CHIANG KAI SHEK SCHOOL, petitioner, vs. COURT OF APPEALS and FAUSTINA FRANCO OH,respondents.

SYLLABUS 1.REMEDIAL LAW; PARTIES IN A CIVIL ACTION; FAILURE OF SCHOOL TO INCORPORATE DOES NOT EXEMPT IT FROM SUIT AS A JURIDICAL ENTITY. It is true that Rule 3, Section 1, of the Rules of Court clearly provides that "only natural or juridical persons may be parties in a civil action." It is also not denied that the school has not been incorporated. However, this omission should not prejudice the private respondent in the assertion of her claims against the school. As a school, the petitioner was governed by Act No. 2706 as amended by C.A. No. 180, which provided as follows: Unless exempted for special reasons by the Secretary of Public Instruction, any private school or college recognized by the government shall be incorporated under the provisions of Act No. 1459 known as the Corporation Law, within 90 days after the date of recognition, and shall file with the Secretary of Public Instruction a copy of its incorporation papers and by-laws. Having been recognized by the government, it was under obligation to incorporate under the Corporation Law within 90 days from such recognition. It appears that it had not done so at the time the complaint was filed notwithstanding that it had been in existence even earlier than 1932. The petitioner cannot now invoke its own non-compliance with the law to immunize it from the private respondent's complaint. 2.ID.; ID.; SCHOOL HAVING REPRESENTED ITSELF AS POSSESSED OF JURIDICAL PERSONALITY ESTOPPED FROM DENYING THE SAME. There is no question that having contracted with the private respondent every year for thirty two years and thus represented itself as possessed of juridical personality to do so, the petitioner Chiang Kai Shek School is now estopped from denying such personality to defeat her claim against it. According to Article 1431 of the Civil Code, "through estoppel an admission or representation is rendered conclusive upon the person making it and cannot be denied or disproved as against the person relying on it." 3.LABOR LAW; CHARITABLE INSTITUTIONS COVERED THEREIN. It is clear now that a charitable institution is covered by the labor laws although the question was still unsettled when this case arose in 1968. At any rate, there was no law even then exempting such institutions from the operation of the labor laws (although they were exempted by the Constitution from ad valorem taxes). Hence, even assuming that the petitioner was a charitable institution as it claims, the private respondent was nonetheless still entitled to the protection of the Termination Pay Law, which was then in force. 4.ID.; TERMINATION OF EMPLOYMENT; DISMISSAL OF PERMANENT EMPLOYEE WITHOUT CAUSE AND DUE NOTICE NOT PROPER. The Court holds, after considering the particular circumstance of Oh's employment, that she had become a permanent employee of the school and entitled to security of tenure at the time of her dismissal. Since no cause was shown and established at an appropriate hearing, and the notice then required by law had not been given, such dismissal was invalid. The private respondent's position is no different from that of the rank-andfile employees involved in Gregorio Araneta University Foundation v. NLRC, of whom the Court had the following to say: Undoubtedly, the private respondents' positions as deans and department heads of the petitioner university are necessary in its usual business. Moreover, all the private respondents have been serving the university from 18 to 28 years. All of them rose from the ranks starting as instructors until they became deans and department heads of the university. A person who has served the University for 28 years and who occupies a high administrative position in addition to teaching duties could not possibly be a temporary employee or a casual. 5.ID.; ID.; ILLEGAL DISMISSAL DONE IN WANTON AND OPPRESSIVE MANNER, AWARD OF MORAL AND EXEMPLARY DAMAGES PROPER. We find that the private respondent was arbitrarily treated by the petitioner, which has shown no cause for her removal nor had it given her the notice required by the Termination Pay Law. As the respondent court said, the contention that she did not report one week before the start of classes is a flimsy justification for replacing her. She had been in its employ for all of thirty-two years. Her record was apparently unblemished. There is no showing of any previous strained relations between her and the petitioner. Oh had every

reason to assume, as she had done in previous years, that she would continue teaching as usual. It is easy to imagine the astonishment and hurt she felt when she was flatly and without warning told she was dismissed. There was not even the amenity of a formal notice of her replacement, with perhaps a graceful expression of thanks for her past services. She was simply informed she was no longer in the teaching staff. To put it bluntly, she was fired. For the wrongful act of the petitioner, the private respondent is entitled to moral damages. As a proximate result of her illegal dismissal, she suffered mental anguish, serious anxiety, wounded feelings and even besmirched reputation as an experienced teacher for more than three decades. We also find that the respondent court did not err in awarding her exemplary damages because the petitioner acted in a wanton and oppressive manner when it dismissed her.

DECISION

CRUZ, J p: An unpleasant surprise awaited Fausta F. Oh when she reported for work at the Chiang Kai Shek School in Sorsogon on the first week of July, 1968. She was told she had no assignment for the next semester. Oh was shocked. She had been teaching in the school since 1932 for a continuous period of almost 33 years. And now, out of the blue, and for no apparent or given reason, this abrupt dismissal. Oh sued. She demanded separation pay, social security benefits, salary differentials, maternity benefits and moral and exemplary damages. 1 The original defendant was the Chiang Kai Shek School but when it filed a motion to dismiss on the ground that it could not be sued, the complaint was amended. 2 Certain officials of the school were also impleaded to make them solidarily liable with the school. The Court of First Instance of Sorsogon dismissed the complaint. 3 On appeal, its decision was set aside by the respondent court, which held the school suable and liable while absolving the other defendants. 4 The motion for reconsideration having been denied, 5 the school then came to this Court in this petition for review on certiorari. The issues raised in the petition are: 1.Whether or not a school that has not been incorporated may be sued by reason alone of its long continued existence and recognition by the government. 2.Whether or not a complaint filed against persons associated under a common name will justify a judgment against the association itself and not its individual members. 3.Whether or not the collection of tuition fees and book rentals will make a school profit-making and not charitable. 4.Whether or not the Termination Pay Law then in force was available to the private respondent who was employed on a year-to-year basis. 5.Whether or not the awards made by the respondent court were warranted. We hold against the petitioner on the first question. It is true that Rule 3, Section 1, of the Rules of Court clearly provides that "only natural or juridical persons may be parties in a civil action." It is also not denied that the school

has not been incorporated. However, this omission should not prejudice the private respondent in the assertion of her claims against the school. LLphil As a school, the petitioner was governed by Act No. 2706 as amended by C.A. No. 180, which provided as follows: Unless exempted for special reasons by the Secretary of Public Instruction, any private school or college recognized by the government shall be incorporated under the provisions of Act No. 1459 known as the Corporation Law, within 90 days after the date of recognition, and shall file with the Secretary of Public Instruction a copy of its incorporation papers and by-laws. Having been recognized by the government, it was under obligation to incorporate under the Corporation Law within 90 days from such recognition. It appears that it had not done so at the time the complaint was filed notwithstanding that it had been in existence even earlier than 1932. The petitioner cannot now invoke its own noncompliance with the law to immunize it from the private respondent's complaint. There should also be no question that having contracted with the private respondent every year for thirty two years and thus represented itself as possessed of juridical personality to do so, the petitioner is now estopped from denying such personality to defeat her claim against it. According to Article 1431 of the Civil Code, "through estoppel an admission representation is rendered conclusive upon the person making it and cannot be denied or disproved as against the person relying on it." As the school itself may be sued in its own name, there is no need to apply Rule 3, Section 15, under which the persons joined in an association without any juridical personality may be sued with such association. Besides, it has been shown that the individual members of the board of trustees are not liable, having been appointed only after the private respondent's dismissal. 6 It is clear now that a charitable institution is covered by the labor laws 7 although the question was still unsettled when this case arose in 1968. At any rate, there was no law even then exempting such institutions from the operation of the labor laws (although they were exempted by the Constitution from ad valorem taxes). Hence, even assuming that the petitioner was a charitable institution as it claims, the private respondent was nonetheless still entitled to the protection of the Termination Pay Law, which was then in force.

shown and established at an appropriate hearing, and the notice then required by law had not been given, such dismissal was invalid. The private respondent's position is no different from that of the rank-and-file employees involved in Gregorio Araneta University Foundation v. NLRC, 9 of whom the Court had the following to say: Undoubtedly, the private respondents' positions as deans and department heads of the petitioner university are necessary in its usual business. Moreover, all the private respondents have been serving the university from 18 to 28 years. All of them rose from the ranks starting as instructors until they became deans and department heads of the university. A person who has served the University for 28 years and who occupies a high administrative position in addition to teaching duties could not possibly be a temporary employee or a casual. The applicable law is the Termination Pay Law, which provided: SECTION 1.In cases of employment, without a definite period, in a commercial, industrial, or agricultural establishment or enterprise, the employer or the employee may terminate at any time the employment with just cause; or without just cause in the case of an employee by serving written notice on the employer at least one month in advance, or in the case of an employer, by serving such notice to the employee at least one month in advance or one-half month for every year of service of the employee, whichever, is longer, a fraction of at least six months being considered as one whole year. The employer, upon whom no such notice was served in case of termination of employment without just cause may hold the employee liable for damages. The employee, upon whom no such notice was served in case of termination of employment without just cause shall be entitled to compensation from the date of termination of his employment in an amount equivalent to his salaries or wages corresponding to the required period of notice. . . . The respondent court erred, however, in awarding her one month pay instead of only one-half month salary for every year of service. The law is quite clear on this matter. Accordingly, the separation pay should be computed at P90.00 times 32 months, for a total of P2,880.00. Cdpr

While it may be that the petitioner was engaged in charitable works, it would not necessarily follow that those in its employ were as generously motivated. Obviously, most of them would not have the means for such charity. The private respondent herself was only a humble school teacher receiving a meager salary of P180.00 per month. At that, it has not been established that the petitioner is a charitable institution, considering especially that it charges tuition fees and collects book rentals from its students. 8 While this alone may not indicate that it is profit-making, it does weaken its claim that it is a non-profit entity. llcd The petitioner says the private respondent had not been illegally dismissed because her teaching contract was on a yearly basis and the school was not required to rehire her in 1968. The argument is that her services were terminable at the end of each year at the discretion of the school. Significantly explanation was given by the petitioner, and no advance notice either, of her relief. After teaching year in and year out for all of thirty-two years, the private respondent was simply told she could not teach any more. The Court holds, after considering the particular circumstance of Oh's employment, that she had become a permanent employee of the school and entitled to security of tenure at the time of her dismissal. Since no cause was

Parenthetically, R.A. No. 4670, otherwise known as the Magna Carta for Public School Teachers, confers security of tenure on the teacher upon appointment as long as he possesses the required qualification. 10 And under the present policy of the Department of Education, Culture and Sports, a teacher becomes permanent and automatically acquires security of tenure upon completion of three years in the service. 11 While admittedly not applicable to the case at bar, these rules nevertheless reflect the attitude of the government on the protection of the worker's security of tenure, which is now guaranteed by no less than the Constitution itself. 12 We find that the private respondent was arbitrarily treated by the petitioner, which has shown no cause for her removal nor had it given her the notice required by the Termination Pay Law. As the respondent court said, the contention that she did not report one week before the start of classes is a flimsy justification for replacing her. 13 She had been in its employ for all of thirty-two years. Her record was apparently unblemished. There is no showing of any previous strained relations between her and the petitioner. Oh had every reason to assume, as she had done in previous years, that she would continue teaching as usual.

It is easy to imagine the astonishment and hurt she felt when she was flatly and without warning told she was dismissed. There was not even the amenity of a formal notice of her replacement, with perhaps a graceful expression of thanks for her past services. She was simply informed she was no longer in the teaching staff. To put it bluntly, she was fired. For the wrongful act of the petitioner, the private respondent is entitled to moral damages. 14 As a proximate result of her illegal dismissal, she suffered mental anguish, serious anxiety, wounded feelings and even besmirched reputation as an experienced teacher for more than three decades. We also find that the respondent court did not err in awarding her exemplary damages because the petitioner acted in a wanton and oppressive manner when it dismissed her. 15 The Court takes this opportunity to pay a sincere tribute to the grade school teachers, who are always at the forefront in the battle against illiteracy and ignorance. If only because it is they who open the minds of their pupils to an unexplored world awash with the magic of letters and numbers, which is an extraordinary feat indeed, these humble mentors deserve all our respect and appreciation. WHEREFORE, the petition is DENIED. The appealed decision is AFFIRMED except for the award of separation pay, which is reduced to P2,880.00. All the other awards are approved. Costs against the petitioner. This decision is immediately executory. SO ORDERED. THE HEIRS OF THE LATE FLORENTINA NUGUID VDA. DE HABERER, petitioner, vs. COURT OF APPEALS, * FEDERICO MARTINEZ, BALDOMERO MANALO, FAUSTINO BAGALAWIS, FEDERICO STA. TERESA, ANGELITO KING, GREGORIO DEL ROSARIO, LEODOVICO TORRES, LEON SORIANO, SANTIAGO TUMANG, LUIS PASTOR and CRISTINO LIBRAMANTE,respondents.

its discretion to dismiss an appeal on the ground of failure to file appellant's brief, must do so in accordance with the tenets of justice and fair play, having in mind the circumstances of the case, and without applying the Rules with rigidity and inflexibility. Petition granted. Appellant's brief ordered admitted and the case remanded to the appellate court for further proceedings.

SYLLABUS 1.REMEDIAL LAW; CIVIL PROCEDURE; APPEALS; DISMISSAL FOR FAILURE TO FILE APPELLANT'S BRIEF DUE TO HER DEATH; NOT PROPER WHERE COURT FAILED TO REQUIRE DECEASED'S SUBSTITUTION; CASE AT BAR. Section 17, Rule 3 of the Rules of Court sets the rule on substitution of parties in case of death of any of the parties. Under the Rules, it is the court that is called upon, after notice of a party's death and the claim is not extinguished, to order upon proper notice the legal representative of the deceased to appear within a period of 30 days or such time as it may grant. The Rule further provides, that the court should set a period for the substitution of the deceased party with her legal representative or heirs, falling which, the court is called upon to order the opposing party to procure the appointment of a legal representative of the deceased at the cost of the deceased's estate, and such representative shall then "immediately appear for and on behalf of the interest of the deceased." Thus, in the case at bar where deceased's counsel duly notified the court of their client's death, the court gravely erred in not following the Rules and requiring in appearance of the legal representative of the deceased and instead dismissing the appeal of the deceased who yet had to be substituted in the pending appeal. Since no administrator of the estate of the deceased appellant had yet been appointed as the same was still pending determination in the Court of First Instance of Quezon City, the motion of the deceased's counsel for the suspension of the running of the period within which to file appellant's brief was well-taken. 2.ID.; ID.; PARTIES TO AN ACTION; DEATH OF PARTY; ORDER OF SUBSTITUTION REQUIRED BY THE RULES; ABSENCE THEREOF RENDERS PROCEEDINGS VOID. Where a party dies in an action that survives, and no order is issued by the court for the appearance of the legal representative or of the heirs of the deceased in substitution of the deceased, and as a matter of fact no such substitution has ever been effected, the trial held by the court without such legal representatives or heirs and the judgment rendered after such trial are null and void because the court acquired no jurisdiction over the persons of the legal representatives or of the heirs upon whom the trial and the judgment would be binding. 3.ID.; ID.; ID.; ID.; EFFECT THEREOF ON ATTORNEY-CLIENT RELATIONSHIP; CASE AT BAR. It is error for respondent court to rule that since upon the demise of the party-appellant, the attorney-client relationship between her and counsel "was automatically severed and terminated," whatever pleadings filed by said counsel with it after the death of said appellant "are mere scraps of paper." If at all, due to said death and severance of the attorneyclient relationship, further proceedings and specifically the running of the original 45-day period for filing the appellant's brief should be legally deemed as having been automatically suspended, until the proper substitution of the deceased appellant by her executor or administrator or her heirs shall have been effected within the time set by respondent court pursuant to the Rules. 4.ID.; ID.; APPEALS; DISMISSAL; SUPERVENING DEATH OF APPELLANT IN CASE AT BAR DOES NOT RENDER CONTINUANCE OF APPEAL UNNECESSARY. Respondent court gravely erred in dismissing the appeal on "(its) belief that the supervening death of the appellant Florentina Nuguid Vda. de Haberer rendered the continuance of the appeal unnecessary"' on the basis of totally inapplicable citation of a ruling in Velasco vs. Rosenberg, 29 Phil., 212, 214 that "If pending appeal, an event occurs which renders it impossible for the appellate court to grant any relief, the appeal will be dismissed." Manifestly, the appellant's death in no way impedes that the deceased's appeal to recover the parcel of land registered in her name be continued and determined for the benefit of her estate and heirs.

Bausa, Ampil and Suarez for petitioner. Felipe C. Navarro for private respondents.

SYNOPSIS During her lifetime, Florentina Nuguid Vda. de Haberer appealed from a decision of the trial court dismissing her eleven complaints for recovery of possession of a parcel of land which was registered in her name. Upon her death, her counsel filed three motions respectively on June 28, 1975, September 18, 1975, and November 24, 1975 notifying the court of appellant's death and praying either for the suspension of the running of the period for filing appellant's brief pending the appointment of an executor of her estate in the Court of First Instance, or an extension of sixty days. Acting only on the third motion, the appellate court denied the request for extension and dismissed the appeal on the ground that appellant had already been given a total of 195 days within which to file her brief. A motion for reconsideration of the order wherein the appellant's brief was also presented for admission was likewise denied by the court stating that litigants have no right to assume that such extension will be granted as a matter of right. Hence, is petition. The Supreme Court held, that upon notice of appellants' death, the Rules of Court calls upon the court to require the appearance of the deceased's legal representative instead of dismissing the appeal; and that the court, in exercising

5.ID.; ID.; LIBERAL AND RELAXED APPLICATION OF RULES. What should guide judicial action is the principle that a party litigant is to be given the fullest opportunity to establish the merits of his complaint or defense rather than for him to lose life, liberty. honor or property on technicalities. A liberal, rather than a strict and inflexible adherence to the Rules, is justified not only because appellant in this case, her estate and/or heirs should be given every opportunity to be heard but also because no substantial injury or prejudice can well be caused to the adverse parties principally, since they are in actual possession of the disputed land. The better and certainly the more prudent course of action in every judicial proceeding is to hear both sides and decide on the merits rather than dispose of a case on technicalities, especially where no substantial prejudice is caused to the adverse party. 6.ID.; ID.; APPEAL; DISMISSAL ON GROUND OF FAILURE TO FILE APPELLANT'S BRIEF; NOT AUTOMATIC BUT MERELY DISCRETIONARY. The dismissal of an appeal on the appellant's failure to file brief is based on a power granted to respondent Court of Appeals and not on a specific and mandatory duty imposed upon it by the Rules. Since the power or authority is not mandatory but merely directory, she exercise thereof requires a great deal of circumspection, considering all the attendant circumstances. The failure of an appellant to file his brief within the time prescribed does not have the effect of dismissing the appeal automatically. Rather, the Court of Appeals has the discretion to dismiss or not to dismiss appellant's appeal, which discretion must be a sound one to be exercised in accordance with the tenets of justice and fair play having in mind the circumstances obtaining in each case. Thus, where a reading of the appellant's brief discloses that petitioners-appellants have a prima facie meritorious case, the same should be properly determined on the merits and "the element of rigidity should not be affixed to procedural concepts and made to cover the matter," for to dismiss the appeal would not serve the ends of justice.

the material data rule requiring that the Record on Appeal state such data as will show that the appeal was perfected on time."

The cases were remanded to the Court of Appeals where appellant was required to file printed brief within forty-five days from her receipt of notice. Three days before the period was to expire, or on June 18, 1975, appellant's counsel requested for an extension of time within which to file appellant's brief. Respondent court in a resolution dated June 23, 1975 granted the request and gave appellant a 90-day extension (with warning of no further extension) from receipt on June 27, 1975 or up to September 25, 1975 within which to file the appellant's printed brief. On June 23, 1975, private respondent opposed the extension by filing a "Motion to Set Aside Order Granting Extension of Time to File Brief. " Appellant was directed by respondent court to comment on the said opposition and appellant's counsel complied by submitting its comments on July 15, 1975. In the meantime, appellant Florentina Nuguid Vda. de Haberer had died on May 26, 1975. Appellant's counsel Attorneys Bausa, Ampil and Suarez accordingly gave respondent court notice of the death of their client in their motion of June 28, 1975 and asked for the suspension of the running of the period within which to file the appellant's brief pending the appointment of an executor of the estate left by their client in the Court of First Instance of Quezon City (Sp. Proc. No. Q-2026) where a petition for the probate of the alleged will of the deceased had been filed by another lawyer, Atty. Sergio Amante. Respondents in turn contended that the lawyers of the deceased had "no longer any legal standing and her attorneys could no longer act for and in her behalf for the reason that their client-attorney relationship had been automatically terminated or severed" and asked that the appeal be dismissed "for failure to prosecute." 2 Since their motion of June 28, 1975 remained unacted upon and the original extension granted by the respondent court for the deceased appellant to file her printed brief was about to expire, her counsel filed on September 18, 1975 a manifestation and/or motion asking either for an extension of sixty (60) days and/or resolution suspending the running of the period within which to submit appellant's printed brief. Still, respondent court remained silent. Not certain whether their services would still be retained by the heirs of the deceased, counsel for the late Florentina Nuguid Vda. de Haberer reiterated their request in a motion dated November 14, 1975 either for an extension of time to file appellant's brief or for the issuance of a resolution suspending the running of the period for filing the same, pending the appointment of an administrator or executor of the estate of the deceased appellant. Finally, acting on counsel's motion of November 14, 1975, respondent court denied the request for extension and at the same time dismissed the appeal, ruling in its resolution dated November 24, 1975 as follows: "Upon consideration of the manifestation and/or for another extension to file appellant's brief dated November 14, 1975, filed by counsel for the appellant on the grounds therein stated, and considering that appellant has already been given a total of one hundred ninety-five (195) days within which to file brief, the Court Resolved to deny the motion for another extension to file brief and to dismiss the appeal." Counsel for the deceased appellant forthwith filed their urgent motion for reconsideration of December 8, 1975 explaining their predicament that the requests for extension/suspension of period to file brief was due to the uncertainty that their services may no longer be retained by the heirs or legal representatives of their deceased client but they felt obligated to preserve the right of such heirs/successors to continue the appeal pursuant to Rule 3, Section 17 of the Rules of Court, pending the settlement of the question of who among them should be the executor of the deceased's estate and presented therewith, for admission, the printed "brief for the appellant" the printing of which they had deferred "for professional ethical considerations," pending respondent court's action on their request for suspension of the period. They further submitted therewith copies of 2 separate orders of September 3, 1975 and August 26, 1975 issued by the Court of Agrarian Relations and the Court of First Instance

DECISION

TEEHANKEE, J p: The Court grants the petition for review by way of appeal from the Resolutions of respondent Court of Appeals dated November 24, 1975 and January 15, 1976 dismissing the appeal of the late Florentina Nuguid Vda. de Haberer in CA-G.R. No. 53680-90-R and ordering all pleadings filed in said cases after the death of said appellant stricken off the records, for having been issued with grave error of law if not with grave abuse of discretion and remands the case for proper proceedings and determination of the appeal on the merits. This case originated from the Court of First Instance of Rizal where the late Florentina Nuguid Vda. de Haberer as the duly registered owner filed in 1964 and 1965 eleven (11) complaints for recovery of possession of the parcel of land evidenced by Transfer Certificate of Title No. 15043 of the Register of Deeds of Rizal issued in her name, situated at Mandaluyong, Rizal, alleging that private respondents had surreptitiously entered the land and built their houses thereon. The lower court, after trial on the merits, rendered a consolidated decision, dated May 26, 1971, dismissing all the complaints. On motion of the late Florentina Nuguid Vda. de Haberer the cases were reopened and retried on grounds of newly discovered evidence. On September 15, 1972, the lower court issued an order reviving its decision of May 26, 1971. The decision was thus appealed to the Court of Appeals. In the Court of Appeals, the cases were erroneously dismissed once before, on the ground that the appeal was allegedly filed out of time. The issue was brought to this Court in Cases Nos. L-39366 and L-39620-29, entitled "Florentina Nuguid Vda. de Haberer vs. Federico Martinez, et al." 1 On January 29, 1975, this Court rendered its judgment setting aside the appellate court's dismissal of the appeal and ordering the reinstatement of the same for proper disposition on the merits, having found "that contrary to respondent court's erroneous premises and computation, petitioner duly and timely perfected her appeal within the reglementary period and in compliance with

both at Guimba, Nueva Ecija, respectively, wherein the deceased Florentina Nuguid Vda. de Haberer was partydefendant, granting the deceased's counsel's prayer to hold in abeyance further proceedings therein pending the appointment of an administrator for the estate of the deceased. Respondent court, however, denied reconsideration, per its Resolution of January 15, 1976 citing the general principle that "litigants have no right to assume that such extensions will be granted as a matter of course." But respondent court erred in applying this general principle and summarily denying reconsideration and denying admission of the appellant's brief conditioned upon the administrator of the deceased's estate making his appearance upon his appointment and being granted leave to file his supplemental brief/memorandum, 3 in view of the intervening event of appellant's death and the interposition of the equally established principle that the relation of attorney and client is terminated by the death of the client, as acknowledged by respondent court itself as well as respondents. In the absence of a retainer from the heirs or authorized representatives of his deceased client, the attorney would thereafter have no further power or authority to appear or take any further action in the case, save to inform the court of the client's death and take the necessary steps to safeguard the deceased's rights in the case. This is what the deceased's counsel did in the case at bar. They properly informed respondent court of the death of the appellant and sought suspension of the proceedings and of the period for filing appellant's brief pending the appointment of the executor of the deceased's estate in the proper probate proceedings filed with the Court of First Instance of Quezon City. Section 17, Rule 3 of the Rules of Court 4 sets the rule on substitution of parties in case of death of any of the parties. Under the Rule, it is the court that is called upon, after notice of a party's death and the claim is not thereby extinguished, to order upon proper notice the legal representative of the deceased to appear within a period of 30 days or such time as it may grant. Since no administrator of the estate of the deceased appellant had yet been appointed as the same was still pending determination in the Court of First Instance of Quezon City, the motion of the deceased's counsel for the suspension of the running of the period within which to file appellant's brief was well-taken. More, under the Rule, it should have set a period for the substitution of the deceased party with her legal representative or heirs, failing which, the court is called upon to order the opposing party to procure the appointment of a legal representative of the deceased at the cost of the deceased's estate, and such representative shall then "immediately appear for and on behalf of the interest of the deceased." Respondent court gravely erred in not following the Rule and requiring the appearance of the legal representative of the deceased and instead dismissing the appeal of the deceased who yet had to be substituted in the pending appeal. Thus, it has been held that when a party dies in an action that survives, and no order is issued by the court for the appearance of the legal representative or of the heirs of the deceased in substitution of the deceased, and as a matter of fact no such substitution has ever been effected, the trial held by the court without such legal representatives or heirs and the judgment rendered after such trial are null and void because the court acquired no jurisdiction over the persons of the legal representatives or of the heirs upon whom the trial and the judgment would be binding. 5 Respondent court therefore erred in ruling that since upon the demise of the party-appellant, the attorney-client relationship between her and her counsels "was automatically severed and terminated," whatever pleadings filed by said counsel with it after the death of said appellant "are mere scraps of paper." 6 If at all, due to said death on May 25, 1975 and severance of the attorney-client relationship, further proceedings and specifically the running of the original 45-day period for filing the appellant's brief should be legally deemed as having been automatically suspended, until the proper substitution of the deceased appellant by her executor or administrator or her heirs shall have been effected within the time set by respondent court pursuant to the cited Rule. Respondent court likewise gravely erred in dismissing the appeal on "(its) belief that the supervening death of the appellant Florentina Nuguid Vda. de Haberer rendered the continuance of the appeal unnecessary" on the basis of a totally inapplicable citation of a ruling in Velasco vs. Rosenberg, 29 Phil. 212, 214 that "If pending appeal, an event occurs which renders it impossible for the appellate court to grant any relief, the appeal will be dismissed." Manifestly, the appellant's death in no way impedes that the deceased's appeal to recover the parcel of land registered in her name be continued and determined for the benefit of her estate and heirs.

Prescinding from the foregoing, justice and equity dictate under the circumstances of the case at bar that the rules, while necessary for the speedy and orderly administration of justice, should not be applied with the rigidity and inflexibility of respondent court's resolutions. 7 What should guide judicial action is the principle that a party litigant is to be given the fullest opportunity to establish the merits of his complaint or defense rather than for him to lose life, liberty, honor or property on technicalities. 8 A liberal, rather than a strict and inflexible adherence to the Rules, is justified not only because appellant (in this case, her estate and/or heirs) should be given every opportunity to be heard but also because no substantial injury or prejudice can well be caused to the adverse parties principally, since they are in actual possession of the disputed land. 9 The better and certainly the more prudent course of action in every judicial proceeding is to hear both sides and decide on the merits rather than dispose of a case on technicalities, 10 especially where no substantial prejudice is caused to the adverse party. 11

The dismissal of an appeal based on the appellant's failure to file brief is based on a power granted to respondent Court of Appeals and not on a specific and mandatory duty imposed upon it by the Rules. 12 Since the power or authority is not mandatory but merely directory, the exercise thereof requires a great deal of circumspection, considering all the attendant circumstances. 13 The failure of an appellant to file his brief within the time prescribed does not have the effect of dismissing the appeal automatically. 14 Rather, the Court of Appeals has the discretion to dismiss or not to dismiss appellant's appeal, which discretion must be a sound one to be exercised in accordance with the tenets of justice and fair play having in mind the circumstances obtaining in each case. 5 Paraphrasing what the Court stressed in the leading case of Berkenkotter vs. Court of Appeals, 16 a reading of the appellant's brief discloses that petitioners-appellants have a prima facie meritorious case which should be properly determined on the merits and "the element of rigidity should not be affixed to procedural concepts and made to cover the matter," 17 for to dismiss the appeal would not serve the ends of justice. A final note: On March 19, 1976, counsels submitted with their Manifestation the written authority dated January 20, 1976 individually signed by instituted heirs and/or legal representatives of the testate estate of the deceased Florentina Nuguid Vda. de Haberer granting said counsels full authority to file and prosecute the case and any other incidental cases for and in their behalf, 18 which was duly noted in the Court's Resolution of March 26, 1976. Such manifestation and authority may be deemed the formal substitution of the deceased by her heirs, as in fact they appear as petitioners in the title of the case at bar. Hence, the proper determination of the pending appeal may now proceed, as herein directed. ACCORDINGLY, the petition is granted and respondent court's resolutions of November 24, 1975 and January 15, 1976 are set aside. The appellant's brief filed with respondent court in the pending appeal in CA-G.R. Nos. 5368090-R is ordered admitted and the cases are remanded to respondent Court of Appeals for further proceedings and proper determination of the appeal on the merits. With costs against private respondents. The Court has noted that upon recommendation of the Solicitor General in Adm. Case No. 2148 entitled "Francisco Ortigas, Jr., et al. vs. Atty. Felipe C. Navarro" that counsel for respondents Felipe C. Navarro be disbarred for "gross misconduct and/or malpractice," he has been suspended from the practice of law during the pendency of said proceedings. The Court, however, directs that copy of this decision be served on said counsel for the sole purpose of apprising private respondents through him of the promulgation of this judgment and to require respondents (1) to inform the Court of their new counsel, if any, and to direct him to enter his appearance or (2) if they have no new or other counsel, to inform the Court of their respective addresses for purposes of service of the Court's processes, within ten (10) days from notice thereof. FABIANA C. VDA. DE SALAZAR, petitioner, vs. COURT OF APPEALS, PRIMITIVO NEPOMUCENO and EMERENCIANA NEPOMUCENO, respondents.

Proceso M. Nacino for petitioner.

