Go v. Distinction Properties Development and Construction, Inc.

(2012)
ii.
FACTS
Philip L. Go, Pacifico Q. Lim and Andrew Q. Lim (petitioners) are registered individual owners of condominium
units in Phoenix Heights Condominium developed by the respondent. Distinction Properties (DPDCI) was the
developer of the said condo. Eventually, Phoenix Hts. Condo Corp (PHCC) was formed.
In August 2008, petitioners, as condominium unit-owners, filed a complaint before the HLURB against Distinction
Properties (DPDCI) [note: the case was filed against DPDCI, and NOT PHCC] for unsound business practices and
violation of the Master Deed and Declaration of Restrictions (MDDR), alleging that DPDCI committed
misrepresentation in their circulated flyers and brochures as to the facilities or amenities that would be available in
the condominium and failed to perform its obligation to comply with the MDDR.
In defense, DPDCI alleged that the brochure attached to the complaint was a mere preparatory draft. HLURB
rendered its decision in favor of petitioners. DPDCI filed with the CA its Petition for Certiorari and Prohibition on the
ground that HLURB acted without or beyond its jurisdiction.
The CA ruled that the HLURB had no jurisdiction over the complaint filed by petitioners as the controversy did not
fall within the scope of the administrative agencys authority.
ISSUES:
1. Whether the HLURB has jurisdiction over the complaint filed by the petitioners
2. Whether PHCC is an indispensable party
HELD:
1.

HLURB has no jurisdiction

a.
General Stuff about jurisdiction over subject matter
i. Jurisdiction over the subject matter of a case is conferred by law and determined by
the allegations in the complaint which comprise a concise statement of the ultimate
facts constituting the plaintiff's cause of action. The nature of an action, as well as
which court or body has jurisdiction over it, is determined based on the allegations
contained in the complaint of the plaintiff, irrespective of whether or not the
plaintiff is entitled to recover upon all or some of the claims asserted therein. The
averments in the complaint and the character of the relief sought are the ones to
be consulted. Once vested by the allegations in the complaint, jurisdiction also
remains vested irrespective of whether or not the plaintiff is entitled to recover upon
all or some of the claims asserted therein.
b. Regarding the jurisdiction of the HLURB
i. The HLURB is given wide latitude in characterizing acts which may constitute
unsound business practice or breach of contractual obligations in the real estate
trade. This grant of expansive jurisdiction to the HLURB does not mean, however,
that all cases involving subdivision lots or condominium units automatically fall
under its jurisdiction. The mere relationship between the parties, i.e., that of being
subdivision owner/developer and subdivision lot buyer, does not automatically vest
jurisdiction in the HLURB.
ii. For an action to fall within the exclusive jurisdiction of the HLURB, the decisive
element is the nature of the action; on this matter, we have consistently held that the
concerned administrative agency, the HLURB, has jurisdiction over complaints
aimed at compelling the subdivision DEVELOPER to comply with its
contractual and statutory obligations.
c.
In the present case:
i. The complaint filed by petitioners alleged causes of action that apparently are not
cognizable by the HLURB considering the nature of the action and the reliefs

iii.

2.

sought.
A perusal of the complaint discloses that petitioners are actually seeking to nullify
and invalidate the duly constituted acts of PHCC (involving an agreement entered
into by PHCC and DPDCI and its Board Resolution)
Moreover, considering that petitioners, who are members of PHCC, are ultimately
challenging the agreement entered into by PHCC with DPDCI, they are assailing, in
effect, PHCCs acts as a body corporate. This action, therefore, partakes the nature
of an intra-corporate controversy, the jurisdiction over which belongs to the RTC
(this should have been filed as a derivative suit).

PHCC is an indispensable party. Thus this case cannot prosper for failure to implead PHCC.
a.
Definition of indispensable party
i. An indispensable party is defined as one who has such an interest in the controversy
or subject matter that a final adjudication cannot be made, in his absence, without
injuring or affecting that interest. It is "precisely when an indispensable party is
not before the court (that) an action should be dismissed. The absence of an
indispensable party renders all subsequent actions of the court null and void
for want of authority to act, not only as to the absent parties but even to those
present. The purpose of the rules on joinder of indispensable parties is a complete
determination of all issues not only between the parties themselves, but also as
regards other persons who may be affected by the judgment.
b. What the Court should do for failure to implead an indispensable party
i. The general rule with reference to the making of parties in a civil action requires the
joinder of all indispensable parties under any and all conditions, their presence
being a sine qua non of the exercise of judicial power.
ii. For this reason, our Supreme Court has held that when it appears of record that
there are other persons interested in the subject matter of the litigation, who are not
made parties to the action, it is the duty of the court to suspend the trial until
such parties are made either plaintiffs or defendants.
iii. Where the petition failed to join as party defendant the person interested in
sustaining the proceeding in the court, the same should be dismissed. When an
indispensable party is not before the court, the action should be dismissed.
iv. Parties in interest without whom no final determination can be had of an action
shall be joined either as plaintiffs or defendants. (Sec. 7, Rule 3, Rules of Court).
The burden of procuring the presence of all indispensable parties is on the
plaintiff.
c.
What is the purpose of this rule?
i. The evident purpose of the rule is to prevent the multiplicity of suits by requiring
the person arresting a right against the defendant to include with him, either as coplaintiffs or as co-defendants, all persons standing in the same position, so that the
whole matter in dispute may be determined once and for all in one litigation.
d. Why the PCC is an indispensable party
i. From all indications, PHCC is an indispensable party and should have been
impleaded, either as a plaintiff or as a defendant, in the complaint filed before the
HLURB as it would be directly and adversely affected by any determination
therein.
ii. To belabor the point, the causes of action, or the acts complained of, were the acts
of PHCC as a corporate body.
iii. Note that in the judgment rendered by the HLURB, DPDCI was ordered (1) to pay
xxx to PHCC; and (2) to refund to PHCC xxx. Also, the HLURB declared as
illegal an agreement to which agreement PHCC was a party.
iv. Evidently, the cause of action rightfully pertains to PHCC.
v. Without PHCC as a party, there can be no final adjudication of the HLURBs
judgment. The CA was, thus, correct in ordering the dismissal of the case for failure
to implead an indispensable party.

WON PNP-DPRM is an indispensable party YES

Macawadib vs PNP

Petitioner was a police officer with the rank of Police Senior Superintendent. Pursuant to the Department of the
Interior and Local Government Act of 1990, the Chief of Directorial Staff of the Philippine National Police (PNP)
issued General Order No. 1168, enumerating the names of commissioned officers who were subject to compulsory
retirement (age of 56). Included in the said Order was petitioner,who was supposed to retire on January 11, 2002.
PNP Records indicate that he was born on January 11, 1946. Petitioner filed an application for late registration of his
birth with the Municipal Civil Registrars Office. Petitioner swore under oath that he was born on January 11, 1956.
The application was, subsequently, approved. Petitioner filed with the RTC of Marawi a Petition for Correction of
Entry in the Public Service Records Regarding the Birth Date.

his allegations are as follows:

That herein petitioner is 45 years old xxx that when petitioner herein joined with (sic) the government service,
particularly the local police force and later on the Integrated National Police, he honestly entered his birth date as
January 11, 1946, while in his (sic) Government Service Insurance System (GSIS, in short) and National Police
Commission, he erroneously entered his birth date as January 11, 1946, which entry are honestly based on estimation,
as Muslim (sic) in the south do not register their marriages and births before. That herein petitioner has correctly
entered his true and correct birth date, January 11, 1956, in his Service Record at the National Headquarters,
Philippine National Police xxx

RTC:
Ordering the Chief, Records Management, PNP NHQ, Camp Crame, Quezon City; Director, Personnel and Records
Management Service, NAPOLCOM; Chief[,] Records of the Civil Service Commission to make a correction upon
the birth date of herein petitioner to January 11, 1956

Respondent filed a Petition for Annulment of Judgment with Prayer for the Issuance of a Temporary Restraining
Order and/or Writ of Preliminary Injunction with the CA on the ground that the trial court failed to acquire
jurisdiction over the PNP, an unimpleaded indispensable party.

CA:
The assailed Decision dated December 4, 2001 of the respondent court in Spl. Proc. No. 782-01 is NULLIFIED and
SET ASIDE. Let a permanent injunction issue in the meantime, barring the private respondent Dimapinto Babai
Macawadib from continuing and prolonging his tenure with the PNP beyond the mandatory retirement age of fifty-six
(56) years.

It is the integrity and correctness of the public records in the custody of the PNP, National Police Commission
(NAPOLCOM) and Civil Service Commission (CSC) which are involved and which would be affected by any
decision rendered in the petition for correction filed by herein petitioner. The aforementioned government agencies
are, thus, required to be made parties to the proceeding. They are indispensable parties, without whom no final
determination of the case can be had. An indispensable party is defined as one who has such an interest in the
controversy or subject matter that a final adjudication cannot be made, in his absence, without injuring or affecting
that interest.

Go v. Distinction Properties Development

Under Section 7, Rule 3 of the Rules of Court, parties in interest without whom no final determination can be had
of an action shall be joined as plaintiffs or defendants. If there is a failure to implead an indispensable party, any
judgment rendered would have no effectiveness. It is precisely when an indispensable party is not before the court
(that) an action should be dismissed. The absence of an indispensable party renders all subsequent actions of the
court null and void for want of authority to act, not only as to the absent parties but even to those present. The
purpose of the rules on joinder of indispensable parties is a complete determination of all issues not only between the
parties themselves, but also as regards other persons who may be affected by the judgment. A decision valid on its
face cannot attain real finality where there is want of indispensable parties. The general rule is that the joinder of all
indispensable parties under any and all conditions, their presence being a sine qua non of the exercise of judicial
power. When it appears of record that there are other persons interested in the subject matter of the litigation, who are
not made parties to the action, it is the duty of the court to suspend the trial until such parties are made either
plaintiffs or defendants. Where the petition failed to join as party defendant the person interested in sustaining the
proceeding in the court, the same should be dismissed. When an indispensable party is not before the court, the action
should be dismissed.

The burden of procuring the presence of all indispensable parties is on the plaintiff. there is a necessity to implead the
PNP, NAPOLCOM and CSC because they stand to be adversely affected by petitioners petition which involves
substantial and controversial alterations in petitioners service records. If petitioners service is extended by ten years,
the government, through the PNP, shall be burdened by the additional salary and benefits. Aside from the OSG, all
other agencies which may be affected by the change should be notified or represented as the truth is best ascertained
under an adversary system of justice. As the above-mentioned agencies were not impleaded in this case much less
given notice of the proceedings, the decision of the trial court granting petitioners prayer for the correction of entries
in his service records, is void.

The absence of an indispensable party renders all subsequent actions of the court null and void for want of authority
to act, not only as to the absent parties but even as to those present.
Issue 2:
whether or not respondent is estopped from assailing the decision of the RTC for failure of the OSG, as government
representative, to participate in the proceedings before the trial court or to file an opposition

No bearing on the validity of the appeal. Absence of opposition from government agencies is of no controlling
significance, because the State cannot be estopped by the omission, mistake or error of its officials or agents.
Issue:

7.

Proclamation No. 131, Series of 1987, was issued instituting a comprehensive agrarian reform program
(CARP) to cover all agricultural lands, regardless of tenurial arrangement and commodity produced, as
provided in the Constitution.

8.

In 1987, Executive Order No. 229 (EO 229) was issued providing, as its title indicates, the mechanisms
for CARP implementation. It created the Presidential Agrarian Reform Council (PARC) as the highest
policy-making body that formulates all policies, rules, and regulations necessary for the implementation of
CARP.
In 1988, RA 6657 or the Comprehensive Agrarian Reform Law of 1988, also known as CARL or the
CARP Law, took effect, ushering in a new process of land classification, acquisition, and distribution. As
to be expected, RA 6657 met stiff opposition, its validity or some of its provisions challenged at every
possible turn. The assault was inevitable, the CARP being an untried and untested project, an experiment
[even], as all life is an experiment, the Court said, borrowing from Justice Holmes.

Issue 3:
WON petitioner was indeed born in 1956,

The late registration of petitioners certificate of live birth on September 3, 2001 was made forty-five (45) years after
his supposed birth and a mere 34 days after the PNPs issuance of its Order for his compulsory retirement. He had all
the time to make such registration but why did he do it only when he was about to retire? If petitioner was indeed
born in 1956, he would have been merely 14 years old in 1970 when he was appointed as Chief of Police. Further, he
does not really appear to be 52 years old but his old age of 62. It can be argued that petitioners belatedly registered
certificate of live birth, as a public document, enjoys the presumption of validity. However, petitioner merely relied
on such presumption without presenting any other convincing or credible evidence. The totality of the evidence
sufficiently negate the presumption of regularity accorded to petitioners belatedly registered birth certificate.

9.

The Case

Hacienda Luisita, Inc. v. PARC, et al.

In this Petition for Certiorari and Prohibition under Rule 65 with prayer for preliminary injunctive relief, petitioner
Hacienda Luisita, Inc. (HLI) assails and seeks to set aside PARC Resolution No. 2005-32-01 and Resolution No.
2006-34-01 as well as the implementing Notice of Coverage.

Historical Background
Facts
1.

2.
3.

4.

5.

6.

Land reform, or the broader term agrarian reform, has been a government policy even before the
Commonwealth era. In fact, at the onset of the American regime, initial steps toward land reform were
already taken to address social unrest. Then, under the 1935 Constitution, specific provisions on social
justice and expropriation of landed estates for distribution to tenants as a solution to land ownership and
tenancy issues were incorporated.
In 1955, the Land Reform Act (Republic Act No. 1400) was passed, setting in motion the expropriation of
all tenanted estates.
In 1963, the Agricultural Land Reform Code (RA 3844) was enacted, abolishing share tenancy and
converting all instances of share tenancy into leasehold tenancy. RA 3844 created the Land Bank of the
Philippines (LBP) to provide support in all phases of agrarian reform.
o
As its major thrust, RA 3844 aimed to create a system of owner-cultivatorship in rice and corn,
supposedly to be accomplished by expropriating lands in excess of 75 hectares for their
eventual resale to tenants. The law, however, had this restricting feature: its operations were
confined mainly to areas in Central Luzon, and its implementation at any level of intensity
limited to the pilot project in Nueva Ecija.
Subsequently, Congress passed the Code of Agrarian Reform (RA 6389) declaring the entire country a
land reform area, and providing for the automatic conversion of tenancy to leasehold tenancy in all areas.
From 75 hectares, the retention limit was cut down to seven hectares.
Barely a month after declaring martial law in September 1972, then President Ferdinand Marcos issued
Presidential Decree No. 27 (PD 27) for the emancipation of the tiller from the bondage of the soil.
Based on this issuance, tenant-farmers, depending on the size of the landholding worked on, can either
purchase the land they tilled or shift from share to fixed-rent leasehold tenancy. While touted as
revolutionary, the scope of the agrarian reform program PD 27 enunciated covered only tenanted,
privately-owned rice and corn lands.
Then came the revolutionary government of then President Corazon C. Aquino and the drafting and
eventual ratification of the 1987 Constitution. Its provisions foreshadowed the establishment of a legal
framework for the formulation of an expansive approach to land reform, affecting all agricultural lands
and covering both tenant-farmers and regular farmworkers

Hacienda Luisita de Tarlac (Hacienda Luisita), once a 6,443-hectare mixed agricultural-industrial-residential expanse
straddling several municipalities of Tarlac and owned by Compa ia General de Tabacos de Filipinas (Tabacalera). In
1957, the Spanish owners of Tabacalera offered to sell Hacienda Luisita as well as their controlling interest in the
sugar mill within the hacienda, the Central Azucarera de Tarlac (CAT), as an indivisible transaction. The Tarlac
Development Corporation (Tadeco), then owned and/or controlled by the Jose Cojuangco, Sr. Group, was willing to
buy. As agreed upon, Tadeco undertook to pay the purchase price for Hacienda Luisita in pesos, while that for the
controlling interest in CAT, in US dollars.

To facilitate the adverted sale-and-purchase package, the Philippine government, through the then Central Bank of
the Philippines, assisted the buyer to obtain a dollar loan from a US bank. Also, the Government Service Insurance
System (GSIS) Board of Trustees extended a PhP 5.911 million loan in favor of Tadeco to pay the peso price
component of the sale. One of the conditions contained in the approving GSIS Resolution No. 3203, as later amended
by Resolution No. 356, Series of 1958, reads as follows: That the lots comprising the Hacienda Luisita shall be
subdivided by the applicant- corporation and sold at cost to the tenants, should there be any, and whenever conditions
should exist warranting such action under the provisions of the Land Tenure Act.

Tadeco had fully paid the purchase price for the acquisition of Hacienda Luisita and Tabacaleras interest in CAT.

The martial law administration filed a suit before the Manila Regional Trial Court (RTC) against Tadeco, et al., for
them to surrender Hacienda Luisita to the then Ministry of Agrarian Reform (MAR, now the Department of Agrarian
Reform [DAR]) so that the land can be distributed to farmers at cost. Responding, Tadeco or its owners alleged that
Hacienda Luisita does not have tenants, besides which sugar landsof which the hacienda consistedare not
covered by existing agrarian reform legislations. As perceived then, the government commenced the case against
Tadeco as a political message to the family of the late Benigno Aquino, Jr.

which were to be issued only to qualified and registered beneficiaries of the CARP, and the remaining 250,000,000 to
any stockholder of the corporation.

