil
Forfeiture, Asset Preservation, and Freezing of
Monetary Instrument, Property, or Proceeds
Representing, Involving, or Relating to an Unlawful
Activity or Money Laundering Offense under RA
9160, as amended (Rule of Procedure in Cases of
Civil Forfeiture). The order dismissing the
Republics complaint for civil forfeiture of
Glasgows account in CSBI has not yet attained
finality on account of the pendency of this
appeal. Thus, the Rule of Procedure in Cases of
Civil Forfeiture applies to the Republics
8
complaint. Moreover, Glasgow itself judicially
admitted that the Rule of Procedure in Cases of
Civil Forfeiture is "applicable to the instant case.
Section 3, Title II (Civil Forfeiture in the Regional
Trial Court) of the Rule of Procedure in Cases of
Civil Forfeiture provides:
Sec. 3. Venue of cases cognizable by the
regional trial court. A petition for civil
forfeiture shall be filed in any regional
trial court of the judicial region where
the monetary instrument, property or
proceeds representing, involving, or
relating to an unlawful activity or to a
money
laundering
offense
are
located; provided, however, that where
all or any portion of the monetary
instrument, property or proceeds is
located outside the Philippines, the
petition may be filed in the regional trial
court in Manila or of the judicial region
where any portion of the monetary
instrument, property, or proceeds is
located, at the option of the petitioner.
(emphasis supplied)
Under Section 3, Title II of the Rule of Procedure in
Cases of Civil Forfeiture, therefore, the venue of
civil forfeiture cases is any RTC of the judicial
region where the monetary instrument, property
or proceeds representing, involving, or relating to
an unlawful activity or to a money laundering
offense are located. Pasig City, where the account
sought to be forfeited in this case is situated, is
within the National Capital Judicial Region (NCJR).
Clearly, the complaint for civil forfeiture of the
account may be filed in any RTC of the NCJR. Since
the RTC Manila is one of the RTCs of the NCJR,10 it
was a proper venue of the Republics complaint for

civil forfeiture of Glasgows account.
There Was No Failure
To Prosecute
It was shown from the given facts. The Republic
continued to exert efforts to obtain information
from other government agencies on the
whereabouts or current status of respondent
Glasgow if only to save on expenses of publication
of summons. Its efforts, however, proved futile.
The records on file with the Securities and
Exchange Commission provided no information.
Other inquiries yielded negative results.
In Marahay v. Melicor,18 this Court ruled:
While a court can dismiss a case on the
ground of non prosequitur, the real test
for the exercise of such power is whether,
under the circumstances, plaintiff is
chargeable with want of due diligence in
failing to proceed with reasonable
promptitude. In the absence of a pattern
or scheme to delay the disposition of the
case or a wanton failure to observe the
mandatory requirement of the rules on
the part of the plaintiff, as in the case at
bar, courts should decide to dispense
with rather than wield their authority to
dismiss. (emphasis supplied)
We see no pattern or scheme on the part of the
Republic to delay the disposition of the case or a
wanton failure to observe the mandatory
requirement of the rules. The trial court should not
have so eagerly wielded its power to dismiss the
Republics complaint.
Service Of Summons
May Be By Publication
19
In Republic v. Sandiganbayan, this Court declared

that the rule is settled that forfeiture proceedings
are actionsin rem. While that case involved
forfeiture proceedings under RA 1379, the same
principle applies in cases for civil forfeiture under
RA 9160, as amended, since both cases do not
terminate in the imposition of a penalty but
merely in the forfeiture of the properties either
acquired illegally or related to unlawful activities in
favor of the State.
As an action in rem, it is a proceeding against the