Where the defendant in an ejectment case dies before the rendition by the trial court of its decision therein, does the trial court's failure to effectuate a substitution of heirs before its rendition of judgment render such judgment jurisdictionally infirm? On July 23, 1970, both private respondents Primitivo Nepomuceno and Emerenciana Nepomuceno filed separate complaints 1 with the then Court of Agrarian Relations of Malolos, Bulacan, for ejectment on the ground of personal cultivation and conversion of land for useful non-agricultural purposes against petitioner's deceased husband, Benjamin Salazar. After protracted proceedings in the agrarian court and then the Regional Trial Court 2spanning from 1970 to 1993, the trial court rendered its joint decision 3 in favor of private respondents. An appeal 4therefrom was interposed in the name of petitioner's deceased husband on the ground that private respondents herein failed to satisfy the requirements pertaining to personal cultivation and conversion of the landholding into non-agricultural uses. The Court of Appeals rejected such contention upon finding that the record was replete with evidence justifying private respondent's assertion of their right of cultivation and conversion of their landholdings. 5 Almost a year after the termination of that appeal, the same trial court decision subject thereof was once again assailed before the Court of Appeals through a petition 6 for annulment of judgment. Herein petitioner assailed the same trial court decision as having been rendered by a court that did not have jurisdiction over her and the other heirs of her deceased husband because notwithstanding the fact that her husband had already died on October 3, 1991, the trial court still proceeded to render its decision on August 23, 1993 without effecting the substitution of heirs in accordance with Section 17, Rule 3, of the Rules of Court thereby depriving her of her day in court. Petitioner, not having asserted the matter of fraud or collusion in her petition for annulment of judgment, the Court of Appeals decided the same on the basis of the sole issue of non-jurisdiction resulting from the alleged deprivation of petitioner's right to due process and ruled in favor of the validity of the challenged decision. 7Petitioner filed a motion for reconsideration of the decision of the appellate court reiterating the trial court's lack of jurisdiction over the heirs of petitioner's deceased husband as a consequence of the failure of the trial court to effectuate a valid substitution of heirs. Said motion was denied in a resolution promulgated on August 14, 1995. Hence this petition. The petition is bereft of merit. The need for substitution of heirs is based on the right to due process accruing to every party in any proceeding. 8 The rationale underlying this requirement in case a party dies during the pendency of proceedings of a nature not extinguished by such death, is that ". . . the exercise of judicial power to hear and determine a cause implicitly presupposes in

SYLLABUS 1.REMEDIAL LAW; CIVIL PROCEDURE; PARTIES TO CIVIL ACTION; DEATH OF A PARTY; SUBSTITUTION OF HEIRS; BASIS. The need for substitution of heirs is based on the right to due process accruing to every party in any proceeding. The rationale underlying this requirement in case a party dies during the pendency of proceedings of a nature not extinguished by such death, is that ". . . the exercise of judicial power to hear and determine a cause

implicitly presupposes in the trial court, amongst other essentials, jurisdiction over the persons of the parties. That jurisdiction was inevitably impaired upon the death of the protestee pending the proceedings below such that unless and until a legal representative is for him duly named and within the jurisdiction of the trial court, no adjudication in the cause could have been accorded any validity or binding effect upon any party, in representation of the deceased, without trenching upon the fundamental right to a day in court which is the very essence of the constitutionally enshrined guarantee of due process." We are not unaware of several cases where we have ruled that a party having
died in an action that survives, the trial held by the court without appearance of the deceased's legal representative or substitution of heirs and the judgment rendered after such trial, are null and void because the court acquired no jurisdiction over the persons of the legal representatives or of the heirs upon whom the trial and the judgment would be binding. dctai

2.ID.; ID.; ID.; ID.; ID.; NOT NECESSARY WHEN THE HEIRS THEMSELVES VOLUNTARILY APPEARED, PARTICIPATED IN THE CASE AND PRESENTED EVIDENCE IN DEFENSE OF DECEASED DEFENDANT. Formal substitution of heirs is not necessary when the heirs themselves voluntarily appeared, participated in the case and presented evidence in defense of deceased defendant. Attending the case at bench, after all, are these particular circumstances which negate petitioner's belated and seemingly ostensible claim of violation of her rights to due process. We should not lose sight of the principle underlying the general rule that formal substitution of heirs must be effectuated for them to be bound by a subsequent judgment. Such had been the general rule established not because the rule on substitution of heirs and that on appointment of a legal representative are jurisdictional requirements per se but because non-compliance therewith results in the undeniable violation of the right to due process of those who, though not duly notified of the proceedings, are substantially affected by the decision rendered therein. Consequently, we rule that, as in the case at bench, the defendant in an ejectment case having died before the rendition by the trial court of its decision therein, its failure to effectuate a formal substitution of heirs before its rendition of judgment does not invalidate such judgment where the heirs themselves appeared before the trial court, participated in the proceedings therein, and presented evidence in defense of deceased defendant, it undeniably being evident that the heirs themselves sought their day in court and exercised their right to due process. 3.ID.; SPECIAL CIVIL ACTIONS; EJECTMENT; NOT EXTINGUISHED BY THE DEFENDANT'S DEATH. Ejectment, being an action involving recovery of real property, is a real action which as such, is not extinguished by the defendant's death. There is no dispute that an ejectment case survives the death of a party, which death did not extinguish the deceased's civil personality. More significantly, a judgment in an ejectment case is conclusive between the parties and their successors in interest by title subsequent to the commencement of the action. LLjur

the trial court, amongst other essentials, jurisdiction over the persons of the parties. That jurisdiction was inevitably impaired upon the death of the protestee pending the proceedings below such that unless and until a legal representative is for him duly named and within the jurisdiction of the trial court, no adjudication in the cause could have been accorded any validity or binding effect upon any party, in representation of the deceased, without trenching upon the fundamental right to a day in court which is the very essence of the constitutionally enshrined guarantee of due process." 9
We are not unaware of several cases 10 where we have ruled that a party having died in an action that survives, the trial held by the court without appearance of the deceased's legal representative or substitution of heirs and the judgment rendered after such trial, are null and void because the court acquired no jurisdiction over the persons of the legal representatives or of the heirs upon whom the trial and the judgment would be binding. This general rule notwithstanding, in denying petitioner's motion for reconsideration, the Court of Appeals correctly ruled that formal substitution of heirs is not necessary when the heirs themselves voluntarily appeared, participated in the case and presented evidence in defense of deceased defendant. Attending the case at bench, after all, are these particular circumstances which negate petitioner's belated and seemingly ostensible claim of violation of her rights to due process. We should not lose sight of the principle underlying the general rule that formal substitution of heirs must be effectuated for them to be bound by a subsequent judgment. Such had been the general rule established not because the rule on substitution of heirs and that on appointment of a legal representative are jurisdictional requirements per se but because non-compliance therewith results in the undeniable violation of the right to due process of those who, though not duly notified

DECISION

HERMOSISIMA, JR., J p:

of the proceedings, are substantially affected by the decision rendered therein. Viewing the rule on substitution of heirs in this light, the Court of Appeals, in the resolution denying petitioner's motion for reconsideration, thus expounded: "Although the jurisprudential rule is that failure to make the substitution is a jurisdictional

5.The case cited by the herein petitioner (Ferreria et al. vs. Manuela Ibarra vda. de Gonzales, et al.) cannot be availed of to support the said petitioner's contention relative to non-acquisition of jurisdiction by the court. In that case, Manolita Gonzales was not served notice and, more importantly, she never appeared in court, unlike herein petitioner who appeared and even testified regarding the death of her husband." 11
Consequently, we rule that, as in the case at bench, the defendant in an ejectment case having died before the rendition by the trial court of its decision therein, its failure to effectuate a formal substitution of heirs before its rendition of judgment, does not invalidate such judgment where the heirs themselves appeared before the trial court, participated in the proceedings therein, and presented evidence in defense of deceased defendant, it undeniably being evident that the heirs themselves sought their day in court and exercised their right to due process. Respondent Court of Appeals also correctly ruled that ejectment, being an action involving recovery of real property, is a real action which as such, is not extinguished by the defendant's death. ". . . 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 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." 12 There is no dispute that an ejectment case survives the death of a party, which death did not extinguish the deceased's civil personality. 13 More significantly, a judgment in an ejectment case is conclusive between the parties and their successors in interest by title subsequent to the commencement of the action. 14 Thus, we have held that: ". . . In such a case and considering that the supervening death of appellant did not

defect, it should be noted that the purpose of this procedural rule is to comply with due process requirements. The original party having died, he could not continue to defend himself in court despite the fact that the action survived him. For the case to continue, the real party in interest must be substituted for the deceased. The real party in interest is the one who would be affected by the judgment. It could be the administrator or executor or the heirs. In the instant case, the heirs are the proper substitutes. Substitution gives them the opportunity to continue the defense for the deceased. Substitution is important because such opportunity to defend is a requirement to comply with due process. Such substitution consists of making the proper changes in the caption of the case which may be called the formal aspect of it. Such substitution also includes the process of letting the substitutes know that they shall be bound by any judgment in the case and that they should therefore actively participate in the defense of the deceased. This part may be called the substantive aspect. This is the heart of the procedural rule because this substantive aspect is the one that truly embodies and gives effect to the purpose of the rule. It is this court's view that compliance with the substantive aspect of the rule despite failure to comply with the formal aspect may be considered substantial compliance. Such is the situation in the case at bench because the only inference that could be deduced from the following facts was that there was active participation of the heirs in the defense of the deceased after his death:

1 .The original lawyer did not stop representing the deceased. It would be absurd to think that the lawyer would continue to represent somebody if nobody is paying him his fees. The lawyer continued to represent him in the litigation before the trial court which lasted for about two more years. A dead party cannot pay him any fee. With or without payment of fees, the fact remains that the said counsel was allowed by the petitioner who was well aware of the instant litigation to continue appearing as counsel until August 23, 1993 when the challenged decision was rendered; 2.After the death of the defendant, his wife, who is the petitioner in the instant case, even testified in the court and declared that her husband is already deceased. She knew therefore that there was a litigation against her husband and that somehow her interest and those of her children were involved; 3.This petition for annulment of judgment was filed only after the appeal was decided against the defendant on April 3, 1995, more than one and a half year (sic) after the decision was rendered (even if we were to give credence to petitioner's manifestation that she was not aware that an appeal had been made); 4 .The Supreme Court has already established that there is such a thing as jurisdiction by estoppel. This principle was established even in cases where jurisdiction over the subject matter was being questioned. In the instant case, only jurisdiction over the person of the heirs is in issue. Jurisdiction over the person may be acquired by the court more easily than jurisdiction over the subject matter. Jurisdiction over the person may be acquired by the simple appearance of the person in court as did herein petitioner appear;

extinguish her civil personality, the appellate court was well within its jurisdiction to proceed as it did with the case. There is no showing that the appellate court's proceedings in the case were tainted with irregularities.

It appears that petitioners are heirs of Adela Salindon. In fact, it was because of this relationship that the petitioners were able to transfer the title of Adela Salindon over the subject lot to their names. . . . Considering all this, the appellate decision is binding and enforceable against the petitioners as successors-in-interest by title subsequent to the commencement of the action (Section 49 [b] Rule 39, Rules of Court) . Furthermore, . . .judgment in an ejectment case may be enforced not only against defendants therein but also against the members of their family, their relatives, or privies who derive their right of possession from the defendants (Ariem v. De los Angeles, 49 SCRA 343) . Under the circumstances of this case, the same rule should apply to the successors-in-interest . . ." 15
While it is true that a decision in an action for ejectment is enforceable not only against the defendant himself but also against members of his family, his relatives, and his privies who derived their right of possession from the defendant and his successors-in-interest, 16 it had been established that petitioner had, by her own acts, submitted to the jurisdiction of the trial court. She is now estopped to deny that she had been heard in defense of her deceased husband in the proceedings therein. As such, this petition evidently has no leg to stand on. WHEREFORE, the instant petition is dismissed for lack of merit. Costs against petitioner. SO ORDERED. VIRGINIA O. GOCHAN, FELIX Y. GOCHAN III, MAE GOCHAN-EFANN, LOUISE Y. GOCHAN, ESTEBAN Y. GOCHAN JR., DOMINIC Y. GOCHAN, FELIX O. GOCHAN III, MERCEDES R. GOCHAN, ALFREDO R. GOCHAN, ANGELINA R. GOCHAN-HERNAEZ,

MARIA MERCED R. GOCHAN, CRISPO R. GOCHAN JR., MARION R. GOCHAN, MACTAN REALTY DEVELOPMENT CORPORATION and FELIX GOCHAN & SONS REALTY CORPORATION, petitioners, vs. RICHARD G. YOUNG, DAVID G. YOUNG, JANE G. YOUNG-LLABAN, JOHN D. YOUNG JR., MARY G. YOUNG-HSU and ALEXANDER THOMAS G. YOUNG as heirs of Alice Gochan; the INTESTATE ESTATE OF JOHN D. YOUNG SR.; and CECILIA GOCHAN-UY and MIGUEL C. UY, for themselves and on behalf and for the benefit of FELIX GOCHAN & SONS REALTY CORPORATION, respondents.

"In 1962, the Regional Trial Court of Cebu adjudicated 6/14 of these shares to her children, herein [respondents] Richard Young, David Young, Jane Young Llaban, John Young Jr., Mary Young Hsu and Alexander Thomas Young. "Having earned dividends, these stocks numbered 179 by 20 September 1979. "Five days later (25 September), at which time all the children had reached the age of majority, their father John Sr., requested Gochan Realty to partition the shares of his late wife by cancelling the stock certificates in his name and issuing in lieu thereof, new stock certificates in the names of [herein respondents]. "On 17 October 1979, respondent Gochan Realty refused, citing as reason, the right of first refusal granted to the remaining stockholders by the Articles of Incorporation.

DECISION

PANGANIBAN, J p: A court or tribunal's jurisdiction over the subject matter is determined by the allegations in the complaint. The fact that certain persons are not registered as stockholders in the books of the corporation will not bar them from filing a derivative suit, if it is evident from the allegations in the complaint that they are bona fide stockholders. In view of RA 8799, intra-corporate controversies are now within the jurisdiction of courts of general jurisdiction, no longer of the Securities and Exchange Commission.

"On 21, 1990, [sic] John, Sr. died, leaving the shares to the [respondents]. "On 8 February 1994, [respondents] Cecilia Gochan Uy and Miguel Uy filed a complaint with the SEC for issuance of shares of stock to the rightful owners, nullification of shares of stock, reconveyance of property impressed with trust, accounting, removal of officers and directors and damages against respondents. A Notice of Lis Pendens was annotated as [sic] real properties of the corporation. "On 16 March 1994, [herein petitioners] moved to dismiss the complaint alleging that: (1) the SEC ha[d] no jurisdiction over the nature of the action; (2) the [respondents] [were] not the real parties-in-interest and ha[d] no capacity to sue; and (3) [respondents'] causes of action [were] barred by the Statute of Limitations. "The motion was opposed by herein [respondents].

The Case
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court. The Petition assails the February 28, 1996 Decision 1 of the Court of Appeals (CA), as well as its December 18, 1997 Resolution denying petitioner's Motion for Reconsideration. The dispositive part of the CA Decision reads as follows: "WHEREFORE, the petition as far as the heirs of Alice Gochan, is DISMISSED, without prejudice to filing the same in the regular courts. SO ORDERED." 2 In dismissing the Complaint before the SEC regarding only Alice Gochan's heirs but not the other complainants, the CA effectively modified the December 9, 1994 Order of the hearing officer 3 of the Securities and Exchange Commission (SEC). The Order, which was affirmed in full by the SEC en banc, dismissed the entire case.

"On 29 March 1994, [petitioners] filed a Motion for cancellation of Notice of Lis Pendens. [Respondents] opposed the said motion. "On 9 December 1994, the SEC, through its Hearing Officer, granted the motion to dismiss and ordered the cancellation of the notice of lis pendens annotated upon the titles of the corporate lands. In its order, the SEC opined: 'In the instant case, the complaint admits that complainants Richard G. Young, David G. Young, Jane G. Young Llaban, John D. Young, Jr., Mary G. Young Hsu and Alexander Thomas G. Young, who are the children of the late Alice T. Gochan and the late John D. Young, Sr. are suing in their own right and as heirs of and/or as the beneficial owners of the shares in the capital stock of FGSRC held in trust for them during his lifetime by the late John D. Young. Moreover, it has been shown that said complainants ha[d] never been . . . stockholder[s] of record of FGSRC to confer them with the legal capacity to bring and maintain their action. Conformably, the case cannot be considered as an intra-corporate controversy within the jurisdiction of this Commission. cDAISC 'The complainant heirs base what they perceived to be their stockholders' rights upon the fact of their succession to all the rights, property and interest of their father, John D. Young, Sr. While their heirship is not disputed, their right to compel

The Facts
The undisputed facts are summarized by the Court of Appeals as follows: "Felix Gochan and Sons Realty Corporation (Gochan Realty, for brevity) was registered with the SEC on June, 1951, with Felix Gochan, Sr., Maria Pan Nuy Go Tiong, Pedro Gochan, Tomasa Gochan, Esteban Gochan and Crispo Gochan as its incorporators. "Felix Gochan Sr.'s daughter, Alice, mother of [herein respondents], inherited 50 shares of stock in Gochan Realty from the former. "Alice died in 1955, leaving the 50 shares to her husband, John Young, Sr.

the corporation to register John D. Young's Sr. shares of stock in their names cannot go unchallenged because the devolution of property to the heirs by operation of law in succession is subject to just obligations of the deceased before such property passes to the heirs. Conformably, until therefore the estate is settled and the payment of the debts of the deceased is accomplished, the heirs cannot as a matter of right compel the delivery of the shares of stock to them and register such transfer in the books of the corporation to recognize them as stockholders. The complainant heirs succeed to the estate of [the] deceased John D. Young, Sr. but they do not thereby become stockholders of the corporation. 'Moreover, John D. [Young Sr.'s] shares of stocks form part of his estate which is the subject of Special Proceedings No. 3694-CEB in the Regional Trial Court of Cebu, Branch VIII, [par. 4 of the complaint]. As complainants clearly claim[,] the Intestate Estate of John D. Young, Sr. has an interest in the subject matter of the instant case. However, actions for the recovery or protection of the property [such as the shares of stock in question] may be brought or defended not by the heirs but by the executor or administrator thereof. 'Complainants further contend that the alleged wrongful acts of the corporation and its directors constitute fraudulent devices or schemes which may be detrimental to the stockholders. Again, the injury [is] perceived[,] as is alleged[,] to have been suffered by complainants as stockholders, which they are not. Admittedly, the SEC has no jurisdiction over a controversy wherein one of the parties involved is not or not yet a stockholder of the corporation. [SEC vs. CA, 201 SCRA 134]. 'Further, by the express allegation of the complaint, herein complainants bring this action as [a] derivative suit on their own behalf and on behalf of respondent FGSRC. 'Section 5, Rule III of the Revised Rules of Procedure in the Securities and Exchange Commission provides: 'Section 5.Derivative Suit. No action shall be brought by stockholder in the right of a corporation unless the complainant was a stockholder at the time the questioned transaction occurred as well as at the time the action was filed and remains a stockholder during the pendency of the action. . . .' 'The rule is in accord with well settled jurisprudence holding that a stockholder bringing a derivative action must have been [so] at the time the transaction or act complained of [took] place. (Pascual vs. Orozco, 19 Phil. 82; Republic vs. Cuaderno, 19 SCRA 671; San Miguel Corporation vs. Khan, 176 SCRA 462-463) The language of the rule is mandatory, strict compliance with the terms thereof thus being a condition precedent, a jurisdictional requirement to the filing of the instant action. 'Otherwise stated, proof of compliance with the requirement must be sufficiently established for the action to be given due course by this Commission. The failure to comply with this jurisdictional requirement on derivative action must necessarily result in the dismissal of the instant complaint.' (pp. 77-79, Rollo) "[Respondents] moved for a reconsideration but the same was denied for being pro-forma.

"[Respondents] appealed to the SEC en banc, contending, among others, that the SEC ha[d] jurisdiction over the case. "[Petitioners], on the other hand, contend that the appeal was 97 days late, beyond the 30day period for appeals. "On 3 March 1995, the SEC en banc ruled for the [petitioners,] holding that the [respondents'] motion for reconsideration did not interrupt the 30-day period for appeal because said motion was pro-forma." 4 Aggrieved, herein respondents then filed a Petition for Review with the Court of Appeals.

Ruling of the Court of Appeals

The Court of Appeals ruled that the SEC had no jurisdiction over the case as far as the heirs of Alice Gochan were concerned, because they were not yet stockholders of the corporation. On the other hand, it upheld the capacity of Respondents Cecilia Gochan Uy and her spouse Miguel Uy. It also held that the Intestate Estate of John Young Sr. was an indispensable party. The appellate court further ruled that the cancellation of the notice of lis pendens on the titles of the corporate real estate was not justified. Moreover, it declared that respondents' Motion for Reconsideration before the SEC was not pro forma; thus, its filing tolled the appeal period.

Hence, this Petition. 5

The Issues
These are the issues presented before us: "A.Whether or not the Spouses Uy have the personality to file an action before the SEC against Gochan Realty Corporation. "B.Whether or not the Spouses Uy could properly bring a derivative suit in the name of Gochan Realty to redress wrongs allegedly committed against it for which the directors refused to sue. "C.Whether or not the intestate estate of John D. Young Sr. is an indispensable party in the SEC case considering that the individual heirs' shares are still in the decedent stockholder's name. "D.Whether or not the cancellation of [the] notice of lis pendens was justified considering that the suit did not involve real properties owned by Gochan Realty." 6 In addition, the Court will determine the effect of Republic Act No. 8799 7 on this case.

The Court's Ruling

The Petition has no merit. In view of the effectivity of RA 8799, however, the case should be remanded to the proper regional trial court, not to the Securities and Exchange Commission.

First Issue: Personality of the Spouses Uy to File a Suit Before the SEC
Petitioners argue that Spouses Cecilia and Miguel Uy had no capacity or legal standing to bring the suit before the SEC on February 8, 1994, because the latter were no longer stockholders at the time. Allegedly, the stocks had already been purchased by the corporation. Petitioners further assert that, being allegedly a simple contract of sale cognizable by the regular courts, the purchase by Gochan Realty of Cecilia Gochan Uy's 210 shares does not come within the purview of an intra-corporate controversy. As a general rule, the jurisdiction of a court or tribunal over the subject matter is determined by the allegations in the complaint. 8 For purposes of resolving a motion to dismiss, Cecilia Uy's averment in the Complaint that the purchase of her stocks by the corporation was null and void ab initio is deemed admitted. It is elementary that a void contract produces no effect either against or in favor of anyone; it cannot create, modify or extinguish the juridical relation to which it refers. 9 Thus, Cecilia remains a stockholder of the corporation in view of the nullity of the Contract of Sale. Although she was no longer registered as a stockholder in the corporate records as of the filing of the case before the SEC, the admitted allegations in the Complaint made her still a bona fide stockholder of Felix Gochan & Sons Realty Corporation (FGSRC), as between said parties. In any event, the present controversy, whether intra-corporate or not, is no longer cognizable by the SEC, in view of RA 8799, which transferred to regional trial courts the former's jurisdiction over cases involving intra-corporate disputes.

"16.That on information and belief, in further pursuance of the said conspiracy and for the fraudulent purpose of depressing the value of the stock of the Corporation and to induce the minority stockholders to sell their shares of stock for an inadequate consideration as aforesaid, respondent Esteban T. Gochan . . ., in violation of their duties as directors and officers of the Corporation . . ., unlawfully and fraudulently appropriated [for] themselves the funds of the Corporation by drawing excessive amounts in the form of salaries and cash advances . . . and by otherwise charging their purely personal expenses to the Corporation."ADSTCa xxx xxx xxx "41.That the payment of P1,200,000.00 by the Corporation to complainant Cecilia Gochan Uy for her shares of stock constituted an unlawful, premature and partial liquidation and distribution of assets to a stockholder, resulting in the impairment of the capital of the Corporation and prevented it from otherwise utilizing said amount for its regular and lawful business, to the damage and prejudice of the Corporation, its creditors, and of complainants as minority stockholders;" 12 As early as 1911, this Court has recognized the right of a single stockholder to file derivative suits. In its words: "[W]here corporate directors have committed a breach of trust either by their frauds, ultra vires acts, or negligence, and the corporation is unable or unwilling to institute suit to remedy the wrong, a single stockholder may institute that suit, suing on behalf of himself and other stockholders and for the benefit of the corporation, to bring about a redress of the wrong done directly to the corporation and indirectly to the stockholders." 13 In the present case, the Complaint alleges all the components of a derivative suit. The allegations of injury to the Spouses Uy can coexist with those pertaining to the corporation. The personal injury suffered by the spouses cannot disqualify them from filing a derivative suit on behalf of the corporation. It merely gives rise to an additional cause of action for damages against the erring directors. This cause of action is also included in the Complaint filed before the SEC. The Spouses Uy have the capacity to file a derivative suit in behalf of and for the benefit of the corporation. The reason is that, as earlier discussed, the allegations of the Complaint make them out as stockholders at the time the questioned transaction occurred, as well as at the time the action was filed and during the pendency of the action.

Action Has Not Prescribed

Petitioners contend that the statute of limitations already bars the Uy spouses' action, be it one for annulment of a voidable contract or one based upon a written contract. The Complaint, however, contains respondents' allegation that the sale of the shares of stock was not merely voidable, but was void ab initio. Below we quote its relevant portion: "38.That on November 21, 1979, respondent Felix Gochan & Sons Realty Corporation did not have unrestricted retained earnings in its books to cover the purchase price of the 208 shares of stock it was then buying from complainant Cecilia Gochan Uy, thereby rendering said purchase null and void ab initio for being violative of the trust fund doctrine and contrary to law, morals good customs, public order and public policy;" Necessarily, petitioners' contention that the action has prescribed cannot be sustained. Prescription cannot be invoked as a ground if the contract is alleged to be void ab initio. 10 It is axiomatic that the action or defense for the declaration of nullity of a contract does not prescribe. 11

Third Issue: Capacity of the Intestate Estate of John D. Young Sr.

Petitioners contend that the Intestate Estate of John D. Young Sr. is not an indispensable party, as there is no showing that it stands to be benefited or injured by any court judgment. It would be useful to point out at this juncture that one of the causes of action stated in the Complaint filed with the SEC refers to the registration, in the name of the other heirs of Alice Gochan Young, of 6/14th of the shares still registered under the name of John D. Young Sr. Since all the shares that belonged to Alice are still in his name, no final determination can be had without his estate being impleaded in the suit. His estate is thus an indispensable party with respect to the cause of action dealing with the registration of the shares in the names of the heirs of Alice.

Second Issue: Derivative Suit and the Spouses Uy

Petitioners also contend that the action filled by the Spouses Uy was not a derivative suit, because the spouses and not the corporation were the injured parties. The Court is not convinced. The following quoted portions of the Complaint readily shows allegations of injury to the corporation itself:

Petitioners further claim that the Estate of John Young Sr. was not properly represented. They claim that "when the estate is under administration, suits for the recovery or protection of the property or rights of the deceased may be brought only by the administrator or executor as approved by the court." 14 The rules relative to this matter do not, however, make any such categorical and confining statement. Section 3 of Rule 3 of the Rules of Court, which is cited by petitioners in support of their position, reads: "SECTION 3.Representatives as parties. Where the action is allowed to be prosecuted or defended by a representative or someone acting in a fiduciary capacity, the beneficiary shall be included in the title of the case and shall be deemed to be the real party in interest. A representative may be a trustee of an express trust, a guardian, an executor or administrator, or a party authorized by law or these Rules. An agent acting in his own name and for the benefit of an undisclosed principal may sue or be sued without joining the principal except when the contract involves things belonging to the principal." Section 2 of Rule 87 of the same Rules, which also deals with administrators, states: "SECTION 2.Executor or administrator may bring or defend actions which survive. For the recovery or protection of the property or rights of the deceased, an executor or administrator may bring or defend, in the right of the deceased, actions for causes which survive." The above-quoted rules, while permitting an executor or administrator to represent or to bring suits on behalf of the deceased, do not prohibit the heirs from representing the deceased. These rules are easily applicable to cases in which an administrator has already been appointed. But no rule categorically addresses the situation in which special proceedings for the settlement of an estate have already been instituted, yet no administrator has been appointed. In such instances, the heirs cannot be expected to wait for the appointment of an administrator; then wait further to see if the administrator appointed would care enough to file a suit to protect the rights and the interests of the deceased; and in the meantime do nothing while the rights and the properties of the decedent are violated or dissipated.

Under the third, fourth and fifth causes of action of the Complaint, there are allegations of breach of trust and confidence and usurpation of business opportunities in conflict with petitioners' fiduciary duties to the corporation, resulting in damage to the Corporation. Under these causes of action, respondents are asking for the delivery to the Corporation ofpossession of the parcels of land and their corresponding certificates of title. Hence, the suit necessarily affects the title to or right of possession of the real property sought to be reconveyed. The Rules of Court 17 allows the annotation of a notice of lis pendens in actions affecting the title or right of possession of real property. 18 Thus, the Court of Appeals was correct in reversing the SEC Order for the cancellation of the notice of lis pendens. The fact that respondents are not stockholders of the Mactan Realty Development Corporation and the Lapu-Lapu Real Estate Corporation does not make them non-parties to this case. To repeat, the jurisdiction of a court or tribunal over the subject matter is determined by the allegations in the Complaint. In this case, it is alleged that the aforementioned corporations are mere alter egos of the directors-petitioners, and that the former acquired the properties sought to be reconveyed to FGSRC in violation of the directors-petitioners' fiduciary duty to FGSRC. The notion of corporate entity will be pierced or disregarded and the individuals composing it will be treated as identical 19 if, as alleged in the present case, the corporate entity is being used as a cloak or cover for fraud or illegality; as a justification for a wrong; or as an alter ego, an adjunct, or a business conduit for the sole benefit of the stockholders.

Effect of RA 8799
While we sustain the appellate court, the case can no longer be remanded to the SEC. As earlier stated, RA 8799, which became effective on August 8, 2000, transferred SEC's jurisdiction over cases involving intra-corporate disputes to courts of general jurisdiction or to the regional trial courts. 20 Section 5.2 thereof reads as follows: "5.2.The Commission's jurisdiction over all cases enumerated under Section 5 of Presidential Decree No. 902-A is hereby transferred to the Courts of general jurisdiction or the appropriate Regional Trial Court: Provided, That the Supreme Court in the exercise of its authority may designate the Regional Trial Court branches that shall exercise jurisdiction over these cases. The Commission shall retain jurisdiction over pending cases involving intra-corporate disputes submitted for final resolution which should be resolved within one (1) year from the enactment of this Code. The Commission shall retain jurisdiction over pending suspension of payments/rehabilitation cases filed as of 30 June 2000 until finally disposed." In the light of the Resolution issued by this Court in AM No. 00-8-10-SC, 21 the Court Administrator and the Securities and Exchange Commission should be directed to cause the transfer of the records of SEC Case No. 02-944674 to the appropriate court of general jurisdiction. WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED, subject to the modification that the case be remanded to the proper regional trial court. The December 9, 1994 Order of Securities and Exchange Commission hearing officer dismissing the Complaint and directing the cancellation of the notice of lis pendens, as well as the March 3, 1995 Order denying complainants' motion for reconsideration are REVERSED and SET ASIDE. Pursuant to AM No. 00-8-10-SC, the Office of the Court Administrator and the SEC are DIRECTED to cause the actual transfer of the records of SEC Case No. 02-94-4674 to the appropriate regional trial court. SO ORDERED. JUDGE ANTONIO C. SUMALJAG, petitioner, vs. SPOUSES DIOSDIDIT and MENENDEZ M. LITERATO; and MICHAELES MAGLASANG RODRIGO, respondents.

The Rules are to be interpreted liberally in order to promote their objective of securing a just, speedy and inexpensive disposition of every action and proceeding. 15 They cannot be interpreted in such a way as to unnecessarily put undue hardships on litigants. For the protection of the interests of the decedent, this Court has in previous instances 16recognized the heirs as proper representatives of the decedent, even when there is already an administrator appointed by the court. When no administrator has been appointed, as in this case, there is all the more reason to recognize the heirs as the proper representatives of the deceased. Since the Rules do not specifically prohibit them from representing the deceased, and since no administrator had as yet been appointed at the time of the institution of the Complaint with the SEC, we see nothing wrong with the fact that it was the heirs of John D. Young Sr. who represented his estate in the case filed before the SEC.

Fourth Issue: Notice of Lis Pendens

On the issue of the annotation of the Notice of Lis Pendens on the titles of the properties of the corporation and the other respondents, we still find no reason to disturb the ruling of the Court of Appeals.

DECISION

Menendez, through counsel, objected to the proposed substitution, alleging that Atty. Puray filed the notice of death and substitution of party beyond the thirty-day period provided under Section 16, Rule 3 of the 1997 Rules of Civil Procedure, as amended. She recommended instead that Josefa be substituted by the latter's full-blood sister, Michaeles Maglasang Rodrigo ("Michaeles"). The RTC denied Atty. Puray's motion for substitution and instead ordered the appearance of Michaeles as representative of the deceased Josefa. This Order provides: WHEREFORE, in view of the foregoing, the motion is hereby DENIED for lack of merit and instead order the appearance of Mrs. Mechailes Maglasang-Rodrigo of Brgy. Binulho, Albuera, Leyte, as representative of the deceased Josefa Maglasang. SO ORDERED. 11 The RTC subsequently denied the petitioner's motion for reconsideration in an order 12 dated May 25, 2000. The petitioner went to the CA on a petition for certiorari (docketed as CA-G.R. SP No. 59712) to question the above interlocutory orders. In a Decision 13 dated June 26, 2001, the CA dismissed the petition for lack of merit. The appellate court similarly denied the petitioner's motion for reconsideration in its Resolution 14 dated September 4, 2001. The present petition essentially claims that the CA erred in dismissing CA-G.R. No. SP 59712 since: (a) the property under litigation was no longer part of Josefa's estate since she was no longer its owner at the time of her death; (b) the petitioner had effectively been subrogated to the rights of Josefa over the property under litigation at the time she died; (c) without an estate, the heir who was appointed by the lower court no longer had any interest to represent; (d) the notice of death was seasonably submitted by the counsel of Josefa to the RTC within the extended period granted; and (e) the petitioner is a transferee pendente lite who the courts should recognize pursuant to Rule 3, Section 20 of the Rules of Court. THE COURT'S RULING

BRION, J p: Before this Court is the Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the Decision 1 of the Court of Appeals ("CA") dated June 26, 2001 and its related Resolution 2 dated September 4, 2001 in CA-G.R. SP No. 59712. The assailed Decision dismissed the petition for certiorari filed by petitioner Judge Antonio C. Sumaljag (the "petitioner" ) in the interlocutory matter outlined below in Civil Cases B-1239 and B1281 before the trial court. The challenged Resolution denied the petitioner's motion for reconsideration. ANTECEDENT FACTS On November 16, 1993, Josefa D. Maglasang ("Josefa") filed with the Regional Trial Court ("RTC"), Branch 14, Baybay, Leyte a complaint 3 (docketed as Civil Case No. B-1239) for the nullity of the deed of sale of real property purportedly executed between her as vendor and the spouses Diosdidit and Menendez Literato (the "respondent spouses" ) as vendees. The complaint alleged that this deed of sale dated October 15, 1971 of Lot 1220-D is spurious. Josefa was the sister of Menendez Maglasang Literato ("Menendez"). They were two (2) of the six (6) heirs who inherited equal parts of a 6.3906-hectare property (Lot 1220) passed on to them by their parents Cristito and Inecita Diano Maglasang. 4 Lot 1220-D was partitioned to Josefa, while Lot 1220-E was given to Menendez. The respondent spouses' response to the complaint was an amended answer with counterclaim 5 denying that the deed of sale was falsified. They impleaded the petitioner with Josefa as counterclaim defendant on the allegation that the petitioner, at the instance of Josefa, occupied Lot 1220-D and Lot 1220-E without their (the respondent spouses') authority; Lot 1220-E is theirs by inheritance while 1220-D had been sold to them by Josefa. They also alleged that the petitioner acted in bad faith in acquiring the two (2) lots because he prepared and notarized on September 26, 1986 the contract of lease over the whole of Lot 1220 between all the Maglasang heirs (but excluding Josefa) and Vicente Tolo, with the lease running from 1986 to 1991; thus, the petitioner then knew that Josefa no longer owned Lot 1220-D. Civil Case No. 1281 6 is a complaint that Menendez filed on April 4, 1996 with the RTC for the declaration of the inexistence of lease contract, recovery of possession of land, and damages against the petitioner and Josefa after the RTC dismissed the respondent spouses' counterclaim in Civil Case No. 1239. The complaint alleged that Josefa, who had previously sold Lot 1220-D to Menendez, leased it, together with Lot 1220-E, to the petitioner. Menendez further averred that the petitioner and Josefa were in bad faith in entering their contract of lease as they both knew that Josefa did not own the leased lots. Menendez prayed, among others, that this lease contract between Josefa and the petitioner be declared null and void. Josefa died on May 3, 1999 during the pendency of Civil Case Nos. B-1239 and B-1281. On August 13, 1999, Atty. Zenen A. Puray ("Atty. Puray") the petitioner's and Josefa's common counsel asked the RTC in Civil Case No. 1239 that he be given an extended period or up to September 10, 1999 within which to file a formal notice of death and substitution of party. The RTC granted the motion in an order dated August 13, 1999. 7 On August 26, 1999, Atty. Puray filed with the RTC a notice of death and substitution of party, 8 praying that Josefa in his capacity as plaintiff and third party counterclaim defendant be substituted by the petitioner. The submission alleged that prior to Josefa's death, she executed aQuitclaim Deed 9 over Lot 1220-D in favor of Remismundo D. Maglasang 10 who in turn sold this property to the petitioner.