As appearing in its proposed SDP, the properties and assets of Tadeco contributed to the capital stock of HLI, as
appraised and approved by the SEC, have an aggregate value of PhP 590,554,220, or after deducting the total
liabilities of the farm amounting to PhP 235,422,758, a net value of PhP 355,531,462. This translated to 355,531,462
shares with a par value of PhP 1/share.

Eventually, the Manila RTC rendered judgment ordering Tadeco to surrender Hacienda Luisita to the MAR.
Therefrom, Tadeco appealed to the Court of Appeals (CA).

The Office of the Solicitor General (OSG) moved to withdraw the governments case against Tadeco, et al. The CA
dismissed the case the Marcos government initially instituted and won against Tadeco, et al. The dismissal action
was, however, made subject to the obtention by Tadeco of the PARCs approval of a stock distribution plan (SDP)
that must initially be implemented after such approval shall have been secured.

Section 10 of EO 229 allows corporate landowners, as an alternative to the actual land transfer scheme of CARP, to
give qualified beneficiaries the right to purchase shares of stocks of the corporation under a stock ownership
arrangement and/or land-to-share ratio.

Like EO 229, RA 6657, under the latters Sec. 31, also provides two (2) alternative modalities, i.e., land or stock
transfer, pursuant to either of which the corporate landowner can comply with CARP, but subject to well-defined
conditions and timeline requirements.

Some 93% of the then farmworker-beneficiaries (FWBs) complement of Hacienda Luisita signified in a referendum
their acceptance of the proposed HLIs Stock Distribution Option Plan. The Stock Distribution Option Agreement
(SDOA), styled as a Memorandum of Agreement (MOA), was entered into by Tadeco, HLI, and the 5,848 qualified
FWBs and attested to by then DAR Secretary Philip Juico. The SDOA embodied the basis and mechanics of the SDP,
which would eventually be submitted to the PARC for approval.

As may be gleaned from the SDOA, included as part of the distribution plan are: (a) production-sharing equivalent to
three percent (3%) of gross sales from the production of the agricultural land payable to the FWBs in cash dividends
or incentive bonus; and (b) distribution of free homelots of not more than 240 square meters each to familybeneficiaries. The production-sharing, as the SDP indicated, is payable irrespective of whether [HLI] makes money
or not, implying that the benefits do not partake the nature of dividends, as the term is ordinarily understood under
corporation law.

Given that, during the period material, the assigned value of the agricultural land in the hacienda was PhP 196.63
million, while the total assets of HLI was PhP 590.55 million with net assets of PhP 355.53 million, Tadeco/HLI
would admit that the ratio of the land-to-shares of stock corresponds to 33.3% of the outstanding capital stock of the
HLI equivalent to 118,391,976.85 shares of stock with a par value of PhP 1/share.

Vis- -vis the stock distribution aspect of the aforequoted Sec. 31, DAR issued Administrative Order No. 10, Series of
1988 (DAO 10), entitled Guidelines and Procedures for Corporate Landowners Desiring to Avail Themselves of the
Stock Distribution Plan under Section 31 of RA 6657.
Subsequently, HLI submitted to DAR its SDP, designated as Proposal for Stock Distribution under C.A.R.P.,
which was substantially based on the SDOA.
From the start, the stock distribution scheme appeared to be Tadecos preferred option, for, it organized a spin-off
corporation, HLI, as vehicle to facilitate stock acquisition by the farmworkers. For this purpose, Tadeco assigned and
conveyed to HLI the agricultural land portion (4,915.75 hectares) and other farm-related properties of Hacienda
Luisita in exchange for HLI shares of stock.

Pedro Cojuangco, Josephine C. Reyes, Teresita C. Lopa, Jose Cojuangco, Jr., and Paz C. Teopaco were the
incorporators of HLI.

To accommodate the assets transfer from Tadeco to HLI, the latter, with the Securities and Exchange Commissions
(SECs) approval, increased its capital stock on from PhP 1,500,000 divided into 1,500,000 shares with a par value of
PhP 1/share to PhP 400,000,000 divided into 400,000,000 shares also with par value of PhP 1/share, 150,000,000 of

Notably, in a follow-up referendum the DAR conducted, 5,117 FWBs, out of 5,315 who participated, opted to receive
shares in HLI. One hundred thirty-two (132) chose actual land distribution.

After a review of the SDP, then DAR Secretary Miriam Defensor-Santiago (Sec. DefensorSantiago) addressed a letter
to Pedro S. Cojuangco (Cojuangco), then Tadeco president, proposing that the SDP be revised. In a letter-reply to
Sec. Defensor-Santiago, Tadeco/HLI explained that the proposed revisions of the SDP are already embodied in both
the SDP and MOA. Following that exchange, the PARC, under then Sec. Defensor-Santiago, by Resolution No.
8912-2, approved the SDP of Tadeco/HLI.

At the time of the SDP approval, HLI had a pool of farmworkers, numbering 6,296, more or less, composed of
permanent, seasonal and casual master list/payroll and non-master list members.

Apart from the 500 hectares alluded to, another 80.51 hectares were later detached from the area coverage of
Hacienda Luisita which had been acquired by the government as part of the Subic-Clark-Tarlac Expressway
(SCTEX) complex. In absolute terms, 4,335.75 hectares remained of the original 4,915 hectares Tadeco ceded to
HLI.

HLI claimed to have extended the several benefits to the FWBs. Two separate groups subsequently contested this
claim of HLI.

HLI applied for the conversion of 500 hectares of land of the hacienda from agricultural to industrial use, pursuant to
Sec. 65 of RA 6657.

The application, according to HLI, had the backing of 5,000 or so FWBs, including respondent Rene Galang, and
Jose Julio Suniga, as evidenced by the Manifesto of Support they signed and which was submitted to the DAR. After
the usual processing, the DAR, thru then Sec. Ernesto Garilao, approved the application, per DAR Conversion Order
No. 030601074-764-(95), Series of 1996, subject to payment of three percent (3%) of the gross selling price to the
FWBs and to HLIs continued compliance with its undertakings under the SDP, among other conditions.

HLI, in exchange for subscription of 12,000,000 shares of stocks of Centennary Holdings, Inc. (Centennary), ceded
300 hectares of the converted area to the latter. Consequently, HLIs Transfer Certificate of Title (TCT) No. 287910
was canceled and TCT No. 292091 was issued in the name of Centennary. HLI transferred the remaining 200
hectares covered by TCT No. 287909 to Luisita Realty Corporation (LRC) in two separate transactions in 1997 and
1998, both uniformly involving 100 hectares for PhP 250 million each.

Centennary, a corporation with an authorized capital stock of PhP 12,100,000 divided into 12,100,000 shares and
wholly-owned by HLI, had the following incorporators: Pedro Cojuangco, Josephine C. Reyes, Teresita C. Lopa,
Ernesto G. Teopaco, and Bernardo R. Lahoz.

Subsequently, Centennary sold the entire 300 hectares to Luisita Industrial Park Corporation (LIPCO) for PhP 750
million. The latter acquired it for the purpose of developing an industrial complex. As a result, Centennarys TCT No.
292091 was canceled to be replaced by TCT No. 310986 in the name of LIPCO.

From the area covered by TCT No. 310986 was carved out two (2) parcels, for which two (2) separate titles were
issued in the name of LIPCO, specifically: (a) TCT No. 365800 and (b) TCT No. 365801, covering 180 and four
hectares, respectively. TCT No. 310986 was, accordingly, partially canceled.

Later on, in a Deed of Absolute Assignment, LIPCO transferred the parcels covered by its TCT Nos. 365800 and
365801 to the Rizal Commercial Banking Corporation (RCBC) by way of dacion en pago in payment of LIPCOs
PhP 431,695,732.10 loan obligations. LIPCOs titles were canceled and new ones, TCT Nos. 391051 and 391052,
were issued to RCBC.

Two separate petitions, both undated, reached the DAR in the latter part of 2003. In the first, denominated as
Petition/Protest, respondents Jose Julio Suniga and Windsor Andaya, identifying themselves as head of the
Supervisory Group of HLI (Supervisory Group), and 60 other supervisors sought to revoke the SDOA,
alleging that HLI had failed to give them their dividends and the one percent (1%) share in gross sales, as well
as the thirty-three percent (33%) share in the proceeds of the sale of the converted 500 hectares of land. They
further claimed that their lives have not improved contrary to the promise and rationale for the adoption of
the SDOA. They also cited violations by HLI of the SDOAs terms. They prayed for a renegotiation of the
SDOA, or, in the alternative, its revocation.

Revocation and nullification of the SDOA and the distribution of the lands in the hacienda were the call in the
second petition, styled as Petisyon (Petition). The Petisyon was ostensibly filed by Alyansa ng mga
Manggagawang Bukid ng Hacienda Luisita (AMBALA), where the handwritten name of respondents Rene
Galang as Pangulo AMBALA and Noel Mallari as Sec-Gen. AMBALA appeared. As alleged, the petition
was filed on behalf of AMBALAs members purportedly composing about 80% of the 5,339 FWBs of
Hacienda Luisita.

HLI would eventually answer the petition/protest of the Supervisory Group. On the other hand, HLIs answer to the
AMBALA petition was contained in its letter also filed with DAR.

Meanwhile, the DAR constituted a Special Task Force to attend to issues relating to the SDP of HLI. Among other
duties, the Special Task Force was mandated to review the terms and conditions of the SDOA and PARC Resolution
No. 89-12-2 relative to HLIs SDP; evaluate HLIs compliance reports; evaluate the merits of the petitions for the
revocation of the SDP; conduct ocular inspections or field investigations; and recommend appropriate remedial
measures for approval of the Secretary.

After investigation and evaluation, the Special Task Force submitted its Terminal Report: Hacienda Luisita,
Incorporated (HLI) Stock Distribution Plan (SDP) Conflict (Terminal Report), finding that HLI has not complied
with its obligations under RA 6657 despite the implementation of the SDP. The Terminal Report and the Special
Task Forces recommendations were adopted by then DAR Sec. Nasser Pangandaman.

Subsequently, Sec. Pangandaman recommended to the PARC Executive Committee (Excom) (a) the recall/revocation
of PARC Resolution No. 89-12-2 dated November 21, 1989 approving HLIs SDP; and (b) the acquisition of
Hacienda Luisita through the compulsory acquisition scheme. Following review, the PARC Validation Committee
favorably endorsed the DAR Secretarys recommendation afore-stated.

The PARC issued the assailed Resolution No. 2005-32-01, the lands subject of the recalled/revoked TDC/HLI SDO
plan be forthwith placed under the compulsory coverage or mandated land acquisition scheme of the [CARP].

A copy of Resolution No. 2005-32-01 was served on HLI the following day, without any copy of the documents
adverted to in the resolution attached. A letter-request for certified copies of said documents was sent to, but was not
acted upon by, the PARC secretariat.

Therefrom, HLI, sought reconsideration. On the same day, the DAR Tarlac provincial office issued the Notice of
Coverage which HLI received.

Its motion notwithstanding, HLI has filed the instant recourse in light of what it considers as the DARs hasty placing
of Hacienda Luisita under CARP even before PARC could rule or even read the motion for reconsideration. As HLI
later rued, it can not know from the above-quoted resolution the facts and the law upon which it is based.

notice of coverage. In the main, they claimed that the revocation of the SDP cannot legally affect their rights as
innocent purchasers for value. Both motions for leave to intervene were granted and the corresponding petitions-inintervention admitted.

The Court heard the main and intervening petitioners on oral arguments. On the other hand, the Court, heard public
respondents as well as the respective counsels of the AMBALA-Mallari-Supervisory Group, the AMBALA-Galang
faction, and the FARM and its 27 members argue their case.

Prior to the oral arguments, however, HLI; AMBALA, represented by Mallari; the Supervisory Group, represented
by Suniga and Andaya; and the United Luisita Workers Union, represented by Eldifonso Pingol, filed with the Court
a joint submission and motion for approval of a Compromise Agreement (English and Tagalog versions).

The Court, in a bid to resolve the dispute through an amicable settlement, issued a Resolution creating a Mediation
Panel. Despite persevering and painstaking efforts on the part of the panel, mediation had to be discontinued when no
acceptable agreement could be reached.

PARC would eventually deny HLIs motion for reconsideration via Resolution No. 2006- 34-01.
PERTINENT Issue: Whether the Supervisory Group, AMBALA, and their respective leaders are real parties-ininterest
By Resolution, the Court, acting on HLIs motion, issued a temporary restraining order, enjoining the implementation
of Resolution No. 2005-32-01 and the notice of coverage.
Held: Yes, they are.
The OSG, for public respondents PARC and the DAR, filed its Comment on the petition.
Ratio
Noel Mallari, impleaded by HLI as respondent in his capacity as Sec-Gen. AMBALA, filed his Manifestation and
Motion with Comment Attached, (Manifestation and Motion). In it, Mallari stated that he has broken away from
AMBALA with other AMBALA ex-members and formed Farmworkers Agrarian Reform Movement, Inc. (FARM).
Should this shift in alliance deny him standing, Mallari also prayed that FARM be allowed to intervene.

As events would later develop, Mallari had a parting of ways with other FARM members, particularly would-be
intervenors Renato Lalic, et al. As things stand, Mallari returned to the AMBALA fold, creating the AMBALA-Noel
Mallari faction and leaving Renato Lalic, et al. as the remaining members of FARM who sought to intervene.

HLI would deny real party-in-interest status to the purported leaders of the Supervisory Group and AMBALA, i.e.,
Julio Suniga, Windsor Andaya, and Rene Galang, who filed the revocatory petitions before the DAR. As HLI would
have it, Galang, the self-styled head of AMBALA, gained HLI employment in June 1990 and, thus, could not have
been a party to the SDOA executed a year earlier.

The Supervisory Group and the AMBALA-Rene Galang faction submitted their Comment/Opposition.

As regards the Supervisory Group, HLI alleges that supervisors are not regular farmworkers, but the company
nonetheless considered them FWBs under the SDOA as a mere concession to enable them to enjoy the same benefits
given qualified regular farmworkers. However, if the SDOA would be canceled and land distribution effected, so HLI
claims, the supervisors would be excluded from receiving lands as farmworkers other than the regular farmworkers
who are merely entitled to the fruits of the land.

RCBC filed a Motion for Leave to Intervene and to File and Admit Attached Petition-In-Intervention. LIPCO later
followed with a similar motion. In both motions, RCBC and LIPCO contended that the assailed resolution effectively
nullified the TCTs under their respective names as the properties covered in the TCTs were veritably included in the

The SDOA no less identifies the SDP qualified beneficiaries as the farmworkers who appear in the annual payroll,
inclusive of the permanent and seasonal employees, who are regularly or periodically employed by HLI. Galang, per
HLIs own admission, is employed by HLI, and is, thus, a qualified beneficiary of the SDP; he comes within the

definition of a real party-in-interest under Sec. 2, Rule 3 of the Rules of Court, meaning, one who stands to be
benefited or injured by the judgment in the suit or is the party entitled to the avails of the suit.

The same holds true with respect to the Supervisory Group whose members were admittedly employed by HLI and
whose names and signatures even appeared in the annex of the SDOA. Being qualified beneficiaries of the SDP,
Suniga and the other 61 supervisors are certainly parties who would benefit or be prejudiced by the judgment
recalling the SDP or replacing it with some other modality to comply with RA 6657.

Even assuming that members of the Supervisory Group are not regular farmworkers, but are in the category of other
farmworkers mentioned in Sec. 4, Article XIII of the Constitution, thus only entitled to a share of the fruits of the
land, as indeed Fortich teaches, this does not detract from the fact that they are still identified as being among the
SDP qualified beneficiaries. As such, they are, thus, entitled to bring an action upon the SDP. At any rate, Atty.
Gener Asuncion, counsel of HLI, admitted during the oral arguments protesters Galang, Suniga, and Andaya are real
parties in interest:

In 1978, RBG and the Central Bank entered into an agreement whereby RBG shall facilitate the loan application of
farmer-borrowers under the CB-International Bank for Reconstruction and Developments (IRBD) Rural Credit
Project. The agreement required RBG to open a separate account where IBRD loan proceeds would be deposited.
RBG opened a special savings account with Metrobank. Metrobank was to receive the credit released by the CB;
Metrobank would then credit the proceeds to RBGs account for release to the farmers. On three occasions, amounts
were credited to Metrobank, which the latter transferred to RBGs account.
(P178,652.00 of farmer-borrower Dominador de Jesus. RBG withdrew the P178,652.00 from its account; Basilio
Panopio, for P189,052.00; Metrobank claims that the RBG also withdrew the entire credited amount from its
account; and Ponciano Lagmans loan application for P220,000.00; RBG only withdrew P75,375.00.)
A month after the last withdrawal, the CB issued debit advices, reversing all approved IBRD loans. The CB debited
Metrobanks account. Metrobank in turn debited RBGs account. However, since RBDs account was insufficient,
Metrobank demanded payment, filing a complaint for collection before the RTC.
RTC yay Metrobank, there is legal subrogation. CA yay Metrobank, but no legal subrogation, and the CB should
be impleaded as a necessary party to explain the loan reversals. Metrobank appeals
Issues

Justice Bersamin: I heard you a while ago that you were conceding the qualified farmer
beneficiaries of Hacienda Luisita were real parties in interest?

Is the CB a necessary party?