thing itself instead of against the person.20 In
actions in rem orquasi in rem, jurisdiction over the
person of the defendant is not a prerequisite to
conferring jurisdiction on the court, provided that
the
court
acquires
jurisdiction
over
the res.21 Nonetheless, summons must be served
upon the defendant in order to satisfy the
22
requirements of due process. For this purpose,
service may be made by publication as such mode
of service is allowed in actions in rem and quasi in
rem.23
In this connection, Section 8, Title II of the Rule of
Procedure in Cases of Civil Forfeiture provides:
Sec. 8. Notice and manner of service. - (a) The
respondent shall be given notice of the petition in
the same manner as service of summons under
Rule 14 of the Rules of Court and the following
rules:
1. The notice shall be served on
respondent personally, or by any other
means prescribed in Rule 14 of the Rules
of Court;
2. The notice shall contain: (i) the title of
the case; (ii) the docket number; (iii) the
cause of action; and (iv) the relief prayed
for; and
3. The notice shall likewise contain a
proviso that, if no comment or opposition
is filed within the reglementary period,
the court shall hear the case ex parte and
render such judgment as may be
warranted by the facts alleged in the
petition and its supporting evidence.
(b) Where the respondent is
designated as an unknown
owner
or whenever
his
whereabouts are unknown and
cannot be ascertained by
diligent inquiry, service may, by
leave of court, be effected upon
him by publication of the notice
of the petition in a newspaper
of general circulation in such
places and for such time as the
court may order. In the event
that the cost of publication
exceeds the value or amount of
the property to be forfeited by
ten percent, publication shall not

be required. (emphasis supplied)
WHEREFORE, the petition is hereby GRANTED.

Rule 3 Sec.9 - 4 (Rules of Court Jurisprudence Digest)

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Rule 3 Sec.9 - 4 (Rules of Court Jurisprudence Digest)

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Sec. 9.

Non-joinder of necessary parties to be

repairing and upgrading radio/communication

SPOUSES CARANDANG: Three of the four checks

important to take note that an indispensable party

rights of such necessary party. Non-compliance

she need not have been impleaded in said suit,

procedural consequences thereof, although such

and a chattel mortgage over the car as security for

After the execution of said documents, Violago

Petitioner filed a Motion to Implead Filinvest

which he complements with a provision in Rule 6,

unwilling party must be a real party in interest. In

-petition is Denied; the assailed decision on the CA

respondent instead filed a motion to dismiss the

court a quo to invoke estoppel to justify its denial

Whether or not Manuel Toledo is an

No, Manuel Toledo

Rule 3, Section 7 of the 1997 Rules of Court states:

interest or leaving the controversy in such a

estate of Manuel. Consequently, the estate of

No, the inclusion of Manuel Toledo as

Section 11 of Rule 3 of the Rules of Court states

Private respondent Catalino U. Villamater

In the course of his chemotherapy, when no

Under Rule 3, Section 11 of the Rules of Court,

Both of these spouses eventually died. Upon the

his failure to do so shall mean dismissal of the

in its own behalf and as a class suit representing

dated March 3, 1999 and (2) the Omnibus Order

(1) their right to use the road on the basis of

NATIONAL FEDERATION OF SUGARCANE

2. The necessary elements for the maintenance of

A writ of preliminary injunction is available to

Petitioner, Newsweek, Inc., a foreign corporation

expenses of litigation, attorneys fees and costs of

This principle has been recognized to be

On Nov. 5, 1981, petitioner filed a motion to

In the case of Uy Tioco vs. Yang Shu Wen

Whether or not the private respondents'

Whether or not the case at bar is a class

Yes, private respondents complaint failed

It is evident from the above ruling that where the

No, the case at bar is not a class suit.

have here a case where each of the

of Directors [which date was subsequently fixed as

1. The necessary elements for the maintenance of

necessary qualifications to become stockholders of

spurious class action (Rule 23 (a) (3) which

The defendants demurred to the

In an amended answer the defendants

Yes. The trial judge is incorrect in

a class interest which will be affected by the

the purpose of the plaintiffs, ifthey secure

parties actually before it are sufficiently numerous

The judgment of the court below is reversed, and

Lianas Supermarket vs National Labor Relations

What number of the inhabitants of the town

ISSUE: WON this case falls under the term class

distinguish the rule on class suits is the

SUPREME COURT DECISION: NO. This is a

The rule is that for a class suit to be allowed, it is

Sec. 12 Class Suit. --- When the