We resolve to deny the petition for lack of merit. The Governing Rule. The rule on substitution in case of death of a party is governed by Section 16, Rule 3 of the 1997 Rules of Civil Procedure, as amended, which provides: Section 16.Death of a party; duty of counsel. Whenever a party to a pending action dies, and the claim is not thereby extinguished, it shall be the duty of his counsel to inform the court within thirty (30) days after such death of the fact thereof, and to give the name and address of his legal representative or representatives. Failure of counsel to comply with this duty shall be a ground for disciplinary action. The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or administrator and the court may appoint a guardian ad litem for the minor heirs. The court shall forthwith order said legal representative or representatives to appear and be substituted within a period of thirty (30) days from notice.

If no legal representative is named by the counsel for the deceased party, or if the one so named shall fail to appear within the specified period, the court may order the opposing party, within a specified time, to procure the appointment of an executor or administrator for the estate of the deceased, and the latter shall immediately appear for and on behalf of the deceased. The court charges in procuring such appointment, if defrayed by the opposing party, may be recovered as costs. (Emphasis ours) The purpose behind this rule is the protection of the right to due process of every party to the litigation who may be affected by the intervening death. The deceased litigant is herself or himself protected as he/she continues to be properly represented in the suit through the duly appointed legal representative of his estate. 15 Application of the Governing Rule. a.Survival of the pending action A question preliminary to the application of the above provision is whether Civil Case Nos. B-1239 and B-1281 are actions that survive the death of Josefa. We said in Gonzalez v. Pagcor: 16 "The criteria for determining whether an action survives the death of a plaintiff or petitioner was elucidated upon in Bonilla v. Barcena (71 SCRA 491 (1976)) as follows: . . . 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. . . . Since the question involved in these cases relate to property and property rights, then we are dealing with actions that survive so that Section 16, Rule 3 must necessarily apply. b.Duty of Counsel under the Rule. The duty of counsel under the aforecited provision is to inform the court within thirty (30) days after the death of his client of the fact of death, and to give the name and address of the deceased's legal representative or representatives. Incidentally, this is the only representation that counsel can undertake after the death of a client as the fact of death terminated any further lawyer-client relationship. 17 In the present case, it is undisputed that the counsel for Josefa did in fact notify the lower court, although belatedly, of the fact of her death. 18 However, he did as well inform the lower court that "2.That before she died she executed a QUITCLAIM DEED in favor of REMISMUNDO D. MAGLASANG over the land in question (Lot No. 1220-D of Benolho, Albuera, Leyte), evidenced by a QUITCLAIM DEED, copy of which is hereto attached as Annex "B" who in turn sold it in favor of JUDGE ANTONIO SUMALJAG, evidenced by a DEED OF ABSOLUTE SALE, copy of which is hereto attached as Annex "C"."

Further, counsel asked that "the deceased Josefa Maglasang in her capacity as plaintiff and as Third Party

Counterclaim Defendant be substituted in the case at bar by JUDGE ANTONIO SUMALJAG whose address is 38 Osmena Street, Ormoc City" pursuant to "Section 16, Rule 3 of the 1997 Rules of Civil Procedure".
This notification, although filed late, effectively informed the lower court of the death of litigant Josefa Maglasang so as to free her counsel of any liability for failure to make a report of death under Section 16, Rule 3 of the Rules of Court. In our view, counsel satisfactorily explained to the lower court the circumstances of the late reporting, and the latter in fact granted counsel an extended period. The timeliness of the report is therefore a non-issue. The reporting issue that goes into the core of this case is whether counsel properly gave the court the name and address of the legal representative of the deceased that Section 16, Rule 3 specifies. We rule that he did not. The "legal representatives" that the provision speaks of, refer to those authorized by law the administrator, executor or guardian 19 who, under the rule on settlement of estate of deceased persons, 20 is constituted to take over the estate of the deceased. Section 16, Rule 3 likewise expressly provides that "the heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or administrator . . .". Significantly, the person now the present petitioner that counsel gave as substitute was not one of those mentioned under Section 16, Rule 3. Rather, he is a counterclaim co-defendant of the deceased whose proferred * justification for the requested substitution is the transfer to him of the interests of the deceased in the litigation prior to her death. Under the circumstances, both the lower court and the CA were legally correct in not giving effect to counsel's suggested substitute.

First, the petitioner is not one of those allowed by the Rules to be a substitute. Section 16, Rule 3 speaks for itself in
this respect.

Second, as already mentioned above, the reason for the Rule is to protect all concerned who may be affected by the

intervening death, particularly the deceased and her estate. We note in this respect that the Notice that counsel filed in fact reflects a claim against the interest of the deceased through the transfer of her remaining interest in the litigation to another party. Interestingly, the transfer is in favor of the very same person who is suggested to the court as the substitute. To state the obvious, the suggested substitution effectively brings to naught the protection that the Rules intend; plain common sense tells us that the transferee who has his own interest to protect, cannot at the same time represent and fully protect the interest of the deceased transferor.

Third, counsel has every authority to manifest to the court changes in interest that transpire in the course of

litigation. Thus, counsel could have validly manifested to the court the transfer of Josefa's interests in the subject matter of litigation pursuant to Section 19, Rule 3. 21 But this can happen only while the client-transferor was alive and while the manifesting counsel was still the effective and authorized counsel for the client-transferor, not after the death of the client when the lawyer-client relationship has terminated. The fact that the alleged transfer may have actually taken place is immaterial to this conclusion, if only for the reason that it is not for counsel, after the death of his client, to make such manifestation because he then has lost the authority to speak for and bind his client. Thus, at most, the petitioner can be said to be a transferee pendente lite whose status is pending with the lower court.

Lastly, a close examination of the documents attached to the records disclose that the subject matter of the

Quitclaim allegedly executed by Josefa in favor of Remismundo is Lot 1220-E, while the subject matter of the deed of sale executed by Remismundo in the petitioner's favor is Lot 1220-D. This circumstance alone raises the possibility that there is more than meets the eye in the transactions related to this case. c.The Heirs as Legal Representatives.

The CA correctly harked back to the plain terms of Section 16, Rule 3 in determining who the appropriate legal representative/s should be in the absence of an executor or administrator. The second paragraph of the Section 16, Rule 3 of the 1997 Rules of Court, as amended, is clear the heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or administrator. Our decisions on this matter have been clear and unequivocal. In San Juan, Jr. v. Cruz, this Court held: The pronouncement of this Court in Lawas v. Court of Appeals . . . that priority is given to the legal representative of the deceased (the executor or administrator) and that it is only in case of unreasonable delay in the appointment of an executor or administrator, or in cases where the heirs resort to an extra-judicial settlement of the estate that the court may adopt the alternative of allowing the heirs of the deceased to be substituted for the deceased, is no longer true. 22 (Emphasis ours) We likewise said in Gochan v. Young: 23 For the protection of the interests of the decedent, this Court has in previous instances recognized the heirs as proper representatives of the decedent, even when there is already an administrator appointed by the court. When no administrator has been appointed, as in this case, there is all the more reason to recognize the heirs as the proper representatives of the deceased. Josefa's death certificate 24 shows that she was single at the time of her death. The records do not show that she left a will. Therefore, as correctly held by the CA, in applying Section 16, Rule 3, her heirs are her surviving sisters (Michaelis, Maria, Zosima, and Consolacion) and the children of her deceased sister, Lourdes (Manuel, Cesar, Huros and Regulo) who should be her legal representatives. Menendez, although also a sister, should be excluded for being one of the adverse parties in the cases before the RTC. WHEREFORE, premises considered, we DENY the petition for lack of merit. We AFFIRM the Court of Appeals decision that the surviving heirs of the deceased Josefa namely Michaelis M. Rodrigo; Maria M. Cecilio; Zosima D. Maglasang; Consolacion M. Bag-aw; and the children of Lourdes M. Lumapas, namely Manuel Lumapas, Cesar Lumapas, Huros Lumapas and Regulo Maquilan should be her substitutes and are hereby so ordered to be substituted for her in Civil Case Nos. B-1239 and B-1281. Costs against the petitioner. SO ORDERED. O. VENTANILLA ENTERPRISES CORPORATION, petitioner, vs. ADELINA S. TAN and SHERIFF REYNANTE G. VELASQUEZ, Presiding Judge, * respondents.

This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court, praying that the Resolution 1 of the Court of Appeals (CA), dated May 24, 2007, refusing to recall its entry of judgment, and its Resolution 2 dated October 19, 2007, denying petitioner's Motion for Reconsideration, be reversed and set aside. The records of the case bear out the following antecedent facts. Petitioner leased out two of its properties in Cabanatuan City to Alfredo S. Tan and herein private respondent Adelina S. Tan (the Tans). Due to the failure of the Tans to comply with the terms of the lease, petitioner filed a complaint against the Tans for cancellation and termination of contract of lease with the Regional Trial Court of Cabanatuan City (RTC). On December 10, 1996, the RTC rendered a Decision, 3 the dispositive portion of which reads as follows: WHEREFORE, judgment is hereby rendered in favor of the plaintiff Oscar Ventanilla Enterprises Corporation and against the defendants Alfredo S. Tan, Sr. and Adelina S. Tan, ordering the latter to: (1)surrender possession and complete control of the premises, Avelune and Capital Theaters, as well as the properties enumerated in the addendum to the lease contract dated 22 June 1992, to the plaintiff; (2)pay the plaintiff the sum of P4,297,004.84 plus interest thereon that may become due at the rate stipulated in the lease contract entered into by the parties on June 22, 1992; (3)pay the plaintiff the sum of P250,000.00 as exemplary damages to serve as deterrent for others who in the future may follow the bad example set by the herein defendants; (4)pay the plaintiff by way of liquidated damages as agreed upon in paragraph 23 of the lease contract the sum equivalent to 50% of the unpaid rentals; (5)declaring the deposit initially made as forfeited in favor of the plaintiff; [and] EcDSHT (6)pay the sum equivalent to 15% of the unpaid rentals by way of Attorney's fees, and to pay the costs of the suit. SO ORDERED. 4 Both Alfredo S. Tan and private respondent Adelina S. Tan appealed from said Decision. However, herein petitioner filed a motion for execution pending appeal and the same was granted by the trial court. Several properties and bank accounts of private respondent and Alfredo S. Tan were levied upon. The Tans decided to pay the amounts as ordered in the RTC Decision, and on September 24, 1997, the trial court issued Orders 5 lifting and cancelling the Notice of Levy on private respondent Adelina Tan's properties and also on several bank accounts in the name of the Tans. Both orders stated that after the court allowed the writ of execution pending appeal, defendant tendered payment in the amount of P9,073,694.76 in favor of herein petitioner, who through Mr. Moises C. Ventanilla, acknowledged receipt of said amount as complete and full satisfaction of the adjudged obligations of the Tans to petitioner in this case. 6

DECISION

PERALTA, J p:

The appeal filed by Alfredo S. Tan was dismissed by the CA, but the appeal filed by herein private respondent Adelina S. Tan (docketed as CA-G.R. CV No. 58817), proceeded in due course. On October 21, 2002, the CA promulgated its Decision, 7 the dispositive portion of which is reproduced hereunder: WHEREFORE, the appeal is PARTIALLY GRANTED. For lack of legal and factual justification, the awards of exemplary damages and attorney's fees shall be DELETED. Likewise, the award of liquidated damages under paragraph 23 of the lease contract is further REDUCED to 25% of the unpaid rentals. All the other aspects of the decision are AFFIRMED. SO ORDERED. 8 None of the parties filed any motion for reconsideration or appeal from the CA Decision, thus, the same became final and executory on November 21, 2002, per the Entry of Judgment 9 issued by the CA. Private respondent Adelina Tan then filed with the trial court a Motion for Execution 10 dated March 27, 2003, praying that the excess of the amounts she previously paid as exemplary damages, attorney's fees and liquidated damages be refunded to her, in accordance with the judgment of the CA. To counter such move, on June 19, 2003, petitioner filed with the CA in CA-G.R. CV No. 58817, an Omnibus Motion (with entry of appearance), praying that the entry of judgment be recalled, lifted and set aside; that the CA Decision dated October 21, 2002 in CA-G.R. CV No. 58817 be recalled, reconsidered, and/or vacated and, thereafter, the appeal of Adelina Tan be dismissed or the appeal be reopened to allow petitioner to file an appeal brief. Petitioner argued that its counsel, Atty. Liberato Bauto died on March 29, 2001, hence, any notice sent to him must be deemed ineffective; that the parties have arrived at a settlement of the case, as shown by the fact that private respondent already paid P9,073,694.76 as complete and full satisfaction of the adjudged obligations of the defendants to petitioner, and thus, the appeal should have been deemed mooted. EaDATc Meanwhile, the RTC granted the motion for execution, and in an Orders, 11 dated January 23, 2004, ordered as follows: Thus, based on the amount computed by defendant Adelina Tan in her motion for execution and following the reduction of the award to the plaintiffs made by the Court of Appeals in its decision, the defendants are entitled to the following amounts: Php250,000.00 Php644,550.606 Php1,074,251.01 amount of the deleted exemplary damages amount of the deleted attorney's fees amount of the reduced liquidated damages (25% of the unpaid rentals) Php1,968,801.616 total amount to be refunded Motion for December Reconsideration 2, 2003 is is

SO ORDERED. 12 On March 8, 2004, petitioner filed with the RTC a Very Urgent Motion (for recall and reconsideration of order and quashal of alias writ of execution, levy, and notice of sheriff's sale, etc.), 13 but this motion was denied in an Order 14dated March 10, 2004. Petitioner then filed a petition for certiorari with the CA (docketed as CA-G.R. SP No. 82608) to assail the trial court's denial of the Very Urgent Motion, but as admitted by petitioner in the present petition, 15 said action for certiorari was denied due course and dismissed by the CA on March 12, 2004. As to petitioner's Omnibus Motion (with entry of appearance) filed with the CA in CA-G.R. CV No. 58817, the appellate court issued a Resolution 16 dated March 19, 2004, merely noting petitioner's motion because its Decision dated October 21, 2002 has long become final and executory. Undaunted, petitioner again filed on October 2, 2006, a Manifestation and Motion in CA-G.R. CV No. 58817, praying that its Omnibus Motion and Supplemental Motion be resolved on the merits instead of merely being noted as the CA did in its Resolution dated March 19, 2004; that the petition for certiorari be resolved and granted; and that the proceedings in the trial court with regard to the execution of the CA Decision in CA-G.R. CV No. 58817, be annulled and set aside. aSCHIT On May 24, 2007, the CA promulgated the Resolution denying the above-mentioned Manifestation and Motion filed by petitioner on October 2, 2006. The CA pointed out that the separate petition for certiorari which petitioner sought to be resolved had already been dismissed on March 12, 2004. The CA also ruled that petitioner's prayer for the recall of the entry of judgment cannot be granted, as petitioner's bare assertion, that its former counsel had not received notices of orders, resolutions or decisions of the court because said counsel died while the appeal was pending, does not qualify as one of those cases where the court allowed such recall. Petitioner moved for reconsideration of said Resolution, but on October 19, 2007, the CA issued a Resolution denying the same. The CA reiterated that it could not find any reason to recall the entry of judgment. Hence, the present petition. Although the petition is an appeal from the Resolution of the CA issued on May 24, 2007, refusing to recall its entry of judgment, and its Resolution dated October 19, 2007, denying reconsideration of the earlier resolution, petitioner is actually making a vain attempt to reopen a case that has long been final and executory. The Court frowns upon such conduct of litigants and their lawyers. The Court strikes down the argument that the CA Decision in CA-G.R. CV No. 58817 did not attain finality because petitioner's counsel, who died while the case was pending before the CA, was unable to receive a copy thereof. The CA was correct in ruling that there is no extraordinary circumstance in this case that would merit a recall of the entry of judgment to reopen the case. The reason given by petitioner, that its former counsel had died before the CA Decision was promulgated, hence, it was not properly notified of the judgment, is too tenuous to be given serious consideration. In Mojar, et al. v. Agro Commercial Security Service Agency, Inc., 17 the Court explained that it is the party's duty to inform the court of its counsel's demise, and failure to apprise the court of such fact shall be considered negligence on the part of said party. Expounding further, the Court stated: . . . It is not the duty of the courts to inquire, during the progress of a case, whether the law firm or partnership representing one of the litigants continues to exist lawfully, whether the partners are still alive, or whether its associates are still connected with the firm. HTScEI . . . They cannot pass the blame to the court, which is not tasked to monitor the changes in the circumstances of the parties and their counsel. xxx xxx xxx

WHEREFORE, in view of the foregoing, the hereby GRANTED and the Order dated hereby RECONSIDERED and SET ASIDE.

Let an Alias Writ of Execution issue stating the amount to be refunded to defendants which is Php1,968,801.616, the same to be enforced against the herein plaintiff.

In Ampo v. Court of Appeals, this Court explained the vigilance that must be exercised by a party: xxx xxx xxx Litigants who are represented by counsel should not expect that all they need to do is sit back, relax and await the outcome of their cases. Relief will not be granted to a party who seeks avoidance from the effects of the judgment when the loss of the remedy at law was due to his own negligence. The circumstances of this case plainly show that petitioner only has himself to blame. Neither can he invoke due process. The essence of due process is simply an opportunity to be heard. Due process is satisfied when the parties are afforded a fair and reasonable opportunity to explain their respective sides of the controversy. Where a party, such as petitioner, was afforded this opportunity to participate but failed to do so, he cannot complain of deprivation of due process. If said opportunity is not availed of, it is deemed waived or forfeited without violating the constitutional guarantee. Thus, for failure of petitioner to notify the CA of the death of its counsel of record and have said counsel substituted, then service of the CA Decision at the place or law office designated by its counsel of record as his address, is sufficient notice. The case then became final and executory when no motion for reconsideration or appeal was filed within the reglementary period therefor. Petitioner's next allegation, that the trial court erred in ordering the issuance of a writ of execution against petitioner, ordering it to refund the amount of P1,968,801.616 to herein private respondent, is also unfounded. Petitioner insists that the fact that private respondent had previously paid petitioner the amount of P9,073,694.76 when the trial court granted petitioner's motion for execution pending appeal, means that the parties have arrived at a compromise settlement which should have terminated the case between them. The argument holds no water. First of all, as held in Legaspi v. Ong, 18 "[e]xecution pending appeal does not bar the continuance of the appeal on the merits, for the Rules of Court precisely provides for restitution according to equity in case the executed judgment is reversed on appeal." 19 cSCADE Secondly, contrary to petitioner's claim, private respondent merely paid the amount of P9,073,694.76 in compliance with the writ of execution pending appeal, and not by reason of a compromise agreement. No such agreement or contract appears on record. Furthermore, petitioner's claim is belied by the fact that private respondent actively pursued the appeal of the case, which resulted in the CA Decision decreasing the amounts awarded by the RTC. Petitioner then contends that there is a substantial variance between the writ of execution and the CA Decision, as the latter did not make mention of petitioner having to make a refund. However, note Section 5, Rule 39 of the Rules of Court, which provides that: Sec. 5.Effect of reversal of executed judgment. Where the executed judgment is reversed totally or partially, or annulled, on appeal or otherwise, the trial court may, on motion, issue such orders of restitution or reparation of damages as equity and justice may warrant under the circumstances. (Emphasis supplied) Evidently, the action of the RTC in ordering the issuance of the writ of execution against herein petitioner for it to return the excess amount private respondent has paid in compliance with the execution pending appeal, is in accordance with the Rules.

In sum, there is nothing amiss in ordering petitioner to refund the amount of P1,968,801.616 to herein private respondent, as the appellate court has ruled with finality that petitioner is not entitled to such amount. WHEREFORE, the petition is DENIED for utter lack of merit. SO ORDERED. ATTY. ROGELIO E. SARSABA, petitioner, vs. FE VDA. DE TE, represented by her Attorney-in-Fact, FAUSTINO CASTAEDA,respondents.

DECISION

PERALTA, J p: Before us is a petition for review on certiorari 1 with prayer for preliminary injunction assailing the Order 2 dated March 22, 2006 of the Regional Trial Court (RTC), Branch 19, Digos City, Davao del Sur, in Civil Case No. 3488. HcDSaT The facts, as culled from the records, follow. On February 14, 1995, a Decision was rendered in NLRC Case No. RAB-11-07-00608-93 entitled, Patricio Sereno v. Teodoro Gasing/Truck Operator, finding Sereno to have been illegally dismissed and ordering Gasing to pay him his monetary claims in the amount of P43,606.47. After the Writ of Execution was returned unsatisfied, Labor Arbiter Newton R. Sancho issued an Alias Writ of Execution 3 on June 10, 1996, directing Fulgencio R. Lavarez, Sheriff II of the National Labor Relations Commission (NLRC), to satisfy the judgment award. On July 23, 1996, Lavarez, accompanied by Sereno and his counsel, petitioner Atty. Rogelio E. Sarsaba, levied a Fuso Truck bearing License Plate No. LBR-514, which at that time was in the possession of Gasing. On July 30, 1996, the truck was sold at public auction, with Sereno appearing as the highest bidder. 4 Meanwhile, respondent Fe Vda. de Te, represented by her attorney-in-fact, Faustino Castaeda, filed with the RTC, Branch 18, Digos, Davao del Sur, a Complaint 5 for recovery of motor vehicle, damages with prayer for the delivery of the truck pendente lite against petitioner, Sereno, Lavarez and the NLRC of Davao City, docketed as Civil Case No. 3488. Respondent alleged that: (1) she is the wife of the late Pedro Te, the registered owner of the truck, as evidenced by the Official Receipt 6 and Certificate of Registration; 7 (2) Gasing merely rented the truck from her; (3) Lavarez erroneously assumed that Gasing owned the truck because he was, at the time of the "taking", 8 in possession of the same; and (4) since neither she nor her husband were parties to the labor case between Sereno and Gasing, she should not be made to answer for the judgment award, much less be deprived of the truck as a consequence of the levy in execution. Petitioner filed a Motion to Dismiss 9 on the following grounds: (1) respondent has no legal personality to sue, having no real interests over the property subject of the instant complaint; (2) the allegations in the complaint do not sufficiently state that the respondent has cause of action; (3) the allegations in the complaint do not contain sufficient cause of action as against him; and (4) the complaint is not accompanied by an Affidavit of Merit and Bond that would entitle the respondent to the delivery of the tuck pendente lite.

The NLRC also filed a Motion to Dismiss 10 on the grounds of lack of jurisdiction and lack of cause of action. Meanwhile, Lavarez filed an Answer with Compulsory Counterclaim and Third-Party Complaint. 11 By way of special and affirmative defenses, he asserted that the RTC does not have jurisdiction over the subject matter and that the complaint does not state a cause of action. On January 21, 2000, the RTC issued an Order 12 denying petitioner's Motion to Dismiss for lack of merit. In his Answer, 13 petitioner denied the material allegations in the complaint. Specifically, he cited as affirmative defenses that: respondent had no legal personality to sue, as she had no interest over the motor vehicle; that there was no showing that the heirs have filed an intestate estate proceedings of the estate of Pedro Te, or that respondent was duly authorized by her co-heirs to file the case; and that the truck was already sold to Gasing on March 11, 1986 by one Jesus Matias, who bought the same from the Spouses Te. Corollarily, Gasing was already the lawful owner of the truck when it was levied on execution and, later on, sold at public auction. Incidentally, Lavarez filed a Motion for Inhibition, 14 which was opposed 15 by respondent. On October 13, 2000, RTC Branch 18 issued an Order 16 of inhibition and directed the transfer of the records to Branch 19. RTC Branch 19, however, returned the records back to Branch 18 in view of the appointment of a new judge in place of Judge-designate Rodolfo A. Escovilla. Yet, Branch 19 issued another Order 17 dated November 22, 2000 retaining the case in said branch. Eventually, the RTC issued an Order 18 dated May 19, 2003 denying the separate motions to dismiss filed by the NLRC and Lavarez, and setting the Pre-Trial Conference on July 25, 2003. On October 17, 2005, petitioner filed an Omnibus Motion to Dismiss the Case on the following grounds: 19 (1) lack of jurisdiction over one of the principal defendants; and (2) to discharge respondent's attorney-in-fact for lack of legal personality to sue. It appeared that the respondent, Fe Vda. de Te, died on April 12, 2005. 20 Respondent, through her lawyer, Atty. William G. Carpentero, filed an Opposition, 21 contending that the failure to serve summons upon Sereno is not a ground for dismissing the complaint, because the other defendants have already submitted their respective responsive pleadings. He also contended that the defendants, including herein petitioner, had previously filed separate motions to dismiss the complaint, which the RTC denied for lack of merit. Moreover, respondent's death did not render functus officio her right to sue since her attorney-in-fact, Faustino Castaeda, had long testified on the complaint on March 13, 1998 for and on her behalf and, accordingly, submitted documentary exhibits in support of the complaint. cHSIDa On March 22, 2006, the RTC issued the assailed Order 22 denying petitioner's aforesaid motion. Petitioner then filed a Motion for Reconsideration with Motion for Inhibition, 23 in which he claimed that the judge who issued the Order was biased and partial. He went on to state that the judge's husband was the defendant in a petition for judicial recognition of which he was the counsel, docketed as Civil Case No. C-XXI-100, before the RTC, Branch 21, Bansalan, Davao del Sur. Thus, propriety dictates that the judge should inhibit herself from the case. Acting on the motion for inhibition, Judge Carmelita Sarno-Davin granted the same 24 and ordered that the case be re-raffled to Branch 18. Eventually, the said RTC issued an Order 25 on October 16, 2006 denying petitioner's motion for reconsideration for lack of merit. SDTIHA

Hence, petitioner directly sought recourse from the Court via the present petition involving pure questions of law, which he claimed were resolved by the RTC contrary to law, rules and existing jurisprudence. 26 There is a "question of law" when the doubt or difference arises as to what the law is on certain state of facts, and which does not call for an examination of the probative value of the evidence presented by the parties-litigants. On the other hand, there is a "question of fact" when the doubt or controversy arises as to the truth or falsity of the alleged facts. Simply put, when there is no dispute as to fact, the question of whether or not the conclusion drawn therefrom is correct, is a question of law. 27 Verily, the issues raised by herein petitioner are "questions of law", as their resolution rest solely on what the law provides given the set of circumstances availing. The first issue involves the jurisdiction of the court over the person of one of the defendants, who was not served with summons on account of his death. The second issue, on the other hand, pertains to the legal effect of death of the plaintiff during the pendency of the case. At first brush, it may appear that since pure questions of law were raised, petitioner's resort to this Court was justified and the resolution of the aforementioned issues will necessarily follow. However, a perusal of the petition requires that certain procedural issues must initially be resolved before We delve into the merits of the case. Notably, the petition was filed directly from the RTC which issued the Order in the exercise of its original jurisdiction. The question before Us then is: whether or not petitioner correctly availed of the mode of appeal under Rule 45 of the Rules of Court. Significantly, the rule on appeals is outlined below, to wit: 28 (1)In all cases decided by the RTC in the exercise of its original jurisdiction, appeal may be made to the Court of Appeals by mere notice of appeal where the appellant raises questions of fact or mixed questions of fact and law; (2)In all cases decided by the RTC in the exercise of its original jurisdiction where the appellant raises only questions of law, the appeal must be taken to the Supreme Court on a petition for review on certiorari under Rule 45. (3)All appeals from judgments rendered by the RTC in the exercise of its appellate jurisdiction, regardless of whether the appellant raises questions of fact, questions of law, or mixed questions of fact and law, shall be brought to the Court of Appeals by filing a petition for review under Rule 42. Accordingly, an appeal may be taken from the RTC which exercised its original jurisdiction, before the Court of Appeals or directly before this Court, provided that the subject of the same is a judgment or final order that completely disposes of the case, or of a particular matter therein when declared by the Rules to be appealable. 29 The first mode of appeal, to be filed before the Court of Appeals, pertains to a writ of error under Section 2 (a), Rule 41 of the Rules of Court, if questions of fact or questions of fact and law are raised or involved. On the other hand, the second mode is by way of an appeal by certiorari before the Supreme Court under Section 2 (c), Rule 41, in relation to Rule 45, where only questions of law are raised or involved. 30 An order or judgment of the RTC is deemed final when it finally disposes of a pending action, so that nothing more can be done with it in the trial court. In other words, the order or judgment ends the litigation in the lower court. 31 On the other hand, an order which does not dispose of the case completely and indicates that other things remain to be done by the court as regards the merits, is interlocutory. Interlocutory refers to something between the commencement and the end of the suit which decides some point or matter, but is not a final decision on the whole controversy. 32

The subject of the present petition is an Order of the RTC, which denied petitioner's Omnibus Motion to Dismiss, for lack of merit. EHaDIC We have said time and again that an order denying a motion to dismiss is interlocutory. 33 Under Section 1 (c), Rule 41 of the Rules of Court, an interlocutory order is not appealable. As a remedy for the denial, a party has to file an answer and interpose as a defense the objections raised in the motion, and then to proceed to trial; or, a party may immediately avail of the remedy available to the aggrieved party by filing an appropriate special civil action for certiorari under Rule 65 of the Revised Rules of Court. Let it be stressed though that a petition for certiorari is appropriate only when an order has been issued without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction. Based on the foregoing, the Order of the RTC denying petitioner's Omnibus Motion to Dismiss is not appealable even on pure questions of law. It is worth mentioning that the proper procedure in this case, as enunciated by this Court, is to cite such interlocutory order as an error in the appeal of the case in the event that the RTC rules in favor of respondent and not to appeal such interlocutory order. On the other hand, if the petition is to be treated as a petition for review under Rule 45, it would likewise fail because the proper subject would only be judgments or final orders that completely dispose of the case. 34 Not being a proper subject of an appeal, the Order of the RTC is considered interlocutory. Petitioner should have proceeded with the trial of the case and, should the RTC eventually render an unfavorable verdict, petitioner should assail the said Order as part of an appeal that may be taken from the final judgment to be rendered in this case. Such rule is founded on considerations of orderly procedure, to forestall useless appeals and avoid undue inconvenience to the appealing party by having to assail orders as they are promulgated by the court, when all such orders may be contested in a single appeal. EScaIT In one case, 35 the Court adverted to the hazards of interlocutory appeals: It is axiomatic that an interlocutory order cannot be challenged by an appeal. Thus, it has been held that "the proper remedy in such cases is an ordinary appeal from an adverse judgment on the merits, incorporating in said appeal the grounds for assailing the interlocutory order. 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. . . . . Another recognized reason of the law in permitting appeal only from a final order or judgment, and not from an interlocutory or incidental one, is to avoid multiplicity of appeals in a single action, which must necessarily suspend the hearing and decision on the merits of the case during the pendency of the appeal. If such appeal were allowed, trial on the merits of the case would necessarily be delayed for a considerable length of time and compel the adverse party to incur unnecessary expenses, for one of the parties may interpose as many appeals as incidental questions may be raised by him, and interlocutory orders rendered or issued by the lower court. 36 And, even if We treat the petition to have been filed under Rule 65, the same is still dismissible for violating the principle on hierarchy of courts. Generally, a direct resort to us in a petition for certiorari is highly improper, for it violates the established policy of strict observance of the judicial hierarchy of courts. 37 This principle, as a rule, requires that recourse must first be made to the lower-ranked court exercising concurrent jurisdiction with a higher court. However, the judicial hierarchy of courts is not an iron-clad rule. A strict application of the rule is not necessary when cases brought before the appellate courts do not involve factual but legal questions. 38 In the present case, petitioner submits pure questions of law involving the effect of non-service of summons following the death of the person to whom it should be served, and the effect of the death of the complainant during the pendency of the case. We deem it best to rule on these issues, not only for the benefit of the bench and bar, but

in order to prevent further delay in the trial of the case. Resultantly, our relaxation of the policy of strict observance of the judicial hierarchy of courts is warranted. HCacDE Anent the first issue, petitioner argues that, since Sereno died before summons was served on him, the RTC should have dismissed the complaint against all the defendants and that the same should be filed against his estate. The Sheriff's Return of Service 39 dated May 19, 1997 states that Sereno could not be served with copy of the summons, together with a copy of the complaint, because he was already dead. In view of Sereno's death, petitioner asks that the complaint should be dismissed, not only against Sereno, but as to all the defendants, considering that the RTC did not acquire jurisdiction over the person of Sereno. Jurisdiction over a party is acquired by service of summons by the sheriff, his deputy or other proper court officer, either personally by handing a copy thereof to the defendant or by substituted service. 40 On the other hand, summons is a writ by which the defendant is notified of the action brought against him. Service of such writ is the means by which the court may acquire jurisdiction over his person. 41 Records show that petitioner had filed a Motion to Dismiss on the grounds of lack of legal personality of respondent; the allegations in the complaint did not sufficiently state that respondent has a cause of action or a cause of action against the defendants; and, the complaint was not accompanied by an affidavit of merit and bond. The RTC denied the motion and held therein that, on the basis of the allegations of fact in the complaint, it can render a valid judgment. Petitioner, subsequently, filed his answer by denying all the material allegations of the complaint. And by way of special and affirmative defenses, he reiterated that respondent had no legal personality to sue as she had no real interest over the property and that while the truck was still registered in Pedro Te's name, the same was already sold to Gasing. Significantly, a motion to dismiss may be filed within the time for but before the filing of an answer to the complaint or pleading asserting a claim. 42 Among the grounds mentioned is the court's lack of jurisdiction over the person of the defending party. As a rule, all defenses and objections not pleaded, either in a motion to dismiss or in an answer, are deemed waived. 43The exceptions to this rule are: (1) when the court has no jurisdiction over the subject matter, (2) when there is another action pending between the parties for the same cause, or (3) when the action is barred by prior judgment or by statute of limitations, in which cases, the court may dismiss the claim. In the case before Us, petitioner raises the issue of lack of jurisdiction over the person of Sereno, not in his Motion to Dismiss or in his Answer but only in his Omnibus Motion to Dismiss. Having failed to invoke this ground at the proper time, that is, in a motion to dismiss, petitioner cannot raise it now for the first time on appeal. In fine, We cannot countenance petitioner's argument that the complaint against the other defendants should have been dismissed, considering that the RTC never acquired jurisdiction over the person of Sereno. The court's failure to acquire jurisdiction over one's person is a defense which is personal to the person claiming it. Obviously, it is now impossible for Sereno to invoke the same in view of his death. Neither can petitioner invoke such ground, on behalf of Sereno, so as to reap the benefit of having the case dismissed against all of the defendants. Failure to serve summons on Sereno's person will not be a cause for the dismissal of the complaint against the other defendants, considering that they have been served with copies of the summons and complaints and have long submitted their respective responsive pleadings. In fact, the other defendants in the complaint were given the chance to raise all possible defenses and objections personal to them in their respective motions to dismiss and their subsequent answers. We agree with the RTC in its Order when it resolved the issue in this wise:

As correctly pointed by defendants, the Honorable Court has not acquired jurisdiction over the person of Patricio Sereno since there was indeed no valid service of summons insofar as Patricio Sereno is concerned. Patricio Sereno died before the summons, together with a copy of the complaint and its annexes, could be served upon him. However, the failure to effect service of summons unto Patricio Sereno, one of the defendants herein does not render the action DISMISSIBLE, considering that the three (3) other defendants, namely, Atty. Rogelio E. Sarsaba, Fulgencio Lavares and the NLRC, were validly served with summons and the case with respect to the answering defendants may still proceed independently. Be it recalled that the three (3) answering defendants have previously filed a Motion to Dismiss the Complaint which was denied by the Court. Hence, only the case against Patricio Sereno will be DISMISSED and the same may be filed as a claim against the estate of Patricio Sereno, but the case with respect to the three (3) other accused will proceed. TCaEIc Anent the second issue, petitioner moves that respondent's attorney-in-fact, Faustino Castaeda, be discharged as he has no more legal personality to sue on behalf of Fe Vda. de Te, who passed away on April 12, 2005, during the pendency of the case before the RTC. When a party to a pending action dies and the claim is not extinguished, the Rules of Court require a substitution of the deceased. 44 Section 1, Rule 87 of the Rules of Court enumerates the actions that survived and may be filed against the decedent's representatives as follows: (1) actions to recover real or personal property or an interest thereon, (2) actions to enforce liens thereon, and (3) actions to recover damages for an injury to a person or a property. In such cases, a counsel is obliged to inform the court of the death of his client and give the name and address of the latter's legal representative. 45 The rule on substitution of parties is governed by Section 16, 46 Rule 3 of the 1997 Rules of Civil Procedure, as amended. Strictly speaking, the rule on substitution by heirs is not a matter of jurisdiction, but a requirement of due process. The rule on substitution was crafted to protect every party's right to due process. It was designed to ensure that the deceased party would continue to be properly represented in the suit through his heirs or the duly appointed legal representative of his estate. Moreover, non-compliance with the Rules results in the denial of the right to due process for the heirs who, though not duly notified of the proceedings, would be substantially affected by the decision rendered therein. Thus, it is only when there is a denial of due process, as when the deceased is not represented by any legal representative or heir, that the court nullifies the trial proceedings and the resulting judgment therein. 47 In the case before Us, it appears that respondent's counsel did not make any manifestation before the RTC as to her death. In fact, he had actively participated in the proceedings. Neither had he shown any proof that he had been retained by respondent's legal representative or any one who succeeded her. SDAcaT However, such failure of counsel would not lead Us to invalidate the proceedings that have long taken place before the RTC. The Court has repeatedly declared that failure of the counsel to comply with his duty to inform the court of the death of his client, such that no substitution is effected, will not invalidate the proceedings and the judgment rendered thereon if the action survives the death of such party. The trial court's jurisdiction over the case subsists despite the death of the party. 48

The purpose behind this rule is the protection of the right to due process of every party to the litigation who may be affected by the intervening death. The deceased litigants are themselves protected as they continue to be properly represented in the suit through the duly appointed legal representative of their estate. 49 Anent the claim of petitioner that the special power of attorney 50 dated March 4, 1997 executed by respondent in favor of Faustino has become functus officio and that the agency constituted between them has been extinguished upon the death of respondent, corollarily, he had no more personality to appear and prosecute the case on her behalf. Agency is extinguished by the death of the principal. 51 The only exception where the agency shall remain in full force and effect even after the death of the principal is when if it has been constituted in the common interest of the latter and of the agent, or in the interest of a third person who has accepted the stipulation in his favor. 52 A perusal of the special power of attorney leads us to conclude that it was constituted for the benefit solely of the principal or for respondent Fe Vda. de Te. Nowhere can we infer from the stipulations therein that it was created for the common interest of respondent and her attorney-in-fact. Neither was there any mention that it was to benefit a third person who has accepted the stipulation in his favor. cCSEaA On this ground, We agree with petitioner. However, We do not believe that such ground would cause the dismissal of the complaint. For as We have said, Civil Case No. 3488, which is an action for the recovery of a personal property, a motor vehicle, is an action that survives pursuant to Section 1, Rule 87 of the Rules of Court. As such, it is not extinguished by the death of a party. In Gonzalez v. Philippine Amusement and Gaming Corporation, 53 We have laid down the criteria for determining whether an action survives the death of a plaintiff or petitioner, to wit: . . . The question as to whether an action survives or not depends on the nature of the action and the damage sued for. If 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. . . . Thus, the RTC aptly resolved the second issue with the following ratiocination: While it may be true as alleged by defendants that with the death of Plaintiff, Fe Vda. de Te, the Special Power of Attorney she executed empowering the Attorney-in-fact, Faustino Castaeda to sue in her behalf has been rendered functus officio, however, this Court believes that the Attorney-in-fact had not lost his personality to prosecute this case. It bears stressing that when this case was initiated/filed by the Attorney-in-fact, the plaintiff was still very much alive. Records reveal that the Attorney-in-fact has testified long before in behalf of the said plaintiff and more particularly during the state when the plaintiff was vehemently opposing the dismissal of the complainant. Subsequently thereto, he even offered documentary evidence in support of the complaint, and this court admitted the same. When this case was initiated, jurisdiction was vested upon this Court to try and hear the same to the end. Well-settled is the rule to the point of being elementary that once jurisdiction is acquired by this Court, it attaches until the case is decided.

Thus, the proper remedy here is the Substitution of Heirs and not the dismissal of this case which would work injustice to the plaintiff. SEC. 16, RULE 3 provides for the substitution of the plaintiff who dies pending hearing of the case by his/her legal heirs. As to whether or not the heirs will still continue to engage the services of the Attorney-in-fact is another matter, which lies within the sole discretion of the heirs. In fine, We hold that the petition should be denied as the RTC Order is interlocutory; hence, not a proper subject of an appeal before the Court. In the same breath, We also hold that, if the petition is to be treated as a petition for certiorarias a relaxation of the judicial hierarchy of courts, the same is also dismissible for being substantially insufficient to warrant the Court the nullification of the Order of the RTC. EDIaSH Let this be an occasion for Us to reiterate that the rules are there to aid litigants in prosecuting or defending their cases before the courts. However, these very rules should not be abused so as to advance one's personal purposes, to the detriment of orderly administration of justice. We can surmise from the present case herein petitioner's manipulation in order to circumvent the rule on modes of appeal and the hierarchy of courts so that the issues presented herein could be settled without going through the established procedures. In Vergara, Sr. v. Suelto, 54 We stressed that this should be the constant policy that must be observed strictly by the courts and lawyers, thus: . . . . The Supreme Court is a court of last resort, and must so remain if it is to satisfactorily perform the functions assigned to it by the fundamental charter and immemorial tradition. It cannot and should not be burdened with the task of dealing with causes in the first instance. Its original jurisdiction to issue the so-called extraordinary writs should be exercised only where absolutely necessary or where serious and important reasons exist therefor. Hence, that jurisdiction should generally be exercised relative to actions or proceedings before the Court of Appeals, or before constitutional or other tribunals, bodies or agencies whose acts for some reason or another are not controllable by the Court of Appeals. Where the issuance of an extraordinary writ is also within the competence of the Court of Appeals or a Regional Trial Court, it is in either of these courts that the specific action for the writ's procurement must be presented. This is and should continue to be the policy in this regard, a policy that courts and lawyers must strictly observe. 55 WHEREFORE, premises considered, the Petition is DENIED. The Order dated March 22, 2006 of the Regional Trial Court, Branch 19, Digos, Davao del Sur in Civil Case No. 3488, is hereby AFFIRMED. Costs against the petitioner. ETISAc SO ORDERED. MAYOR RHUSTOM L. DAGADAG, petitioner, vs. MICHAEL C. TONGNAWA and ANTONIO GAMMOD, respondents.

Before us is a petition for review on certiorari 1 assailing the joint Decision 2 dated July 31, 2003 and Resolution dated December 10, 2003 of the Court of Appeals in CA-G.R. SP Nos. 54511 and 57315. The dispositive portion of the joint Decision reads: "WHEREFORE, these consolidated Petitions for Review are hereby GRANTED. The assailed Resolutions dated October 21, 1997 and May 31, 1999 of the Civil Service Commission upholding Respondent's [now petitioner Mayor Rhustom L. Dagadag] Order of Suspension dated June 29, 1999, and January 24, 2000 upholding Respondent's Order of Separation, are hereby REVERSED AND SET ASIDE. Petitioners Michael C. Tongnawa and Antonio B. Gammod are hereby accordingly REINSTATED WITH CORRESPONDING BACKWAGES. SO ORDERED." 3 Petitioner was formerly the mayor of the municipality of Tanudan, Province of Kalinga. Michael Tongnawa and Antonio Gammod, respondents, are the municipal engineer and municipal planning and development coordinator, respectively, of the said municipality. IEaCDH On July 24, 1995, petitioner, while then the mayor of Tanudan, sent respondents a memorandum ordering them to explain within 72 hours why they should not be administratively sanctioned for acts unbecoming of public servants and failure to perform their duties. Respondents submitted to petitioner their respective explanations. On August 1, 1995, petitioner issued Executive Order No. 95-002 creating a Municipal Grievance Committee to investigate the charges against respondents. Guilbert Dangpason, then the vice-mayor of Tanudan, was designated Chairman. After investigation, the Committee found respondents liable for insubordination, non-performance of duties and absences without official leaves (AWOL). On November 27, 1995, petitioner issued an order suspending respondents from their respective positions for two months or from December 1, 1995 to February 28, 1996. Respondents then appealed to the Civil Service Commission (CSC) contending that their right to due process has been violated. On May 23, 1996, during the pendency of respondents' appeal, petitioner issued an order dropping them from the roll of employees effective May 28, 1996 by reason of their unauthorized absences. Again, they appealed to the CSC.DTIaCS On October 21, 1997, the CSC issued Resolution No. 974229 affirming petitioner's order suspending respondents from the service for two months. They moved for a reconsideration but was denied by the CSC on May 31, 1999, prompting them to file with the Court of Appeals a petition for review, docketed as CA-G.R. SP No. 54511. Meanwhile, on June 29, 1999, the CSC issued Resolution No. 991136 affirming petitioner's order dropping respondents from the roll. When their motion for reconsideration was denied by the CSC, respondents filed with the Court of Appeals a petition for review, docketed as CA-G.R. SP 57315. As mentioned earlier, the Court of Appeals, in its joint Decision in CA-G.R. SP Nos. 54511 and 57315, granted respondents' petitions for review, reversing the CSC challenged Resolutions and reinstating them to their respective positions and ordering the payment of their corresponding backwages. In reversing the CSC, the Court of Appeals held:

DECISION

SANDOVAL-GUTIERREZ, J p:

"As a general rule, findings of the CSC are not disturbed on appeal, but if there are substantial facts which may alter the results of the case, this Court is tasked to evaluate and take them into consideration. IHCDAS Petitioners (now respondents) ascribed irregularities in the conduct of the Grievance Committee hearing and submitted two Affidavits subscribed by one William Tumbali and by former Vice-Mayor Guilbert Dangpason, then chairman of the said Grievance Committee. Dangpason attested that while it is true that there was a meeting held, no investigation was actually conducted. The Petitioners maintained that they were not given an opportunity to explain their side and prove their defenses. They claimed that the minutes on which the suspension of the Petitioners was solely based do not state the true proceedings, therefore, depriving them of their right to be heard. None other than the Chairman of the Grievance Committee, assigned to investigate the alleged negligence of the Petitioners, had renounced the contents of the minutes of the supposed investigation. Dangpason who 'wish(ed) to set the record straight . . . in fairness to all concerned' categorically declared that the Petitioners were not given an opportunity to defend themselves since there was no actual investigation conducted and even expressed his willingness 'to testify and confirm' his declarations just to ascertain the truth. These declarations of Dangpason and Tumbali were not denied by the Respondent. In the absence therefore of any showing of ill intent or bad faith on the part of Dangpason and Tumbali, their Affidavits are to be afforded great weight and credence. In the light of this clear and convincing evidence, Petitioners were able to rebut or overcome the presumption of regularity in the conduct of the Grievance Committee hearing. Accordingly, the minutes cannot solely be the basis for Petitioners' suspension. xxx xxx xxx . . ., we find that the suspension of the Petitioners has no factual basis. xxx xxx xxx It must be emphasized that, in administrative proceedings, it is not the duty of Petitioners to disperse what the Respondent failed to prove. The Respondent must first affirmatively show rationally adequate evidence that Petitioners' suspension was for a justifiable cause. Petitioners' suspension was not justified and, therefore, illegal because Respondent failed to prove the allegations and accusations against the Petitioners. HEITAD The Petitioners likewise assailed the resolution of the CSC affirming Respondent's Order of Separation as having been done in violation of their right to due process. xxx xxx xxx The previous rule required that the absences of an officer or employee before he can be dropped from the roll must be 'for at least thirty (30) days without approved leave.' However, the above-quoted rule now provides that the absences without authorized leave must be continuous, which means uninterrupted, or unbroken totaling at least 30 days. Clearly, the amendment is intended to make the requirement on absences 'continuous' and not just totaling 'at least 30 days.'

Considering that statutes prescribing the grounds for the suspension or removal of an officer are penal in nature, the same should be strictly construed. Thus, where the law enumerates the grounds for disciplinary action, no other grounds may be invoked for his suspension or removal. Hence, although the unauthorized absences of Petitioners Tongnawa and Gammod totaled 41 and 43 days, respectively, it is clear from the records that the days when the Petitioners were absent, although more than 30 days, were not continuous as required by the law, but intermittent. Furthermore, there was no evidence, much less allegation, that the gap or break was a special or a regular holiday. Clearly, one of the requirements for the dropping from the rolls is not attendant. Hence, there was no valid termination of Petitioners' services. Inescapable then is the conclusion that since the Petitioners were illegally suspended and unjustifiably separated from their work, they are entitled to reinstatement and backwages." Petitioner filed a joint motion for reconsideration but was denied by the Court of Appeals. Hence, the instant petition. DHSACT Basically, petitioner alleges that his "suspension and dismissal orders against the respondents are supported by substantial evidence." 4 Moreover, the sworn declarations of William Tumbali and Guilbert Dangpason, the designated Chairman of the Municipal Grievance Committee, that there was actually no investigation conducted on petitioner's charges, are "devoid of credibility." 5 In their joint comment, respondents aver that petitioner has no legal personality to file the instant petition because he had ceased to be the municipal mayor of Tanudan, Kalinga; and that the CSC, being the aggrieved party, is the proper party to file this petition. The fundamental issue before us is: who may appeal from the Decision of the Court of Appeals? In resolving the issue, the concept of "real party in interest" becomes relevant. Section 2, Rule 3 of the 1997 Rules of Civil Procedure, as amended, provides: "SEC. 2.Parties in interest. A real party in interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these Rules, every action must be prosecuted or defended in the name of the real party in interest." CSDcTA The established rule is that a real party in interest is one who would be benefited or injured by the judgment, or one entitled to the avails of the suit. The word "interest," as contemplated by the Rules, means material interest or an interest in issue and to be affected by the judgment, as distinguished from mere interest in the question involved or a mere incidental interest. Stated differently, the rule refers to a real or present substantial interest as distinguished from a mere expectancy, or a future, contingent, subordinate, or consequential interest. As a general rule, one who has no right or interest to protect cannot invoke the jurisdiction of the court as party-plaintiff in an action. 6 We hold that the CSC and the mayor of Tanudan are real parties in interest in this case and, therefore, can contest the assailed joint Decision of the Court of Appeals before us. The CSC is the party adversely affected by the questioned Decision of the Court of Appeals because it has been mandated by the Constitution to preserve and safeguard the integrity of our civil service system. 7 Thus, any

transgression by herein respondents of the CSC rules and regulations will adversely affect its integrity. Significantly, it has not challenged the assailed Decision.

with it the power to remove. Being chief executive of the municipality, he possesses this disciplinary power over

appointive municipal officials and employees. 10 To be sure, whenever his order imposing administrative sanctions upon erring municipal personnel is challenged, he should be allowed to defend his action considering that he is the appointing authority. The second reason why the municipal mayor of Tanudan has legal personality to challenge the Decision of the Court of Appeals is because the salaries of the respondents, being municipal officials, are drawn from the municipal funds. Obviously, the mayor has real and substantial interest in the outcome of the administrative cases against respondents. Admittedly, however, petitioner, at the time he filed with this Court the instant petition assailing the Appellate Court Decision, was no longer the mayor of Tanudan. Section 17, Rule 3 of the 1997 Rules of Civil Procedure, as amended, is relevant, thus: "Sec. 17.Death or separation of a party who is a public officer. When a public officer is a party in an action in his official capacity and during its pendency dies, resigns or otherwise ceases to hold office, the action may be continued and maintained by or against his successor if, within thirty (30) days after the successor takes office or such time as may be granted by the court, it is satisfactorily shown to the court by any party that there is a

As regards the mayor of Tanudan, there are two (2) reasons why he may interpose such appeal. The first is rooted in his power to appoint officials and employees of his municipality. 8 Both respondents were appointed by petitioner during his incumbency. In Francisco Abella, Jr. vs. Civil Service Commission, 9 the Court En Banc (through Justice Artemio V. Panganiban) held that the municipal mayor, being the appointing authority, is the real party in interest to challenge the CSC's disapproval of the appointment of his appointee, thus: HScAEC ". . . The power of appointment necessarily entails the exercise of judgment and discretion (Sevilla vs. Parina, 128 Phil. 639, 643, October 30, 1967; Manalang vs. Quitoriano, 94 Phil. 903, 911, April 30, 1954). Luego vs. Civil Service Commission (227 Phil. 303, August 5, 1986) declared: 'Appointment is an essentially discretionary power and must be performed by the officer in which it is vested according to his best lights, the only condition being that the appointee should possess the qualifications required by law. If he does, then the appointment cannot be faulted on the ground that there are others better qualified who should have been preferred. This is a political question involving considerations of wisdom which only the appointing authority can decide' (Rimonte vs. Civil Service Commission, 314 Phil. 421, 430, May 29, 1995). Significantly, 'the selection of the appointee taking into account the totality of his qualifications, including those abstract qualities that define his personality is the prerogative of the appointing authority (Lapinid vs. Civil Service Commission, 274 Phil. 381, 387, May 14, 1991, per Cruz J.; Jimenez vs. Francisco, 127 Phil. 1025, 1032, February 28, 1957; Branganza vs. Commission on Elections, 127 Phil. 442, 447, August 15, 1967). No tribunal, not even this Court (Lapinid vs. Civil Service Commission, supra; Amponin vs. Commission on Elections, 128 Phil. 412, 415, September 29, 1967), may compel the exercise of an appointment for a favored person (Sevilla vs. Patrina, supra; Manalang vs. Quitoriano, supra; Torio vs. Civil Service Commission, 209 SCRA 677, 691, June 9, 1992; Medalla vs. Sto. Tomas, 208 SCRA 351, 357, May 5, 1992).

substantial need for continuing or maintaining it and that the successor adopts or continues or threatens to adopt or continue the action of his predecessor. Before a substitution is made,
the party or officer to be affected, unless expressly assenting thereto, shall be given reasonable notice of the application therefor and accorded an opportunity to be heard." (emphasis ours) IHEDAT

Interpreting the above rule, in Miranda vs. Carreon, 11 Heirs of Mayor Nemencio Galvez vs. Court of Appeals, 12 andRoque, et al. vs. Delgado, et al., 13 we held that where the petitioner (a public officer) ceases to be mayor, the appeal and/or action he initiated may be continued and maintained by his successor if there is substantial need to do so. If the successor failed to pursue the appeal and/or action, the same should be dismissed. Records show that upon petitioner's cessation from public office, his successor did not file any manifestation to the effect that he is continuing and maintaining this appeal. We thus agree with the respondents that petitioner has lost his legal personality to interpose the instant petition. WHEREFORE, the instant petition is hereby DENIED. Costs against petitioner. SO ORDERED.

The CSC's disapproval of an appointment is a challenge to the exercise of the appointing authority's discretion. The appointing authority must have the right to contest the disapproval. Thus, Section 2 of Rule VI of CSC Memorandum Circular 40, s. 1998 is justified insofar as it allows the appointing authority to request reconsideration or appeal. HSCcTD In Central Bank vs. Civil Service Commission (171 SCRA 744, 756, April 10, 1989), this Court has affirmed that the appointing authority stands to be adversely affected when the CSC disapproves an appointment. Thus, the said authority can 'defend its appointment since it knows the reasons for the same' (id., p. 757, per Gancayco, J.). It is also the act of the appointing authority that is being questioned when an appointment is disapproved (id.).
xxx xxx xxx." (emphasis ours) Similarly, where a municipal mayor orders the suspension or dismissal of a municipal employee on grounds he believes to be proper, but his order is reversed or nullified by the CSC or the Court of Appeals (as in this case), he has the right to contest such adverse ruling. His right to appeal flows from the fact that his power to appoint carries

ARCADIO and MARIA LUISA CARANDANG, petitioners, vs. HEIRS OF QUIRINO A. DE GUZMAN, namely: MILAGROS DE GUZMAN, VICTOR DE GUZMAN, REYNALDO DE GUZMAN, CYNTHIA G. RAGASA and QUIRINO DE GUZMAN, JR., respondents.

DECISION

CHICO-NAZARIO, J p: This is a Petition for Review on Certiorari assailing the Court of Appeals Decision 1 and Resolution affirming the Regional Trial Court (RTC) Decision rendering herein petitioners Arcadio and Luisa Carandang [hereinafter referred to as spouses Carandang] jointly and severally liable for their loan to Quirino A. de Guzman. The Court of Appeals summarized the facts as follows: [Quirino de Guzman] and [the Spouses Carandang] are stockholders as well as corporate officers of Mabuhay Broadcasting System (MBS for brevity), with equities at fifty four percent (54%) and forty six percent (46%) respectively. On November 26, 1983, the capital stock of MBS was increased, from P500,000 to P1.5 million and P345,000 of this increase was subscribed by [the spouses Carandang]. Thereafter, on March 3, 1989, MBS again increased its capital stock, from P1.5 million to P3 million, [the spouses Carandang] yet again subscribed to the increase. They subscribed to P93,750 worth of newly issued capital stock. [De Guzman] claims that, part of the payment for these subscriptions were paid by him, P293,250 for the November 26, 1983 capital stock increase and P43,125 for the March 3, 1989 Capital Stock increase or a total of P336,375. Thus, on March 31, 1992, [de Guzman] sent a demand letter to [the spouses Carandang] for the payment of said total amount. [The spouses Carandang] refused to pay the amount, contending that a pre-incorporation agreement was executed between [Arcadio Carandang] and [de Guzman], whereby the latter promised to pay for the stock subscriptions of the former without cost, in consideration for [Arcadio Carandang's] technical expertise, his newly purchased equipment, and his skill in repairing and upgrading radio/communication equipment therefore, there is no indebtedness on their part [sic]. On June 5, 1992, [de Guzman] filed his complaint, seeking to recover the P336,375 together with damages. After trial on the merits, the trial court disposed of the case in this wise: "WHEREFORE, premises considered, judgment is hereby rendered in favor of [de Guzman]. Accordingly, [the spouses Carandang] are ordered to jointly and severally pay [de Guzman], to wit: (1)P336,375.00 representing [the spouses Carandang's] loan to de Guzman; (2)interest on the preceding amount at the rate of twelve percent (12%) per annum from June 5, 1992 when this complaint was filed until the principal amount shall have been fully paid; (3)P20,000.00 as attorney's fees; (4)Costs of suit. DTcASE The spouses Carandang appealed the RTC Decision to the Court of Appeals, which affirmed the same in the 22 April 2003 assailed Decision:

WHEREFORE, in view of all the foregoing the assailed Decision is hereby AFFIRMED. No costs. 2 The Motion for Reconsideration filed by the spouses Carandang was similarly denied by the Court of Appeals in the 6 October 2003 assailed Resolution: WHEREFORE, in view thereof, the motion for reconsideration is hereby DENIED and our Decision of April 22, 2003, which is based on applicable law and jurisprudence on the matter is hereby AFFIRMED and REITERATED. 3 The spouses Carandang then filed before this Court the instant Petition for Review on Certiorari, bringing forth the following issues: I. WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED MANIFEST ERROR IN FAILING TO STRICTLY COMPLY WITH SECTION 16, RULE 3 OF THE 1997 RULES OF CIVIL PROCEDURE. II. WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THERE IS AN ALLEGED LOAN FOR WHICH PETITIONERS ARE LIABLE, CONTRARY TO EXPRESS PROVISIONS OF BOOK IV, TITLE XI, OF THE NEW CIVIL CODE PERTAINING TO LOANS. III. WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT THE RESPONDENTS WERE ABLE TO DISCHARGE THEIR BURDEN OF PROOF, IN COMPLETE DISREGARD OF THE REVISED RULES ON EVIDENCE. IV. WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT FAILED TO APPLY SECTIONS 2 AND 7, RULE 3 OF THE 1997 RULES OF CIVIL PROCEDURE. V. WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT THE PURPORTED LIABILITY OF PETITIONERS ARE JOINT AND SOLIDARY, IN VIOLATION OF ARTICLE 1207 OF THE NEW CIVIL CODE. 4 Whether or for failing 3 of the Rules of Court not to the comply RTC with Decision Section is 16, void Rule

The spouses Carandang claims that the Decision of the RTC, having been rendered after the death of Quirino de Guzman, is void for failing to comply with Section 16, Rule 3 of the Rules of Court, which provides: SEC. 16.Death of party; duty of counsel. Whenever a party to a pending action dies, and the claim is not thereby extinguished, it shall be the duty of his counsel to inform the court within thirty (30) days after such death of the fact thereof, and to give the name and address of his legal representative or representatives. Failure of counsel to comply with this duty shall be a ground for disciplinary action. The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or administrator and the court may appoint a guardian ad litem for the minor heirs. The court shall forthwith order the legal representative or representatives to appear and be substituted within a period of thirty (30) days from notice. If no legal representative is named by the counsel for the deceased party, or if the one so named shall fail to appear within the specified period, the court may order the opposing party, within a specified time, to procure the appointment of an executor or administrator for the estate of the deceased and the latter shall immediately appear for and on behalf of the deceased. The court charges in procuring such appointment, if defrayed by the opposing party, may be recovered as costs. The spouses Carandang posits that such failure to comply with the above rule renders void the decision of the RTC, in adherence to the following pronouncements in Vda. de Haberer v. Court of Appeals 5 and Ferreria v. Vda. de Gonzales 6: Thus, it has been held that when a party dies in an action that survives and no order is issued by the court for the appearance of the legal representative or of the heirs of the deceased in substitution of the deceased, and as a matter of fact no substitution has ever been effected, the trial held by the court without such legal representatives or heirs and the judgment rendered after such trial are null and void because the court acquired no jurisdiction over the persons of the legal representatives or of the heirs upon whom the trial and judgment would be binding. 7 In the present case, there had been no court order for the legal representative of the deceased to appear, nor had any such legal representative appeared in court to be substituted for the deceased; neither had the complainant ever procured the appointment of such legal representative of the deceased, including appellant, ever asked to be substituted for the deceased. As a result, no valid substitution was effected, consequently, the court never acquired jurisdiction over appellant for the purpose of making her a party to the case and making the decision binding upon her, either personally or as a representative of the estate of her deceased mother. 8 However, unlike jurisdiction over the subject matter which is conferred by law and is not subject to the discretion of the parties, 9 jurisdiction over the person of the parties to the case may be waived either expressly or impliedly. 10 Implied waiver comes in the form of either voluntary appearance or a failure to object. 11 In the cases cited by the spouses Carandang, we held that there had been no valid substitution by the heirs of the deceased party, and therefore the judgment cannot be made binding upon them. In the case at bar, not only do the heirs of de Guzman interpose no objection to the jurisdiction of the court over their persons; they are actually

claiming and embracing such jurisdiction. In doing so, their waiver is not even merely implied (by their participation in the appeal of said Decision), but express (by their explicit espousal of such view in both the Court of Appeals and in this Court). The heirs of de Guzman had no objection to being bound by the Decision of the RTC. DaScHC Thus, lack of jurisdiction over the person, being subject to waiver, is a personal defense which can only be asserted by the party who can thereby waive it by silence. It also pays to look into the spirit behind the general rule requiring a formal substitution of heirs. The underlying principle therefor is not really because substitution of heirs is a jurisdictional requirement, but because noncompliance therewith results in the undeniable violation of the right to due process of those who, though not duly notified of the proceedings, are substantially affected by the decision rendered therein. 12 Such violation of due process can only be asserted by the persons whose rights are claimed to have been violated, namely the heirs to whom the adverse judgment is sought to be enforced. Care should, however, be taken in applying the foregoing conclusions. In People v. Florendo, 13 where we likewise held that the proceedings that took place after the death of the party are void, we gave another reason for such nullity: "the attorneys for the offended party ceased to be the attorneys for the deceased upon the death of the latter, the principal . . . ." Nevertheless, the case at bar had already been submitted for decision before the RTC on 4 June 1998, several months before the passing away of de Guzman on 19 February 1999. Hence, no further proceedings requiring the appearance of de Guzman's counsel were conducted before the promulgation of the RTC Decision. Consequently, de Guzman's counsel cannot be said to have no authority to appear in trial, as trial had already ceased upon the death of de Guzman.

In sum, the RTC Decision is valid despite the failure to comply with Section 16, Rule 3 of the Rules of Court, because of the express waiver of the heirs to the jurisdiction over their persons, and because there had been, before the promulgation of the RTC Decision, no further proceedings requiring the appearance of de Guzman's counsel. Before proceeding with the substantive aspects of the case, however, there is still one more procedural issue to tackle, the fourth issue presented by the spouses Carandang on the non-inclusion in the complaint of an indispensable party. Whether dismissed cause de party, plaintiff or the of Guzman, was not case action, not RTC failure considering allegedly an included as the for should have to state a that Milagros indispensable a party-

The spouses Carandang claim that, since three of the four checks used to pay their stock subscriptions were issued in the name of Milagros de Guzman, the latter should be considered an indispensable party. Being such, the spouses Carandang claim, the failure to join Mrs. de Guzman as a party-plaintiff should cause the dismissal of the action because "(i)f a suit is not brought in the name of or against the real party in interest, a motion to dismiss may be filed on the ground that the complaint states no cause of action." 14 The Court of Appeals held: We disagree. The joint account of spouses Quirino A de Guzman and Milagros de Guzman from which the four (4) checks were drawn is part of their conjugal property and under both

the Civil Code and the Family Code the husband alone may institute an action for the recovery or protection of the spouses' conjugal property. Thus, in Docena v. Lapesura [355 SCRA 658], the Supreme Court held that ". . . Under the New Civil Code, the husband is the administrator of the conjugal partnership. In fact, he is the sole administrator, and the wife is not entitled as a matter of right to join him in this endeavor. The husband may defend the conjugal partnership in a suit or action without being joined by the wife. . . . Under the Family Code, the administration of the conjugal property belongs to the husband and the wife jointly. However, unlike an act of alienation or encumbrance where the consent of both spouses is required, joint management or administration does not require that the husband and wife always act together. Each spouse may validly exercise full power of management alone, subject to the intervention of the court in proper cases as provided under Article 124 of the Family Code. . . . ." The Court of Appeals is correct. Petitioners erroneously interchange the terms "real party in interest" and "indispensable party." A real party in interest is the party who stands to be benefited or injured by the judgment of the suit, or the party entitled to the avails of the suit. 15 On the other hand, an indispensable party is a party in interest without whom no final determination can be had of an action, 16 in contrast to a necessary party, which is one who is not indispensable but who ought to be joined as a party if complete relief is to be accorded as to those already parties, or for a complete determination or settlement of the claim subject of the action. 17 The spouses Carandang are indeed correct that "(i)f a suit is not brought in the name of or against the real party in interest, a motion to dismiss may be filed on the ground that the complaint states no cause of action." 18 However, what dismissal on this ground entails is an examination of whether the parties presently pleaded are interested in the outcome of the litigation, and not whether all persons interested in such outcome are actually pleaded. The latter query is relevant in discussions concerning indispensable and necessary parties, but not in discussions concerning real parties in interest. Both indispensable and necessary parties are considered as real parties in interest, since both classes of parties stand to be benefited or injured by the judgment of the suit. Quirino and Milagros de Guzman were married before the effectivity of the Family Code on 3 August 1988. As they did not execute any marriage settlement, the regime of conjugal partnership of gains govern their property relations. 19 All property acquired during the marriage, whether the acquisition appears to have been made, contracted or registered in the name of one or both spouses, is presumed to be conjugal unless the contrary is proved. 20 Credits are personal properties, 21 acquired during the time the loan or other credit transaction was executed. Therefore, credits loaned during the time of the marriage are presumed to be conjugal property. DTIACH Consequently, assuming that the four checks created a debt for which the spouses Carandang are liable, such credits are presumed to be conjugal property. There being no evidence to the contrary, such presumption subsists. As such, Quirino de Guzman, being a co-owner of specific partnership property, 22 is certainly a real party in interest. Dismissal on the ground of failure to state a cause of action, by reason that the suit was allegedly not brought by a real party in interest, is therefore unwarranted. So now we come to the discussion concerning indispensable and necessary parties. When an indispensable party is not before the court, the action should likewise be dismissed. 23 The absence of an indispensable party renders all subsequent actuations of the court void, for want of authority to act, not only as to the absent parties but even as to those present. 24 On the other hand, the non-joinder of necessary parties do not result in the dismissal of the case. Instead, Section 9, Rule 3 of the Rules of Court provides for the consequences of such non-joinder: Sec. 9.Non-joinder of necessary parties to be pleaded. Whenever in any pleading in which a claim is asserted a necessary party is not joined, the pleader shall set forth his name, if

known, and shall state why he is omitted. Should the court find the reason for the omission unmeritorious, it may order the inclusion of the omitted necessary party if jurisdiction over his person may be obtained. The failure to comply with the order for his inclusion, without justifiable cause, shall be deemed a waiver of the claim against such party. The non-inclusion of a necessary party does not prevent the court from proceeding in the action, and the judgment rendered therein shall be without prejudice to the rights of such necessary party. Non-compliance with the order for the inclusion of a necessary party would not warrant the dismissal of the complaint. This is an exception to Section 3, Rule 17 which allows the dismissal of the complaint for failure to comply with an order of the court, as Section 9, Rule 3 specifically provides for the effect of such non-inclusion: it shall not prevent the court from proceeding in the action, and the judgment rendered therein shall be without prejudice to the rights of such necessary party. Section 11, Rule 3 likewise provides that the non-joinder of parties is not a ground for the dismissal of the action. Other than the indispensable and necessary parties, there is a third set of parties: the pro-forma parties, which are those who are required to be joined as co-parties in suits by or against another party as may be provided by the applicable substantive law or procedural rule. 25 An example is provided by Section 4, Rule 3 of the Rules of Court: Sec. 4.Spouses as parties. Husband and wife shall sue or be sued jointly, except as provided by law. Pro-forma parties can either be indispensable, necessary or neither indispensable nor necessary. The third case occurs if, for example, a husband files an action to recover a property which he claims to be part of his exclusive property. The wife may have no legal interest in such property, but the rules nevertheless require that she be joined as a party. In cases of pro-forma parties who are neither indispensable nor necessary, the general rule under Section 11, Rule 3 must be followed: such non-joinder is not a ground for dismissal. Hence, in a case concerning an action to recover a sum of money, we held that the failure to join the spouse in that case was not a jurisdictional defect. 26 The nonjoinder of a spouse does not warrant dismissal as it is merely a formal requirement which may be cured by amendment. 27 Conversely, in the instances that the pro-forma parties are also indispensable or necessary parties, the rules concerning indispensable or necessary parties, as the case may be, should be applied. Thus, dismissal is warranted only if the pro-forma party not joined in the complaint is an indispensable party. Milagros de Guzman, being presumed to be a co-owner of the credits allegedly extended to the spouses Carandang,seems to be either an indispensable or a necessary party. If she is an indispensable party, dismissal would be proper. If she is merely a necessary party, dismissal is not warranted, whether or not there was an order for her inclusion in the complaint pursuant to Section 9, Rule 3. Article 108 of the Family Code provides: Art. 108.The conjugal partnership shall be governed by the rules on the contract of partnership in all that is not in conflict with what is expressly determined in this Chapter or by the spouses in their marriage settlements.