Held/Ratio
No.
Atty. Asuncion: Yes, Your Honor please, real party in interest which that question refers to the
complaints of protest initiated before the DAR and the real party in interest there be considered
as possessed by the farmer beneficiaries who initiated the protest.

Further, under Sec. 50, paragraph 4 of RA 6657, farmer-leaders are expressly allowed to represent themselves, their
fellow farmers or their organizations in any proceedings before the DAR.

Clearly, the respective leaders of the Supervisory Group and AMBALA are contextually real parties-in-interest
allowed by law to file a petition before the DAR or PARC.

This is not necessarily to say, however, that Galang represents AMBALA, for as records show and as HLI aptly
noted, his petisyon filed with DAR did not carry the usual authorization of the individuals in whose behalf it was
supposed to have been instituted. To date, such authorization document, which would logically include a list of the
names of the authorizing FWBs, has yet to be submitted to be part of the records.

Metrobank v. Rural Bank of Gerona

Facts

A basic first step in resolving this case is to determine who the liable parties are on the IBRD loans that the Central
Bank extended. The Terms and Conditions of the IBRD 4th Rural Credit Project (Project Terms and Conditions)
executed by the Central Bank and the RBG shows that the farmers-borrowers to whom credits have been extended,
are primarily liable for the payment of the borrowed amounts. The loans were extended through the RBG which also
took care of the collection and of the remittance of the collection to the Central Bank. RBG, however, was not a
mere conduit and collector. While the farmers-borrowers were the principal debtors, RBG assumed liability under
the Project Terms and Conditions by solidarily binding itself with the principal debtors to fulfill the obligation.
How RBG profited from the transaction is not clear from the records and is not part of the issues before us, but if it
delays in remitting the amounts due, the Central Bank imposed a 14% per annum penalty rate on RBG until the
amount is actually remitted. The Central Bank was further authorized to deduct the amount due from RBGs demand
deposit reserve should the latter become delinquent in payment. On these points, paragraphs 5 and 6 of the Project
Terms and Conditions read:
5. Collection received representing repayments of borrowers shall be immediately remitted to the Central Bank,
otherwise[,] the Rural Bank/SLA shall be charged a penalty of fourteen [percent] (14%) p.a. until date of remittance.
6. In case the rural bank becomes delinquent in the payment of amortizations due[,] the Central Bank is authorized to
deduct the corresponding amount from the rural banks demand deposit reserve[13] at any time to cover any
delinquency.
Based on these arrangements, the Central Banks immediate recourse, therefore should have been against the
farmers-borrowers and the RBG; thus, it erred when it deducted the amounts covered by the debit advices
from Metrobanks demand deposit account. Under the Project Terms and Conditions, Metrobank had no
responsibility over the proceeds of the IBRD loans other than serving as a conduit for their transfer from the Central
Bank to the RBG once credit advice has been issued. Thus, we agree with the CAs conclusion that the
agreement governed only the parties involved the Central Bank and the RBG. Metrobank was simply an
outsider to the agreement. Our disagreement with the appellate court is in its conclusion that no legal

subrogation took place; the present case, in fact, exemplifies the circumstance contemplated under paragraph 2, of
Article 1302 of the Civil Code which provides:

4.

Art. 1302. It is presumed that there is legal subrogation:

(2) When a third person, not interested in the obligation, pays with the express or tacit approval of the debtor;
As discussed, Metrobank was a third party to the Central Bank-RBG agreement, had no interest except as a conduit,
and was not legally answerable for the IBRD loans. Despite this, it was Metrobanks demand deposit account,
instead of RBGs, which the Central Bank proceeded against, on the assumption perhaps that this was the
most convenient means of recovering the cancelled loans. That Metrobanks payment was involuntarily made
does not change the reality that it was Metrobank which effectively answered for RBGs obligations.
Was there express or tacit approval by RBG of the payment enforced against Metrobank? After Metrobank received
the Central Banks debit advices in November 1978, it (Metrobank) accordingly debited the amounts it could from
RBGs special savings account without any objection from RBG. RBGs President and Manager, Dr. Aquiles
Abellar, even wrote Metrobank, on August 14, 1979, with proposals regarding possible means of settling the
amounts debited by Central Bank from Metrobanks demand deposit account. These instances are all
indicative of RBGs approval of Metrobanks payment of the IBRD loans. That RBGs tacit approval came after
payment had been made does not completely negate the legal subrogation that had taken place.
Article 1303 of the Civil Code states that subrogation transfers to the person subrogated the credit with all the rights
thereto appertaining, either against the debtor or against third persons. As the entity against which the collection was
enforced, Metrobank was subrogated to the rights of Central Bank and has a cause of action to recover from RBG the
amounts it paid to the Central Bank, plus 14% per annum interest.
Under this situation, impleading the Central Bank as a party is completely unnecessary. We note that the CA
erroneously believed that the Central Banks presence is necessary in order x x x to shed light on the matter of
reversals made by it concerning the loan applications of the end users and to have a complete determination or
settlement of the claim. In so far as Metrobank is concerned, however, the Central Banks presence and the
reasons for its reversals of the IBRD loans are immaterial after subrogation has taken place; Metrobanks
interest is simply to collect the amounts it paid the Central Bank. Whatever cause of action RBG may have
against the Central Bank for the unexplained reversals and any undue deductions is for RBG to ventilate as a thirdparty claim; if it has not done so at this point, then the matter should be dealt with in a separate case that should not in
any way further delay the disposition of the present case that had been pending before the courts since 1980.

5.

6.

7.

Petitioners claimed that the document Pagmamana sa Labas ng Hukuman pertaining to the 240 sq m
lot was perfectly valid and legal, as it was a product of mutual and voluntary agreement between and
among the descendants of the deceased Pedro Sr; that the respondents have no cause of action against
them considering that the respondents lawful share over the estate of Pedro Sr., had already been
transferred to them as evidenced by the Deed of Extrajudicial Settlement with Waiver
a.
In the said deed, respondents adjudicated unto themselves to the exclusion of other heirs, the
parcel of land with an area of 192 sq m by misrepresenting that they were the only legitimate
heirs of Pedro Sr.
RTC: They are in pari delicto, whereby the law leaves them as they are and denies recovery by either one
of them. Although, plaintiffs-heirs of Pedro Constantino, Jr., including Asuncion Laquindanum and
Josefina Cailipan are not parties or signatories to the Extrajudicial Settlement with Waiver they are
successorsininterest of Pedro Constantino, Jr. They are considered privies to said deed, and are bound
by said extrajudicial settlement. They are estopped to share in the real property subject matter of this case.
Pagmamana sa Labas ng Hukuman and the tax declarations stand.
CA: Extrajudicial Settlement with Waiver covering the 192 sq m lot actually belongs to Pedro Jr. (It had
a typographical error: Instead of Pedro Jr., Pedro Constantino only), hence, not part of the estate of Pedro
Sr, considering that the children of Pedro Jr. were specifically identified.
It is asserted by the petitioners that their execution in 1992 of the contract denominated as Pagmamana sa
Labas ng Hukuman which excluded other heirs of Pedro Sr., was with an underlying agreement with the
other heirs including Maria Constantino, daughter of Pedro Jr. and grandmother of respondents. The
agreement was for the other heirs to recognize the 192 square meters lot subject matter of the
Extrajudicial Settlement with Waiver executed in 1968 as the share of the heirs of Pedro Sr. in the estate
of Pedro Sr.

Issue/Held: Whether or not respondents (great grand children of Pedro, Sr.) are considered parties to the unlawful
Extrajudicial Settlement with Waiver, although not signatories to such --- Yes.

Ratio:
Clearly, the principle of in pari delicto cannot be applied. The inapplicability is dictated not only by the fact that two
deeds, not one contract, are involved, but because of the more important reason that such an application would result
in the validation of both deeds instead of their nullification as necessitated by their illegality. It must be emphasized
that the underlying agreement resulting in the execution of the deeds is nothing but a void agreement (contrary to law;
morals, good customs, public order or public policy).

Constantino v. Heirs of Pedro Constantino

Facts:
1.

2.

3.

Pedro Constantino, Sr. (Pedro Sr.), ancestors of the petitioners and respondents, owned several parcels of
land, one of which is an unregistered parcel of land in Bulacan. Upon his death, he was survived by his six
children, one of which is Pedro Constantino, Jr. (Pedro Jr.), the grandfather of the respondents.
Respondents great grandchildren of Pedro Sr. (Laquindanum and Cailipan), in representation of Pedro,
Jr. filed a complaint against petitioners, grandchildren of Pedro Sr. ( Oscar Constantino, Maxima
Constantino and Casimira Maturingan), for the nullification of a document denominated as Pagmamana
sa Labas ng Hukuman, and certain tax declarations.
Respondents alleged that in 1998, petitioners asserted their claim of ownership over the whole parcel of
land to the exclusion of respondents who are occupying a portion thereof; that a tax declaration in the
name of petitioners was unlawfully issued due to the execution of a fictitious document denominated as
Pagmamana sa Labas ng Hukuman, where petitioners misrepresented themselves as the sole and only
heirs of Pedro Sr.

That said, we cannot give credence to the contention of respondents that no fault can be attributed to them or that they
are free from the effects of violation of any laws arising from the supposed unlawful agreement entered into between
Maria Laquindanum, their predecessor-in- interest, and the other heirs, including petitioners herein, based on the fact
that they are not signatories to said agreement, thus, the lack of any binding effect to them. Respondents argued and
set forth as an issue during the trial that they were not signatories to any of the contract or privies to such an
arrangement.

It is not disputed, however, that respondents are successors-in-interest of Maria Laquindanum, one of the
signatories in the Extrajudicial Settlement with Waiver who was also allegedly in agreement with the
petitioners. On this note, We agree with the trial court that respondents are privies to Maria Laquindanum. By
the term privies is meant those between whom an action is deemed binding although they are not literally
parties to the said action.

Correa v. Pascual: Privity in estate denotes the privity between assignor and assignee, donor and donee, grantor and
grantee, joint tenant for life and remainderman or reversioner and their respective assignees, vendor by deed of
warranty and a remote vendee or assignee. A privy in estate is one, it has been said, who derives his title to the
property in question by purchase; one who takes by conveyance.

Cagato v. Almonte

Facts:
1.
Respondents, as successors-in-interest, derive their right from and are in the same position as their predecessor in
whose shoes they now stand. As such successors, respondents situation is analogous to that of a transferee pendente
lite illustrated in Santiago Land Development Corporation v. Court of Appeals: As such, he stands exactly in the
shoes of his predecessor in interest, the original defendant, and is bound by the proceedings had in the case before the
property was transferred to him. He is a proper, but not an indispensable, party as he would, in any event, have been
bound by the judgment against his predecessor. Thus, any condition attached to the property or any agreement
precipitating the execution of the Deed of Extrajudicial Settlement with Waiver which was binding upon
Maria Laquindanum is applicable to respondents who merely succeeded Maria.

This notwithstanding, it must however be shown that the Deed of Extrajudicial Settlement with Waiver, referred to a
property owned by Pedro Sr. Records show that apart from respondent Asuncion Laquindanumss statement that the
parcel of land subject matter of the Deed of Extrajudicial Settlement with Waiver is not part of the estate of Pedro Sr.,
their common ancestor, no other evidence was offered to support it. CA in giving credence to the respondents claim,
merely relied on the alleged typographical error in the Deed. The mention of the names of the children of Pedro Jr. in
the Extrajudicial Settlement is not proof that the subject of the deed is the property of Pedro Jr. meant to exclude all
the other heirs of Pedro Sr.

CA actually contradicted the admissions made no less by the respondents during the pre-trial conference where they
stipulated that the land covered by the tax declaration belongs to Pedro Sr. Clearly, the stipulation is an admission
against respondents interest of the fact of ownership by Pedro, Sr. which was transferred to respondents mother, the
daughter of Pedro, Jr. The general rule regarding conclusiveness of judicial admission upon the party making it and
the dispensation of proof admits of two exceptions: 1) when it is shown that the admission was made through
palpable mistake, and 2) when it is shown that no such admission was in fact made. The latter exception allows one
to contradict an admission by denying that he made such an admission. However, respondents failed to refute the
earlier admission/stipulation before and during the trial, and merely offered a vague explanation as to how such
parcel of land was acquired by Pedro Jr.

Considering that the infirmities in the two deeds relate to exclusion of heirs, both deeds are to be considered void.
While both parties acted in violation of the law on legitimes, the pari delicto rule which refuses remedy to either party
to an illegal agreement and leaves them where they are, does not apply in this case. In order not to put a premium to
the circumvention of the laws as contemplated by the parties in the instant case, we must declare both contracts as
void. Indeed, any circumvention of the law cannot be countenanced.

Decision of the CA reversed.

Action for annulment of deeds of sale, cancellation of title and damages by Cagato against Almonte,
Aguilar, Spouses Fernandez, and Fernandez siblings
2. homestead patent over the property was issued in favor of Juan Gatchalian. Cagatao claimed that
Gatchalian sold the lot to n Manzulin in exchange for one carabao, as embodied in a barter agreement
which was unfortunately destroyed or lost during the Second World War. Manzulin allegedly executed a
private written document transferring ownership over the property to his son-in-law, Cagatao.
3. Cagatao then occupied and cultivated the land until the Fernandez Siblings attempted to take possession of
the lot, thereby prompting him to file the subject complaint before the RTC.
4. The respondents, on the other hand, contended that the Spouses Fernandez purchased the property from
Almonte and Aguilar who had in their possession a tax declaration covering the said land. To protect their
interest, Spouses Fernandez once again bought the same property for P220,000.00 from Emmaculada
Carlos (Carlos), believed to be the owner of the lot by virtue of Transfer Certificate of Title a reconstituted
title in her name. Carlos, in turn, executed a deed of sale in favor of their children, the Fernandez Siblings.
5. Cagatao questioned the sale to Spouses Fernandez by Carlos because, at that time, Manzulin was already
the owner of the subject property. He also pointed out that it was highly irregular that Spouses Fernandez
would buy the same property from two different vendors on two different occasions.
6. Cagatao insisted that the TCT in the name of the Fernandez Siblings was a nullity because the sale from
the Spouses Fernandez was simulated, as testified to by Avelina Fernandez (Fernandez) who confirmed
that she and her husband did not sign the deed of sale purporting to have transferred ownership of the
property to the Fernandez Siblings.
7. respondents claimed that Cagatao was unable to present proof of title or any public document embodying
the sale of the property from Gatchalian to Manzulin and from the latter to Cagatao. They also argued that
even if a homestead patent was indeed issued to Gatchalian, the same became void when he (Gatchalian)
did not occupy the land himself.
8. Pending litigation, the RTC issued a writ of preliminary injunction restraining the respondents from
disturbing Cagataos possession
9. In its Decision, however, the RTC ruled that Cagataos evidence was insufficient to prove his ownership
over the land in question because Manzulin never acquired a lawful title to the property from his
predecessor, Gatchalian. The court explained that the transfer to Manzulin was null and void because it
failed to comply with Section 2015 of Commonwealth Act No. 141. As to the supposed conveyance of the
lot from Manzulin to Cagatao, it could not have been valid because the document alleged to be a deed of
sale was a private document which did not conclusively establish his (Cagataos) right to the property
because of the requirement in contract law that the transmission of rights over an immovable property
must be contained in a public document.
10. The RTC also ruled that his claim of possession could not prevail over the claim of ownership by Spouses
Fernandez as evidenced by a certificate of title. It upheld the validity of the deed of sale between Spouses
Fernandez and Carlos. It, however, nullified the transfer from Spouses Fernandez to Fernandez Siblings
because Avelina herself admitted that she and her husband never signed the deed of sale which transferred
ownership to their children.
11. Cagatao elevated the case to the CA. The CA deemed as speculative and without legal basis the trial
courts conclusion that Gatchalian might have abandoned his homestead patent, leaving it open for another
person to apply for a patent and secure an original certificate of title from which TCT in the name of
Carlos originated. The CA invalidated the deed of sale between Carlos and Spouses Fernandez. It also
considered as void the sale of the same property by Almonte to Spouses Fernandez and observed that
neither the latter nor the Fernandez siblings invoked this transaction as the basis of their claim.
12. CA reversed itself when it ruled that the deed of sale between Carlos and Spouses Fernandez could
not be declared null and void, especially because Carlos was not impleaded as a party in the case.
However, the CA stressed that Cagataos possession of the subject property should be respected. Any
party, including the respondents, who would like to assert their claim of ownership or a better right over
the lot should assert their right in an appropriate action in court against him.

13. Cagataos entire petition revolves around the assertion that the reconstituted TCT in the name of Carlos
was a fake and should have been declared void. This claim is based on the existence of an allegedly
falsified annotation, the speculative nature of the RTCs declaration that the said title appeared valid, and
the fact that the respondents were not able to present an affidavit of loss or any proof of judicial
reconstitution.

shall be deprived of property without due process of law. Thus, should Cagatao wish to question the
ownership of the subject lot of Carlos and Spouses Fernandez, he should institute a direct action before the
proper courts for the cancellation or modification of the titles in the name of the latter two. He cannot do
so now because it is tantamount to a collateral attack on Carlos title, which is expressly prohibited by law
and jurisprudence.

Deed of sale between Carlos and Spouses Fernandez is presumed valid

Issue: w/n CA erred when it ruled that the deed of sale between Carlos and Spouses Fernandez could not be declared
null and void because Carlos was not impleaded as a party in the case. No. CA correctly ruled that the deed of sale
could not be declared null and void.