This provision is practically the same as the Civil Code provision it superceded: Art. 147.The conjugal partnership shall be governed by the rules on the contract of partnership in all that is not in conflict with what is expressly determined in this Chapter. In this connection, Article 1811 of the Civil Code provides that "[a] partner is a co-owner with the other partners of specific partnership property." Taken with the presumption of the conjugal nature of the funds used to finance the four checks used to pay for petitioners' stock subscriptions, and with the presumption that the credits themselves are part of conjugal funds, Article 1811 makes Quirino and Milagros de Guzman co-owners of the alleged credit. ECTSDa

Simply put, preponderance of evidence means that the evidence as a whole adduced by one side is superior to that of the other. The concept of preponderance of evidence refers to evidence that is of greater weight, or more convincing, than that which is offered in opposition to it; it means probability of truth. [The spouses Carandang] admitted that it was indeed [the de Guzmans] who paid their stock subscriptions and their reason for not reimbursing the latter is the alleged pre-incorporation agreement, to which they offer no clear proof as to its existence. It is a basic rule in evidence that each party must prove his affirmative allegation. Thus, the plaintiff or complainant has to prove his affirmative allegations in the complaints and the defendant or respondent has to prove the affirmative allegations in his affirmative defenses and counterclaims. 33 The spouses Carandang, however, insist that the de Guzmans have not proven the loan itself, having presented evidence only of the payment in favor of the Carandangs. They claim: It is an undeniable fact that payment is not equivalent to a loan. For instance, if Mr. "A" decides to pay for Mr. "B's" obligation, that payment by Mr. "A" cannot, by any stretch of imagination, possibly mean that there is now a loan by Mr. "B" to Mr. "A". There is a possibility that such payment by Mr. "A" is purely out of generosity or that there is a mutual agreement between them. As applied to the instant case, that mutual agreement is the preincorporation agreement (supra) existing between Mr. de Guzman and the petitioners to the effect that the former shall be responsible for paying stock subscriptions of the latter. Thus, when Mr. de Guzman paid for the stock subscriptions of the petitioners, there was no loan to speak of, but only a compliance with the pre-incorporation agreement. 34 The spouses Carandang are mistaken. If indeed a Mr. "A" decides to pay for a Mr. "B's" obligation, the presumption is that Mr. "B" is indebted to Mr. "A" for such amount that has been paid. This is pursuant to Articles 1236 and 1237 of the Civil Code, which provide: Art. 1236.The creditor is not bound to accept payment or performance by a third person who has no interest in the fulfillment of the obligation, unless there is a stipulation to the contrary.

Being co-owners of the alleged credit, Quirino and Milagros de Guzman may separately bring an action for the recovery thereof. In the fairly recent cases of Baloloy v. Hular 28 and Adlawan v. Adlawan, 29 we held that, in a coownership, co-owners may bring actions for the recovery of co-owned property without the necessity of joining all the other co-owners as co-plaintiffs because the suit is presumed to have been filed for the benefit of his co-owners. In the latter case and in that of De Guia v. Court of Appeals, 30 we also held that Article 487 of the Civil Code, which provides that any of the co-owners may bring an action for ejectment, covers all kinds of action for the recovery of possession. 31 In sum, in suits to recover properties, all co-owners are real parties in interest. However, pursuant to Article 487 of the Civil Code and relevant jurisprudence, any one of them may bring an action, any kind of action, for the recovery of co-owned properties. Therefore, only one of the co-owners, namely the co-owner who filed the suit for the recovery of the co-owned property, is an indispensable party thereto. The other co-owners are not indispensable parties. They are not even necessary parties, for a complete relief can be accorded in the suit even without their participation, since the suit is presumed to have been filed for the benefit of all co-owners. 32 We therefore hold that Milagros de Guzman is not an indispensable party in the action for the recovery of the allegedly loaned money to the spouses Carandang. As such, she need not have been impleaded in said suit, and dismissal of the suit is not warranted by her not being a party thereto. Whether to prove petitioners or the not loan respondents sought to were collected able from

be

Whoever pays for another may demand from the debtor what he has paid, except
that if he paid without the knowledge or against the will of the debtor, he can recover only insofar as the payment has been beneficial to the debtor.

In the second and third issues presented by the spouses Carandang, they claim that the de Guzmans failed to prove the alleged loan for which the spouses Carandang were held liable. As previously stated, spouses Quirino and Milagros de Guzman paid for the stock subscriptions of the spouses Carandang, amounting to P336,375.00. The de Guzmans claim that these payments were in the form of loans and/or advances and it was agreed upon between the late Quirino de Guzman, Sr. and the spouses Carandang that the latter would repay him. Petitioners, on the other hand, argue that there was an oral pre-incorporation agreement wherein it was agreed that Arcardio Carandang would always maintain his 46% equity participation in the corporation even if the capital structures were increased, and that Quirino de Guzman would personally pay the equity shares/stock subscriptions of Arcardio Carandang with no cost to the latter. On this main issue, the Court of Appeals held: [The spouses Carandang] aver in its ninth assigned error that [the de Guzmans] failed to prove by preponderance of evidence, either the existence of the purported loan or the nonpayment thereof.

Art. 1237.Whoever pays on behalf of the debtor without the knowledge or against the will of the latter, cannot compel the creditor to subrogate him in his rights, such as those arising from a mortgage, guarantee, or penalty. SaHcAC Articles 1236 and 1237 are clear that, even in cases where the debtor has no knowledge of payment by a third person, and even in cases where the third person paid against the will of the debtor, such payment would produce a debt in favor of the paying third person. In fact, the only consequences for the failure to inform or get the consent of the debtor are the following: (1) the third person can recover only insofar as the payment has been beneficial to the debtor; and (2) the third person is not subrogated to the rights of the creditor, such as those arising from a mortgage, guarantee or penalty. 35 We say, however, that this is merely a presumption. By virtue of the parties' freedom to contract, the parties could stipulate otherwise and thus, as suggested by the spouses Carandang, there is indeed a possibility that such

payment by Mr. "A" was purely out of generosity or that there was a mutual agreement between them. But such mutual agreement, being an exception to presumed course of events as laid down by Articles 1236 and 1237, must be adequately proven. The de Guzmans have successfully proven their payment of the spouses Carandang's stock subscriptions. These payments were, in fact, admitted by the spouses Carandang. Consequently, it is now up to the spouses Carandang to prove the existence of the pre-incorporation agreement that was their defense to the purported loan. Unfortunately for the spouses Carandang, the only testimony which touched on the existence and substance of the pre-incorporation agreement, that of petitioner Arcardio Carandang, was stricken off the record because he did not submit himself to a cross-examination of the opposing party. On the other hand, the testimonies of Romeo Saavedra, 36Roberto S. Carandang, 37 Gertrudes Z. Esteban, 38 Ceferino Basilio, 39 and Ma. Luisa Carandang 40 touched on matters other than the existence and substance of the pre-incorporation agreement. So aside from the fact that these witnesses had no personal knowledge as to the alleged existence of the preincorporation agreement, the testimonies of these witnesses did not even mention the existence of a preincorporation agreement. Worse, the testimonies of petitioners Arcadio Carandang and Ma. Luisa Carandang even contradicted the existence of a pre-incorporation agreement because when they were asked by their counsel regarding the matter of the check payments made by the late Quirino A. de Guzman, Sr. in their behalf, they said that they had already paid for it thereby negating their own defense that there was a pre-incorporation agreement excusing themselves from paying Mr. de Guzman the amounts he advanced or loaned to them. This basic and irrefutable fact can be gleaned from their testimonies which the private respondents are quoting for easy reference: a.With respect to the testimony of Ma. Luisa Carandang Q:Now, can you tell this Honorable Court how do you feel with respect to the Complaint of the plaintiff in this case charging you that you paid for this year and asking enough to paid (sic) your tax? A:We have paid already, so, we are not liable for anything payment (sic). 41 b.With respect to the testimony of Arcadio Carandang "Q:How much? A:P40,000.00 to P50,000.00 per month. Q:The plaintiff also claimed thru witness Edgar Ragasa, that there were receipts issued for the payment of your shares; which receipts were marked as Exhibits "G" to "L" (Plaintiff). I'm showing to you these receipts so marked by the plaintiff as their exhibits which were issued in the name of Ma. Luisa Carandang, your wife; and also, Arcadio M. Carandang. Will you please go over this Official Receipt and state for the records, who made for the payment stated in these receipts in your name? A:I paid for those shares." 42

There being no testimony or documentary evidence proving the existence of the pre-incorporation agreement, the spouses Carandang are forced to rely upon an alleged admission by the original plaintiff of the existence of the preincorporation agreement. Petitioners claim that the late Quirino A. de Guzman, Sr. had admitted the existence of the pre-incorporation agreement by virtue of paragraphs 13 and 14 of their Answer and paragraph 4 of private respondents' Reply.

Paragraphs 13 and 14 of petitioners' Answer dated 7 July 1992 state in full: 13.Sometime in November, 1973 or thereabout, herein plaintiff invited defendant Arcadio M. Carandang to a joint venture by pooling together their technical expertise, equipments, financial resources and franchise. Plaintiff proposed to defendant and mutually agreed on the following: 1.That they would organize a corporation known as Mabuhay Broadcasting Systems, Inc. ASCTac 2.Considering the technical expertise and talent of defendant Arcadio M. Carandang and his new equipments he bought, and his skill in repairing and modifying radio/communication equipments into high proficiency, said defendant would have an equity participation in the corporation of 46%, and plaintiff 54% because of his financial resources and franchise. 3.That defendant would always maintain his 46% equity participation in the corporation even if the capital structures are increased, and that plaintiff would personally pay the equity shares/stock subscriptions of defendant with no cost to the latter. 4.That because of defendant's expertise in the trade including the marketing aspects, he would be the President and General Manager, and plaintiff the Chairman of the Board. 5.That considering their past and trustworthy relations, they would maintain such relations in the joint venture without any mental reservation for their common benefit and success of the business. 14.Having mutually agreed on the above arrangements, the single proprietorship of plaintiff was immediately spun-off into a corporation now known as Mabuhay Broadcasting System, Inc. The incorporators are plaintiff and his family members/nominees controlling jointly 54% of the stocks and defendant Arcadio M. Carandang controlling singly 46% as previously agreed. 43 Meanwhile, paragraphs 3 and 4 of private respondents' Reply dated 29 July 1992 state in full: 3.Plaintiffs admits the allegation in paragraph 13.1 of the Answer only insofar the plaintiff and defendant Arcadio M. Carandang organized a corporation known as Mabuhay Broadcasting Systems, Inc. Plaintiff specifically denies the other allegations in paragraph 13 of the Answer, the same being devoid of any legal or factual bases. The truth of the matter is that defendant

Arcadio M. Carandang was not able to pay plaintiff the agreed amount of the lease for a number of months forcing the plaintiff to terminate lease. Additionally, the records would show that it was the defendant Arcadio M. Carandang who proposed a joint venture with the plaintiff. It appears that plaintiff agreed to the formation of the corporation principally because of a directive of then President Marcos indicating the need to broaden the ownership of radio broadcasting stations. The plaintiff owned the franchise, the radio transmitter, the antenna tower, the building containing the radio transmitter and other equipment. Verily, he would be placed in a great disadvantage if he would still have to personally pay for the shares of defendant Arcadio M. Carandang. 4.Plaintiff admits the allegations in paragraph 14 of the Answer. 44 In effect, the spouses Carandang are relying on the fact that Quirino de Guzman stated that he admitted paragraph 14 of the Answer, which incidentally contained the opening clause "(h)aving mutually agreed on the above arrangements, . . . ." Admissions, however, should be clear and unambiguous. This purported admission by Quirino de Guzman reeks of ambiguity, as the clause "(h)aving mutually agreed on the above arrangements," seems to be a mere introduction to the statement that the single proprietorship of Quirino de Guzman had been converted into a corporation. If Quirino de Guzman had meant to admit paragraph 13.3, he could have easily said so, as he did the other paragraphs he categorically admitted. Instead, Quirino de Guzman expressly stated the opposite: that "(p)laintiff specifically denies the other allegations of paragraph 13 of the Answer." 45 The Reply furthermore states that the only portion of paragraph 13 which Quirino de Guzman had admitted is paragraph 13.1, and only insofar as it said that Quirino de Guzman and Arcardio Carandang organized Mabuhay Broadcasting Systems, Inc. 46 All the foregoing considered, we hold that Quirino de Guzman had not admitted the alleged pre-incorporation agreement. As there was no admission, and as the testimony of Arcardio Carandang was stricken off the record, we are constrained to rule that there was no pre-incorporation agreement rendering Quirino de Guzman liable for the spouses Carandang's stock subscription. The payment by the spouses de Guzman of the stock subscriptions of the spouses Carandang are therefore by way of loan which the spouses Carandang are liable to pay. Whether or not Carandang is joint and solidary the liability of the spouses No costs.

It must be noted that for marriages governed by the rules of conjugal partnership of gains, an obligation entered into by the husband and wife is chargeable against their conjugal partnership and it is the partnership, which is primarily bound for its repayment. Thus, when the spouses are sued for the enforcement of the obligation entered into by them, they are being impleaded in their capacity as representatives of the conjugal partnership and not as independent debtors, such that the concept of joint and solidary liability, as between them, does not apply. 47 The Court of Appeals is correct insofar as it held that when the spouses are sued for the enforcement of the obligation entered into by them, they are being impleaded in their capacity as representatives of the conjugal partnership and not as independent debtors. Hence, either of them may be sued for the whole amount, similar to that of a solidary liability, although the amount is chargeable against their conjugal partnership property. Thus, in the case cited by the Court of Appeals, Alipio v. Court of Appeals, 48 the two sets of defendant-spouses therein were held liable for P25,300.00 each, chargeable to their respective conjugal partnerships. ECDAcS WHEREFORE, the Decision of the Court of Appeals, affirming the judgment rendered against the spouses Carandang, is hereby AFFIRMED with the following MODIFICATION: The spouses Carandang are ORDERED to pay the following amounts from their conjugal partnership properties: (1)P336,375.00 representing the spouses Carandang's loan to Quirino de Guzman; and (2)Interest on the preceding amount at the rate of twelve percent (12%) per annum from 5 June 1992 when the complaint was filed until the principal amount can be fully paid; and (3)P20,000.00 as attorney's fees.

SO ORDERED. EDWINO A. TORRES (deceased), represented and substituted by ALFONSO P. TORRES III and FATIMA P. TORRES, son and daughter, respectively, of deceased petitioner, petitioners,vs. BALLIGI V. RODELLAS, respondent.

Finally, the Court of Appeals also upheld the RTC Decision insofar as it decreed a solidary liability. According to the Court of Appeals: DECISION With regards (sic) the tenth assigned error, [the spouses Carandang] contend that: "There is absolutely no evidence, testimonial or documentary, showing that the purported obligation of [the spouses Carandang] is joint and solidary. . . . "Furthermore, the purported obligation of [the spouses Carandang] does not at all qualify as one of the obligations required by law to be solidary . . . ." It is apparent from the facts of the case that [the spouses Carandang] were married way before the effectivity of the Family Code hence; their property regime is conjugal partnership under the Civil Code. CHICO-NAZARIO, J p: This Petition for Review on Certiorari, 1 under Rule 45 of the Revised Rules of Court, seeks the review of the 29 November 2006 2 and 2 May 2007 3 Resolutions of the Court of Appeals in CA-G.R. SP No. 81305, entitled "Edwino A. Torres (deceased) represented and substituted by Alfonso P. Torres III, Fatima P. Torres, son and daughter of deceased petitioner", which, respectively, dismissed the petition assailing the decision of the Office of the President, and denied the subsequent motion for reconsideration thereof. DTIaHE

The root of the present controversy is a 111-square meter parcel of alienable and disposable residential land, described as Lot No. 4, Sgs-04-000316-D, located at Poblacion, San Jose, Occidental Mindoro (subject property). Respondent Balligi V. Rodellas (Balligi) and her family began occupying the subject property sometime in 1967. They built thereon a residential house (the Rodellas' house), initially made of light materials, but eventually renovated and replaced using stronger materials. In October 1986, Balligi filed a Miscellaneous Sales Application (MSA) for the subject property with the Department of Environment and Natural Resources (DENR). Said application was docketed as MSA No. (IV-18) 3524. SAHIDc In 1989, Balligi and her family left Occidental Mindoro for Manila in order to find work. On 1 October 1989, Balligi left the country to join her husband in Saudi Arabia as an Overseas Filipino Worker (OFW). In the meantime, the house built by Balligi and her family on the subject property was left in the care and possession of her relatives, namely, her half-brother, Aster Vallejos; her sister, Bituin Vallejos; her cousin-in-law, Sonia Jaravata; her sister and brother-in-law, spouses Inanama Vallejos (Inanama) and Oscar Gallardo; Milagros Olarte; and Ildefonso Ruiz and family. Sometime thereafter, still in 1989, petitioner Edwino A. Torres (Edwino) and his spouse moved into the house on the subject property, occupying the portion vacated by Aster Vallejos. Edwino claimed that Balligi already sold him the subject property and the house built thereon for P60,000.00, as evidenced by an Affidavit of Relinquishment/Sale of Right supposedly signed by the parties thereto and notarized on 9 October 1989. From that time on, Edwino collected monthly rental of P300.00 from the other occupants of the house. AEcIaH On the basis of the Affidavit of Relinquishment/Sale of Right, Edwino filed with the DENR an MSA in his own name for the subject property, docketed as MSA No. (IV-18) 3780. After conducting an investigation and ocular inspection, Wilfredo M. Paguia, Land Investigator, DENR, issued a Report on 10 June 1991, recommending that Edwino's MSA be given due course. On 15 July 1991, the Provincial Environment and Natural Resources Officer (PENRO) issued an Order 1) rejecting Balligi's MSA No. (IV-18) 3524; and 2) giving due course to Edwino's MSA No. (IV-18) 3780. In 1992, respondent Balligi's son, Eugenio V. Rodellas, Jr. (Eugenio), returned to Occidental Mindoro. While there, he came to learn that Edwino claimed ownership of the subject property and the house thereon by virtue of the Affidavit of Relinquishment/Sale of Right. On 8 December 1992, Eugenio, alleging to act on behalf of his mother, Balligi, but without presenting any written authority from the latter, filed before the Community Environment and Natural Resources Office (CENRO), San Jose, Occidental Mindoro, a Protest against Edwino's MSA No. (IV-18) 3780. Eugenio prayed, inter alia, for the cancellation of said MSA on the ground that the Affidavit of Relinquishment/Sale of Right, the very basis of the application, was a forged document. Eugenio insisted that Balligi never entered into any sale of the subject property and house, much less signed the purported Affidavit of Relinquishment/Sale of Right on 9 October 1989, considering that Balligi and her husband were in Saudi Arabia at that time. Eugenio's Opposition to Edwino's MSA was docketed as DENR Case No. 5438. On 8 March 1993, Eugenio and his aunt, Inanama, filed an Amended Protest against Edwino's MSA No. (IV-18) 3780. Attached to the Amended Protest was a Special Power of Attorney, which Balligi executed in favor of Eugenio and Inanama, and acknowledged before Vice Consul Alimatar M. Garangan, Philippine Embassy, Riyadh, Kingdom of Saudi Arabia in January 1993. In an Order 4 dated 4 June 1993, Antonio G. Principe, Regional Executive Director, Regional Office (RO) No. IV, DENR, dismissed the protests against Edwino's MSA No. (IV-18) 3780 for lack of merit, to wit:

WHEREFORE, in view of the foregoing, the Protest as well as the Amended Protest is (sic) hereby as it is ordered DISMISSED for lack of merit and whatever amount paid on account thereof is forfeited in favor of the government. The MSA No. (IV-18) 3780 of Edwino A. Torres is hereby given further due course. DHACES According to DENR-RO No. IV, neither Eugenio nor Inanama had the personality to represent Balligi. It credited no value to the Special Power of Attorney in favor of Eugenio and Inanama, as the "document itself was highly questionable. Close scrutiny of the same shows that the authentication was done on the 25th day of January 1993 [even] before the execution of the said document by Balligi Letty V. Rodellas on January 26, 1993". 5 DENR-RO No. IV also mentioned in its Order that it was not in a position to determine and resolve the genuineness and due execution of the Affidavit of Relinquishment/Sale of Right presented by Edwino, the same being within the jurisdiction of the courts. On 21 June 1993, Balligi, still through her son, Eugenio, filed a Request for Extension of Time to file a motion for reconsideration of the 4 January 1993 Order of DENR-RO No. IV. However, DENR-RO No. IV, in an Order dated 10 September 1993, denied Balligi's request for extension, because it was supposedly filed beyond the 15-day reglementary period within which to appeal the assailed order. The dispositive portion of the 10 September 1993 Order reads: CSTDEH WHEREFORE, in view of the foregoing premises, the Motion for Reconsideration dated June 21, 1993 filed by herein [petitioner Balligi], represented by Eugenio V. Rodellas, Jr. and Inanama V. Gallardo, is hereby as it is ordered DENIED for lack of merit. Consequently thereto, the Order dated June 4, 1993 issued in the above-entitled case is deemed final and executory. 6 Determined, respondent Balligi, who had arrived back in the Philippines, herself filed, on 15 April 1994, anotherOpposition/Protest against petitioner Edwino's MSA No. (IV-18) 3780. On 6 June 1994, another Order was issued by the DENR-RO No. IV directing the conduct of an investigation of the matters alleged in Balligi's Opposition/Protest; and holding the processing of Edwino's MSA No. (IV-18) 3780 in abeyance. aSTECA After an evaluation of the record of the case, DENR-RO No. IV dismissed respondent Balligi's Opposition/Protest in an Order dated 13 December 1995, the fallo of which states: WHEREFORE, premises considered, the instant "OPPOSITION AND/OR PROTEST" filed by Balligi V. Rodellas is hereby, as it is ordered, DISMISSED for lack of merit. Let the MSA No. (IV-18) 3780 of Edwino A. Torres be now given further due course leading to the issuance of patent therefor. 7 Citing its 10 September 1993 Order, DENR-RO No. IV reasoned that Balligi's Opposition/Protest was barred by res judicata. Balligi moved for the reconsideration of the Order dated 13 December 1995 of DENR-RO No. IV before the Office of the DENR Secretary. Her Motion for Reconsideration, docketed as DENR Case No. 7771, was denied by the DENR Secretary in an Order 8 dated 29 June 1998. The DENR Secretary held that "there is no showing that she, [herein respondent Balligi] Rodellas, ever filed a complaint with the proper forum, i.e., the Court, against the herein [petitioner Edwino] involving the alleged falsified and spurious document. Mere allegation that such document is spurious and forged do not make such document spurious and a forgery". 9

Undaunted, Balligi filed an appeal with the Office of the President, docketed as O.P. Case No. 98-8537. STIcEA In a Decision 10 promulgated on 5 August 2003, the Office of the President reversed and set aside the assailed orders of the DENR Secretary and the DENR-RO No. IV. The Office of the President adjudged that the principle of res judicata was not applicable to the facts of O.P. Case No. 98-8537, given that: A careful review of the order of June 4, 1993, which the DENR claims constitutes a bar to subsequent litigation, would reveal that the same does not comply with the third requisite enumerated above, that the judgment must be on the merits. It will be recalled that the Regional Executive Director (RED) refused to rule on the main issue raised in the protest, which is the alleged forged and spurious Affidavit of Relinquishment/Sale of Right, claiming that his Office is not in the position to determine and resolve the genuineness and due execution of the aforesaid document; and claiming further that "the said protest should not have been entertained in the first place considering that upon its filing, Eugenio V. Rodellas Jr. has no personality to represent Balligi V. Rodellas". The Office of the President opined that "the DENR should have applied res ipsa loquitur" instead, since: It should have been very clear that the alleged Affidavit of Relinquishment/Sale of Right is nothing but a forgery. [Respondent Balligi] was in the Kingdom of Saudi Arabia at the time she was supposed to have executed the document, as duly evidenced by the entries in her passport. She left the Philippines on October 1, 1989, while the Affidavit is dated October 9, 1989 . . . . In fact, at the inception of the case, she was still there in Saudi Arabia, which was why the RED did not want to recognize the legal personality of her son to represent her. If the DENR knew that appellant was out of the country all along, how can it even entertain the thought that she was the one who signed the document in Occidental Mindoro? It is important to note that [Edwino] never questioned the veracity of the entries in [Balligi]'s passport. 11 DSETcC

According to the Office of the President, Ewino's death extinguished his agency relationship with Atty. Restor. Hence, Atty. Restor had no more authority to continue to act on Edwino's behalf. In addition, the Motion for Reconsideration was filed by Atty. Restor beyond the 15-day reglementary period. On 16 November 2003, Edwino's representatives and legal heirs executed a Letter of Appointment 14 "[appointing] and [engaging] the legal services of Atty. Alexander Restor in O.P. Case No. 988537 before the Office of the President and to further represent [them] in the event that the afore-mentioned case is appealed to the Court of Appeals/Supreme Court". Subsequently, on 9 December 2003, Atty. Restor filed, on behalf of Edwino, represented and substituted by the latter's son and daughter, Alfonso P. Torres III (Alfonso) and Fatima P. Torres (Fatima), respectively, a Petition for Review with the Court of Appeals, challenging the 5 August 2003 Decision and 27 October 2003 Order of the Office of the President. Their Petition was docketed as CA-G.R. SP No. 81305. In a Resolution promulgated on 29 November 2006, the appellate court dismissed the Petition in CA-G.R. SP No. 81305, thus: IN VIEW OF THE FOREGOING, the petition is hereby DISMISSED. 15 The Court of Appeals affirmed the finding of the Office of the President that the 5 August 2003 Decision of the latter had long since attained finality in view of the late filing of Edwino's Motion for Reconsideration of the same. Moreover, the appellate court agreed that Atty. Restor had no personality to move for the reconsideration of the decision in question, and as a result, "no motion for reconsideration of the August 5, 2003 Decision of the Office of the President could have been considered filed". 16 As expected, Alfonso and Fatima filed a Motion for Reconsideration of the 29 November 2006 Resolution of the Court of Appeals, arguing therein that Atty. Restor had timely filed the Motion for Reconsideration of the 5 August 2003 Decision of the Office of the President. Atty. Restor received a copy of the challenged Decision of the Office of the President on 29 August 2003, and the 15th day or last day for filing a motion for reconsideration of the same, 13 September 2003, was a Saturday; hence, Atty. Restor was able to file such a motion only on 15 September 2003, Monday, the next working day. In its Resolution dated 2 May 2007, the Court of Appeals reconsidered its initial position on the point of the late filing of the Motion for Reconsideration of the 5 August 2003 Decision of the Office of the President, conceding that: aHcDEC It is true, as [herein petitioners Alfonso and Fatima] argue, that the Office of the President failed to take into consideration that the 15th day fell on a Saturday and therefore, the Motion for Reconsideration, which was filed on the 17th day, cannot be said to have been filed out of time. 17 But the appellate court remained steadfast in its resolve that Atty. Restor lacked the legal personality to file the Motion for Reconsideration of the 5 August 2003 Decision of the Office of the President despite the Letter of Appointment,dated 16 November 2003, executed by Edwino's representatives and legal heirs in Atty. Restor's favor. The Court of Appeals pronounced that: [T]he Letter of Appointment (citation omitted) appended by the petitioners to the Petition for Review cannot cure Atty. Restor's lack of authority in filing the Motion for Reconsideration before the Office of the President. Not only was said letter not presented before the latter. It was likewise executed only after the Office of the President issued the assailed Order. That being the case, Atty. Restor's lack of authority cannot be said to have been cured. 18 DSCIEa

The Office of the President disposed: WHEREFORE, the decision of the Acting Secretary of Environment and Natural Resources dated September 19, 1997, and the order dated June 29, 1998, reiterating it, are hereby REVERSED and SET ASIDE. The Department of Environment and Natural Resources is hereby ordered to reject the Miscellaneous Sales Application No. (IV-18) 3780 of Edwino A. Torres and reinstate Miscellaneous Sales Application No. (IV-18) 3524 of Balligi V. Rodellas, and give due course thereto. All persons occupying the subject property by virtue of the Miscellaneous Sales Application of Edwino A. Torres, his heirs and assigns, are hereby ordered to vacate the same. 12 Atty. Alexander Restor (Atty. Restor), Edwino's counsel, received a copy of the 5 August 2003 Decision of the Office of the President on 29 August 2003. On 15 September 2003, Atty. Restor filed a Motion for Reconsideration of said Decision, and at the same time, manifested that his client, Edwino, had since passed away, but without actually intimating the exact date of the latter's death. CcSEIH In an Order dated 27 October 2003, the Office of the President ruled that the Motion for Reconsideration filed by Atty. Restor was DISMISSED for being filed out of time and for lack of personality of the movant. 13

In the end, the Court of Appeals concluded that: Thus, while the petition for review appears to have been filed on time, the fact is that the decision sought to be reviewed has already become final and executory. In view of said finality, this Court is without authority to review said Decision anymore. 19 Hence, this Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court bringing forth the following assignment of errors: I. THE COURT OF APPEALS ERRED IN AFFIRMING THE RULING OF THE OFFICE OF THE PRESIDENT THAT ATTY. RESTOR, PETITIONER'S FORMER COUNSEL, HAD NO LEGAL PERSONALITY TO FILE THE MOTION FOR RECONSIDERATION BEFORE THE OFFICE OF THE PRESIDENT, IN VIEW OF EDWINO'S DEATH, PURSUANT TO SECTION 16, RULE 3 OF THE RULES OF COURT AND ARTICLE 1919(3) OF THE CIVIL CODE; II.

the Honorable Court of Appeals . . .". 22 That said, however, Balligi, through a new counsel, Atty. Amando S. Fabros, digressed from previous arguments. Balligi now claims that "[t]he ruling of the Office of the President was not so much based on the failure of either Atty. Alfredo A. Castillo (Atty. Castillo) or Atty. Restor to give advice or information as to the death of Edwino A. Torres but on the apparent non-withdrawal of Atty. Castillo who was handling the appeal, and the unceremonious taking over of said appeal by Atty. Restor without such withdrawal and written authority of petitioners". 23 She insists that "what was invalidated or not given force and effect was the Motion for Reconsideration filed by Atty. Restor without legal authority or personality". 24 Balligi submits that "if a party appears in an action by attorney, he must be heard only through such attorney, who, so long as he remains the attorney of record, has the exclusive management and control of the action and of all steps and proceedings taken therein to enforce the rights and remedies of his client". 25 We agree with petitioners that the Office of the President misapplied the rule on substitution upon the death of a party litigant. Note that the rules and regulations governing appeals to the Office of the President of the Philippines are embodied in Administrative Order No. 18, Series of 1987, entitled "Prescribing Rules and Regulations Governing Appeals to the Office of the President of the Philippines". Though nothing therein provides for substitution of a party in case of death, the same states in its Section 9 that: EDATSI SECTION 9. The Rules of Court shall apply in a suppletory character whenever practicable.

THE COURT OF APPEALS ERRED IN REFUSING TO RULE ON THE PROPRIETY OF THE DISMISSAL OF PETITIONER'S MOTION FOR RECONSIDERATION BY THE OFFICE OF THE PRESIDENT; and III. THE DECISION OF THE DENR REGIONAL EXECUTIVE DIRECTOR DATED JUNE 4, 1993 IN DENR CASE NO. IV-5438 IN FAVOR OF PETITIONERS HAS LONG BECOME FINAL AND EXECUTORY. AS SUCH, RESPONDENT'S SUBSEQUENT OPPOSITION AND/OR PROTEST DATED APRIL 15, 1994 DOCKETED AS DENR CASE NO. IV-B-5520 VIOLATES THE PRINCIPLE OF RES JUDICATA. caIETS At the crux of this Petition is the issue of whether the Court of Appeals erred in dismissing the Petition for Review of Edwino's legal heirs in CA-G.R. SP No. 81305 on the ground that the 5 August 2003 Decision of the Office of the President in O.P. Case No. 98-8537, being assailed in the latter Petition, had already attained finality. Alfonso and Fatima maintain that the Court of Appeals erred in affirming the 27 October 2003 Order of the Office of the President which dismissed the Motion for Reconsideration filed by Atty. Restor based on a misapplication of Section 16, Rule 3 of the Revised Rules of Court. They aver that the failure to comply with said procedural rule should not invalidate the proceedings and the judgment rendered therein if the action survives the death of the party to the case. The action in this case "survives the death of Edwino A. Torres as the subject of said action was ownership of real property and not some personal liability". Thus, Edwino's death "did not extinguish his civil personality". Alfonso and Fatima argue further that their "right to due process would be violated if their motion for reconsideration would be brushed aside just because counsel failed to move for a substitution of a party. . . . . In any case, Atty. Restor submitted a Letter of Appointment appointing him as counsel which ratified his representation of petitioners". 20 SHEIDC In defense of the assailed resolutions of the Court of Appeals, Balligi contends that the arguments of Edwino's heirs are untenable as "[p]etitioners' stand is premised on the assumption that the proceedings and the judgment had before the Office of the President were invalid". 21 Quite the reverse, Balligi asserts that "said proceedings stand for even petitioners ADMITTED the non-personality of Atty. Restor under (sic) their Motion for Reconsideration before Sec. 16, Rule 3 of the Revised Rules of Court, thus, finds application herein, in that it covers the situation in case of the death of a party. The rule provides: Section 16.Death of party; duty of counsel. Whenever a party to a pending action dies, and the claim is not thereby extinguished, it shall be the duty of his counsel to inform the court within thirty (30) days after such death of the fact thereof, and to give the name and address of his legal representative or representatives. Failure of counsel to comply with his duty shall be a ground for disciplinary action. IaESCH The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or administrator and the court may appoint a guardian ad litem for the minor heirs. The court shall forthwith order said legal representative or representatives to appear and be substituted within a period of thirty (30) days from notice. If no legal representative is named by the counsel for the deceased party, or if the one so named shall fail to appear within the specified period, the court may order the opposing party, within a specified time, to procure the appointment of an executor or administrator for the estate of the deceased and the latter shall immediately appear for and on behalf of the deceased. The court charges in procuring such appointment, if defrayed by the opposing party, may be recovered as costs. (Emphases ours.) acAIES Clear from the aforequoted provision that a deceased party may be substituted by his heirs, but it must be emphasized that substitution may only be allowed in actions that survive the death of a party thereto. In Gonzales v. Philippine Amusement and Gaming Corporation, 26 citing Bonilla v. Barcena, 27 we declared that the determination of whether an action survives the death of a party depends on the nature of the action and the damage sued for. We explicated:

In the causes of action which survive the wrong complained of affects primarily and principally property and property rights, the injuries to the person being merely incidental, while in the causes of action which do not survive the injury complained of is to the person, the property and rights of property affected being incidental . . . . In the case at bar, both parties accuse the other of unlawfully depriving them of their respective rights to acquire the subject property, together with the house built thereon, by means of an MSA grant from the State. Evidently, what are primarily and principally affected herein are the property and property rights of the parties, and any injuries to their persons (i.e., damages) are only incidental. Such property and property rights survived Edwino's death and may pass on by succession to his heirs. Therefore, the heirs must be allowed to continue any litigation to protect said property or property rights and to substitute themselves for the deceased party in accordance with appropriate rules. ASDTEa According to Section 16, Rule 3 of the Revised Rules of Court, a counsel, within 30 days from his client's death, is duty-bound to inform the court of such fact, and to submit the name/s and address/es of the deceased client's legal representative/s. Thereafter, the court shall order, forthwith, the appearance of and substitution by the deceased party's legal representative/s within another period of 30 days from notice. Nowhere is it mentioned in the instant case when exactly Edwino died. Atty. Restor just informed the Office of the President of the fact of Edwino's death in the Motion for Reconsideration of the 5 August 2003 Decision, which he filed on 15 September 2003 on behalf of his deceased client. With no exact date of Edwino's death, we have no basis for determining whether Atty. Restor was able to inform the Office of the President of such fact within the requisite period of 30 days. Nevertheless, even assuming that Atty. Restor belatedly notified the Office of the President of Edwino's death, Section 16, Rule 3 of the Revised Rules of Court only provided that, in case of failure of the counsel to comply with his duty as stated in the first paragraph thereof, it would be a ground for disciplinary action against said counsel, not that he/she would already be without personality to appear as counsel in the proceedings for the benefit of his/her client or the latter's heirs. AICDSa Instructive herein is our ruling in Heirs of F. Nuguid Vda. de Haberer v. Court of Appeals. 28 Florentina Nuguid Vda. de Haberer (Florentina) was the appellant in the case still pending before the Court of Appeals when she died. Florentina's counsel, Attorneys Bausa, Ampil and Suarez, gave the Court of Appeals notice of their client's death and requested the suspension of the running of the period within which to file the appellant's brief, pending the appointment by the probate court of an executor of the latter's estate. The Court of Appeals denied the motion for extension/suspension of time to file appellant's brief and dismissed the appeal. Florentina's counsels filed their urgent motion for reconsideration, explaining that their predicament over the requests for extension/suspension of period to file a brief was due to the uncertainty of whether their services would still be retained by the heirs or legal representatives of their deceased client. Florentina's counsels still felt obligated, however, to preserve the right of Florentina's heirs/successors to continue the appeal, pursuant to what is now Section 16, Rule 3 of the Revised Rules of Court, pending the settlement of the question of who among such heirs/successors should be the executor of the deceased's estate. Hence, Florentina's counsel presented, for admission, the printed "brief for the appellant", the printing of which they had deferred "for professional ethical considerations", pending action by the appellate court on their request for suspension of the period. Despite the foregoing explanation by Florentina's counsel, the Court of Appeals still refused to reconsider its earlier dismissal of the appeal and to admit the submitted appellant's brief. In addition to invoking the general principle that "litigants have no right to assume that such extensions will be granted as a matter of course"; the appellate court also cited the equally established principle that the relation of attorney and client is terminated by the death of the client. In the absence of a retainer from the heirs or authorized representatives of his deceased client, the attorney would thereafter have no further power or authority to appear or take any further action in the case, save to inform the court of the client's death and take the necessary steps to safeguard the deceased's rights in the case. Upon appeal to us, we found that the Court of Appeals gravely erred in not following the Rule and requiring the appearance of the legal representative of the deceased and instead dismissing the appeal of the latter who had yet to be substituted in the pending appeal. We held that:

Respondent court therefore erred in ruling that since upon the demise of the party-appellant, the attorney-client relationship between her and her counsels "was automatically severed and terminated", whatever pleadings filed by said counsel with it after the death of said appellant "are mere scraps of paper". If at all, due to said death on May 25, 1975 and severance of the attorney-client relationship, further proceedings and specifically the running of the original 45day period for filing the appellant's brief should be legally deemed as having been automatically suspended, until the proper substitution of the deceased appellant by her executor or administrator or her heirs shall have been effected within the time set by respondent court pursuant to the cited Rule. AScHCD xxx xxx xxx Prescinding from the foregoing, justice and equity dictate under the circumstances of the case at bar that the rules, while necessary for the speedy and orderly administration of justice, should not be applied with the rigidity and inflexibility of respondent court's resolutions. What should guide judicial action is the principle that a party litigant is to be given the fullest opportunity to establish the merits of his complaint or defense rather than for him to lose life, liberty, honor or property on technicalities. . . . . 29 (Emphases supplied.) In this case, Atty. Restor is in much the same situation as Florentina's counsels. Though incomplete, the mention by Atty. Restor of Edwino's death in the Motion for Reconsideration effectively informed the Office of the President of the same. Having been apprised of the fact of Edwino's death, it was incumbent upon the Office of the President, even without Atty. Restor's motion to such effect, to order the legal representative/s of the deceased party to appear and be substituted; or, at the very least, to direct the counsel to furnish the court with the names and addresses of such representative/s. CAcIES Since Atty. Restor filed the Motion for Reconsideration within the reglementary period and no longer requested for suspension/extension of time to do so, the Office of the President need not suspend the running of said reglementary period as in Heirs of F. Nuguid Vda. de Haberer, but it could have deferred any action on said Motion until a substitution had been effected and it had ascertained that the substituted heirs chose to retain Atty. Restor's services as legal counsel. Conspicuously, the Office of the President completely failed to act on the information that Edwino had died so as to effect proper substitution by the latter's heirs, as set forth in Section 16, Rule 3 of the Revised Rules of Court. The only action the Office of the President took as regards said information was to deny the Motion for Reconsideration filed by Atty. Restor for his lack of personality, given his client's death. This we find totally contrary to equity and fair play since Edwino's heirs were, in effect, deprived of their right to seek reconsideration or appeal of the adverse decision of the Office of the President which was itself partly responsible for their non-substitution.

We emphasize that the purpose behind Section 16, Rule 3 of the Revised Rules of Procedure is the protection of theright to due process of every party to a litigation who may be affected by the intervening death. The deceased litigant is himself or herself protected, as he/she continues to be properly represented in the suit through the duly appointed legal representative of his estate. 30 The spirit behind the general rule requiring a formal substitution of heirs is "not really because substitution of heirs is a jurisdictional requirement, but because non-compliance therewith results in the undeniable violation of the right to due process of those who, though not duly notified of the proceedings, are substantially affected by the decision rendered therein". 31 CETDHA It must also be remembered that, unless properly relieved, the counsel is responsible for the conduct of the case; 32 he is obligated by his client and the court to do what the interest of his client requires until the end of litigation or his representation is terminated formally and there is a termination of record. 33 And the only way the Office of the President could have ascertained whether Atty. Restor still had the authority to file the Motion for

Reconsideration on behalf of Edwino's heirs, or otherwise had been relieved or his representation terminated, was by having Edwino's heirs come forth as the rules required. In fact, in the Letter of Appointment dated 16 November 2003, which was presented before the Court of Appeals, Alfonso and Fatima, as Edwino's legal representatives and heirs, explicitly retained the services of Atty. Restor by "[appointing] and [engaging] [his] legal services . . . in O.P. Case No. 98-8537 before the Office of the President and to further represent [them] in the event that the aforementioned case is appealed to the Court of Appeals/Supreme Court". 34 Even though belatedly executed, such Letter of Appointment demonstrates that if they were just given the opportunity by the Office of the President, Alfonso and Fatima could have easily confirmed the authority of Atty. Restor to continue acting as their counsel in the proceedings and to submit the Motion for Reconsideration of the 5 August 2003 Decision of the Office of the President. ESCacI Interestingly, if, as argued by the Office of the President and the Court of Appeals, Atty. Restor no longer had the personality to represent Edwino upon the latter's death, assuming he died prior to the rendition of the decision of the Office of the President, should it not also follow that the sending of a copy of the 5 August 2003 Decision of the Office of the President to Atty. Restor, as counsel of record, could no longer be deemed a notice to the party, and his receipt of the same could not have caused the commencement of the period within which to file a motion for reconsideration? As a consequence, the reglementary period within which to move for reconsideration of the assailed decision in O.P. Case No. 98-8537 had really not yet begun to toll. Given the foregoing, the 5 August 2003 Decision of the Office of the President could not have attained finality. It being partly responsible for the non-substitution of the heirs for the deceased Edwino, the Office of the President could not dismiss the Motion for Reconsideration filed by Atty. Restor, to the prejudice of said heirs. Justice and equity demand that Edwino's heirs be given the opportunity to contest the adverse judgment that affects the property and property rights to which they succeeded. A rule intended to protect due process cannot be invoked to defeat the same. This having been said, we address the recent theory 35 of Atty. Fabros, Balligi's new counsel, that Atty. Restor's lack of personality to file the Motion for Reconsideration of the 5 August 2003 Decision of the Office of the President was due to the failure of Atty. Castillo, Edwino's previous counsel, to formally withdraw as such, and of Atty. Restor to formally substitute for Atty. Castillo. A thorough review of the Order dated 27 October 2003 of the Office of the President (dismissing the Motion for Reconsideration of the Decision dated 5 August 2003 filed by Atty. Restor, due to the latter's lack of personality), and the Resolutions dated 29 November 2006 and 2 May 2007 of the Court of Appeals (affirming the dismissal by the Office of the President of said Motion for Reconsideration) reveal no such pronouncement. The plain reason for the dismissal of the Motion for Reconsideration was that Atty. Restor had no more personality to file the same, given that Edwino's death extinguished the attorney-client relationship between them. But even assuming, for the sake of argument, that the Office of the President and the Court of Appeals did find that Atty. Restor had no personality to file the Motion for Reconsideration in question because Atty. Castillo had not withdrawn as Edwino's counsel and Atty. Restor had not substituted for Atty. Castillo; such finding would have likewise been erroneous. A party may have two or more lawyers working in collaboration in a given litigation, 36 but the fact that a second attorney enters his appearance for the same party does not necessarily raise the presumption that the authority of the first attorney has been withdrawn. 37 The second counsel should only be treated as a collaborating counsel despite his appearance as "the new counsel of record". A lawyer is presumed to be properly authorized to represent any cause in which he appears; 38 the second counsel, in this case Atty. Restor, is presumed to have acted within his authority as collaborating counsel when he filed the Motion for Reconsideration of the 5 August 2003 Decision of the Office of the President. Finally, we stop short of resolving the issue of whose MSA should be given due course, because in order to do so, we must first make findings of fact concerning the authenticity and validity of the Affidavit of Relinquishment/Sale of Rightdated 9 October 1989, allegedly executed by Balligi in favor of Edwino. It must be noted that the DENR and the Office of the President made divergent findings thereon. We cannot, as of yet, make such findings given the derth of evidence on record. To arrive at an ultimate determination, the remand of the case to the Court of Appeals is in

order, so that it can give due course to the Petition for Review in CA-G.R. SP No. 81305. Time and again, we have stated that this Court is not a trier of fact or otherwise structurally capacitated to receive and evaluate evidence de novo, unlike the Court of Appeals. The Court of Appeals generally has the authority to review findings of fact, and even hold hearings for further reception of evidence. Its conclusions as to findings of fact are generally accorded great respect by this Court. It is a body that is fully capacitated and has a surfeit of experience in appreciating factual matters, including documentary evidence. WHEREFORE, premises considered, the instant Petition is PARTLY GRANTED. The assailed twin Resolutions dated 29 November 2006 and 2 May 2007 of the Court of Appeals in CA-G.R. SP No. 81305 are REVERSED and SET ASIDE, insofar as they affirmed the declarations of the Office of the President in the latter's Order dated 27 October 2003 in O.P. Case No. 98-8537 that, given the death of his client, Edwino A. Torres, Atty. Alexander Restor lacked the personality to file the Motion for Reconsideration of the Decision dated 5 August 2003; and that, since no motion for reconsideration or appeal had been timely filed, the said Decision dated 5 August 2003 of the Office of the President had become final and executory. THADEI The case is hereby REMANDED to the Court of Appeals, which is ORDERED to give due course to the Petition for Review filed in CA-G.R. SP No. 81305 and to hold further proceedings in accordance with this Decision. SO ORDERED. G. AGUAS, FELIX GUARDINO and FRANCISCO SALINAS, plaintiffsappellants, vs.HERMOGENES LLEMOS, deceased defendant substituted by his MARIA

representatives, PERPETUA YERRO-LLEMOS, HERMENEGILDO LLEMOS, FELINO LLEMOS and AMADO LLEMOS, defendants-appellees.

Jesus M. Aguas for plaintiffs-appellants. Serafin P. Ramento for defendants-appellees.

SYLLABUS 1.EXECUTOR AND ADMINISTRATOR; CLAIMS AGAINST THE ESTATE OF THE DECEASED; ACTIONS THAT ARE ABATED BY DEATH. Under Rule 87, section 5, of the Rules of Court, actions that are abated by death are: (1) claims for funeral expenses and those for the last sickness of the decedent; (2) judgments for money; and (3) "all claims for money against the decedent arising from contract express or implied." The phrase "contract express or implied" includes all purely personal obligations other than those which have their source in delict or tort." (Leung Ben vs. O'Brien, 38 Phil., 182, 189-194.) 2.ID.; ID.; ACTIONS THAT SURVIVE; MEANING OF "INJURY TO PROPERTY." Actions that survive against a decedent's executor or administrator are: (1) actions to recover real personal property from the state; (2) actions to enforce a lien thereon; and (3) actions to recover damages for an injury to person or property. (Rule 88, Sec. 1). Injury to property is not limited to injuries to specific property, but extends to other wrongs by which personal estate is injured or diminished (Baker vs. Crandall, 47 Am. Rep. 126; also 171 A.L.R., 1395). To maliciously cause a party to incur unnecessary expenses is injury to that party's property (Javier vs. Araneta, 90 Phil., 292). Hence, a suit for damages therefor survives the death of the defendant.

DECISION

RULE 4 IRENE MARCOS-ARANETA, DANIEL RUBIO, ORLANDO G. RESLIN, and JOSE G. RESLIN,petitioners, vs. COURT OF APPEALS, JULITA C. BENEDICTO, and FRANCISCA BENEDICTO-PAULINO, respondents.

REYES, J.B.L., J p: On 14 March 1960, Francisco Salinas and the spouses Felix Guardino and Maria Aguas jointly filed an action in the Court of First Instance of Catbalogan, Samar (Civil Case No. 4824), to recover damages from Hermogenes Llemos, averring that the latter served them by registered mail with a copy of a petition for a writ of possession, with notice that the same would be submitted to the said court of Samar on February 23, 1960 at 8:00 a. m.; that in view of the copy and notice served, plaintiffs proceeded to the court from their residence in Manila accompanied by their lawyers, only to discover that no such petition had been filed; and that defendant Llemos maliciously failed to appear in court, so that plaintiffs' expenditure and trouble turned out to be in vain, causing them mental anguish and undue embarrassment. On 1 April 1960, before he could answer the complaint, the defendant died. Upon leave of court, plaintiffs amended their complaint to include the heirs of the deceased. On 21 July 1960, the heirs filed a motion to dismiss, and by order of 12 August 1960, the court below dismissed it, on the ground that the legal representative, and not the heirs, should have been made the party defendant; and that anyway the action being for recovery of money, testate or intestate proceeding should be initiated and the claim filed therein (Rec. on Appeal, pp. 26-27) Motion for reconsideration having been denied, the case was appealed to us on points of law. Plaintiffs argue with considerable cogency that contrasting the correlated provisions of the Rules of Court, those concerning claims that are barred if not filed in the estate settlement proceedings (Rule 87, sec. 5) and those defining actions that survive and may be prosecuted against the executor or administrator (Rule 88, sec. 1), it is apparent that actions for damages caused by tortious conduct of defendant (as in the case at bar) survive the death of the latter. Under Rule 87, section 5, the actions that are abated by death are: (1) claims for funeral expenses and those for the last sickness of the decedent; (2) judgments for money; and (3) "all claims for money against the decedent, arising from contract express or implied". None of these includes that of the plaintiffs-appellants; for it is not enough that the claim against the deceased party be for money, but it must arise from "contract express or implied", and these words (also used by the Rules in connection with attachments and derived from the common law) were construed in Leung Ben vs.O'Brien, 38 Phil. 182, 189-194, "to include all purely personal obligations other than those which have their source in delict or tort." Upon the other hand, Rule 88, section 1, enumerates actions that survive against a decedent's executors or administrators, and they are: (1) actions to recover real and personal property from the estate; (2) actions to enforce a lien thereon; and (3) actions to recover damages for an injury to person or property. The present suit is one for damages under the last class, it having been held that "injury to property" is not limited to injuries to specific property, but extends to other wrongs by which personal estate is injured or diminished (Baker vs. Crandall, 47 Am. Rep. 126; also 171 A. L. R. 1395). To maliciously cause a party to incur unnecessary expenses, as charged in this case, is certainly injury to that party's property (Javier vs. Araneta, L4269, Aug. 31 1953). Be that as it may, it now appears from a communication from the Court of First Instance of Samar that the parties have arrived at an amicable settlement of their differences, and that they have agreed to dismiss this appeal. The settlement has been approved and embodied in an order of the Court of First Instance. The case having thus become moot, it becomes unnecessary to resolve the questions raised therein. This appeal is, therefore, ordered dismissed, without special pronouncement as to costs.

DECISION

VELASCO, JR., J p: The Case This Petition for Review on Certiorari under Rule 45 assails and seeks to nullify the Decision 1 dated October 17, 2001 of the Court of Appeals (CA) in CA-G.R. SP No. 64246 and its Resolution 2 of June 20, 2002 denying petitioners' motion for reconsideration. The assailed CA decision annulled and set aside the Orders dated October 9, 2000, December 18, 2000, and March 15, 2001 of the Regional Trial Court (RTC), Branch 17 in Batac, Ilocos Norte which admitted petitioners' amended complaint in Civil Case Nos. 3341-17 and 3342-17. The Facts Sometime in 1968 and 1972, Ambassador Roberto S. Benedicto, now deceased, and his business associates (Benedicto Group) organized Far East Managers and Investors, Inc. (FEMII) and Universal Equity Corporation (UEC), respectively. As petitioner Irene Marcos-Araneta would later allege, both corporations were organized pursuant to a contract or arrangement whereby Benedicto, as trustor, placed in his name and in the name of his associates, as trustees, the shares of stocks of FEMII and UEC with the obligation to hold those shares and their fruits in trust and for the benefit of Irene to the extent of 65% of such shares. Several years after, Irene, through her trusteehusband, Gregorio Ma. Araneta III, demanded the reconveyance of said 65% stockholdings, but the Benedicto Group refused to oblige. ITSCED In March 2000, Irene thereupon instituted before the RTC two similar complaints for conveyance of shares of stock, accounting and receivership against the Benedicto Group with prayer for the issuance of a temporary restraining order (TRO). The first, docketed as Civil Case No. 3341-17, covered the UEC shares and named Benedicto, his daughter, and at least 20 other individuals as defendants. The second, docketed as Civil Case No. 3342-17, sought the recovery to the extent of 65% of FEMII shares held by Benedicto and the other defendants named therein. Respondent Francisca Benedicto-Paulino, 3 Benedicto's daughter, filed a Motion to Dismiss Civil Case No. 3341-17, followed later by an Amended Motion to Dismiss. Benedicto, on the other hand, moved to dismiss 4 Civil Case No. 3342-17, adopting in toto the five (5) grounds raised by Francisca in her amended motion to dismiss. Among these were: (1) the cases involved an intra-corporate dispute over which the Securities and Exchange Commission, not the RTC, has jurisdiction; (2) venue was improperly laid; and (3) the complaint failed to state a cause of action, as there was no allegation therein that plaintiff, as beneficiary of the purported trust, has accepted the trust created in her favor. HECTaA To the motions to dismiss, Irene filed a Consolidated Opposition, which Benedicto and Francisca countered with a Joint Reply to Opposition.

Upon Benedicto's motion, both cases were consolidated. During the preliminary proceedings on their motions to dismiss, Benedicto and Francisca, by way of bolstering their contentions on improper venue, presented the Joint Affidavit 5 of Gilmia B. Valdez, Catalino A. Bactat, and Conchita R. Rasco who all attested being employed as household staff at the Marcos' Mansion in Brgy. Lacub, Batac, Ilocos Norte and that Irene did not maintain residence in said place as she in fact only visited the mansion twice in 1999; that she did not vote in Batac in the 1998 national elections; and that she was staying at her husband's house in Makati City. Against the aforesaid unrebutted joint affidavit, Irene presented her PhP5 community tax certificate 6 (CTC) issued on "11/07/99" in Curimao, Ilocos Norte to support her claimed residency in Batac, Ilocos Norte. In the meantime, on May 15, 2000, Benedicto died and was substituted by his wife, Julita C. Benedicto, and Francisca.TEAICc On June 29, 2000, the RTC dismissed both complaints, stating that these partly constituted "real action", and that Irene did not actually reside in Ilocos Norte, and, therefore, venue was improperly laid. In its dismissal order, 7 the court also declared "all the other issues raised in the different Motions to Dismiss . . . moot and academic". From the above order, Irene interposed a Motion for Reconsideration 8 which Julita and Francisca duly opposed. Pending resolution of her motion for reconsideration, Irene filed on July 17, 2000 a Motion (to Admit Amended Complaint), 9 attaching therewith a copy of the Amended Complaint 10 dated July 14, 2000 in which the names of Daniel Rubio, Orlando G. Reslin, and Jose G. Reslin appeared as additional plaintiffs. As stated in the amended complaint, the added plaintiffs, all from Ilocos Norte, were Irene's new trustees. Parenthetically, the amended complaint stated practically the same cause of action but, as couched, sought the reconveyance of the FEMII shares only. During the August 25, 2000 hearing, the RTC dictated in open court an order denying Irene's motion for reconsideration aforementioned, but deferred action on her motion to admit amended complaint and the opposition thereto. 11 On October 9, 2000, the RTC issued an Order 12 entertaining the amended complaint, dispositively stating: WHEREFORE, the admission of the Amended Complaint being tenable and legal, the same is GRANTED. Let copies of the Amended Complaint be served to the defendants who are ordered to answer within the reglementary period provided by the rules. The RTC predicated its order on the following premises:

(3)Secs. 2 and 3 of Rule 3 in relation to Sec. 2 of Rule 4 allow the filing of the amended complaint in question in the place of residence of any of Irene's co-plaintiffs. In time, Julita and Francisca moved to dismiss the amended complaint, but the RTC, by Order 14 dated December 18, 2000, denied the motion and reiterated its directive for the two to answer the amended complaint. In said order, the RTC stood pat on its holding on the rule on amendments of pleadings. And scoffing at the argument about there being no complaint to amend in the first place as of October 9, 2000 (when the RTC granted the motion to amend) as the original complaints were dismissed with finality earlier, i.e., on August 25, 2000 when the court denied Irene's motion for reconsideration of the June 29, 2000 order dismissing the original complaints, the court stated thusly: there was actually no need to act on Irene's motion to admit, it being her right as plaintiff to amend her complaints absent any responsive pleading thereto. Pushing its point, the RTC added the observation that the filing of the amended complaint on July 17, 2000 ipso facto superseded the original complaints, the dismissal of which, per the June 29, 2000 Order, had not yet become final at the time of the filing of the amended complaint. Following the denial on March 15, 2001 of their motion for the RTC to reconsider its December 18, 2000 order aforestated, Julita and Francisca, in a bid to evade being declared in default, filed on April 10, 2001 their Answer to the amended complaint. 15 But on the same day, they went to the CA via a petition for certiorari, docketed as CAG.R. SP No. 64246, seeking to nullify the following RTC orders: the first, admitting the amended complaint; the second, denying their motion to dismiss the amended complaint; and the third, denying their motion for reconsideration of the second issuance. TCaSAH Inasmuch as the verification portion of the joint petition and the certification on non-forum shopping bore only Francisca's signature, the CA required the joint petitioners "to submit . . . either the written authority of Julita C. Benedicto to Francisca B. Paulino authorizing the latter to represent her in these proceedings, or a supplemental verification and certification duly signed by . . . Julita C. Benedicto". 16 Records show the submission of the corresponding authorizing Affidavit 17 executed by Julita in favor of Francisca. Later developments saw the CA issuing a TRO 18 and then a writ of preliminary injunction 19 enjoining the RTC from conducting further proceedings on the subject civil cases. On October 17, 2001, the CA rendered a Decision, setting aside the assailed RTC orders and dismissing the amended complaints in Civil Case Nos. 3341-17 and 3342-17. The fallo of the CA decision reads: WHEREFORE, based on the foregoing premises, the petition is hereby GRANTED. The assailed Orders admitting the amended complaints are SET ASIDE for being null and void, and the amended complaints a quoare, accordingly, DISMISSED. 20 Irene and her new trustees' motion for reconsideration of the assailed decision was denied through the equally assailed June 20, 2002 CA Resolution. Hence, this petition for review is before us. The Issues

(1)Pursuant to Section 2, Rule 10 of the Rules of Court, 13 Irene may opt to file, as a matter of right, an amended complaint. (2)The inclusion of additional plaintiffs, one of whom was a Batac, an Ilocos Norte resident, in the amended complaint setting out the same cause of action cured the defect of improper venue.

Petitioners urge the setting aside and annulment of the assailed CA decision and resolution on the following submissions that the appellate court erred in: (1) allowing the submission of an affidavit by Julita as sufficient compliance with the requirement on verification and certification of non-forum shopping; (2) ruling on the merits of the trust issue which involves factual and evidentiary determination, processes not proper in a petition for certiorari under Rule 65 of the Rules of Court; (3) ruling that the amended complaints in the lower court should be dismissed because, at the time it was filed, there was no more original complaint to amend; (4) ruling that the

respondents did not waive improper venue; and (5) ruling that petitioner Irene was not a resident of Batac, Ilocos Norte and that none of the principal parties are residents of Ilocos Norte. 21 DIcSHE

the petitioners or complainants, acting as representative, is sufficient compliance. We said so in Cavile v. Heirs of Clarita Cavile. 29 Like Thomas Cavile, Sr. and the other petitioners in Cavile, Francisca and Julita, as petitioners before the CA, had filed their petition as a collective, sharing a common interest and having a common single defense to protect their rights over the shares of stocks in question. Second Issue: Merits of the Case cannot be Resolved on Certiorari under Rule 65 Petitioners' posture on the second issue is correct. As they aptly pointed out, the CA, in the exercise of its certiorarijurisdiction under Rule 65, is limited to reviewing and correcting errors of jurisdiction only. It cannot validly delve into the issue of trust which, under the premises, cannot be judiciously resolved without first establishing certain facts based on evidence. Whether a determinative question is one of law or of fact depends on the nature of the dispute. A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain given set of facts; or when the issue does not call for an examination of the probative value of the evidence presented, the truth or falsehood of facts being admitted. A question of fact obtains when the doubt or difference arises as to the truth or falsehood of facts or when the query invites the calibration of the whole evidence considering mainly the credibility of the witnesses, the existence and relevancy of specific surrounding circumstances, as well as their relation to each other and to the whole, and the probability of the situation. 30 Clearly then, the CA overstepped its boundaries when, in disposing of private respondents' petition for certiorari, it did not confine itself to determining whether or not lack of jurisdiction or grave abuse of discretion tainted the issuance of the assailed RTC orders, but proceeded to pass on the factual issue of the existence and enforceability of the asserted trust. In the process, the CA virtually resolved petitioner Irene's case for reconveyance on its substantive merits even before evidence on the matter could be adduced. Civil Case Nos. 3341-17 and 3342-17 in fact have not even reached the pre-trial stage. To stress, the nature of the trust allegedly constituted in Irene's favor and its enforceability, being evidentiary in nature, are best determined by the trial court. The original complaints and the amended complaint certainly do not even clearly indicate whether the asserted trust is implied or express. To be sure, an express trust differs from the implied variety in terms of the manner of proving its existence. 31 Surely, the onus of factually determining whether the trust allegedly established in favor of Irene, if one was indeed established, was implied or express properly pertains, at the first instance, to the trial court and not to the appellate court in a special civil action forcertiorari, as here. In the absence of evidence to prove or disprove the constitution and necessarily the existence of the trust agreement between Irene, on one hand, and the Benedicto Group, on the other, the appellate court cannot intelligently pass upon the issue of trust. A pronouncement on said issue of trust rooted on speculation and conjecture, if properly challenged, must be struck down. So it must be here. Third Issue: Admission of Amended Complaint Proper As may be recalled, the CA veritably declared as reversibly erroneous the admission of the amended complaint. The flaw in the RTC's act of admitting the amended complaint lies, so the CA held, in the fact that the filing of the amended complaint on July 17, 2000 came after the RTC had ordered with finality the dismissal of the original complaints. According to petitioners, scoring the CA for its declaration adverted to and debunking its posture on the finality of the said RTC order, the CA failed to take stock of their motion for reconsideration of the said dismissal order. We agree with petitioners and turn to the governing Sec. 2 of Rule 10 of the Rules of Court which provides: SEC. 2.Amendments as a matter of right. A party may amend his pleading once as a matter of right at any time before a responsive pleading is served or in the case of a reply, at any time within ten (10) days after it is served.