Ratio:

The validity of TCT No. 12159-A cannot be attacked collaterally; Carlos is an indispensable party

Section 48 of P.D. No. 1529 clearly states that a certificate of title shall not be subject to collateral attack.
It cannot be altered, modified, or cancelled except in a direct proceeding in accordance with law. An
attack on the validity of the title is considered to be a collateral attack when, in an action to obtain a
different relief and as an incident of the said action, an attack is made against the judgment granting the
title. Cagataos original complaint before the RTC was for the cancellation of TCT in the name of the
Fernandez Siblings and the nullification of the deeds of sale between the Fernandez Siblings and Spouses
Fernandez, and the earlier one between the latter and Almonte and Aguilar. Nowhere in his complaint did
Cagatao mention that he sought to invalidate TCT No. 12159-A. It was only during the course of the
proceedings, when Spouses Fernandez disclosed that they had purchased the property from Carlos, that
Cagatao thought of questioning the validity of TCT No. 12159-A.
Although the CA correctly ruled that the transfer from Gatchalian to Manzulin was invalid, the existence
of a valid Torrens title in the name of Carlos which has remained unchallenged before the proper courts
has made irrelevant the issue of whether Gatchalian and his successors-in-interest should have retained
ownership over the property. This is pursuant to the principle that a Torrens title is irrevocable and its
validity can only be challenged in a direct proceeding. The purpose of adopting a Torrens System in our
jurisdiction is to guarantee the integrity of land titles and to protect their indefeasibility once the claim of
ownership is established and recognized.

This is to avoid any possible conflicts of title that may arise by giving the public the right to rely upon the
face of the Torrens title and dispense with the need of inquiring further as to the ownership of the
property. Hence, a Torrens certificate of title is indefeasible and binding upon the whole world unless it is
nullified by a court of competent jurisdiction in a direct proceeding for cancellation of title.

Moreover, Carlos, as the registered owner of the lot whose title Cagatao seeks to nullify, should
have been impleaded as an indispensable party. Section 7, Rule 3 of the 1997 Rules of Civil Procedure
defines indispensable parties to be parties in interest without whom no final determination can be
had of an action. It is clear in this case that Cagatao failed to include Carlos in his action for the
annulment of TCT No. 12159-A. Basic is the rule in procedural law that no man can be affected by any
proceeding to which he is a stranger and strangers to a case cannot be bound by a judgment
rendered by the court. It would be the height of injustice to entertain an action for the annulment of
Carlos title without giving her the opportunity to present evidence to support her claim of ownership
through title. In addition, it is without question a violation of the constitutional guarantee that no person

a person dealing with a registered land has the right to rely on the face of the Torrens title and need not
inquire further, unless the party concerned has actual knowledge of facts and circumstances that would
impel a reasonably cautious man to make such an inquiry.
The indefeasibility of a Torrens title as evidence of lawful ownership of the property protects buyers in
good faith who rely on what appears on the face of the said certificate of title.
Moreover, a potential buyer is charged with notice of only the burdens and claims annotated on the title.
no showing that Spouses Fernandez were aware of any irregularity in Carlos title that would make them
suspicious and cause them to doubt the legitimacy of Carlos claim of ownership, especially because there
were no encumbrances annotated on Carlos title.
While the Court finds that the validity of TCT No. 12159-A cannot be attacked collaterally and that
Cagatao had not sufficiently established his claim of ownership over the subject property, it agrees with
the CA that he, the current possessor, shall remain to be so until such time that his possession is
successfully contested by a person with a better right.

Moreover, considering that petitioners, who are members of PHCC, are ultimately challenging the agreement entered
into by PHCC with DPDCI, they are assailing, in effect, PHCCs acts as a body corporate. This action, therefore,
partakes the nature of an intra-corporate controversy, the jurisdiction over which used to belong to the Securities
and Exchange Commission (SEC), but transferred to the courts of general jurisdiction or the appropriate Regional
Trial Court (RTC)
Towers 300 Inc. v. Muer

Doctrine: The requisites for a derivative suit are as follows: a) the party bringing suit should be a shareholder as of
the time of the act or transaction complained of, the number of his shares not being material; b) he has tried to
exhaust intra-corporate remedies, i.e., has made a demand on the board of directors for the appropriate relief but the
latter has failed or refused to heed his plea; and c) the cause of action actually devolves on the corporation, the
wrongdoing or harm having been, or being caused to the corporation and not to the particular stockholder bringing
the suit.

Facts:

Petitioners are members of the incumbent board of Legaspi Towers. Pursuant to the by-laws, they set the annual
meeting and election of the new Board of Directors.

Majority of those who were entitled to vote voted through their proxies. The proxy votes were crucial in determining
on whether there was a quorum. The Committee on Elections of Legaspi Tower however found most of the proxy

votes irregular on its face value, thus questionable. For lack of time to authenticate the same, petitioners adjourned for
lack of quorum.

Respondents challenged the adjournment. Despite petitioners insistence that there was no quorum, respondents
pushed through with the scheduled election and they were elected as the new Board of Directors.

Thus petitioners filed a complaint for the declaration of nullity of the election against respondents. They filed an
amended complaint and subsequently, a motion to admit second amended complaint which sought to implead
Legaspi Towers as plaintiff. Respondents meanwhile claimed that the election was legitimate and lawful and
countered plaintiffs motion to admit, seeking to remove the name of Legaspi Towers as plaintiff since the same
was done without the authority of the current board (herein respondents).

Petitioners posits the stand that the CA is under the impression that the action instituted by them is one brought forth
solely by way of a derivative suit. They clarified that the inclusion of Legaspi Towers as a party-plaintiff in the
Second Amended Complaint was, first and foremost, intended as a direct action by the corporation acting through
them (petitioners) as the reconstituted Board of the company. Petitioners allege that their act of including the
corporation as party-plaintiff is consistent with their position that the election conducted by respondents was invalid;
hence, petitioners, under their by-laws, could reconstitute themselves as the Board of Directors of Legaspi Towers in
a hold-over capacity for the succeeding term. By so doing, petitioners had the right as the rightful Board of Directors
to bring the action in representation of Legaspi Towers. Thus, the Second Amended Complaint was intended by the
petitioners as a direct suit by the corporation joined in by the petitioners to protect and enforce their common rights.

They further allege that the corporation is a real party-in- interest as it stands to be affected the most by the
controversy, because it involves the determination of whether or not the corporations by-laws was properly carried
out.

The trial court denied the motion, ruling that such was improper. Petitioners filed an MR but was denied. Petitioners
appealed to CA but was also denied. CA ruled that as the right to vote is a personal right of a stockholder of a
corporation, such right can only be enforced through a direct action; hence, Legaspi Towers 300, Inc. cannot be
impleaded as plaintiff in this case. Hence the present petition.

Ruling

Issues:

In the Amended Complaint, petitioners as plaintiffs stated that they are the incumbent reconstituted Board of
Directors of Legaspi Towers, and that defendants, herein respondents, are the newly-elected members of the Board of
Directors; while in the Second Amended Complaint, the plaintiff is Legaspi Towers, represented by petitioners as the
allegedly incumbent reconstituted Board of Directors of Legaspi Towers.

- Whether or not the denial of the motion to admit second complaint was proper
- Whether or not petitioners could bring the action in behalf of Legaspi Towers

The Court agrees with the CA that the Second Amended Complaint is meant to be a derivative suit filed by
petitioners in behalf of the corporation.

Held:

1. YES, denial of the motion was proper

2. NO, they cannot bring the action in behalf of the company

It is clear that in the Orders dated July 21, 2004, the trial court did not admit the Second Amended Complaint
wherein petitioners made the condominium corporation, Legaspi Towers Admission of the second amended
complaint is improper. Why should Legaspi Towers be included as party-plaintiff when defendants are members
thereof too like plaintiffs. Both parties are deemed to be acting in their personal capacities as they both claim to be
the lawful board of directors.

Petitioners Arguments

Petitioners tried to justify the inclusion of the Legaspi Towers as plaintiff in the amended complaint by invoking the
doctrine of derivative suit. They argue that the amendment of the complaint was done in order to protect the interest
and enforce the right of the Legaspi Towers to be administered and managed by petitioners as the duly constituted
Board of Directors. This is no different from and may in fact be considered as a DERIVATIVE SUIT instituted by an
individual stockholder against those controlling the corporation but is being instituted in the name of and for the
benefit of the corporation whose right/s are being violated.

However the court ruled that a derivative suit is not proper in the instant case.

It is in this part that the Court distinguished between a derivative suit and an individual/class suit.

Suits by stockholders or members of a corporation based on wrongful or fraudulent acts of

directors or other persons may be classified into individual suits, class suits, and derivative

suits. Where a stockholder or member is denied the right of inspection, his suit would be
individual because the wrong is done to him personally and not to the other stockholders or the
corporation. Where the wrong is done to a group of stockholders, as where preferred
stockholders rights are violated, a class or representative suit will be proper for the protection
of all stockholders belonging to the same group. But where the acts complained of constitute a
wrong to the corporation itself, the cause of action belongs to the corporation and not to the
individual stockholder or member. Although in most every case of wrong to the corporation,
each stockholder is necessarily affected because the value of his interest therein would be
impaired, this fact of itself is not sufficient to give him an individual cause of action since the
corporation is a person distinct and separate from him, and can and should itself sue the
wrongdoer. Otherwise, not only would the theory of separate entity be violated, but there
would be multiplicity of suits as well as a violation of the priority rights of creditors.
Furthermore, there is the difficulty of determining the amount of damages that should be paid
to each individual stockholder.

However, in cases of mismanagement where the wrongful acts are committed by the directors
or trustees themselves, a stockholder or member may find that he has no redress because the
former are vested by law with the right to decide whether or not the corporation should sue,
and they will never be willing to sue themselves. The corporation would thus be helpless to
seek remedy. Because of the frequent occurrence of such a situation, the common law
gradually recognized the right of a stockholder to sue on behalf of a corporation in what
eventually became known as a derivative suit. It has been proven to be an effective
remedy of the minority against the abuses of management. Thus, an individual
stockholder is permitted to institute a derivative suit on behalf of the corporation wherein
he holds stock in order to protect or vindicate corporate rights, whenever officials of the
corporation refuse to sue or are the ones to be sued or hold the control of the corporation.
In such actions, the suing stockholder is regarded as the nominal party, with the
corporation as the party-in- interest.

Since it is the corporation that is the real party-in-interest in a derivative suit, then the reliefs prayed for must be for
the benefit or interest of the corporation. When the reliefs prayed for do not pertain to the corporation, then it is an
improper derivative suit. The requisites for a derivative suit are as follows: a) the party bringing suit should be a
shareholder as of the time of the act or transaction complained of, the number of his shares not being material; b) he
has tried to exhaust intra-corporate remedies, i.e., has made a demand on the board of directors for the appropriate
relief but the latter has failed or refused to heed his plea; and c) the cause of action actually devolves on the
corporation, the wrongdoing or harm having been, or being caused to the corporation and not to the particular
stockholder bringing the suit.

Petitioners, as members of the Board of Directors of the condominium corporation before the election in question,
filed a complaint against the newly-elected members of the Board of Directors As stated by the CA petitioners
complaint seek to nullify the said election, and to protect and enforce their individual right to vote. Petitioners seek
the nullification of the election of the Board of Directors, composed of herein respondents, who pushed through with
the election even if petitioners had adjourned the meeting allegedly due to lack of quorum. Petitioners are the
injured party, whose rights to vote and to be voted upon were directly affected by the election of the new set of
board of directors. The party-in-interest are the petitioners as stockholders, who wield such right to vote. The
cause of action devolves on petitioners, not the condominium corporation, which did not have the right to vote.

The complaint for nullification of the election is a direct action by petitioners, who were the members of the
Board of Directors of the corporation before the election, against respondents. Thus the filing of the derivative suit is
improper.

Lastly, petitioners posit the argument that the Second Amended Complaint is a direct action filed by the corporation,
represented by the petitioners as the incumbent Board of Directors. This merely is an afterthought, and lacks merit,
considering that the newly-elected Board of Directors had assumed their function to manage corporate affairs.

Juana Complex I Homeowners Association v. Fil-Estate Land Inc., 667 SCRA 440 (2012)
FACTS:
On January 1999, Juana Complex I Homeowners Assoc. (JCHA), together with individual residents of Juana
Complex I and other neighboring subdivisions filed a complaint for damages against Fil-Estate in its own behalf as
well 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.
JCHA contends that they were regular commuters and motorists that used the entry/exit tolls of SLEX by passing
through the right-of-way public road known as La Paz Road for more than 10 years. Further, they allege that, in
August 1998, Fil-Estate excavated, broke, and deliberately ruined La Paz Road that led to SLEX so JCHA would not
be able to pass through. While the road was restored by the residents, Fil-Estate excavated the road again. Despite
having reported this to the Municipal Government, it failed to repair the road to make it passable and safe to motorists
and pedestrians. As a result of all this, it caused them damage, prejudice, inconvenience blablabla because of traffic
was re-routed to narrower streets that caused traffic congestion and shit.
JHCA prayed for TRO and writ of preliminary injunction (WPI) to enjoin Fil-Estate from stopping and intimidating
them in their use of La Paz Road. Thereafter, TRO was issued and several hearing were conducted for the propriety
of the WPI. WPI was eventually granted.
In its Answer, Fil-Estate sought to dismiss the complaint on the ground of failure to state a cause of action and that
the class suit was improperly filed. Also, it filed an MR regarding the RTCs issuance of the WPI. RTC dismissed
both motions from Fil-Estate.
Unsatisfied, Fil-Estate went up to the CA on certiorari/prohibition. CA partially granted the petition. It set aside the
WPI and remanded the case for full blown trial on the merits. However, it sustained the finding that there was a cause
of action and that the class suit was properly filed. Hence, this petition.
Fil-Estate insists that the complaint was improperly filed as a class suit because it failed to show that JHCA and the
commuters and motorists they are representing have a well-defined community interest over La Paz Road. They
argue that the excavation of La Paz Road would not necessarily give rise to a common right or cause of action for
JHCA against them since each of them has a separate and distinct purpose and each may be affected differently than
the others.
ISSUE: WHETHER THE COMPLAINT WAS PROPERLY FILED AS A CLASS SUIT.
(Other issues: Whether there was a cause of action YES ; Whether the WPI was warranted NO as they failed to
establish prima facie proof of violation of their right to use the road which was disputable since they have no clear
legal right therein)
HELD: YES. CLASS SUIT WAS PROPERLY FILED.
With respect to the issue that the case was improperly instituted as a class suit, the Court finds the opposition without
merit. Section 12, Rule 3 of the Rules of Court defines a class suit, as follows:
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.

On October 17, 1997, Memoracions son-heir, Edgardo Z. Cruz, manifested to the trial court that he is retaining the
services of Atty. Neri for the plaintiff, and also filed an MR against the order of the RTC granting the Mtd.

The necessary elements for the maintenance of a class suit are:

(1)
(2)
(3)

the subject matter of controversy is one of common or general interest to many persons;
the parties affected are so numerous that it is impracticable to bring them all to court; and
the parties bringing the class suit are sufficiently numerous or representative of the class and can fully
protect the interests of all concerned.

Issue: WON it was correct for the trial court to grant the Mtd based on the plaintiffs death? No. We rule that it was
error for the RTC to dismiss the case. The petition for annulment of deed of sale involves property and property
rights, and hence, survives the death of petitioner Memoracion.

In this case, the suit is clearly one that benefits all commuters and motorists who use La Paz Road. As succinctly
stated by the CA:
The subject matter of the instant case, i.e., the closure and excavation of the La Paz Road, is
initially shown to be of common or general interest to many persons. The records reveal
that numerous individuals have filed manifestations with the lower court, conveying their
intention to join private respondents in the suit and claiming that they are similarly situated
with private respondents for they were also prejudiced by the acts of petitioners in closing and
excavating the La Paz Road. Moreover, the individuals sought to be represented by private
respondents in the suit are so numerous that it is impracticable to join them all as parties
and be named individually as plaintiffs in the complaint. These individuals claim to be
residents of various barangays in Bian, Laguna and other barangays in San Pedro, Laguna.

Ratio:

1)

Cruz v Cruz (2010)

On Oct 1993, Memoracion Cruz filed a petition for annulment of sale, reconveyance and damages against her son,
appellee Oswaldo Cruz. She avers that Oswaldo, using a deed of sale procured through fraud, forgery and
misrepresentation, was able to have a TCT of her property to be transferred to his name. However, Memoracion Cruz
died on 30 October 1996. Her counsel, Atty. Roberto T. Neri, notified the trial court of such death Jan 13 1997
through a Manifestation. In the same Manifestation, Neri informed the RTC of Memoracions legal representative
her other son, Edgardo Cruz.

2)

On 24 January 1997, respondent (defendant) Oswaldo . Cruz moved to dismiss the case alleging that it did not
survive Memoracion s death. Grounds used for Mtd:
3)
(1) the plaintiffs reconveyance action is a personal action which does not survive a partys death,
pursuant to Section 21, Rule 3 of the Revised Rules of Court, and (2) to allow the case to continue would
result in legal absurdity whereby one heir is representing the defendant [and is a] co-plaintiff in this case.

The RTC granted the motion to dismiss in the assailed Order dated 2 June 1997.