The Court's Ruling We affirm, but not for all the reasons set out in, the CA's decision. First Issue: Substantial Compliance with the Rule on Verification and Certification of Non-Forum Shopping Petitioners tag private respondents' petition in CA-G.R. SP No. 64246 as defective for non-compliance with the requirements of Secs. 4 22 and 5 23 of Rule 7 of the Rules of Court at least with regard to Julita, who failed to sign the verification and certification of non-forum shopping. Petitioners thus fault the appellate court for directing Julita's counsel to submit a written authority for Francisca to represent Julita in the certiorari proceedings. We are not persuaded. Verification not Jurisdictional; May be Corrected Verification is, under the Rules, not a jurisdictional but merely a formal requirement which the court may motu propriodirect a party to comply with or correct, as the case may be. As the Court articulated in Kimberly

Independent Labor Union for Solidarity, Activism and Nationalism (KILUSAN)-Organized Labor Associations in Line Industries and Agriculture (OLALIA) v. Court of Appeals:
[V]erification 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. 24 Given this consideration, the CA acted within its sound discretion in ordering the submission of proof of Francisca's authority to sign on Julita's behalf and represent her in the proceedings before the appellate court. STECAc Signature by Any of the Principal Petitioners is Substantial Compliance Regarding the certificate of non-forum shopping, the general rule is that all the petitioners or plaintiffs in a case should sign it. 25 However, the Court has time and again stressed that the rules on forum shopping, which were designed to promote the orderly administration of justice, do not interdict substantial compliance with its provisions under justifiable circumstances. 26 As has been ruled by the Court, the signature of any of the principal petitioners 27 or principal parties,28 as Francisca is in this case, would constitute a substantial compliance with the rule on verification and certification of non-forum shopping. It cannot be overemphasized that Francisca herself was a principal party in Civil Case No. 3341-17 before the RTC and in the certiorari proceedings before the CA. Besides being an heir of Benedicto, Francisca, with her mother, Julita, was substituted for Benedicto in the instant case after his demise. And should there exist a commonality of interest among the parties, or where the parties filed the case as a "collective", raising only one common cause of action or presenting a common defense, then the signature of one of

As the aforequoted provision makes it abundantly clear that the plaintiff may amend his complaint once as a matter of right, i.e., without leave of court, before any responsive pleading is filed or served. Responsive pleadings are those which seek affirmative relief and/or set up defenses, 32 like an answer. A motion to dismiss is not a responsive pleading for purposes of Sec. 2 of Rule 10. 33 Assayed against the foregoing perspective, the RTC did not err in admitting petitioners' amended complaint, Julita and Francisca not having yet answered the original complaints when the amended complaint was filed. At that precise moment, Irene, by force of said Sec. 2 of Rule 10, had, as a matter of right, the option of amending her underlying reconveyance complaints. As aptly observed by the RTC, Irene's motion to admit amended complaint was not even necessary. The Court notes though that the RTC has not offered an explanation why it saw fit to grant the motion to admit in the first place. cDHCAE In Alpine Lending Investors v. Corpuz, the Court, expounding on the propriety of admitting an amended complaint before a responsive pleading is filed, wrote: [W]hat petitioner Alpine filed in Civil Case No. C-20124 was a motion to dismiss, not an answer. Settled is the rule that a motion to dismiss is not a responsive pleading for purposes of Section 2, Rule 10. As no responsive pleading had been filed, respondent could amend her complaint in Civil Case No. C-20124 as a matter of right. Following this Court's ruling in Breslin v. Luzon Stevedoring Co. considering that respondent has the right to amend her complaint, it is the correlative duty of the trial court to accept the amended complaint; otherwise, mandamus would lie against it. In other words, the trial court's duty to admit the amended complaint was purely ministerial. In fact, respondent should not have filed a motion to admit her amended complaint. 34 It may be argued that the original complaints had been dismissed through the June 29, 2000 RTC order. It should be pointed out, however, that the finality of such dismissal order had not set in when Irene filed the amended complaint on July 17, 2000, she having meanwhile seasonably sought reconsideration thereof. Irene's motion for reconsideration was only resolved on August 25, 2000. Thus, when Irene filed the amended complaint on July 17, 2000, the order of dismissal was not yet final, implying that there was strictly no legal impediment to her amending her original complaints. 35

It is the posture of Julita and Francisca that the venue was in this case improperly laid since the suit in question partakes of a real action involving real properties located outside the territorial jurisdiction of the RTC in Batac. This contention is not well-taken. In a personal action, the plaintiff seeks the recovery of personal property, the enforcement of a contract, or the recovery of damages. 38 Real actions, on the other hand, are those affecting title to or possession of real property, or interest therein. In accordance with the wordings of Sec. 1 of Rule 4, the venue of real actions shall be the proper court which has territorial jurisdiction over the area wherein the real property involved, or a portion thereof, is situated. The venue of personal actions is the court where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff. 39 In the instant case, petitioners are basically asking Benedicto and his Group, as defendants a quo, to acknowledge holding in trust Irene's purported 65% stockownership of UEC and FEMII, inclusive of the fruits of the trust, and to execute in Irene's favor the necessary conveying deed over the said 65% shareholdings. In other words, Irene seeks to compel recognition of the trust arrangement she has with the Benedicto Group. The fact that FEMII's assets include real properties does not materially change the nature of the action, for the ownership interest of a stockholder over corporate assets is only inchoate as the corporation, as a juridical person, solely owns such assets. It is only upon the liquidation of the corporation that the stockholders, depending on the type and nature of their stockownership, may have a real inchoate right over the corporate assets, but then only to the extent of their stockownership. acAESC The amended complaint is an action in personam, it being a suit against Francisca and the late Benedicto (now represented by Julita and Francisca), on the basis of their alleged personal liability to Irene upon an alleged trust constituted in 1968 and/or 1972. They are not actions in rem where the actions are against the real properties instead of against persons. 40 We particularly note that possession or title to the real properties of FEMII and UEC is not being disputed, albeit part of the assets of the corporation happens to be real properties. Given the foregoing perspective, we now tackle the determinative question of venue in the light of the inclusion of additional plaintiffs in the amended complaint. Interpretation of Secs. 2 and 3 of Rule 3; and Sec. 2 of Rule 4

Fourth Issue: Private Respondents did not Waive Improper Venue Petitioners maintain that Julita and Francisca were effectively precluded from raising the matter of improper venue by their subsequent acts of filing numerous pleadings. To petitioners, these pleadings, taken together, signify a waiver of private respondents' initial objection to improper venue. ICTaEH This contention is without basis and, at best, tenuous. Venue essentially concerns a rule of procedure which, in personal actions, is fixed for the greatest convenience possible of the plaintiff and his witnesses. The ground of improperly laid venue must be raised seasonably, else it is deemed waived. Where the defendant failed to either file a motion to dismiss on the ground of improper venue or include the same as an affirmative defense, he is deemed to have waived his right to object to improper venue. 36 In the case at bench, Benedicto and Francisca raised at the earliest time possible, meaning "within the time for but before filing the answer to the complaint", 37 the matter of improper venue. They would thereafter reiterate and pursue their objection on venue, first, in their answer to the amended complaints and then in their petition for certiorari before the CA. Any suggestion, therefore, that Francisca and Benedicto or his substitutes abandoned along the way improper venue as ground to defeat Irene's claim before the RTC has to be rejected. Fifth Issue: The RTC Has No Jurisdiction on the Ground of Improper Venue Subject Civil Cases are Personal Actions

We point out at the outset that Irene, as categorically and peremptorily found by the RTC after a hearing, is not a resident of Batac, Ilocos Norte, as she claimed. The Court perceives no compelling reason to disturb, in the confines of this case, the factual determination of the trial court and the premises holding it together. Accordingly, Irene cannot, in a personal action, contextually opt for Batac as venue of her reconveyance complaint. As to her, Batac, Ilocos Norte is not what Sec. 2, Rule 4 of the Rules of Court adverts to as the place "where the plaintiff or any of the principal plaintiffs resides" at the time she filed her amended complaint. That Irene holds CTC No. 17019451 41 issued sometime in June 2000 in Batac, Ilocos Norte and in which she indicated her address as Brgy. Lacub, Batac, Ilocos is really of no moment. Let alone the fact that one can easily secure a basic residence certificate practically anytime in any Bureau of Internal Revenue or treasurer's office and dictate whatever relevant data one desires entered, Irene procured CTC No. 17019451 and appended the same to her motion for reconsideration following the RTC's pronouncement against her being a resident of Batac. Petitioners, in an attempt to establish that the RTC in Batac, Ilocos Norte is the proper court venue, asseverate that Batac, Ilocos Norte is where the principal parties reside. Pivotal to the resolution of the venue issue is a determination of the status of Irene's co-plaintiffs in the context of Secs. 2 and 3 of Rule 3 in relation to Sec. 2 of Rule 4, which pertinently provide as follows:

Rule PARTIES TO CIVIL ACTIONS

As earlier stated, no less than the RTC in Batac declared Irene as not a resident of Batac, Ilocos Norte. Withal, that court was an improper venue for her conveyance action. The Court can concede that Irene's three co-plaintiffs are all residents of Batac, Ilocos Norte. But it ought to be stressed in this regard that not one of the three can be considered as principal party-plaintiffs in Civil Case Nos. 3341-17 and 3342-17, included as they were in the amended complaint as trustees of the principal plaintiff. As trustees, they may be accorded, by virtue of Sec. 3 of Rule 3, the right to prosecute a suit, but only on behalf of the beneficiary who must be included in the title of the case and shall be deemed to be the real party-in-interest. In the final analysis, the residences of Irene's co-plaintiffs cannot be made the basis in determining the venue of the subject suit. This conclusion becomes all the more forceful considering that Irene herself initiated and was actively prosecuting her claim against Benedicto, his heirs, assigns, or associates, virtually rendering the impleading of the trustees unnecessary.

SEC. 2.Parties in interest. A real party in interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these Rules, every action must be prosecuted or defended in the name of the real party in interest. SEC. 3.Representatives as parties. Where the action is allowed to be prosecuted or defended by a representative or someone acting in a fiduciary capacity, the beneficiary shall be included in the title of the case and shall be deemed to be the real party in interest. A representative may be a trustee of an express trust, a guardian, an executor or administrator, or a party authorized by law or these Rules. An agent acting in his own name and for the benefit of an undisclosed principal may sue or be sued without joining the principal except when the contract involves things belonging to the principal. CcTIAH Rule VENUE OF ACTIONS 4

SEC. 2.Venue of personal actions. All other actions may be commenced and tried where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff. Venue is Improperly Laid There can be no serious dispute that the real party-in-interest plaintiff is Irene. As self-styled beneficiary of the disputed trust, she stands to be benefited or entitled to the avails of the present suit. It is undisputed too that petitioners Daniel Rubio, Orlando G. Reslin, and Jose G. Reslin, all from Ilocos Norte, were included as co-plaintiffs in the amended complaint as Irene's new designated trustees. As trustees, they can only serve as mere representatives of Irene. Upon the foregoing consideration, the resolution of the crucial issue of whether or not venue had properly been laid should not be difficult. Sec. 2 of Rule 4 indicates quite clearly that when there is more than one plaintiff in a personal action case, the residences of the principal parties should be the basis for determining proper venue. According to the late Justice Jose Y. Feria, "the word 'principal' has been added [in the uniform procedure rule] in order to prevent the plaintiff from choosing the residence of a minor plaintiff or defendant as the venue". 42 Eliminate the qualifying term "principal" and the purpose of the Rule would, to borrow from Justice Regalado, "be defeated where a nominal or formal party is impleaded in the action since the latter would not have the degree of interest in the subject of the action which would warrant and entail the desirably active participation expected of litigants in a case". 43 Before the RTC in Batac, in Civil Case Nos. 3341-17 and 3342-17, Irene stands undisputedly as the principal plaintiff, the real party-in-interest. Following Sec. 2 of Rule 4, the subject civil cases ought to be commenced and prosecuted at the place where Irene resides. Principal Plaintiff not a Resident in Venue of Action

And this brings us to the final point. Irene was a resident during the period material of Forbes Park, Makati City. She was not a resident of Brgy. Lacub, Batac, Ilocos Norte, although jurisprudence 44 has it that one can have several residences, if such were the established fact. The Court will not speculate on the reason why petitioner Irene, for all the inconvenience and expenses she and her adversaries would have to endure by a Batac trial, preferred that her case be heard and decided by the RTC in Batac. On the heels of the dismissal of the original complaints on the ground of improper venue, three new personalities were added to the complaint doubtless to insure, but in vain as it turned out, that the case stays with the RTC in Batac. Litigants ought to bank on the righteousness of their causes, the superiority of their cases, and the persuasiveness of arguments to secure a favorable verdict. It is high time that courts, judges, and those who come to court for redress keep this ideal in mind. WHEREFORE, the instant petition is hereby DISMISSED. The Decision and Resolution dated October 17, 2001 and June 20, 2002, respectively, of the CA in CA-G.R. SP No. 64246, insofar as they nullified the assailed orders of the RTC, Branch 17 in Batac, Ilocos Norte in Civil Case Nos. 3341-17 and 3342-17 on the ground of lack of jurisdiction due to improper venue, are hereby AFFIRMED. The Orders dated October 9, 2000, December 18, 2000, and March 15, 2001 of the RTC in Civil Case Nos. 3341-17 and 3342-17 are accordingly ANNULLED and SET ASIDE and said civil cases are DISMISSED. Costs against petitioners. SO ORDERED. THEODORE and NANCY ANG, represented by ELDRIGE ACERON, petitioners, vs. SPOUSES ALAN and EM ANG, respondents. MARVIN B.

DECISION

REYES, J p:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul and set aside the Decision 1 dated August 28, 2008 and the Resolution 2 dated February 20, 2009 rendered by the Court of Appeals (CA) in CA-G.R. SP No. 101159. The assailed decision annulled and set aside the Orders dated April 12, 2007 3 and August 27, 2007 4 issued by the Regional Trial Court (RTC) of Quezon City, Branch 81 in Civil Case No. Q-06-58834. The Antecedent Facts On September 2, 1992, spouses Alan and Em Ang (respondents) obtained a loan in the amount of Three Hundred Thousand U.S. Dollars (US$300,000.00) from Theodore and Nancy Ang (petitioners). On even date, the respondents executed a promissory note 5 in favor of the petitioners wherein they promised to pay the latter the said amount, with interest at the rate of ten percent (10%) per annum, upon demand. However, despite repeated demands, the respondents failed to pay the petitioners. Thus, on August 28, 2006, the petitioners sent the respondents a demand letter asking them to pay their outstanding debt which, at that time, already amounted to Seven Hundred Nineteen Thousand, Six Hundred Seventy-One U.S. Dollars and Twenty-Three Cents (US$719,671.23), inclusive of the ten percent (10%) annual interest that had accumulated over the years. Notwithstanding the receipt of the said demand letter, the respondents still failed to settle their loan obligation. On August 6, 2006, the petitioners, who were then residing in Los Angeles, California, United States of America (USA), executed their respective Special Powers of Attorney 6 in favor of Attorney Eldrige Marvin B. Aceron (Atty. Aceron) for the purpose of filing an action in court against the respondents. On September 15, 2006, Atty. Aceron, in behalf of the petitioners, filed a Complaint 7 for collection of sum of money with the RTC of Quezon City against the respondents. IcDCaT On November 21, 2006, the respondents moved for the dismissal of the complaint filed by the petitioners on the grounds of improper venue and prescription. 8 Insisting that the venue of the petitioners' action was improperly laid, the respondents asserted that the complaint against them may only be filed in the court of the place where either they or the petitioners reside. They averred that they reside in Bacolod City while the petitioners reside in Los Angeles, California, USA. Thus, the respondents maintain, the filing of the complaint against them in the RTC of Quezon City was improper. The RTC Orders On April 12, 2007, the RTC of Quezon City issued an Order 9 which, inter alia, denied the respondents' motion to dismiss. In ruling against the respondents' claim of improper venue, the court explained that: Attached to the complaint is the Special Power of Attorney . . . which clearly states that plaintiff Nancy Ang constituted Atty. Eldrige Marvin Aceron as her duly appointed attorney-infact to prosecute her claim against herein defendants. Considering that the address given by Atty. Aceron is in Quezon City, hence, being the plaintiff, venue of the action may lie where he resides as provided in Section 2, Rule 4 of the 1997 Rules of Civil Procedure. 10 The respondents sought reconsideration of the RTC Order dated April 12, 2007, asserting that there is no law which allows the filing of a complaint in the court of the place where the representative, who was appointed as such by the plaintiffs through a Special Power of Attorney, resides. 11 The respondents' motion for reconsideration was denied by the RTC of Quezon City in its Order 12 dated August 27, 2007.

The respondents then filed with the CA a petition for certiorari 13 alleging in the main that, pursuant to Section 2, Rule 4 of the Rules of Court, the petitioners' complaint may only be filed in the court of the place where they or the petitioners reside. Considering that the petitioners reside in Los Angeles, California, USA, the respondents assert that the complaint below may only be filed in the RTC of Bacolod City, the court of the place where they reside in the Philippines. cIECaS The respondents further claimed that, the petitioners' grant of Special Power of Attorney in favor of Atty. Aceron notwithstanding, the said complaint may not be filed in the court of the place where Atty. Aceron resides, i.e., RTC of Quezon City. They explained that Atty. Aceron, being merely a representative of the petitioners, is not the real party in interest in the case below; accordingly, his residence should not be considered in determining the proper venue of the said complaint. The CA Decision On August 28, 2008, the CA rendered the herein Decision, 14 which annulled and set aside the Orders dated April 12, 2007 and August 27, 2007 of the RTC of Quezon City and, accordingly, directed the dismissal of the complaint filed by the petitioners. The CA held that the complaint below should have been filed in Bacolod City and not in Quezon City. Thus: As maybe clearly gleaned from the foregoing, the place of residence of the plaintiff's attorney-in-fact is of no moment when it comes to ascertaining the venue of cases filed in behalf of the principal since what should be considered is the residence of the real parties in interest, i.e.[,] the plaintiff or the defendant, as the case may be. Residence is the permanent home the place to which, whenever absent for business or pleasure, one intends to return. Residence is vital when dealing with venue. Plaintiffs, herein private respondents, being residents of Los Angeles, California, U.S.A., which is beyond the territorial jurisdiction of Philippine courts, the case should have been filed in Bacolod City where the defendants, herein petitioners, reside. Since the case was filed in Quezon City, where the representative of the plaintiffs resides, contrary to Sec. 2 of Rule 4 of the 1997 Rules of Court, the trial court should have dismissed the case for improper venue. 15 The petitioners sought a reconsideration of the Decision dated August 28, 2008, but it was denied by the CA in its Resolution dated February 20, 2009. 16 HTASIa Hence, the instant petition. Issue In the instant petition, the petitioners submit this lone issue for this Court's resolution: WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR OF LAW WHEN IT RULED THAT THE COMPLAINT MUST BE DISMISSED ON THE GROUND THAT VENUE WAS NOT PROPERLY LAID.17 The Court's Ruling The petition is denied. Contrary to the CA's disposition, the petitioners maintain that their complaint for collection of sum of money against the respondents may be filed in the RTC of Quezon City. Invoking Section 3, Rule 3 of the Rules of Court, they insist

that Atty. Aceron, being their attorney-in-fact, is deemed a real party in interest in the case below and can prosecute the same before the RTC. Such being the case, the petitioners assert, the said complaint for collection of sum of money may be filed in the court of the place where Atty. Aceron resides, which is the RTC of Quezon City. On the other hand, the respondents in their Comment 18 assert that the petitioners are proscribed from filing their complaint in the RTC of Quezon City. They assert that the residence of Atty. Aceron, being merely a representative, is immaterial to the determination of the venue of the petitioners' complaint. The petitioners' have been filed Bacolod City, the where the not in RTC of Quezon City. complaint the of reside, should of place and

attested by the fact that the choice of venue is given to him, it should not be construed to unduly deprive a resident defendant of the rights conferred upon him by the Rules of Court. 24 SHECcD Atty. Aceron interest in residence is of the filing of the complaint. is the not case immaterial a real below; to party thus, the in his venue

in court respondents

RTC the

Contrary to the petitioners' claim, Atty. Aceron, despite being the attorney-in-fact of the petitioners, is not a real party in interest in the case below. Section 2, Rule 3 of the Rules of Court reads: Sec. 2. Parties in interest. A real party in interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these Rules, every action must be prosecuted or defended in the name of the real party in interest. (Emphasis ours)

It is a legal truism that the rules on the venue of personal actions are fixed for the convenience of the plaintiffs and their witnesses. Equally settled, however, is the principle that choosing the venue of an action is not left to a plaintiff's caprice; the matter is regulated by the Rules of Court. 19 The petitioners' complaint for collection of sum of money against the respondents is a personal action as it primarily seeks the enforcement of a contract. The Rules give the plaintiff the option of choosing where to file his complaint. He can file it in the place (1) where he himself or any of them resides, or (2) where the defendant or any of the defendants resides or may be found. The plaintiff or the defendant must be residents of the place where the action has been instituted at the time the action is commenced. 20 SCaEcD However, if the plaintiff does not reside in the Philippines, the complaint in such case may only be filed in the court of the place where the defendant resides. In Cohen and Cohen v. Benguet Commercial Co., Ltd., 21 this Court held that there can be no election as to the venue of the filing of a complaint when the plaintiff has no residence in the Philippines. In such case, the complaint may only be filed in the court of the place where the defendant resides. Thus: Section 377 provides that actions of this character "may be brought in any province where the defendant or any necessary party defendant may reside or be found, or in any province where the plaintiff or one of the plaintiffs resides, at the election of the plaintiff." The plaintiff in this action has no residence in the Philippine Islands. Only one of the parties to the action resides here. There can be, therefore, no election by plaintiff as to the place of trial. It must be in the province where the defendant resides. . . . . 22 (Emphasis ours) Here, the petitioners are residents of Los Angeles, California, USA while the respondents reside in Bacolod City. Applying the foregoing principles, the petitioners' complaint against the respondents may only be filed in the RTC of Bacolod City the court of the place where the respondents reside. The petitioners, being residents of Los Angeles, California, USA, are not given the choice as to the venue of the filing of their complaint. Thus, the CA did not commit any reversible error when it annulled and set aside the orders of the RTC of Quezon City and consequently dismissed the petitioners' complaint against the respondents on the ground of improper venue. In this regard, it bears stressing that the situs for bringing real and personal civil actions is fixed by the Rules of Court to attain the greatest convenience possible to the litigants and their witnesses by affording them maximum accessibility to the courts. 23 And even as the regulation of venue is primarily for the convenience of the plaintiff, as

Interest within the meaning of the Rules of Court means material interest or an interest in issue to be affected by

the decree or judgment of the case, as distinguished from mere curiosity about the question involved. 25 A real party in interest is the party who, by the substantive law, has the right sought to be enforced. 26 Applying the foregoing rule, it is clear that Atty. Aceron is not a real party in interest in the case below as he does not stand to be benefited or injured by any judgment therein. He was merely appointed by the petitioners as their attorney-in-fact for the limited purpose of filing and prosecuting the complaint against the respondents. Such appointment, however, does not mean that he is subrogated into the rights of petitioners and ought to be considered as a real party in interest. Being merely a representative of the petitioners, Atty. Aceron in his personal capacity does not have the right to file the complaint below against the respondents. He may only do so, as what he did, in behalf of the petitioners the real parties in interest. To stress, the right sought to be enforced in the case below belongs to the petitioners and not to Atty. Aceron. Clearly, an attorney-in-fact is not a real party in interest. 27 The petitioner's reliance on Section 3, Rule 3 of the Rules of Court to support their conclusion that Atty. Aceron is likewise a party in interest in the case below is misplaced. Section 3, Rule 3 of the Rules of Court provides that: EScaIT Sec. 3. Representatives as parties. Where the action is allowed to be prosecuted and defended by a representative or someone acting in a fiduciary capacity, the beneficiary shall be included in the title of the case and shall be deemed to be the real property in interest. A representative may be a trustee of an expert trust, a guardian, an executor or administrator, or a party authorized by law or these Rules. An agent acting in his own name and for the benefit of an undisclosed principal may sue or be sued without joining the principal except when the contract involves things belonging to the principal. (Emphasis ours) Nowhere in the rule cited above is it stated or, at the very least implied, that the representative is likewise deemed as the real party in interest. The said rule simply states that, in actions which are allowed to be prosecuted or defended by a representative, the beneficiary shall be deemed the real party in interest and, hence, should be included in the title of the case.

Indeed, to construe the express requirement of residence under the rules on venue as applicable to the attorney-infact of the plaintiff would abrogate the meaning of a "real party in interest", as defined in Section 2 of Rule 3 of the 1997 Rules of Court vis--vis Section 3 of the same Rule. 28 On this score, the CA aptly observed that: As may be unerringly gleaned from the foregoing provisions, there is nothing therein that expressly allows, much less implies that an action may be filed in the city or municipality where either a representative or an attorney-in-fact of a real party in interest resides. Sec. 3 of Rule 3 merely provides that the name or names of the person or persons being represented must be included in the title of the case and such person or persons shall be considered the real party in interest. In other words, the principal remains the true party to the case and not the representative. Under the plain meaning rule, or verba legis, if a statute is clear, plain and free from ambiguity, it must be given its literal meaning and applied without interpretation. . . . . 29 (Citation omitted) CcTIAH At this juncture, it bears stressing that the rules on venue, like the other procedural rules, are designed to insure a just and orderly administration of justice or the impartial and even-handed determination of every action and proceeding. Obviously, this objective will not be attained if the plaintiff is given unrestricted freedom to choose the court where he may file his complaint or petition. The choice of venue should not be left to the plaintiff's whim or caprice. He may be impelled by some ulterior motivation in choosing to file a case in a particular court even if not allowed by the rules on venue. 30 WHEREFORE, in consideration of the foregoing disquisitions, the petition is DENIED. The Decision dated August 28, 2008 and Resolution dated February 20, 2009 rendered by the Court of Appeals in CA-G.R. SP No. 101159 areAFFIRMED. SO ORDERED. UNIVERSAL ROBINA CORPORATION, petitioner, vs. ALBERT LIM, doing business under the name and style "New H-R Grocery," respondent.

On June 22, 1999, the trial court issued an Order dismissing the complaint motu proprio on grounds of lack of jurisdiction and improper venue, thus: The case is misplaced with respect to jurisdiction and venue. There is not even a remote connection by the parties to Quezon City, where this Regional Trial Court sits, the plaintiff corporation has principal office at Pasig City and the defendant is, as provided in the complaint, from Laoag City. Wherefore, premises considered, this case is hereby DISMISSED without prejudice for improper venue and for lack of jurisdiction. 2 Accordingly, petitioner filed a motion for reconsideration together with an amended complaint alleging that the parties agreed that the proper venue for any dispute relative to the transaction is Quezon City. In an Order dated October 11, 1999, the trial court granted the motion and admitted petitioner's amended complaint. On December 6, 1999, summons was served upon respondent. For his failure to file an answer seasonably and upon motion of petitioner, the trial court issued an Order dated September 12, 2000 declaring him in default and allowing petitioner to present its evidence ex parte. 3 However, on April 17, 2001, the trial court, still unsure whether venue was properly laid, issued an Order directing petitioner to file a memorandum of authorities on whether it can file a complaint in Quezon City. 4 Subsequently, on May 11, 2001, the trial court again issued an Order dismissing the complaint on the ground of improper venue, thus: It appears that there is no connection whatsoever between Quezon City and the parties. Plaintiff's official place of business is in Pasig whereas the defendant's residence is stated to be in Laoag City both stipulated in the Complaint. 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. WHEREFORE, premises considered, venue is hereby declared to have been improperly laid. This case is hereby dismissed without prejudice to filing in the proper venue. 5

DECISION

Petitioner filed a motion for reconsideration but it was denied by the trial court in its Resolution dated August 15, 2001.6 Petitioner then filed with the Court of Appeals a petition for review. But it was dismissed due to petitioner's failure to attach thereto an explanation why copies of the petition were not served by personal service but by registered mail, in violation of Section 11, Rule 14 of the 1997 Rules of Civil Procedure, as amended. 7 Petitioner filed a motion for reconsideration but it was likewise denied by the appellate court in a Resolution dated July 1, 2002, thus: After a careful assessment of the petitioner's motion for reconsideration of the Resolution dated March 21, 2002 dismissing the instant case for failure to comply with Section 11, Rule 14, this Court finds the reasons therein alleged to be not well-taken. Moreover, Supreme Court Circular No. 1-88 and Administrative Circular No. 3-96, provide that subsequent compliance with the requirements of a petition for review/ certiorari shall not warrant reconsideration of the order of dismissal unless the court is fully satisfied that the non-compliance with the said requirements was not in any way attributable to the party,

SANDOVAL-GUTIERREZ, J p: Before us is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the Resolutions dated January 16, 2002 and July 1, 2002 of the Court of Appeals in CA-G.R. SP No. 67368. The present controversy stemmed from a contract of sale between Universal Robina Corporation, petitioner, and Albert Lim, respondent. Pursuant to the contract, petitioner sold to respondent grocery products in the total amount of P808,059.88. After tendering partial payments, respondent refused to settle his obligation despite petitioner's repeated demands. Thus, on May 31, 1999, petitioner filed with the Regional Trial Court, Branch 227, Quezon City, a complaint against respondent for a sum of money, docketed as Civil Case No. Q-99-37791. 1

despite due negligence on his part, and that there are highly justifiable and compelling reasons for the court to make such other disposition as it may deem just and equitable. We find such reasons wanting in the present case. Besides, after a restudy of the facts, law and jurisprudence, as well as the dispositions already contained in the assailed Resolutions of public respondent, we find the present petition for certiorari to be patently without merit, and the questions raised therein are too unsubstantial to require consideration. WHEREFORE, the motion for reconsideration is hereby DENIED for utter lack of merit. 8 Hence, this petition. The fundamental issue being raised is whether the trial court may dismiss motu proprio petitioner's complaint on the ground of improper venue. Sections 2 and 4, Rule 4 of the same Rules provide: Sec. 2.Venue of personal actions. All other actions may be commenced and tried where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff. 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. 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.

In Dacoycoy v. Intermediate Appellate Court, 9 this Court held that a trial court may not motu proprio dismiss a complaint on the ground of improper venue, thus: 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. Indeed, it was grossly erroneous for the trial court to have taken a procedural short-cut by dismissing motu proprio the complaint on the ground of improper venue without first allowing the procedure outlined in the rules of court to take its proper course. Although we are for the speedy and expeditious resolution of cases, justice and fairness take primary importance. The ends of justice require that respondent trial court faithfully adhere to the rules of procedure to afford not only the defendant, but the plaintiff as well, the right to be heard on his cause. In Rudolf Lietz Holdings Inc. v. Registry of Deeds of Paraaque, 10 the Court likewise held that a trial court may not motu proprio dismiss a complaint on the ground of improper venue, thus: Rule 9, Section 1 of the 1997 Rules of Civil Procedure states that defenses and objections not pleaded either in a motion to dismiss or in the answer are 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, 11 including his right to question the propriety of the venue of the action. WHEREFORE, the Petition for Review is GRANTED. The assailed Resolutions of the Court of Appeals in CA-G.R. SP No. 67368 are REVERSED. The Regional Trial Court, Branch 227, Quezon City is ordered to REINSTATE Civil Case No. Q-99-37791 and conduct an ex parte hearing for the reception of petitioner's evidence and dispose of the case with dispatch. SO ORDERED. JIMMY T. GO, petitioner, vs. UNITED COCONUT PLANTERS BANK, ANGELO V. MANAHAN, FRANCISCO C. ZARATE, PERLITA A. URBANO, and ATTY. EDWARD MARTIN, respondents.