What is the test to determine WON an action survives the death of the plaintiff?
a.
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.
b. If the case affects primarily and principally property and property rights, then it survives
the death of the plaintiff or petitioner. In Sumaljag v. Literato, we held that a Petition for
Declaration of Nullity of Deed of Sale of Real Property is one relating to property and property
rights, and therefore, survives the death of the petitioner. Accordingly, the instant case for
annulment of sale of real property merits survival despite the death of petitioner Memoracion
Z. Cruz.
If based on the above test, an action survives, what rule applies?
a.
When a party dies during the pendency of a case, Section 16, Rule 3 of the 1997 Revised Rules
of Civil Procedure necessarily applies (check codal na lang).
b. If the action survives despite death of a party, it is the duty of the deceaseds counsel to
inform the court of such death, and to give the names and addresses of the deceaseds
legal representatives. The deceased may be substituted by his heirs in the pending action.
c.
If no legal representative is named by the counsel of the deceased, or the legal representative
fails to appear within a specified period, it is the duty of the court where the case is pending to
order the opposing party to procure the appointment of an executor or administrator for the
estate of the deceased. The reason for this rule is to protect all concerned who may be affected
by the intervening death, particularly the deceased and his estate.
In this case, was there a proper substitution?
a.
Yes. The RTC was informed, albeit belatedly (but this was not questioned by Oswaldo, so k
lang) of the death of Memoracion, and was supplied with the name and address of her legal
representative, Edgardo Cruz. What the RTC could have done was to require Edgardo Cruz to
appear in court and substitute Memoracion as party to the pending case, pursuant to Section 16,
Rule 3 of the 1997 Revised Rules of Civil Procedure, and established jurisprudence.
b. But, we note that on 17 October 1997, Edgardo Cruz filed with the RTC a Manifestation,
stating that he is retaining the services of Atty. Neri. Consistent with jurisprudence, we
consider such Manifestation, signed by Memoracions heir, Edgardo Cruz, and retaining Atty.
Neris services as counsel, a formal substitution of deceased Memoracion by her heir, Edgardo
Cruz.
c.
It also needs mention that Oswaldo Cruz, although also an heir of Memoracion, should be
excluded as a legal representative in the case for being an adverse party therein.

The two cases were consolidated

Genato vs Bayhon
Trial court: upheld the respondents liability
This is a consolidated case stemming from two civil cases

1. Civil Case No. Q-90-7012

Respondents Benjamin M. Bayhon, Melanie Bayhon, Benjamin Bayhon Jr., Brenda Bayhon, Alina Bayhon-Campos,
Irene Bayhon-Tolosa and the minor Gino Bayhon, as represented by his mother Jesusita filed an action before the
RTC, Quezon City. Respondents sought the declaration of nullity of a dacion en pago allegedly executed by
respondent Benjamin Bayhon in favor of petitioner William Ong Genato.

that respondent obtained a loan in the amount of PhP 1,000,000.00. The terms of the loan were interest payment at
5% per month with an additional 3% penalty in case of nonpayment. With respect to the dacion en pago, it deduced a
novation from the subsequent payments made by the respondent to the petitioner. Of the principal amount, the sum of
PhP 102,870.00 had been paid. All payments were made after the purported execution of the dacion en pago. At the
time of the execution of the real estate mortgage, the wife of respondent was already dead. That the property covered
by TCT No. 38052 was owned in common by the respondents and not by respondent Benjamin Bayhon alone thus
said lot could not have been validly mortgaged by the respondent alone; the deed of mortgage was not enforceable
and only served as evidence of the obligation of the respondent.

Court of Appeals
Benjamin Bayhon alleged that he obtained from the petitioner a loan amounting to PhP 1,000,000.00 and he executed
a Deed of Real Estate Mortgage over the property, however, the execution of the Deed of Real Estate Mortgage was
conditioned upon the personal assurance of the petitioner that the said instrument is only a private memorandum of
indebtedness and that it would neither be notarized nor enforced.

He filed a separate proceeding for the reconstitution of the TCT of said property. Petitioner Genato filed an Answer
in Intervention in the said proceeding and attached a copy of an alleged dacion en pago covering said lot. Respondent
assailed the dacion en pago as a forgery alleging that neither he nor his wife, who had died 3 years earlier, had
executed it.

Bayhon died while the case was still pending decision. the Court of Appeals rendered a decision reversing the trial
court. the real estate mortgage and the dacion en pago were both void. At the time the real estate mortgage and the
dacion en pago were executed, the wife of respondent Benjamin Bayhon was already dead. Thus, she could not have
participated in the execution of the two documents. The appellate court struck down both the dacion en pago and the
real estate mortgage as being simulated or fictitious contracts. While the principal obligation is valid, the death of
respondent Benjamin Bayhon extinguished it. The heirs could not be ordered to pay the debts left by the deceased.

Issue:
Genato denied the claim of the respondent regarding the death of the latters wife.8 He alleged that on the date that
the real estate mortgage was to be signed, respondent introduced to him a woman as his wife and that the respondent
signed the dacion en pago.

1. the nullity of the dacion en pago

Held:
2. Civil Case No. Q-90-7551

Genato filed an action for specific performance, before the RTC, Quezon City. Petitioner alleged that respondent
obtained a loan from him of PhP 1,000,000.00, that respondent failed to pay and executed on October 21, 1989 a
dacion en pago in favor of the petitioner inscribed and recorded with the Registry of Deeds. Despite demands,
respondent refused to execute the requisite documents to transfer to him the ownership of the lot subject of the dacion
en pago. Petitioner prayed, inter alia, for the court to order the respondent to execute the final deed of sale and
transfer of possession

The subject dacion en pago is a simulated or fictitious contract, and hence void. At the time it was allegedly signed by
the wife of the respondent, his wife was already dead, extinguishing the obligation of respondent. As a general rule,
obligations derived from a contract are transmissible.

In Estate of Hemady v. Luzon Surety Co., Inc.,

While in our successional system the responsibility of the heirs for the debts of their decedent cannot exceed the
value of the inheritance they receive from him, the principle remains intact that these heirs succeed not only to the
rights of the deceased but also to his obligations. Under our law, therefore, the general rule is that a party's
contractual rights and obligations are transmissible to the successors barring those rare cases where the obligation is
strictly personal, i.e., is contracted intuitu personae, in consideration of its performance by a specific person and by
no other.

Facts (none as this was a resolution, but we can gather that):

1.
2.
3.

The loan in this case was contracted by respondent. He died while the case was pending before the Court of Appeals.
While he may no longer be compelled to pay the loan, the debt subsists against his estate. No property or portion of
the inheritance may be transmitted to his heirs unless the debt has first been satisfied.
Throughout the appellate stage of this case, the estate has been amply represented by the heirs of the deceased, who
are also his co-parties in Civil Case No. Q-90-7012.

The procedure in vindicating monetary claims involving a defendant who dies before final judgment is governed by
Rule 3, Section 20 of the Rules of Civil Procedure

4.

Petitioners mortgaged real property are located in Para aque City over which respondent bank was
granted a special power to foreclose extra-judicially.
The parties stipulated an exclusive venue Makati City.
Petitioners filed a complaint for Annulment of Foreclosure, Sale, and Damages before the Regional Trial
Court of Para aque City.
Respondent bank filed a petition for Extrajudicial Foreclosure of Mortgage in the same court.

Issue: Whether the stipulated exclusive venue of Makati City is binding not only on petitioners complaint for
Annulment of Foreclosure, Sale, and Damages filed before the Regional Trial Court of Para aque City, but also on
respondent banks Petition for Extrajudicial Foreclosure of Mortgage, which was filed with the same court.

Held: No. It is only binding on the former.

Ratio:
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.

Petitioners remedy lies in filing a claim against the estate of the deceased respondent.

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
Real-Estate Mortgages."

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.

Issue 2: interest awarded by the trial court.

Held:
the interest has been pegged at 5% per month, or 60% per annum. This is unconscionable, hence cannot be enforced.

IN VIEW WHEREOF, the decision of the Court of Appeals dated September 16, 2005 is AFFIRMED with the
MODIFICATION that the obligation to pay the principal loan and interest contracted by the deceased Benjamin
Bayhon subsists against his estate and is computed at PhP 3,050,682.00.

Spouses Ochoa v. China Banking Corporation

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 Para aque City over which
respondent bank was granted a special power to foreclose extra-judicially. Thus, by express provision of
Section , the sale can only be made in Para aque 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.

Universal Robina Corporation v. Lim

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.

Case law also provides 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.

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.

Facts
URC sold P808,059.88 worth of grocery products to Lim (what?!). After partial payments, Lim refused to settle his
obligation despite demands. In 1999, URC filed a complaint for sum of money with the RTC of QC. The RTC
dismissed it motu proprio on lack of jurisdiction and improper venue The RTC is in QC, URC has its principal
office in Pasig City, and Lim is from Laoag City.
URC filed an MR with an amended complaint alleging that the parties agreed that the proper venue was QC. It was
granted, and summons was served. Lim failed to answer and was declared in default.
Then, the RTC, still unsure about venue, ordered URC to file a memorandum on whether it can file the complaint in
QC. The RTC again dismissed on the ground of venue for the same reason The filing is based on the stipulation at
the back of the delivery receipt that venue shall be in Quezon City --- which is not even stated in the Complaint nor
admitted to have been signed by the defendant.
Issues

Whether the trial court may dismiss motu proprio petitioners complaint on the ground of improper venue.

Held/Ratio
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:

No.
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 nonresident defendant where he may be found, at the election of the plaintiff.

In line with the responsibility of an Executive Judge under Administrative Order No. 6, dated
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.

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.
Clearly, in personal actions, the plaintiff may commence an action either in the place of his or her residence or the
place where the defendant resides. However, the parties may agree to a specific venue which could be in a place
where neither of them resides.
Corollarily, Section 1, Rule 9 of the same Rules provides for the instances when the trial court may motu proprio
dismiss a claim, thus:
Section 1. Defenses and objections not pleaded.

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.

Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived.
However, when it appears from the pleadings or the evidence on record that the court has no jurisdiction over the
subject matter, that there is another action pending between the same parties for the same cause, or that the action is
barred by a prior judgment or by statute of limitations, the court shall dismiss the claim.
Implicit from the above provision is that improper venue not impleaded in the motion to dismiss or in the
answer is deemed waived. Thus, a court may not dismiss an action motu proprio on the ground of improper
venue as it is not one of the grounds wherein the court may dismiss an action motu proprio on the basis of the
pleadings.

Dismissing the complaint on the ground of improper venue is certainly not the appropriate course of action at this
stage of the proceedings, particularly as venue, in inferior courts as well as in the courts of first instance (now RTC),
may be waived expressly or impliedly. Where the defendant fails to challenge timely the venue in a motion to
dismiss as provided by Section 4 of Rule 4 of the Rules of Court, and allows the trial to be held and a decision to be
rendered, he cannot on appeal or in a special action be permitted to belatedly challenge the wrong venue, which is
deemed waived.
The court may only dismiss an action motu proprio in case of lack of jurisdiction over the subject matter, litis
pendentia, res judicata and prescription. Therefore, the trial court in this case erred when it dismissed the
petition motu proprio. It should have waited for a motion to dismiss or a responsive pleading from
respondent, raising the objection or affirmative defense of improper venue, before dismissing the petition.
In the instant case, respondent, despite proper service of summons, failed to file an answer and was thus declared in
default by the trial court. Verily, having been declared in default, he lost his standing in court and his right to adduce
evidence and present his defense, including his right to question the propriety of the venue of the action.

Maglasang v. Manila Banking Corporation

Ratio:

Issue on Venue
Petitioners maintain that the extrajudicial foreclosure of the subject properties was null and void since the same was
conducted in violation of the stipulation in the real estate mortgage contract stating that the auction sale should be
held in the capital of the province where the properties are located, i.e., the Province of Leyte.

The Court disagrees. As may be gleaned from the records, the stipulation under the real estate mortgage executed by
Sps. Maglasang which fixed the place of the foreclosure sale at Tacloban City lacks words of exclusivity which
would bar any other acceptable fora wherein the said sale may be conducted, to wit:

It is hereby agreed that in case of foreclosure of this mortgage under Act 3135, the auction sale
shall be held at the capital of the province if the property is within the territorial jurisdiction of
the province concerned, or shall be held in the city if the property is within the territorial
jurisdiction of the city concerned; x x x

Facts:
1.

2.
3.
4.

5.

6.

7.

Flaviano and Salud Maglasang (Sps. Maglasang) obtained a credit line from respondent in the amount of
P350,000.00 which was secured by a real estate mortgage over seven of their properties in Ormoc City
and Leyte.
After Flaviano died intestate, the probate court appointed Edgar as the administrator of Flavianos estate.
During the pendency of the intestate proceedings, Edgar and Oscar (two of the six children of Flaviano)
were able to obtain several loans from respondent, secured by promissory notes.
Probate court terminated the proceedings with the surviving heirs executing an extrajudicial partition of
the properties of Flavianos estate. The loan obligations owed by the estate to respondent, however,
remained unsatisfied.
Nonetheless, the probate court expressly recognized the rights of respondent under the mortgage and
promissory notes executed by the Sps. Maglasang, specifically, its right to foreclose the same within the
statutory period. Respondent proceeded to extrajudicially foreclose the mortgage covering the Sps.
Maglasangs properties and emerged as the highest bidder. A deficiency remained however. Respondent
filed a suit to recover the deficiency.
RTC directed the petitioners to pay respondent. Petitioners appealed to the CA contending that when
respondent filed its claim against the estate of Flaviano in the proceedings before the probate court, it
effectively abandoned its right to foreclose on the mortgage. CA denied the petitioners appeal and
affirmed the RTCs Decision as Section 7, Rule 86 of the Rules does not apply to the present case since
the same does not involve a mortgage made by the administrator over any property belonging to the estate
of the decedent.
Petitioners assert that it is not Act No. 3135 but Section 7, Rule 86 of the Rules which applies in this case.
Likewise, petitioners maintain that the extrajudicial foreclosure of the subject properties was null
and void, not having been conducted in the capital of the Province of Leyte in violation of the
stipulations in the real estate mortgage contract.

Issue/Held: Whether or not the extrajudicial foreclosure of the subject properties was null and void, not having been
conducted in the capital of the Province of Leyte in violation of the stipulations in the real estate mortgage contract -- No.

Case law states that absent such qualifying or restrictive words to indicate the exclusivity of the agreed forum, the
stipulated place should only be as an additional, not a limiting venue.56 As a consequence, the stipulated venue and
that provided under Act No. 3135 can be applied alternatively.

In particular, Section 2 of Act No. 3135 allows the foreclosure sale to be done within the province where the property
to be sold is situated:
SEC. 2. Said sale cannot be made legally outside of the province which the property sold is
situated; and in case the place within said province in which the sale is to be made is subject to
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.

In this regard, since the auction sale was conducted in Ormoc City, which is within the territorial jurisdiction of the
Province of Leyte, then the Court finds sufficient compliance with the above-cited requirement

Cannot claim deficiency

Among these special rules governing estate proceedings is Section 7, Rule 86 of the Rules (Section 7, Rule 86) that
provides the rule in dealing with secured claims against the estate. As the foregoing generally speaks of [a] creditor
holding a claim against the deceased secured by a mortgage or other collateral security, it may be reasonably
concluded that the aforementioned section covers all secured claims, whether by mortgage or any other form of
collateral, which a creditor may enforce against the estate of the deceased debtor. Nowhere from its language can it
be fairly deducible that the said section would narrowly apply only to mortgages made by the administrator over any
property belonging to the estate of the decedent.

Notably, an election of one the three remedies (estate, judicial, extra-judicial) operates as a waiver of the other.
Respondent availed the option of extra-judicially foreclosing the mortgage under Act No. 3135. However, the plain
result of adopting the last mode of foreclosure is that the creditor waives his right to recover any deficiency from the
estate.

Wherefore, the complaint for the recovery of the deficiency is dismissed and the extrajudicial foreclosure of the
mortgaged properties stands.

Republic v. Sunvar
Facts:
1.

2.
3.

4.
5.

6.
7.

8.

9.

Republic of the Philippines (Republic) and National Power Corporation (NPC) are registered co- owners
of several parcels of land covered by four Transfer Certificates of Title (TCTs). The main subject matter
of the instant Petition is one of these four parcels. 80% of the subject property is owned by the Republic,
while the remaining 20% belongs to NPC.
Petitioners (Republic and NPC) leased the four parcels of land, including the subject property, to the
Technology Resource Center Foundation, Inc., (TRCFI) for a period of 25 years.
Under the Contract of Lease (the main lease contract), petitioners granted TRCFI the right to sublease any
portion of the four parcels of land. TRCFI consequently subleased a majority of the subject property to
respondent Sunvar through several sublease agreements
All the agreements were altogether set to expire on 31 December 2002, the expiration date of TRCFIs
main lease contract with petitioners, but subject to renewal at the option of respondent
According to petitioners, in all the sublease agreements, Sunvar agreed to return or surrender the
subleased land, without any delay whatsoever upon the termination or expiration of the sublease contract
or any renewal or extension thereof.
Following a reorganization of the government, TRCFI was dissolved. Philippine Development
Alternatives Foundation (PDAF) was created, assuming the functions previously performed by TRCFI.
less than a year before the expiration of the main lease contract and the sublease agreements, Sunvar wrote
to PDAF as successor of TRCFI. Sunvar expressed its desire to exercise the option to renew the sublease
over the subject property and proposed an increased rental rate and a renewal period of another 25 years. it
also wrote to the Office of the President, DENR and NPC. PDAF informed respondent that the notice of
renewal of the lease had already been sent to petitioners, but that it had yet to receive a response. It further
explained that the proposal of respondent for the renewal of the sublease could not yet be acted upon, and
neither could the proposed rental payments be accepted.
6 months before the main contract of lease was to expire, NPC notified PDAF of the formers decision not
to renew the contract of lease. In turn, PDAF notified Sunvar of NPCs decision. Republic likewise
notified PDAF of the formers decision not to renew the lease contract. The Republic reasoned that the
parties had earlier agreed to shorten the corporate life of PDAF and to transfer the latters assets to the
former for the purpose of selling them to raise funds. PDAF duly informed Sunvar of the Republics
decision not to renew the lease
On 31 December 2002, the main lease contract with PDAF, as well as its sublease agreements with
Sunvar, all expired. Nevertheless, Sunvar continued to occupy the property.

10. 6 years after the main lease contract expired, the Republic, through the OSG advised Sunvar to completely
vacate the subject property within 30 days. Sunvar failed to vacate and remained on the property. Sunvar
received from OSG a final notice to vacate within 15 days. When the period lapsed, Sunvar again refused
to vacate the property and continued to occupy it.
11. Petitioners filed the Complaint for unlawful detainer with the MeTC of Makati City. Petitioners prayed
that Sunvar be ordered to vacate the subject property and to pay damages for the illegal use and lost
income
12. Sunvar moved to dismiss the Complaint and argued that the allegations of petitioners in the Complaint did
not constitute an action for unlawful detainer, since no privity of contract existed between them. It also
argued that petitioners cause of action was more properly an accion publiciana, which fell within the
jurisdiction of the RTC, and not the MeTC, considering that the petitioners supposed dispossession of the
subject property by respondent had already lasted for more than one year. The MeTC denied the Motion to
Dismiss.
13. Despite the filing of its Answer in the summary proceedings for ejectment, Sunvar filed a Rule 65 Petition
for Certiorari with the RTC of Makati City to assail the denial by the MeTC of respondents Motion to
Dismiss.
14. Petitioners placed in issue the jurisdiction of the RTC and reasoned that the Rules on Summary
Procedure expressly prohibited the filing of a petition for certiorari against the interlocutory orders
of the MeTC. Hence, they prayed for the outright dismissal of the certiorari Petition of Sunvar.
15. RTC denied the motion for dismissal and ruled that extraordinary circumstances called for an exception to
the general rule on summary proceedings. Petitioners filed an MRdenied by RTC. Hence, the hearing
on the certiorari Petition of respondent proceeded, and the parties filed their respective Memoranda.
16. the RTC granted the Rule 65 Petition and directed the MeTC to dismiss the Complaint for unlawful
detainer for lack of jurisdiction. The RTC reasoned that the one-year period for the filing of an unlawful
detainer case was reckoned from the expiration of the main lease contract and the sublease agreements on
31 December 2002. Petitioners should have then filed an accion publiciana with the RTC in 2009, instead
of an unlawful detainer suit.
17. Petitioners filed the instant Rule 45 Petition.
18. Sunvar argued that petitioners resort to a Rule 45 Petition for Review on Certiorari before this Court is
an improper mode of review of the assailed RTC Decision. Allegedly, petitioners should have availed
themselves of a Rule 65 Petition instead, since the RTC Decision was an order of dismissal of the
Complaint, from which no appeal can be taken except by a certiorari petition.

Issue: W/N RTC violated the Rules when it took cognizance and granted the certiorari petition against the denial by
the MeTC of the Motion to Dismiss filed by respondent Sunvar.

Ratio:
Petitioners Resort to a Rule 45 Petition

The Court is unconvinced of the arguments of Sunvar and holds that the resort by petitioners to the present
Rule 45 Petition is perfectly within the bounds of our procedural rules. No appeal may be taken from an
order of the RTC dismissing an action without prejudice, but the aggrieved party may file a certiorari
petition under Rule 65. Nevertheless, the Rules do not prohibit any of the parties from filing a Rule 45
Petition with this Court, in case only questions of law are raised or involved. This latter situation was one
that petitioners found themselves in when they filed the instant Petition to raise only questions of law.
There are 3 modes of appeal from decisions of the RTC, to wit: (1) by ordinary appeal or appeal by writ of
error under Rule 41, whereby judgment was rendered in a civil or criminal action by the RTC in the
exercise of its original jurisdiction; (2) by a petition for review under Rule 42, whereby judgment was
rendered by the RTC in the exercise of its appellate jurisdiction; and (3) by a petition for review on
certiorari before the Supreme Court under Rule 45.

The first mode of appeal is taken to the CA on questions of fact or mixed questions of fact and law. The
second mode of appeal is brought to the CA on questions of fact, of law, or mixed questions of fact and
law. The third mode of appeal is elevated to the Supreme Court only on questions of law.
At issue in the present case is the correct application of the Rules on Summary Procedure; or, more
specifically, whether the RTC violated the Rules when it took cognizance and granted the certiorari
petition against the denial by the MeTC of the Motion to Dismiss filed by respondent Sunvar.

case for specific performance involving the same parties shall have been finally decided by the RTC. The
affected party appealed the suspension order to the RTC. In response, the adverse party moved to dismiss
the appeal on the ground that it concerned an interlocutory order in a summary proceeding that was not the
subject of an appeal. The RTC denied the Motion to Dismiss and subsequently directed the MTCC to
proceed with the hearing of the ejectment suit, a ruling that was upheld by the appellate court.
o
Supreme Court allowed the filing of a petition for certiorari against an interlocutory order in an
ejectment suit, considering that the affected party was deprived of any recourse to the MTCCs
erroneous suspension of a summary proceeding.
o
Allowing appeals from interlocutory orders would result in the sorry spectacle of a case being
subject of a counterproductive ping-pong to and from the appellate court as often as a trial
court is perceived to have made an error in any of its interlocutory rulings. However, where the
assailed interlocutory order is patently erroneous and the remedy of appeal would not afford
adequate and expeditious relief, the Court may allow certiorari as a mode of redress.
o
the purpose of the Rules on Summary Procedure is to achieve an expeditious and inexpensive
determination of cases without regard to technical rules.
o
Pursuant to this objective, the Rules prohibit petitions for certiorari, like a number of other
pleadings, in order to prevent unnecessary delays and to expedite the disposition of cases. In
this case, however, private respondent challenged the MTCC order delaying the ejectment suit,
precisely to avoid the mischief envisioned by the Rules. Thus, this Court holds that in
situations wherein a summary proceeding is suspended indefinitely, a petition for certiorari
alleging grave abuse of discretion may be allowed. Because of the extraordinary circumstances
in this case, a petition for certiorari, in fact, gives spirit and life to the Rules on Summary
Procedure.

Propriety of a Rule 65 Petition in Summary Proceedings

Court finds that it was erroneous for the RTC to have taken cognizance of the Rule 65 Petition of
Sunvar, since the Rules on Summary Procedure expressly prohibit this relief for unfavorable
interlocutory orders of the MeTC. Consequently, the assailed RTC Decision is annulled.
Under the Rules on Summary Procedure, a certiorari petition under Rule 65 against an interlocutory order
issued by the court in a summary proceeding is a prohibited pleading. The RTC should have dismissed
outright Sunvars Rule 65 Petition, considering that it is a prohibited pleading. Petitioners have already
alerted the RTC of this legal bar and immediately prayed for the dismissal of the certiorari Petition. Yet,
the RTC not only refused to dismiss the certiorari Petition, but even proceeded to hear the Rule 65 Petition
on the merits.
Sunvars reliance on Bayog v. Natino and Go v. Court of Appeals to justify a certiorari review by the RTC
owing to extraordinary circumstances is misplaced. In both cases, there were peculiar and specific
circumstances that justified the filing of the mentioned prohibited pleadings under the Revised Rules on
Summary Procedureconditions that are not availing in the case of respondent Sunvar.
In Bayog, Alejandro : Bayog filed with the MCTC an ejectment case against Magdato, an agricultural
tenant-lessee who had built a house over his property. When Magdato, an illiterate farmer, received the
Summons from the MCTC to file his answer within 10 days, he was stricken with pulmonary tuberculosis
and was able to consult a lawyer only after the reglementary period. Hence, when the Answer of Magdato
was filed three days after the lapse of the 10-day period, the MCTC ruled that it could no longer take
cognizance of his Answer and, hence, ordered his ejectment from Bayogs land. When his house was
demolished, Magdato filed a Petition for Relief with the RTC, claiming that he was a duly instituted
tenant in the agricultural property, and that he was deprived of due process. Bayog, the landowner, moved
to dismiss the Petition on the ground of lack of jurisdiction on the part of the RTC, since a petition for
relief from judgment covering a summary proceeding was a prohibited pleading. The RTC, however,
denied his Motion to Dismiss and remanded the case to the MCTC for proper disposal.
o
In resolving the Rule 65 Petition, SC ruled that although a petition for relief from judgment
was a prohibited pleading under the Revised Rules on Summary Procedure, the Court
nevertheless allowed the filing of the Petition pro hac vice, since Magdato would otherwise
suffer grave injustice and irreparable injury
o
When Section 19 of the Revised Rule on Summary Procedure bars a petition for relief from
judgment, or a petition for certiorari, mandamus, or prohibition against any interlocutory order
issued by the court, it has in mind no other than Section 1, Rule 38 regarding petitions for relief
from judgment, and Rule 65 regarding petitions for certiorari, mandamus, or prohibition, of the
Rules of Court, respectively.
o
If Section 19 of the Revised Rule on Summary Procedure and Rules 38 and 65 of the Rules of
Court are juxtaposed, the conclusion is inevitable that no petition for relief from judgment nor
a special civil action of certiorari, prohibition, or mandamus arising from cases covered by the
Revised Rule on Summary Procedure may be filed with a superior court.
o
Nevertheless, in view of the unusual and peculiar circumstances of this case, unless some form
of relief is made available to MAGDATO, the grave injustice and irreparable injury that visited
him through no fault or negligence on his part will only be perpetuated. Thus, the petition for
relief from judgment which he filed may be allowed or treated, pro hac vice, either as an
exception to the rule, or a regular appeal to the RTC, or even an action to annul the order
(decision) of the MCTC.
On the other hand, in Go v. Court of Appeals, the Court was confronted with a procedural void in the
Revised Rules of Summary Procedure that justified the resort to a Rule 65 Petition in the RTC. The
preliminary conference in the subject ejectment suit was held in abeyance by the MTCC until after the

Contrary to the assertion of Sunvar, the factual circumstances in these two cases are not comparable with
respondents situation, and our rulings therein are inapplicable to its cause of action in the present suit.
the general rule is that no special civil action for certiorari may be filed with a superior court from
cases covered by the Revised Rules on Summary Procedure. Sunvar filed a certiorari Petition in an
ejectment suit pending before the MeTC. Worse, the subject matter of the Petition was the denial of
respondents Motion to Dismiss, which was necessarily an interlocutory order, which is generally not the
subject of an appeal. No circumstances similar to the situation of the agricultural tenant-lessee in Bayog
are present to support the relaxation of the general rule in the instant case.

there exists no procedural void akin to that in Go v. Court of Appeals that would justify respondents
resort to a certiorari Petition before the RTC

When confronted with the MeTCs adverse denial of its Motion to Dismiss in the ejectment case, the
expeditious and proper remedy for respondent should have been to proceed with the summary hearings
and to file its answer. Resort to a certiorari Petition in the RTC over an interlocutory order in a summary
ejectment proceeding was not only prohibited. The certiorari Petition was already a superfluity on account
of respondents having already taken advantage of a speedy and available remedy by filing an Answer
with the MeTC.

Respondent Sunvar failed to substantiate its claim of extraordinary circumstances that would constrain
this Court to apply the exceptions obtaining in Bayog and Go. The Court hesitates to liberally dispense
the benefits of these two judicial precedents to litigants in summary proceedings, lest these
exceptions be regularly abused and freely availed of to defeat the very goal of an expeditious and
inexpensive determination of an unlawful detainer suit.

If the Court were to relax the interpretation of the prohibition against the filing of certiorari petitions under
the Revised Rules on Summary Procedure, the RTCs may be inundated with similar prayers from

adversely affected parties questioning every order of the lower court and completely dispensing with the
goal of summary proceedings in forcible entry or unlawful detainer suits.

Contrary to petitioners contention, the allegations in the complaint make out a case for unlawful detainer.
The one-year period for filing a complaint for unlawful detainer is reckoned from the date of the last
demand, in this case October 24, 1996, the reason being that the lessor has the right to waive his right of
action based on previous demands and let the lessee remain meanwhile in the premises. Thus, the filing of
the complaint on February 25, 1997 was well within the one year reglementary period.

The Court is aware that petitioners had earlier served a Notice to Vacate on 22 February 2008, which
could have possibly tolled the one-year period for filing an unlawful detainer suit. Nevertheless, they can
be deemed to have waived their right of action against respondent Sunvar and continued to tolerate its
occupation of the subject property. That they sent a final Notice to Vacate almost a year later gave
respondent another opportunity to comply with their implied promise as occupants by mere tolerance.
Consequently, the one-year period for filing a summary action for unlawful detainer with the MeTC must
be reckoned from the latest demand to vacate. If the subsequent demands were merely in the nature of
reminders of the original demand, the one-year period to commence an ejectment suit would be counted
from the first demand.However, respondent failed to raise in any of the proceedings below this question of
fact as to the nature of the second demand issued by the OSG. It is now too late in the proceedings for
them to argue that the 2009 Notice to Vacate was a mere reiteration or reminder of the 2008 Notice to
Vacate.

Nevertheless, it has not escaped the Courts attention that almost a decade has passed without any
resolution of this controversy regarding respondents possession of the subject property, contrary to the
aim of expeditious proceedings under the Revised Rules on Summary Procedure. With the grant of the
instant Petition and the remand of the case to the MeTC for continued hearing, the Court emphasizes the
duty of the lower court to speedily resolve this matter once and for all, especially since this case involves a
prime property of the government located in the countrys business district and the various opportunities
for petitioners to gain public revenues from the property.

Reckoning the One-Year Period in Unlawful Detainer Cases

The Court finds that petitioners correctly availed themselves of an action for unlawful detainer and, hence,
reverses the ruling of the RTC.
Under the Rules of Court, lessors against whom possession of any land is unlawfully withheld after the
expiration of the right to hold possession mayby virtue of any express or implied contract, and within
one year after the unlawful deprivationbring an action in the municipal trial court against the person
unlawfully withholding possession, for restitution of possession with damages and costs. Unless otherwise
stipulated, the action of the lessor shall commence only after a demand to pay or to comply with the
conditions of the lease and to vacate is made upon the lessee; or after a written notice of that demand is
served upon the person found on the premises, and the lessee fails to comply therewith within 15 days in
the case of land or 5 days in the case of buildings.
The possession by the defendant in unlawful detainer is originally legal but became illegal due to the
expiration or termination of the right to possess. The proceeding is summary in nature, jurisdiction over
which lies with the proper MTC or metropolitan trial court. The action must be brought up within one year
from the date of last demand, and the issue in the case must be the right to physical possession.
Hence, a complaint sufficiently alleges a cause of action for unlawful detainer if it states the following
elements:
1. Initially, the possession of the property by the defendant was by contract with or by tolerance of
the plaintiff.
2. Eventually, the possession became illegal upon the plaintiffs notice to the defendant of the
termination of the latters right of possession.
3. Thereafter, the defendant remained in possession of the property and deprived the plaintiff of the
latters enjoyment.
4. Within one year from the making of the last demand on the defendant to vacate the property, the
plaintiff instituted the Complaint for ejectment.

Soriente v. Estate of Arsenio Concepcion

Facts:
On the other hand, accion publiciana is the plenary action to recover the right of possession which should
be brought in the proper RTC when dispossession has lasted for more than one year. It is an ordinary civil
proceeding to determine the better right of possession of realty independently of title. In other words, if at
the time of the filing of the complaint, more than one year had elapsed since defendant had turned plaintiff
out of possession or defendants possession had become illegal, the action will be, not one of forcible
entry or illegal detainer, but an accion publiciana.
Sunvar initially derived its right to possess the subject property from its sublease agreements with TRCFI
and later on with PDAF. However, with the expiration of the lease agreements on 31 December 2002,
respondent lost possessory rights over the subject property.

The one-year period to file an unlawful detainer case is not counted from the expiration of the lease
contract on 31 December 2002. Indeed, the last demand for petitioners to vacate is the reckoning period
for determining the one-year period in an action for unlawful detainer. Such one year period should be
counted from the date of plaintiffs last demand on defendant to vacate the real property, because only
upon the lapse of that period does the possession become unlawful. In case several demands to vacate are
made, the period is reckoned from the date of the last demand

Nenita Concepcion was the owner of a lot occupied by petitioner Soriente. During the lifetime of Arsenio
Concepcion, he allowed and tolerated the occupancy by petitioner. Petitioner was allowed to stay until the
Concepcions needed the lot.

When Arsenio died, the Concepcions initiated steps to develop the lot but was unable to do so due to the occupancy
of the petitioners. Respondents demanded that petitioner vacate the lot but the same was unheeded. Hence
respondents filed a complaint for unlawful detainer with the MTC.

As appearing from the records of the case, Soriente did not file a separate answer (she merely affixed her signature in
the answer filed by defendant Caballero in another ejectment case, filed by the same respondents.) Due to Sorientes

failure to file an answer, respondents filed a motion to render judgment under Section 7 of the Revised Rules on
Summary Procedure.

Trial court denied the motion. Trial court ruled that the two cases (separate ejectment cases against Soriente and
Caballero, both filed by respondents) were quite similar. Trial court believed that Sorientes act of merely affixing her
signature in the pleading filed by Caballero was an intention to adopt the same pleading as her own, having a
common defense with Caballero. Preliminary conference was held but Soriente was absent, thus respondents moved
for the submission of the case for decision.

Trial court ruled on the motion. The case was submitted for decision under Section 7 of the Rules on Summary
Procedure. Trial court thus ruled in favor of respondent. Petitioner appealed but was denied. Hence this petition.

Issues:

- Whether or not respondent is the owner of the lot in question

- Whether or not the lower court erred in holding that the case should be decided under the Rules on Summary
Procedure

Section 4, Rule 8 of the 1997 Rules of Civil Procedure provides:

Sec. 4. Capacity.x x x A party desiring to raise an issue as to the legal existence of any
party or the capacity of any party to sue or be sued in a representative capacity, shall do so by
specific denial, which shall include such supporting particulars as are peculiarly within the
pleaders knowledge.

Although a Motion to Dismiss cannot be availed of to challenge the capacity of the party under the Rules on
Summary Procedure, the defendant-appellant should have at least specifically denied such capacity of the party in
the Answer. The case records clearly disclosed that no such specific denial was made by the appellant and this
court believes that the lower court had carefully and dutifully taken into account the applicable rules
particularly Section 4 of the Revised Rules on Summary Procedure, in relation to Section 4, Rule 8 of the Rules of
Court and pertinent jurisprudence, before rendering the assailed decision

Another of petitioners contention was that the lower court erred in deciding this case in accordance with Section 7 of
the Rules on Summary Procedure. Such provision provides:

SEC. 7. Preliminary conference; appearance of parties. Not later than thirty (30) days
after the last answer is filed, a preliminary conference shall be held. The rules on pre-trial in
ordinary cases shall be applicable to the preliminary conference unless inconsistent with the
provisions of this Rule.

Held:

1. YES

The failure of the plaintiff to appear in the preliminary conference shall be a cause for the
dismissal of his complaint. The defendant who appears in the absence of the plaintiff shall be
entitled to judgment on his counterclaim in accordance with Section 6 hereof. All cross-claims
shall be dismissed.

2. NO

Issue on Summary Procedure

Petitioner contends that respondents do not have legal capacity. They reason out that since lack of capacity to sue is a
ground for dismissal and that a motion to dismiss is a prohibited pleading under the summary procedure, the trial
court failed to exercise its duty to order the outright dismissal of the complaint as mandated under Section 4 of the
1991 Revised Rules on Summary Procedure.

The court held that this contention lacks merit.

If a sole defendant shall fail to appear, the plaintiff shall be entitled to judgment in accordance
with Section 6 hereof. This Rule shall not apply where one of two or more defendants sued
under a common cause of action who had pleaded a common defense shall appear at the
preliminary conference.

Section 6 of the 1991 Revised Rules on Summary Procedure, which is referred to by Section 7 above, states:

SEC. 6. Effect of failure to answer. Should the defendant fail to answer the complaint
within the period above provided, the court, motu proprio, or on motion of the plaintiff, shall
render judgment as may be warranted by the facts alleged in the complaint and limited to what
is prayed for therein: Provided, however, That the court may in its discretion reduce the
amount of damages and attorneys fees claimed for being excessive or otherwise
unconscionable. This is without prejudice to the applicability of Section 4, Rule 18 of the
Rules of Court, if there are two or more defendants.

to sue since it was doing business in the Philippines without the required license; that the complaint had prescribed;
that the damage was beyond the carriers control; etc.
Petitioner contends that considering that the cases against her, defendant Caballero and another defendant, Sadol were
consolidated, and that they filed one common Answer to the complaint, the trial court should not have rendered
judgment on her case based on Section 7 of the 1991 Revised Rules on Summary Procedure when she failed to
appear in the preliminary conference.

The court held that this argument lacks merit.

The ejectment cases filed by respondents was docketed into different cases. The same cases was merely consolidated
by the trial court.

During pre-trial, Cosco filed a Motion to Dismiss contending that the Complaint was signed by one Atty. Rodolfo
Lat, who failed to show his authority to sue (No Special Power of Attorney from Kemper). Moreover, Atty. Lat was
also the one who signed the Certification Against Forum Shopping.
RTC granted Motion to Dismiss and dismissed the case without prejudice. MR denied. On appeal, CA reversed the
RTC ruling. While the CA recognized that the Plaintiff/Principal Party must be the one to sign the Certification
Against Forum Shopping, the CA pointed out that the factual circumstances warranted a liberal application of the
Rules and thus ordered the remand of the case for further proceedings. MR denied. Hence, this petition.
Kemper admitted that it failed to attach a concrete proof of Atty. Lats authority to execute the Certification Against
Forum Shopping. However, it claimed that there was subsequent compliance when it submitted an authenticated SPA
empowering Atty. Lat to represent it in the pre-trial and all stages of the proceedings.
ISSUE: WHETHER LAT WAS PROPERLY AUTHORIZED BY KEMPER TO SIGN THE CERTIFICATION AGAINST FORUM
SHOPPING IN ITS BEHALF.

Under Section 7 of the 1991 Revised Rules on Summary Procedure, if a sole defendant shall fail to appear in the
preliminary conference, the plaintiff shall be entitled to judgment in accordance with Section 6 of the Rule, that is,
the court shall render judgment as may be warranted by the facts alleged in the Complaint and limited to what is
prayed for therein. However, this Rule (Sec. 7) shall not apply where one of two or more defendants sued
under a common cause of action, who had pleaded a common defense, shall appear at the preliminary
conference.

The Court holds that the emphasized provision above does not apply in the case of petitioner, since she and Caballero
were not co-defendants in the same case. The ejectment case filed against petitioner was distinct from that of
Caballero, even if the trial court consolidated the cases and, in the interest of justice.

Considering that petitioner was sued in a separate case for ejectment from that of Caballero and Sadol,
petitioners failure to appear in the preliminary conference entitled respondent to the rendition of judgment
by the trial court on the ejectment case filed against petitioner, in accordance with Section 7 of the 1991
Revised Rules on Summary Procedure.

HELD: NO. NO REASON TO RELAX THE RULES.

We have consistently held that the certification against forum shopping must be signed by the principal parties. If,
for any reason, the principal party cannot sign the petition, the one signing on his behalf must have been duly
authorized.
With respect to a CORPORATION, the certification against forum shopping may be signed for and on its behalf, by
a specifically authorized lawyer who has personal knowledge of the facts required to be disclosed in such
document. A corporation has no power, except those expressly conferred on it by the Corporation Code and those
that are implied or incidental to its existence. In turn, a corporation exercises said powers through its board of
directors and/or its duly authorized officers and agents.
Thus, it has been observed that the power of a corporation to sue and be sued in any court is lodged with the
board of directors that exercises its corporate powers. In turn, physical acts of the corporation, like the signing
of documents, can be performed only by natural persons duly authorized for the purpose by corporate by-laws
or by a specific act of the board of directors.
In Philippine Airlines, Inc. v. Flight Attendants and Stewards Association of the Philippines (FASAP), we ruled that
only individuals vested with authority by a valid board resolution may sign the certificate of non-forum
shopping on behalf of a corporation. We also required proof of such authority to be presented. The petition is
subject to dismissal if a certification was submitted unaccompanied by proof of the signatorys authority.
In the present case, since Kemper is a corporation, the certification must be executed by an officer or member of
the board of directors or by one who is duly authorized by a resolution of the board of directors; otherwise, the
complaint will have to be dismissed.

Cosco Philippines Shipping Inc v. Kemper Insurance Company, 670 SCRA 343 (2012)
FACTS:
Kemper Insurance, a US-based company with no license to engage in business in the Philippines, insured the
shipment of imported frozen boneless beef owned by Genosi Inc. The goods were loaded in Brisbane for shipment to
Genosi in the Philippines in a vessel owned by Cosco Philippines Shipping. Upon arrival in Manila, Genosi rejected a
portion of the shipment due to spoilage caused by the alleged temperature fluctuations of Coscos containers.
Thus, Genosi filed a claim against Cosco and Kemper. After processing of the claim, an amount of $64K or P2M was
recommended to which Genosi accepted. Thereafter, as insurer, Kemper paid Genosi. The latter was subsequently
subrogated by Kemper. As such, Kemper demanded the same amount from Cosco. However, Cosco refused to pay.
Consequently, Kemper sued Cosco alleging that the spoilage was caused by its negligence which resulted in the
breakdown in the electronics of its refrigerated containers. In its Answer, Cosco insisted that Kemper had no capacity

The lack of certification against forum shopping is generally not curable by mere amendment of the complaint,
but shall be a cause for the dismissal of the case without prejudice. The same rule applies to certifications against
forum shopping signed by a person on behalf of a corporation which are unaccompanied by proof that said
signatory is authorized to file the complaint on behalf of the corporation.
There is no proof that Kemper, a private corporation, authorized Atty. Lat, through a board resolution, to sign the
verification and certification against forum shopping on its behalf. Accordingly, the certification against forum
shopping appended to the complaint is fatally defective, and warrants the dismissal of Kempers complaint for
Insurance Loss and Damages against Cosco.
INSTANCES WHEN RULE WAS RELAXED

In Republic v. Coalbrine International Philippines, Inc., the Court cited instances wherein the lack of authority of the
person making the certification of non-forum shopping was remedied through subsequent compliance by the parties
therein. Thus,
[w]hile there were instances where we have allowed the filing of a certification against nonforum shopping by someone on behalf of a corporation without the accompanying proof of
authority at the time of its filing, we did so on the basis of a special circumstance or
compelling reason. Moreover, there was a subsequent compliance by the submission of the
proof of authority attesting to the fact that the person who signed the certification was duly
authorized.
In China Banking Corporation v. Mondragon International Philippines, Inc., the CA dismissed
the petition filed by China Bank, since the latter failed to show that its bank manager who
signed the certification against non-forum shopping was authorized to do so. We reversed the
CA and said that the case be decided on the merits despite the failure to attach the required
proof of authority, since the board resolution which was subsequently attached recognized
the pre-existing status of the bank manager as an authorized signatory.
In Abaya Investments Corporation v. Merit Philippines, where the complaint before the
Metropolitan Trial Court of Manila was instituted by petitioners Chairman and President,
Ofelia Abaya, who signed the verification and certification against non-forum shopping
without proof of authority to sign for the corporation, we also relaxed the rule. We did so
taking into consideration the merits of the case and to avoid a re-litigation of the issues
and further delay the administration of justice, since the case had already been decided by
the lower courts on the merits. Moreover, Abayas authority to sign the certification was
ratified by the Board.
NO RELAXATION
Contrary to the CAs finding, the Court finds that the circumstances of this case do not necessitate the relaxation
of the rules. There was no proof of authority submitted, even belatedly, to show subsequent compliance with the
requirement of the law. Neither was there a copy of the board resolution or secretarys certificate subsequently
submitted to the trial court that would attest to the fact that Atty. Lat was indeed authorized to file said complaint and
sign the verification and certification against forum shopping, nor did respondent satisfactorily explain why it failed
to comply with the rules. Thus, there exists no cogent reason for the relaxation of the rule on this matter.
Obedience to the requirements of procedural rules is needed if we are to expect fair results therefrom, and utter
disregard of the rules cannot justly be rationalized by harking on the policy of liberal construction.
Moreover, the SPA dated May 11, 2000, submitted by respondent allegedly authorizing Atty. Lat to appear on behalf
of the corporation, in the pre-trial and all stages of the proceedings, signed by Brent Healy, was fatally defective and
had no evidentiary value. It failed to establish Healys authority to act in behalf of respondent, in view of the
absence of a resolution from respondents board of directors or secretarys certificate proving the same. Like any
other corporate act, the power of Healy to name, constitute, and appoint Atty. Lat as respondents attorney-infact, with full powers to represent respondent in the proceedings, should have been evidenced by a board
resolution or secretarys certificate.
AMOUNTS TO LACK OF JURISDICTION
Accordingly, since Atty. Lat was not duly authorized by respondent to file the complaint and sign the verification
and certification against forum shopping, the complaint is considered not filed and ineffectual, and, as a necessary
consequence, is dismissable due to lack of jurisdiction.
Since the court has no jurisdiction over the complaint and respondent, petitioner is not estopped from challenging
the trial courts jurisdiction, even at the pre-trial stage of the proceedings. This is so because the issue of
jurisdiction may be raised at any stage of the proceedings, even on appeal, and is not lost by waiver or by estoppel.

Vallacar Transit v Jocelyn Catubig (2011)

Vallacar transit is engaged in the business of transportation and the franchise owner of a Ceres Bulilit bus. Cabanilla
is employed as a regular bus driver of petitioner.

One day, respondents husband, Quintin Catubig, Jr. (Catubig), was on his way home riding in tandem with
Emperado. Catubig tried to overtake a slow moving ten-wheeler cargo truck by crossing-over to the opposite lane,
which was then being traversed by the Ceres Bulilit bus driven by Cabanilla, headed for the opposite direction. The
bus collided with Catubigs motorcycle. Both Catubig and Emperado died.

Cabanilla was charged with reckless imprudence resulting in double homicide with the MCTC, but this was
dismissed since the MCTC found that there was no negligene on his part.

Thereafter, Catubig filed before the RTC a Complaint for Damages against Vallacar Transit, seeking actual, moral,
and exemplary damages (P484,000.00) based on Article 2180 (vicarious liab), in relation to Article 2176, of the Civil
Code.

Vallacars answer: It was Catubig who was negligent. In addition, as a special and affirmative defense, Vallacar
asked for the dismissal of respondents complaint for not being verified and/or for failure to state a cause of action, as
there was no allegation that petitioner was negligent in the selection or supervision of its employee driver.

RTC decision: dismissed the case, found that the proximate cause of the accident was Catubigs negligence.
CA: modified. Both Catubig (he was recklessly overtaking) and Vallacar (Catubig was speeding) were negligent.. So
Court awarded 250k.

Vallacar filed a P for Review. Vallacar asserts that:

Catubigs complaint for damages should be dismissed for the latters failure to verify the same. The
certification against forum shopping attached to the complaint, signed by respondent, is not a valid
substitute for Catubigs verification that she has read the pleading and that the allegations therein are true
and correct of her personal knowledge or based on authentic records. A pleading lacking proper
verification is treated as an unsigned pleading, which produces no legal effect.

Issue: WON the complaint against Vallcar should be dismissed for failure to satisfy the verification requirement.
Held: No. (But, the court still ruled in favor of Vallacar since it was not guilty of negligence).

iii.
Ratio:
Procedural
(1)
(2)

Procedural - At the outset, we find no procedural defect that would have warranted the outright dismissal
of respondents complaint.
The court then discussed principles pertaining to verification:
a. A pleading lacking proper verification is to be treated as an unsigned pleading which
produces no legal effect.
b. However, it also just as clearly states that except when otherwise specifically required by
law or rule, pleadings need not be under oath, verified or accompanied by affidavit.
c.
Although parties would often submit a joint verification and certificate against forum
shopping, the two are different.
i. First difference: who can sign?
1. Cert of Forum shopping: The certificate of non-forum shopping must
be signed by the party, and not by counsel. The certification of
counsel renders the petition defective.
2. Verification: On the other hand, the requirement on verification of a
pleading is a formal and not a jurisdictional requisite. It is intended
simply to secure an assurance that what are alleged in the pleading are
true and correct and not the product of the imagination or a matter of
speculation, and that the pleading is filed in good faith. The party need
not sign the verification. A partys representative, lawyer or any
person who personally knows the truth of the facts alleged in the
pleading may sign the verification.
ii. Second difference: pleadings involved?
1. Cert of NFS: In contrast, all complaints, petitions, applications, and
other initiatory pleadings must be accompanied by a certificate against
forum shopping (Rule 7, Section 5).
2. Verification: In the case before us, we stress that as a general rule, a
pleading need not be verified, unless there is a law or rule specifically
requiring the same.1

The Court then enumerated the pleadings that require verification: (ang dami)
a. all pleadings filed in civil cases under the 1991 Revised Rules on Summary
Procedure;
b. petition for review from the Regional Trial Court to the Supreme Court raising
only questions of law under Rule 41, Section 2;
c. petition for review of the decision of the Regional Trial Court to the Court of
Appeals under Rule 42, Section 1;
d. petition for review from quasi-judicial bodies to the Court of Appeals under Rule
43, Section 5;
e. petition for review before the Supreme Court under Rule 45, Section 1;
f. petition for annulment of judgments or final orders and resolutions under Rule 47,
Section 4;
g. complaint for injunction under Rule 58, Section 4;
h. application for preliminary injunction or temporary restraining order under Rule
58, Section 4;
i. application for appointment of a receiver under Rule 59, Section 1;
j. application for support pendente lite under Rule 61, Section 1;

(3)

Third difference: effect of non-compliance?

1. Cert of NFS: renders pleading defective.
2. Verification: verification is a formal, not jurisdictional, requirement, and
mainly intended to secure an assurance that matters which are alleged
are done in good faith or are true and correct and not of mere
speculation. When circumstances warrant, the court may simply order
the correction of unverified pleadings or act on it and waive strict
compliance with the rules in order that the ends of justice may thereby
be served.

In the present case:

a.
Cert of NFS: It is not disputed herein that respondents complaint for damages was
accompanied by such a certificate.
b. Verification: No such law or rule specifically requires that respondents complaint for damages
should have been verified hence, it is not required to be verified!

Substantive
(1)

(2)

Long discussion on Art. 2180. Basta the Court ruled that the liab of an employer under art 2180 requires
that the negligence of the employee be established first. But since Cabanillas negligence in driving the
bus was not established, then the case against Vallacar transist will not prosper.
Thus, procedurally Vallacars argument is wrong. But on the merits, Vallacar prevails.

Abbott vs Alcaraz

Abbott Laboratories, Philippines (Abbott) caused the publication in a major broadsheet newspaper of its need for a
Medical and Regulatory Affairs Manager who would be responsible for drug safety surveillance operations, staffing,
and budget. Alcaraz who was then a Regulatory Affairs and Information Manager at Aventis showed interest and
submitted her application. Abbott formally offered Alcaraz the abovementioned position. In Abbotts offer sheet, it
was stated that Alcaraz was to be employed on a probationary basis. She accepted the said offer and received an
electronic mail from Abbotts Recruitment Officer, petitioner Teresita C. Bernardo (Bernardo), confirming the same.

k.

petition for certiorari against the judgments, final orders or resolutions of

constitutional commissions under Rule 64, Section 2;
l. petition for certiorari, prohibition, and mandamus under Rule 65, Sections 1 to 3;
m. petition for quo warranto under Rule 66, Section 1;
n. complaint for expropriation under Rule 67, Section 1;
o. petition for indirect contempt under Rule 71, Section 4, all from the 1997 Rules of
Court;
p. all complaints or petitions involving intra-corporate controversies under the
Interim Rules of Procedure on Intra-Corporate Controversies;
q. complaint or petition for rehabilitation and suspension of payment under the
Interim Rules on Corporate Rehabilitation; and
r. petition for declaration of absolute nullity of void marriages and annulment of
voidable marriages as well as petition for summary proceedings under the Family
Code.

Alcaraz signed an employment contract which stated, inter alia, that she was to be placed on probation for a period of
six (6) months signed by Abbotts General Manager, petitioner Edwin Feist (Feist). Petitioner Allan G. Almazar
(Almazar), Hospiras Country Transition Manager, briefed her on her duties and responsibilities , that she will handle
the staff of Hospira ALSU and will directly report to Almazar on matters regarding Hopiras local operations,
operational budget, and performance, evaluation of the Hospira ALSU Staff who are on probationary status.

LA dismissed Alcarazs complaint for lack of merit. They rejected Alcarazs argument that she was not informed
of the reasonable standards considering her admissions that she was briefed by Almazar on her work during her
preemployment orientation meeting30 and that she received copies of Abbotts Code of Conduct and Performance
Modules which were used for evaluating all types of Abbott employees.As Alcaraz was unable to meet the standards
set by Abbott the termination of her probationary employment was justified.

Alcaraz was also given copies of Abbotts Code of Conduct and Probationary Performance Standards and Evaluation
(PPSE) and Performance Excellence Orientation Modules (Performance Modules) which she had to apply in line with
her task of evaluating the Hospira ALSU staff. These performance standards should be discussed in detail with the
employee within the first two (2) weeks on the job.

NLRC annulled and set aside the LAs ruling

During the course of her employment, Alcaraz noticed that some of the staff had disciplinary problems. Thus, she
would reprimand them for non-observance of the dress code, moonlighting, and disrespect of Abbott officers.
However, Alcarazs method of management was considered by Walsh to be too strict. Alcaraz approached Misa
(Abbotts Human Resources (HR) Director) to discuss these concerns and was told to lie low and let Walsh
(Manager of the Literature Drug Surveillance Drug Safety of Hospira and her immediate supervisor) handle the
matter. Misa even assured her that Abbotts HRD would support her in all her management decisions. Alcaraz
received an email from Misa requesting immediate action on the staffs performance evaluation as their probationary
periods were about to end.

Finding respondents Abbot [sic] and individual respondents to have committed illegal dismissal and ordered to
immediately reinstate. There was no evidence showing that Alcaraz had been apprised of her probationary status and
the requirements which she should have complied with in order to be a regular employee. Alcarazs receipt of her job
description and Abbotts Code of Conduct and Performance Modules was not equivalent to her being actually
informed of the performance standards. The NLRC was also not convinced that Alcaraz was terminated for a valid
cause given that petitioners allegation of Alcarazs poor performance remained unsubstantiated.

(First CA Petition) Petitioners filed with the CA a Petition for Certiorari with Prayer for Issuance of a Temporary
Restraining Order and/or Writ of Preliminary Injunction, alleging grave abuse of discretion on the part of NLRC

Alcaraz had a meeting with petitioner Cecille Terrible (Terrible), Abbotts former HR Director, to discuss certain
issues regarding staff performance standards. In the course thereof, Alcaraz accidentally saw a printed copy of an
email sent by Walsh to some staff members which essentially contained queries regarding the formers job
performance. Alcaraz asked if Walshs action was the normal process of evaluation. Terrible said that it was not.

Pending resolution of the First CA Petition, Alcaraz moved for the execution of the NLRCs Decision before
the LA, which petitioners strongly opposed.

Alcaraz was called to a meeting with Walsh and Terrible where she was informed that she failed to meet the
regularization standards for the position of Regulatory Affairs Manager. They requested Alcaraz to tender her
resignation, else they be forced to terminate her and that, regardless of her choice, she should no longer report for
work. She requested to be given one week to decide on the same, but to no avail.

(Second CA Petition) Petitioners filed another Petition for Certiorari with the CA, assailing the propriety of the
execution of the NLRC decision.

The LA denied the said motion, which was, however, eventually reversed on appeal by the NLRC.

CA
Alcaraz told her administrative assistant that she would be on leave for that day.However, Gonzales told her that
Walsh and Terrible already announcedthat Alcaraz already resigned due to health reasons. Walsh, Almazar, and
Bernardo personally handed to Alcaraz a letter stating that her services had been terminated alleging the ff the
reasons for Alcarazs termination: (a) did not manage her time effectively; (b) failed to gain the trust of her staff and
to build an effective rapport with them; (c) failed to train her staff effectively; and (d) was not able to obtain the
knowledge and ability to make sound judgments

Alcaraz felt that she was unjustly terminated from her employment and thus, filed a complaint for illegal dismissal
and damages against Abbott and its officers She claimed that she should have already been considered as a regular
and not a probationary employee given Abbotts failure to inform her of the reasonable standards for her
regularization upon her engagement as required under Article 29525 of the Labor Code. Her employment contract did
not indicate the standards on which her regularization would be based.

affirmed the ruling of the NLRC and held that the latter did not commit any grave abuse of discretion in finding that
Alcaraz was illegally dismissed. On its examination of the employment contract which showed that the same did not
contain any standard of performance or any stipulation that Alcaraz shall undergo a performance evaluation before
she could qualify as a regular employee. Abbott was unable to prove that there was any reasonable ground to
terminate

(May 18, 2010 resolution) The CA likewise denied the Second CA Petition and ruled that the NLRC was correct in
upholding the execution of the NLRC Decision. Thus, petitioners filed a motion for reconsideration. While the
petitioners motion for reconsideration of the CAs May 18, 2010 Resolution was pending, Alcaraz again moved for
the issuance of a writ of execution before the LA.

LA granted Alcarazs motion for execution which they in turn appealed to the NLRC through a Memorandum
of Appeal (June 16, 2010) on the ground that the implementation of the LAs order would render its motion for
reconsideration moot and academic.

In her Comment, Alcaraz also alleges that:

1.

2.

petitioners were guilty of forum shopping when they filed the Second CA Petition pending the resolution of
their motion for reconsideration of the CAs December 10, 2009 Decision i.e., the decision in the First CA
Petition.
that petitioners have not complied with the certification requirement under Section 5, Rule 7 of the Rules
of Court when they failed to disclose in the instant petition the filing of the June 16, 2010 Memorandum of
Appeal filed before the NLRC.

preceding particulars in the two (2) cases is such that any judgment that may be rendered in the pending case,
regardless of which party is successful, would amount to res judicata in the other case.

In this case, records show that, except for the element of identity of parties, the elements of forum shopping do not
exist. Evidently, the First CA Petition was instituted to question the ruling of the NLRC that Alcaraz was illegally
dismissed. On the other hand, the Second CA Petition pertains to the propriety of the enforcement of the judgment
award pending the resolution of the First CA Petition and the finality of the decision in the labor dispute between
Alcaraz and the petitioners. Based on the foregoing, a judgment in the Second CA Petition will not constitute res
judicata insofar as the First CA Petition is concerned. The two petitions clearly cover different subject matters and
causes of action, there exists no forum shopping.

No Violation of Section 5, Rule 7 of the Rules of Court.

Issue:
1. whether or not petitioners are guilty of forum shopping and have violated the certification requirement under
Section 5, Rule 7 of the Rules of Court - No

Alcaraz further imputes that the petitioners violated the certification requirement under Section 5, Rule 7 of the Rules
of Court58 by not disclosing the fact that it filed the June 16, 2010 Memorandum of Appeal before the NLRC in the
instant petition.

2. whether or not Alcaraz was sufficiently informed of the reasonable standards to qualify her as a regular employee Yes
3. whether or not Alcaraz was validly terminated No
4. whether or not the individual petitioners herein are liable - No

Held
No Forum Shopping

Section 5(b), Rule 7 of the Rules of Court requires that a plaintiff who files a case should provide a complete
statement of the present status of any pending case if the latter involves the same issues as the one that was filed. If
there is no such similar pending case, Section 5(a) of the same rule provides that the plaintiff is obliged to declare
under oath that to the best of his knowledge, no such other action or claim is pending.

the issues raised in the instant petition and those in the June 16, 2010 Memorandum of Appeal filed with the NLRC
likewise cover different subject matters and causes of action. In this case, the validity of Alcarazs dismissal is at
issue whereas in the said Memorandum of Appeal, the propriety of the issuance of a writ of execution was in
question. Given the dissimilar issues, petitioners did not have to disclose in the present petition the filing of their June
16, 2010 Memorandum of Appeal with the NLRC.

The prohibition against forum shopping is different from a violation of the certification requirement under Section 5,
Rule 7 of the Rules of Court.
Considering that the issue on the propriety of the issuance of a writ of execution had been resolved in the Second CA
Petition which in fact had already attained finality the matter of disclosing the June 16, 2010 Memorandum of
Appeal is now moot and academic.
In Sps. Ong v. CA xxx compliance with the certification against forum shopping is separate from and independent
of the avoidance of the act of forum shopping itself. There is a difference in the treatment between failure to comply
with the certification requirement and violation of the prohibition against forum shopping not only in terms of
imposable sanctions but also in the manner of enforcing them. The former constitutes sufficient cause for the
dismissal without prejudice [to the filing] of the complaint or initiatory pleading upon motion and after hearing, while
the latter is a ground for summary dismissal thereof and for direct contempt.

Forum shopping takes place when a litigant files multiple suits involving the same parties, either simultaneously or
successively, to secure a favorable judgment. It exists where the elements of litis pendentia are present, namely: (a)
identity of parties, or at least such parties who represent the same interests in both actions; (b) identity of rights
asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity with respect to the two

Despite the existence of a sufficient ground to terminate Alcarazs employment and Abbotts compliance with the
Labor Code termination procedure, it is readily apparent that Abbott breached its contractual obligation to Alcaraz
when it failed to abide by its own procedure in evaluating the performance of a probationary employee.

S.C. Megaworld Construction and Development Corporation v. Parada

That I/we am/are the Plaintiff in the above-captioned case;

Facts:
That I/we have caused the preparation of this Complaint; and
1.

2.
3.
4.

5.
6.

S.C. Megaworld Construction and Development Corporation (petitioner) bought electrical lighting
materials from Gentile Industries, a sole proprietorship owned by Engineer Luis U. Parada (respondent),
for its Read-Rite project in Canlubang, Laguna.
The petitioner was unable to pay for the above purchase on due date, but blamed it on its failure to collect
under its sub-contract with the Enviro KleenTechnologies, Inc.
It was however able to persuade Enviro Kleen to agree to settle its above purchase, but after paying the
respondent P250,000.00.
Enviro Kleen stopped making further payments, leaving an outstanding balance of P816,627.00. It also
ignored the various demands of the respondent, who then filed a suit in the RTC, docketed as Civil Case
to collect from the petitioner the said balance, plus damages, costs and expenses.
RTC: In favor of respondent.
CA: Dismissed the appeal of petitioner. MR was denied as well.

Held: The verification and certification of non-forum shopping in the complaint is not a jurisdictional but a formal
requirement, and any objection as to non-compliance therewith should be raised in the proceedings below and not for
the first time on appeal.

Ratio:

No question will be entertained on appeal unless it has been raised in the proceedings below. Points of law, theories,
issues and arguments not brought to the attention of the lower court, administrative agency or quasi-judicial body,
need not be considered by are viewing court, as they cannot be raised for the first time at that late stage. Basic
considerations of fairness and due process impel this rule. Any issue raised for the first time on appeal is barred by
estoppel.

Through a Special Power of Attorney (SPA), the respondent authorized Engr. Leonardo A. Parada (Leonardo), the
eldest of his three children, to perform the following acts in his behalf: a) to file a complaint against the petitioner for
sum of money with damages; and b) to testify in the trial thereof and sign all papers and documents related thereto,
with full powers to enter into stipulation and compromise.

That I/we have read the same and that all the allegations therein are true and correct to the best
of my/our knowledge.

In this petition, the petitioner reiterates its argument before the CA that the above verification is invalid, since the
SPA executed by the respondent did not specifically include an authority for Leonardo to sign the verification and
certification of non-forum shopping, thus rendering the complaint defective for violation of Sections 4 and 5 of Rule
7.

The said sections provide, as follows:

Sec. 4. Verification. A pleading is verified by an affidavit that the affiant has read the
pleading and that the allegations therein are true and correct of his personal knowledge or
based on authentic records.

Sec. 5. Certification against forum shopping. The plaintiff or principal party shall certify
under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a
sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not
thereto fore commenced any action or filed any claim involving the same issues in any court,
or tribunal x x x and, to the best of his knowledge, no such other action or claim is pending
therein; (b) if there is such other pending action or claim, a complete statement of the present
status thereof; and (c) if he should thereafter learn that the same or similar action or claim has
been filed or is pending, he shall report that fact x x x to the court wherein his aforesaid
complaint or initiatory pleading has been filed.

Failure to comply with the foregoing requirements shall not be curable by mere amendment of
the complaint or other initiatory pleading but shall be cause for the dismissal of the case
without prejudice, unless otherwise provided, upon motion and after hearing.
The respondent, a widower, died, and survived by his legitimate children, Leonardo, Luis, Jr., and Lalaine. They have
since substituted him in this petition. Luis, Jr. and Lalaine Parada executed an SPA authorizing their brother
Leonardo to represent them in the instant petition.
The petitioners argument is untenable. The petitioner failed to reckon that any objection as to compliance with the
requirement of verification in the complaint should have been raised in the proceedings below, and not in the
appellate court for the first time.
In the verification and certification of non-forum shopping attached to the complaint in the Civil Case filed above,
Leonardo as attorney-in-fact of his father acknowledged as follows:

Case law has held that: verification is a formal, not a jurisdictional requisite, as it is mainly intended to secure an
assurance that the allegations therein made are done in good faith or are true and correct and not mere speculation.
The Court may order the correction of the pleading, if not verified, or act on the unverified pleading if the attending
circumstances are such that a strict compliance with the rule may be dispensed with in order that the ends of justice
may be served.

Further, in rendering justice, courts have always been, as they ought to be, conscientiously guided by the norm that
on the balance, technicalities take a backseat vis- -vis substantive rights, and not the other way around.

The question of forum shopping cannot be raised in the CA and in the Supreme Court, since such an issue must be
raised at the earliest opportunity in a motion to dismiss or a similar pleading. The high court even warned that
"invoking it in the later stages of the proceedings or on appeal may result in the dismissal of the action x x x."

Moreover, granting that Leonardo has no personal knowledge of the transaction subject of the complaint below,
Section 4 of Rule 7 provides that the verification need not be based on the verifiers personal knowledge but even
only on authentic records. Sales invoices, statements of accounts, receipts and collection letters for the balance of the
amount still due to the respondent from the petitioner are such records. There is clearly substantial compliance by the
respondents attorney-in-fact with the requirement of verification.

Lastly, it is well-settled that a strict compliance with the rules may be dispensed with in order that the ends of
substantial justice may be served. It is clear that the present controversy must be resolved on its merits, lest for a
technical oversight the respondent should be deprived of what is justly due him.

The following rulings were also held:

1.
2.
3.

4.

A sole proprietorship has no juridical personality separate and distinct from that of its owner, and need not
be impleaded as a party- plaintiff in a civil case.
Novation is never presumed but must be clearly and unequivocally shown.
Pursuant to Article 2209 of the Civil Code, except as provided under Central Bank Circular No. 905, and
now under Bangko Sentral ng Pilipinas Circular No. 799, which took effect on July 1, 2013, the
respondent may be awarded interest of six percent (6%) of the judgment amount by way of actual and
compensatory damages.
The award of attorneys fees is not proper.