DECISION

CHICO-NAZARIO, J p:

Before Us is a Petition for Review on Certiorari 1 assailing the Decision 2 dated 31 July 2002 of the Court of Appeals in CA-G.R. SP No. 62625, the decretal portion of which reads: WHEREFORE, the petition is GRANTED and the assailed orders dated June 7, 2000, August 9, 2000 and November 8, 2000 are SET ASIDE. Respondent judge is directed to DISMISS Civil Case No. 67878 on the ground of improper venue. 3 Petitioner Jimmy T. Go and Alberto T. Looyuko are co-owners of Noah's Ark International, Noah's Ark Sugar Carriers, Noah's Ark Sugar Truckers, Noah's Ark Sugar Repacker, Noah's Ark Sugar Insurers, Noah's Ark Sugar Terminal, Noah's Ark Sugar Building, and Noah's Ark Sugar Refinery. 4 Sometime in August 1996, petitioner Jimmy T. Go and Alberto T. Looyuko applied for an Omnibus Line accommodation with respondent United Coconut Planters Bank (UCPB) in the amount of Nine Hundred Million (P900,000,000) Pesos, 5and was favorably acted upon by the latter. The transaction was secured by Real Estate Mortgages over parcels of land, covered by Transfer Certificate of Title (TCT) No. 64070, located at Mandaluyong City with an area of 24,837 square meters, and registered in the name of Mr. Looyuko; and TCT No. 3325, also located at Mandaluyong City with an area of 14,271 square meters, registered in the name of Noah's Ark Sugar Refinery. On 21 July 1997, the approved Omnibus Line accommodation granted to petitioner was subsequently cancelled 6 by respondent UCPB. As a consequence, petitioner Jimmy T. Go demanded from UCPB the return of the two (2) TCTs (No. 64070 and No. 3325) covered by Real Estate Mortgages earlier executed. UCPB refused to return the same and proceeded to have the two (2) pre-signed Real Estate Mortgages notarized on 22 July 1997 and caused the registration thereof before the Registry of Deeds of Mandaluyong City on 02 September 1997. On 15 June 1999, respondent UCPB filed with the Office of the Clerk of Court and Ex-Officio Sheriff of Mandaluyong City an extrajudicial foreclosure of real estate mortgage 7 covered by TCT No. 64070, for nonpayment of the obligation secured by said mortgage. As a result, the public auction sale of the mortgaged property was set on 11 April 2000 and 03 May 2000. To protect his interest, petitioner Jimmy T. Go filed a complaint for Cancellation of Real Estate Mortgage and damages, with prayer for temporary restraining order and/or writ of preliminary injunction, against respondent bank and its officers, namely, Angelo V. Manahan, Francisco C. Zarate, Perlita A. Urbano and Atty. Edward E. Martin, together withEx-Officio Sheriff Lydia G. San Juan and Sheriff IV Helder A. Dyangco, with the Regional Trial Court of Pasig City, Branch 266, docketed as Civil Case No. 67878. The complaint was subsequently amended 8 on 22 May 2000. The amended complaint alleged, among other things, the following: that petitioner Jimmy T. Go is a co-owner of the property covered by TCT No. 64070, although the title is registered only in the name of Looyuko; that respondent bank was aware that he is a co-owner as he was asked to sign two deeds of real estate mortgage covering the subject property; that the approved omnibus credit line applied for by him and Looyuko did not materialize and was cancelled by respondent bank on 21 July 1997, so that the pre-signed real estate mortgages were likewise cancelled; that he demanded from respondent bank that TCTs No. 64070 and No. 3325 be returned to him, but respondent bank refused to do so; that despite the cancellation of the omnibus credit line on 21 July 1997, respondent bank had the two deeds of real estate mortgage dated and notarized on 22 July 1997 and caused the extrajudicial foreclosure of mortgage constituted on TCT No. 64070; that the auction sale scheduled on 11 April 2000 and 03 May 2000 be enjoined; that the two real estate mortgages be cancelled and TCTs No. 64070 and No. 3325 be returned to him; and that respondent bank and its officers be ordered to pay him moral and exemplary damages and attorney's fees. cECaHA

On 07 June 2000, respondent bank, instead of filing an answer, filed a motion to dismiss 9 based on the following grounds: 1) that the court has no jurisdiction over the case due to nonpayment of the proper filing and docket fees; 2) that the complaint was filed in the wrong venue; 3) an indispensable party/real party in interest was not impleaded and, therefore, the complaint states no cause of action; 4) that the complaint was improperly verified; and 5) that petitioner is guilty of forum shopping and submitted an insufficient and false certification of non-forum shopping. On 07 June 2000, the trial court issued an order 10 granting petitioner's application for a writ of preliminary injunction. Correspondingly, the auction sale, scheduled on 11 April 2000 and 03 May 2000, was enjoined. On 09 August 2000, the trial court denied 11 respondent bank's motion to dismiss Civil Case No. 67878. A motion for reconsideration 12 was filed, but the same was likewise denied in an Order 13 dated 08 November 2000. Respondent bank questioned said orders before the Court of Appeals via a petition for certiorari 14 dated 03 January 2001, alleging that the trial court acted without or in excess of jurisdiction or with grave abuse of discretion in issuing an order denying the motion to dismiss and the motion for reconsideration thereof. On 31 July 2002, the Court of Appeals 15 set aside the Orders dated 07 June 2000, 09 August 2000 and 08 November 2000 issued by the trial court and directed the trial court to dismiss Civil Case No. 67878 on the ground of improper venue. A motion for reconsideration was filed by petitioner, 16 which was denied in an order dated 14 November 2002. 17 Hence, this petition for review on certiorari. 18 On 16 June 2003, the Court gave due course to the petition, and required 19 the parties to file their respective memoranda. Respondents filed their Joint Memorandum on 27 August 2003, while petitioner filed his on 25 September 2003 upon prior leave of court for extension. With leave of this Court, private respondents filed their reply to petitioner's memorandum. In his memorandum, petitioner raised a lone issue: WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT FAILED TO APPLY THE LAW AND ESTABLISHED JURISPRUDENCE ON THE MATTER BY ISSUING THE QUESTIONED RESOLUTIONS FINDING THAT THE CASE A QUO IS A "REAL ACTION." Simply put, the issue to be resolved in this case is whether petitioner's complaint for cancellation of real estate mortgage is a personal or real action for the purpose of determining venue. In a real action, the plaintiff seeks the recovery of real property, or as provided for in Section 1, Rule 4, 20 a real action is an action affecting title to or possession of real property, or interest therein. These include partition or condemnation of, or foreclosure of mortgage on, real property. The venue for real actions is the same for regional trial courts and municipal trial courts the court which has territorial jurisdiction over the area where the real property or any part thereof lies. 21 Personal action is one brought for the recovery of personal property, for the enforcement of some contract or recovery of damages for its breach, or for the recovery of damages for the commission of an injury to the person or property. 22 The venue for personal actions is likewise the same for the regional and municipal trial courts the

court of the place where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, at the election of the plaintiff, as indicated in Section 2 of Rule 4. 23 It is quite clear then that the controlling factor in determining venue for cases of the above nature is the primary objective for which said cases are filed. Thus: 1.In Commodities Storage & Ice Plant Corp. v. Court of Appeals, 24 this Court ruled that "an action to redeem by the mortgage debtor affects his title to the foreclosed property. If the action is seasonably made, it seeks to erase from the title of the judgment or mortgage debtor the lien created by registration of the mortgage and sale. If not made seasonably, it may seek to recover ownership to the land since the purchaser's inchoate title to the property becomes consolidated after [the] expiration of the redemption period. Either way, redemption involves the title to the foreclosed property. It is a real action." 2.In Fortune Motors, (Phils.), Inc., v. Court of Appeals, 25 this Court quoting the decision of the Court of Appeals ruled that "since an extrajudicial foreclosure of real property results in a conveyance of the title of the property sold to the highest bidder at the sale, an action to annul the foreclosure sale is necessarily an action affecting the title of the property sold. It is therefore a real action which should be commenced and tried in the province where the property or part thereof lies." 3.In Punsalan, Jr. v. Vda. de Lacsamana, 26 this court ruled that "while it is true that petitioner does not directly seek the recovery . . . of the property in question, his action for annulment of sale and his claim for damages are closely intertwined with the issue of ownership of the building which, under the law, is considered immovable property, the recovery of which is petitioner's primary objective. The prevalent doctrine is that an action for the annulment or rescission of a sale of real property does not operate to efface the fundamental and prime objective and nature of the case, which is to recover said real property. It is a real action. Respondent Court, therefore, did not err in dismissing the case on the ground of improper venue which was timely raised."

because, although the immediate remedy is to compel the defendant to accept the tender of payment allegedly made, it is obvious that this relief is merely the first step to establish plaintiff's title to [the] real property." 6.In Land Tenure Administration, et al. v. The Honorable Higinio B. Macadaeg and Alejandro T. Lim, 29this Court ruled that "where the lessee seeks to establish an interest in an hacienda that runs with the land and one that must be respected by the purchaser of the land even if the latter is not a party to the original lease contract, the question of whether or not the standing crop is immovable property become[s] irrelevant, for venue is determined by the nature of the principal claim. Since the lessee is primarily interested in establishing his right to recover possession of the land for the purpose of enabling him to gather his share of the crops, his action is real and must be brought in the locality where the land is situated." 7.In Espineli & Mojica v. Hon. Santiago and Vda. de Ramirez, 30 the court ruled that "although the main relief sought in the case at bar was the delivery of the certificate of title, said relief, in turn, entirely depended upon who, between the parties, has a better right to the lot in question. As it is not possible for the court to decide the main relief, without passing upon the claim of the parties with respect to the title to and possession of the lot in question, the claim shall be determined . . . in the province where [the] said property or any part thereof lies." The case of Carandang v. Court of Appeals, 31 is more particularly instructive. There, we held that an action for nullification of the mortgage documents and foreclosure of the mortgaged property is a real action that affects the title to the property. Thus, venue of the real action is before the court having jurisdiction over the territory in which the property lies, which is the Court of First Instance of Laguna. aHcACI Petitioner in this case contends that a case for cancellation of mortgage is a personal action and since he resides at Pasig City, venue was properly laid therein. He tries to make a point by alluding to the case of Francisco S. Hernandez v. Rural Bank of Lucena. 32 Petitioner's reliance in the case of Francisco S. Hernandez v. Rural Bank of Lucena 33 is misplaced. Firstly, said case was primarily an action to compel the mortgagee bank to accept payment of the mortgage debt and to release the mortgage. That action, which is not expressly included in the enumeration found in Section 2(a) of Rule 4 of the Old Civil Procedure and now under Section 1, Rule 4 of the 1997 Rules of Civil Procedure, does not involve titles to the mortgaged lots. It is a personal action and not a real action. The mortgagee has not foreclosed the mortgage. The plaintiffs' title is not in question. They are in possession of the mortgaged lots. Hence, the venue of the plaintiffs' personal action is the place where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff. In the case at bar, the action for cancellation of real estate mortgage filed by herein petitioner was primarily an action to compel private respondent bank to return to him the properties covered by TCTs No. 64070 and No. 3325 over which the bank had already initiated foreclosure proceedings because of the cancellation by the said respondent bank of the omnibus credit line on 21 July 1997. The prime objective is to recover said real properties. Secondly, Carandang distinctly articulated that the ruling in Hernandez does not apply where the mortgaged property had already been foreclosed. Here, and as correctly pointed out by the appellate court, respondent bank had already initiated extrajudicial foreclosure proceedings, and were it not for the timely issuance of a restraining order secured by petitioner Go in the lower court, the same would have already been sold at a public auction. In a relatively recent case, Asset Privatization Trust v. Court of Appeals, 34 it was succinctly stated that the prayer for the nullification of the mortgage is a prayer affecting real property, hence, is a real action.

4.In Ruiz v. J. M. Tuason Co., Inc., et al., 27 the court ruled that "although [a] complaint is entitled to be one for specific performance, yet the fact that [complainant] asked that a deed of sale of a parcel of land . . . be issued in his favor and that a transfer certificate of title covering said land be issued to him, shows that the primary objective and nature of the action is to recover the parcel of land itself because to execute in favor of complainant the conveyance requested there is need to make a finding that he is the owner of the land which in the last analysis resolves itself into an issue of ownership. Hence, the action must be commenced in the province where the property is situated . . . ." 5.In Dr. Antonio A. Lizares, Inc. v. Hon. Hermogenes Caluag, 28 this Court ruled that "an action praying that defendant be ordered 'to accept the payment being made' by plaintiff for the lot which the latter contracted to buy on installment basis from the former, to pay plaintiff compensatory damages and attorney's fees and to enjoin defendant and his agents from repossessing the lot in question, is one that affects title to the land under Section 3 of Rule 5, of the Rules of Court, and 'shall be commenced and tried in the province where the property or any part thereof lies,'

In sum, the cancellation of the real estate mortgage, subject of the instant petition, is a real action, considering that a real estate mortgage is a real right and a real property by itself. 35 An action for cancellation of real estate mortgage is necessarily an action affecting the title to the property. It is, therefore, a real action which should be commenced and tried in Mandaluyong City, the place where the subject property lies. WHEREFORE, the instant petition is DENIED for lack of merit. The assailed decision dated 31 July 2002 and the Order dated 14 November 2002 denying the motion for reconsideration are hereby AFFIRMED. With costs. TIaDHE SO ORDERED.

2.CONTEMPT; INDIRECT CONTEMPT; WHEN NOT PROPER. A sheriff cannot be held for indirect contempt by the judge of one branch for disobeying his order to take possession of and deliver a personal property that had been previously attached pursuant to a valid order of the judge of another branch of the same court.

DECISION

BARREDO, J p: HOECHST PHILIPPINES, INC., petitioner, vs. FRANCISCO TORRES and the Honorable PROCORO J. DONATO, Judge of the Court of First Instance of Isabela, respondents. Petition for certiorari and prohibition to declare respondent court without authority to take cognizance of private respondent's action for "Breach of Contract with Preliminary Injunction" and to enjoin said court from further taking any action in said case upon the ground of improper laying of the venue. On April 8, 1976, private respondent, Francisco Torres, filed with respondent Court of First Instance of Isabela complaint in Civil Case No. V-296 alleging breach of a distributorship contract on the part of petitioner, Hoechst Philippines, Inc. On April 14, 1976, petitioner filed a motion to dismiss said complaint based on the ground that as the contract, the very actionable document invoked in the complaint, provides that "(I)n case of any litigation arising out of this agreement, the venue of any action shall be in the competent courts of the Province of Rizal", venue has been improperly laid in respondent court, petitioner citing in his said motion principally the ruling of this Supreme Court in Bautista vs. De Borja, 18 SCRA 474. Respondent court nevertheless denied the said motion to dismiss as well as the motion for reconsideration of that denial, hence the present petition. Respondent do not deny in their respective answers the clear tenor of the above-quoted stipulation as to venue in the contract in dispute. It is the position of respondent judge, however, that inasmuch as the contract was "a prepared standard form for the defendant-company, wherein blanks were merely filled up after the party-distributor agreed on the valuation of products which he may order from the company for one year" and "all stipulations were standard and pre-made by the company, prepared by, as your Respondent can safely and rightly assume, its legal department" and "it (only) remains upon party-distributor to stamp his approval to the whole contract", hence "plaintiff distributor was given no option whatsoever except `to take it or leave it' ", the word "shall" in the stipulation in question should be construed to be merely permissive and not mandatory. It is argued that this construction serves not only the exclusive interests of petitioner but also that of private respondent. It is further contended in said answer that reading the terms of the contract, it can be gathered that most likely, it would be petitioner who would have to sue private respondent, and, therefore, the stipulation as to venue was meant to apply only to suits to be filed by petitioner. Finally, it is maintained that there are no words in the contract expressly restricting the venue to the courts of Rizal. prLL Upon the other hand, in the answer of private respondent, he capitalizes on the theory that inasmuch as petitioner is a multinational company, it is against public policy for it to stipulate in any contract that the venue of actions thereunder should be in any particular place, much less its place of residence, to the prejudice of small-time distributors, the private respondent. It is urged that to give effect to the stipulation in controversy "is to serve the convenience and the purpose of the petitioner only; its effect is to discourage, to deter, to render expensive and uneconomical the filing of suits by small-time company distributors against the petitioner even for extremely meritorious cases of latter's breach or violation of such distribution agreement." The pose taken by respondents does evoke sympathy, but it can hardly carry the day for them. Change or transfer of venue from that fixed in the rules may be effected upon written agreement of the parties not only before the actual filing of the action but even after the same has been filed. The settled rule of jurisprudence in this jurisdiction is that a written agreement of the parties as to venue, as authorized by Section 3, Rule 4, is not only binding

Manuel S. Fornacier, Jr. for petitioner. Melanio T. Singson for private respondent.

SYNOPSIS The Court of First Instance of Isabela took cognizance of private respondent's complaint for breach of a distributorship contract on the part of the petitioner, despite a stipulation in the said contract that venue in case of any litigation arising out of the agreement "shall be in the competent courts of the Province of Rizal." Petitioner questions the court's authority to take cognizance of the case on the ground of improper venue. Respondents argue that the word "shall" in the stipulation in question should be construed to be merely permissive and not mandatory inasmuch as the stipulations in the contract are standard and pre-made giving the distributors no option except to take it or leave it, and that to give effect to the stipulation in controversy would be against public policy because it serves the convenience and purpose of petitioner only to the prejudice of small-time distributors. The Suprme Court ruled that a written agreement as to venue made before the filing of an action is not only binding between the parties but also enforceable by the court and may not be declared to be against public policy where it is shown that the party concerned is in a position to carry on a litigation in the stipulated place. Petition granted

SYLLABUS 1.ID.; ID.; ID.; JUDGE CANNOT ORDER RETURN OF PERSONAL PROPERTY ATTACHED. A property levied upon pursuant to a valid order of attachment issued by a judge of one branch is in custodia legis and cannot be ordered delivered or returned by the judge of another branch of the same court in an action for replevin in view of Rule 60, Section 2, par. (c) of the Rules of Court. The words "or attachment" were added to the new provision for the purpose of precluding the occurrence of a dismissal situation whereby a judge of one branch can revoke the order issued by a judge of another branch of the same court, to the great prejudice of the orderly administration of justice.

between the parties but also enforceable by the courts. 1 It is only after the action has been filed already that change or transfer of venue by agreement of the parties is understandably controllable in the discretion of the court. 2 The agreement in this case was entered into long before the petitioner's action was filed. It is clear and unequivocal. The parties therein stipulated that "(I)n case of any litigation arising out of this agreement, the venue of any action shall be in the competent courts of the Province of Rizal." No further stipulations are necessary to elicit the thought that both parties agreed that any action by either of them would be filed only in the competent courts of Rizal province exclusively. Respondent judge rather vehemently argues, however, that under the circumstances obtaining between the parties, as earlier stated in this decision, it is permissible, notwithstanding Our ruling in Bautista, supra, that the word " shall" in the agreement in question be construed as "may", hence not strictly obligatory. Private respondent points out that he had no choice but to sign the "Distributorship Agreement" in question, he being practically at the mercy of petitioner company which is allegedly a multinational corporation. He maintains that to enforce the agreement literally would amount to a denial to him, and to other distributors similarly situated, of the opportunity to file any suit against petitioner. We have given due attention to this posture of respondents. Indeed, there may be instances when an agreement as to venue may be so oppressive as to effectively deny to the party concerned access to the courts by reason of poverty. The difficulties pictured by respondents that a poor plaintiff from a distant province may have to encounter in filing suit in a particular place can indeed happen. In such an eventuality and depending on the peculiar circumstances of the case, the Court may declare the agreement as to venue to be in effect contrary to public policy, despite that in general, changes and transfers of venue by written agreement of the parties is allowable whenever it is shown that a stipulation as to venue works injustice by practically denying to the party concerned a fair opportunity to file suit in the place designated by the rules. prcd But a cursory inquiry into the respective economic conditions of the parties herein as reflected in the record before Us does not show that private respondent Francisco Torres is really in no position to carry on a litigation in the Province of Rizal, because of his residence or place of business being in Isabela province. The volume of business covered by the Distributorship Agreement in question, Annex C of the Petition, and to be handled by private respondent Torres is P700,000. The amount sought to be recovered by said respondent in his complaint, Annex A of the Petition, totals more than P300,000. These circumstances preclude, in Our view, the need to apply equitable considerations to the case of respondent Torres. It is quite obvious that his economic condition does not warrant non-enforcement of the stipulation as to venue that he has agreed to. We are persuaded that his pretension that he had no alternative but to agree, even if true, does not merit relief. Considering the nature and volume of the business he has with petitioner, there is nothing oppressive in his being required to litigate out of his province. After all, for practical reasons, there seems to be justification also for petitioner to see to it that all suits against it be concentrated in the Province of Rizal, as otherwise, considering the nationwide extent of its business, it would be greatly inconvenienced if it has to appear in so many provinces everytime an action is filed against it. We are convinced both parties agreed to the venue in controversy with eyes wide open.

DECISION

NOCON, J p: On the strength of the provision in the promissory notes sued upon that Manila shall be the venue of any action which may arise out of the promissory notes, the Regional Trial Court of Makati, Metro Manila granted the motion to dismiss the complaint in Civil Case No. 91-3366 entitled "Philippine Banking Corporation v. Brinell Metal Works Corp., et al." for improper venue. Supported by a plethora of decisions evincing a view contrary to that of the trial court, petitioner comes to us on a petition for review on certiorari. Briefly, the facts show that petitioner, Philippine Banking Corporation, filed a complaint below with prayer for preliminary attachment on December 5, 1991 against private respondents herein, Brinell Metal Works Corporation and Spouses Jose and Nally Ang, for collection of a loan evidenced by two (2) promissory notes. LexLib On December 16, 1991, respondent Court issued an order granting the petitioner's prayer for the issuance of writ of preliminary attachment. On January 28, 1992, private respondents filed with the respondent court a motion to dismiss on the grounds of (a) lack of jurisdiction over the persons of the defendants; and (b) improper venue. They claim that summons was served on defendant corporation's customer who was not authorized to receive the same for and in behalf of the corporation. They likewise object to the venue claiming that the plaintiff's complaint is based on two promissory notes which commonly declare, among others: "I/WE HEREBY EXPRESSLY SUBMIT TO THE JURISDICTION OF THE COURTS OF MANILA, ANY LEGAL ACTION WHICH MAY ARISE OUT OF THIS PROMISSORY NOTE. 1 On February 28, 1992 respondent Court issued the following questioned order, to wit: "Acting on defendants' Motion to Dismiss dated January 28, 1992, on grounds of a) lack of jurisdiction over the corporate defendant insofar as service of summons upon it was effected on a person not authorized in law to receive the same; and b) improper venue; and plaintiff having failed to appear for today's hearing and/or to formally oppose the same notwithstanding a showing of receipt of the subject motion as early as January 31, 1992. "Finding the motion to be studiously well-taken particularly in connection with the dismissal of this action on grounds of improper venue consistent with the provisions of Sec. 13, Rule 14 of the Rules of Court, it appearing on the face of the actionable document sued upon that venue had been by agreement of the parties laid in Manila. LLpr "WHEREFORE, said motion to dismiss is hereby granted forthwith on grounds of impropriety of venue. The above-entitled case is accordingly dismissed without pronouncement as to costs. "SO ORDERED." 2

IN VIEW OF ALL THE FOREGOING, the petition is granted, the orders of respondent judge of May 13, 1976 and July 12, 1976 are hereby set aside, and petitioner's motion to dismiss private respondent's complaint in question is granted. Costs against private respondent Francisco Torres. PHILIPPINE BANKING CORPORATION, petitioner, vs. HON. SALVADOR S. TENSUAN, Judge of the Regional Trial Court, National Capital Region, Branch 146 Makati; BRINELL METAL WORKS CORP., SPS. JOSE & NALLY ANG, respondents.

On March 2, 1992, petitioner moved for reconsideration of the aforesaid order granting the motion to dismiss anchored on the ground that in view of the absence of qualifying or restrictive words in the agreement which would

indicate that Manila alone is the venue agreed upon by the parties, the plaintiff still has the choice to file the action in the place of his residence citing the case of Polytrade Corporation v. Blanco. 3 On March 11, 1992, respondent court denied petitioner's motion for reconsideration and remained steadfast in its position explaining that its dismissal order is predicated on the doctrinal rule enunciated in Bautista v. Hon. Juan de Borja, et al. 4 that the proper court of Manila is the venue for an action upon a document stipulating such "in case of any litigation herefrom, or in connection herewith," on a rationale that neither party reserved the right to choose venue as provided for in Section 2(b), Rule 4 of the Rules of Court, as would have been done had the parties intended to retain such right of election. Respondent court brushed aside Polytrade v. Blanco 5 stating that Bautista and Polytrade appear not to square with each other and that perhaps, the clear parameters on the rule vis-a-vis proper venue should be defined. Thus, the sole issue to be resolved in this petition is whether or not the respondent court erred in holding that the venue of the action was improperly laid. Under Section 1(c), Rule 16 of the Revised Rules of Court, a motion to dismiss an action may be made within the time for pleading on the ground that venue is improperly laid. Venue relates to the place of trial or geographical location in which an action or proceeding should be brought and not to the jurisdiction of the court. The matter of venue is regulated by the Rules of Court, so that the choice of venue is not left to the caprices of plaintiff. 6 As a general rule, all personal actions may be commenced and tried where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff. 7 However, by written agreement of the parties, the venue of an action may be changed or transferred from one province to another. 8 Besides, when improper venue is not objected to in a motion to dismiss it is deemed waived. 9 In other words, venue is waivable. It is procedural, not a jurisdictional matter. It is intended to provide convenience to the parties, rather than restrict their access to the courts. The rules on venue simply arrange for the convenient and effective transaction of business in the courts and do not relate to their power, authority or jurisdiction over the subject matter of the action. prLL As early as the case of Central Azucarera de Tarlac v. De Leon, 10 this Court ruled that an agreement in a contract fixing the venue of actions arising therefrom is a valid waiver of the venue as fixed by law. Interpreting a stipulation in the written contracts sued upon that "in case of any litigation arising (t)herefrom or in connection (t)herewith, the venue of action shall be in the City of Manila, Philippines," this Court held in Bautista v. De Borja, 11 that the parties must reserve their right of election if they want to file in a place other than the venue agreed upon, thus: ". . . We note that neither party to the contracts reserved the right to choose the venue of action as fixed by law, i.e., where the plaintiff or defendant resides, at the election of the plaintiff (par. [b], Section 2, Rule 4, Revised Rules of Court), as is usually done if the parties to retain that right of election granted by the Rules. Such being the case, it can reasonably be inferred that the parties intended to definitely fix the venue of action, in connection with the written contracts sued upon in the proper courts of the City of Manila only, notwithstanding that neither party is a resident of Manila. . . ." Subsequently, in Polytrade Corporation v. Blanco, 12 this Court expostulated a contrary doctrine that as long as the stipulation does not set forth qualifying or restrictive words to indicate that the agreed place alone and none other is the venue of the action, the parties do not lose the option of choosing the venue, to wit: Cdpr

". . . An accurate reading, however, of the stipulation. 'The parties agree to sue and be sued in the Courts of Manila,' does not preclude the filing of suits in the residence of plaintiff or defendant. The plain meaning is that the parties merely consented to be sued in Manila. Qualifying or restrictive words which would indicate that Manila and Manila alone is the venue are totally absent therefrom. We cannot read into that clause that plaintiff and defendant bound themselves to file suits with respect to the last two transactions in question only or exclusively in Manila. For, that agreement did not change or transfer venue. It simply is permissive. The parties solely agreed to add the courts of Manila as tribunals to which they may resort. They did not waive their right to pursue remedy in the courts specifically mentioned in Section 2(b) of Rule 4. Renuntiatio non praesumitur." The latter case made reference to Engel v. Shubert Theatrical Co. 13 where an analogous stipulation which read: "In case of dispute, both contracting parties agree to submit to the jurisdiction of the Vienna courts" was interpreted as follows: "By the clause in question the parties do not agree to submit their dispute to the jurisdiction of the Viennese court, and to those courts only. There is nothing exclusive in the language used. They do agree to submit to the Viennese jurisdiction, but they say not a word in restriction of the jurisdiction of courts elsewhere; and whatever may be said on the subject of the legality of contracts to submit controversies to courts of certain jurisdiction exclusively, it is entirely plain that such agreements should be strictly construed, and should not be extended by implication." The doctrine in Polytrade was reiterated in Nicolas v. Reparations Commission 14 where the issue posed was also whether the stipulation on venue is restrictive or merely permissive. The Court therein held: ". . . venue in personal actions is fixed for the convenience of the plaintiff and his witnesses and to promote the ends of justice. We cannot conceive how the interests of justice may be served by confining the situs of the action to Manila, considering that the residences or offices of all the parties, including the situs of the acts sought to be restrained or required to be done, are all within the territorial jurisdiction of Rizal. LLphil "While the parties have agreed to submit their dispute to the jurisdiction of the Manila courts, there is nothing in the language used in the aforecited stipulation which clearly shows that the intention of the parties was to limit the venue of the action to the City of Manila only. Such agreements should be construed reasonably and should not be applied in such manner that it would work more to the inconvenience of the parties without promoting the ends of justice."

Without reference to Polytrade nor to Nicolas cases, this Court enunciated the same doctrine in Tantoco v. Court of Appeals, 15 to wit: "It is elementary that venue is waivable, since it is a procedural, not a jurisdictional, matter. The record shows that the parties agreed that the courts of Manila shall have jurisdiction to try this case. The agreement is evidenced by sales contracts duly presented at the ex parte hearing of March 25, 1966, whereby the parties submitted themselves to the jurisdiction of the courts of Manila for any legal action arising out of their transaction. In short, the parties agreed to add the courts of Manila as tribunals to which they may resort in the event of suit, and not only to the courts either of Rizal, of which private respondent is a resident, or of Bulacan, where petitioner resides, pursuant to Section 2(b) of Rule 4 of the Revised Rules of Court."

On the other hand, private respondents cite the case of Hoechst Philippines, Inc. v. Torres, 16 in support of the trial court's decision. The stipulation: "In case of litigation arising out of this agreement, the venue of any action shall be in the competent courts of the Province of Rizal" was interpreted therein that any action by either of the parties would have to be filed only in the competent courts of Rizal province exclusively. Noteworthy, however, is the fact that on May 19, 1978, or the day following the promulgation of the Hoechst case in May 18, 1978, this Court interpreted a similar stipulation on venue as unenforceable in Sweet Lines, Inc. v. Teves. 17 Condition 14 of the shipping ticket issued by Sweet Lines, Inc. which provides "that any and all actions arising out of the condition and provisions of this ticket, irrespective of where it is issued, shall be filed in the competent courts in the City of Cebu" was held subversive of public policy on transfers of venue of actions. The Court therein explained that the philosophy underlying the provisions on transfer of venue of actions is the convenience of the plaintiffs as well as his witnesses and to promote the end of justice. Considering the expense and trouble a passenger residing outside of Cebu City would incur to prosecute a claim in the City of Cebu, he would most probably decide not to file the action at all, the Court said. The later cases of Lamis Ents. v. Lagamon 18 Capati v. Ocampo; 19 Western Minolco v. Court of Appeals; 20 Moles v. Intermediate Appellate Court; 21 Hongkong and Shanghai Banking Corporation v. Sherman; 22 Nasser v. Court of Appeals; 23 and just recently, Surigao Century Sawmill Co. v. Court of Appeals, 24 all treaded the path blazed byPolytrade. The conclusion to be drawn from all these is that the more recent jurisprudence shall properly be deemed modificatory of the old ones. Restating the rule, venue stipulations in a contract, while considered valid and enforceable, do not as rule supersede the general rule set forth in Rule 4 of the Revised Rules of Court. In the absence of qualifying or restrictive words, they should be considered merely as an agreement on additional forum, not as limiting venue to the specified place. They are not exclusive but, rather permissive. For, to restrict venue only to that place stipulated in the agreement is a construction purely based on technicality which, on the contrary, should be liberally construed. Thus, we hold that the petitioner in this case is not barred nor proscribed from filing its case against private respondents in Makati where petitioner holds its residence, pursuant to Section 2(b) of Rule 4 of the Revised Rules of Court. LLpr WHEREFORE, the petition in this case is GRANTED and the orders of respondent Presiding Judge of the Regional Trial Court Branch 146, at Makati, dated February 28, 1992 and March 11, 1992 dismissing the complaint and denying the motion for reconsideration are hereby REVERSED and the complaint in the captioned civil case is REINSTATED. SO ORDERED. YOUNG AUTO SUPPLY CO. AND NEMESIO GARCIA, petitioners, vs. THE HONORABLE COURT OF APPEALS (THIRTEENTH DIVISION) AND GEORGE CHIONG ROXAS, respondents.

2.ID.; ID.; ID.; ID.; IN CASE OF CORPORATION. In Clavecilla Radio System v. Antillon, 19 SCRA 379 ([1967]), this Court explained why actions cannot be filed against a corporation in any place where the corporation maintains its branch offices. The Court ruled that to allow an action to be instituted in any place where the corporation has branch offices, would create confusion and work untold inconvenience to said entity. By the same token, a corporation cannot be allowed to file personal actions in a place other than its principal place of business unless such a place is also the residence of a co-plaintiff or a defendant. 3.COMMERCIAL LAW; CORPORATION CODE; CORPORATION; RESIDENCE. A corporation has no residence in the same sense in which this term is applied to a natural person. But for practical purposes, a corporation is in a metaphysical sense a resident of the place where its principal office is located as stated in the articles of incorporation (Cohen v. Benquet Commercial Co., Ltd., 34 Phil. 526 [1916] Clavecilla Radio System v. Antillon, 19 SCRA 379 [1967]). The Corporation Code precisely requires each corporation to specify in its articles of incorporation the "place where the principal office of the corporation is to be located which must be within the Philippines" (Sec. 14 [3]). The purpose of this requirement is to fix the residence of a corporation in a definite place, instead of allowing it to be ambulatory.

DECISION

QUIASON, J p: Petitioners seek to set aside the decision of respondent Court of Appeals in CA-G.R. SP No. 25237, which reversed the Order dated February 8, 1991 issued by the Regional Trial Court, Branch 11, Cebu City in Civil Case No. CEB 6967. The order of the trial court denied the motion to dismiss filed by respondent George C. Roxas of the complaint for collection filed by petitioners. It appears that sometime on October 28, 1987, Young Auto Supply Co. Inc. (YASCO) represented by Nemesio Garcia, its president, Nelson Garcia and Vicente Sy, sold all of their shares of stock in Consolidated Marketing & Development Corporation (CMDC) to Roxas. The purchase price was P8,000,000.00 payable as follows: a down payment of P4,000,000.00 and the balance of P4,000,000.00 in four postdated checks of P1,000,000.00 each. prcd Immediately after the execution of the agreement, Roxas took full control of the four markets of CMDC. However, the vendors held on to the stock certificates of CMDC as security pending full payment of the balance of the purchase price. cdll The first check of P4,000,000.00, representing the down payment, was honored by the drawee bank but the four other checks representing the balance of P4,000,000.00 were dishonored. In the meantime, Roxas sold one of the markets to a third party. Out of the proceeds of the sale, YASCO received P600,000.00, leaving a balance of P3,400,000.00 (Rollo, p. 176). Subsequently, Nelson Garcia and Vicente Sy assigned all their rights and title to the proceeds of the sale of the CMDC shares to Nemesio Garcia. On June 10, 1988, petitioners filed a complaint against Roxas in the Regional Trial Court, Branch 11, Cebu City, praying that Roxas be ordered to pay petitioners the sum of P3,400,000.00 or that full control of the three markets be turned over to YASCO and Garcia. The complaint also prayed for the forfeiture of the partial payment of P4,600,000.00 and the payment of attorney's fees and costs (Rollo, p. 290). cdll

Angara, Abello, Concepcion, Regala & Cruz for petitioners. Antonio Nuyles for private respondent.

SYLLABUS 1.REMEDIAL LAW; CIVIL PROCEDURE; VENUE; PERSONAL ACTION. In the Regional Trial Courts, all personal actions are commenced and tried in the province or city where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff [Sec. 2(b) Rule 4, Revised Rules of Court]. There are two plaintiffs in the case at bench: a natural person and a domestic corporation. Both plaintiffs aver in their complaint that they are residents of Cebu City.

Roxas filed two motions for extension of time to submit his answer. But despite said motion, he failed to do so causing petitioners to file a motion to have him declared in default. Roxas then filed, through a new counsel, a third motion for extension of time to submit a responsive pleading. On August 19, 1988, the trial court declared Roxas in default. The order of default was, however, lifted upon motion of Roxas. On August 22, 1988, Roxas filed a motion to dismiss on the grounds that: "1.The complaint did not state a cause of action due to non-joinder of indispensable parties; 2.The claim or demand set forth in the complaint had been waived, abandoned or otherwise extinguished; and 3.The venue was improperly laid" (Rollo, p. 299). After a hearing, wherein testimonial and documentary evidence were presented by both parties, the trial court in an Order dated February 8, 1991 denied Roxas' motion to dismiss. After receiving said order, Roxas filed another motion for extension of time to submit his answer. He also filed a motion for reconsideration, which the trial court denied in its Order dated April 10, 1991 for being pro-forma (Rollo, p. 17). Roxas was again declared in default, on the ground that his motion for reconsideration did not toll the running of the period to file his answer. On May 3, 1991, Roxas filed an unverified Motion to Lift the Order of Default which was not accompanied with the required affidavit of merit. But without waiting for the resolution of the motion, he filed a petition for certiorari with the Court of Appeals. The Court of Appeals sustained the findings of the trial court with regard to the first two grounds raised in the motion to dismiss but ordered the dismissal of the complaint on the ground of improper venue (Rollo, p. 49). A subsequent motion for reconsideration by petitioner was to no avail. Petitioners now come before us, alleging that the Court of Appeals erred in: "1.holding that venue should be in Pasay City, and not in Cebu City (where both petitioners/plaintiffs are residents; 2.not finding that Roxas is estopped from questioning the choice of venue" (Rollo, p. 19). The petition is meritorious. In holding that the venue was improperly laid in Cebu City, the Court of Appeals relied on the address of YASCO, as appearing in the Deed of Sale dated October 28, 1987, which is "No. 1708 Dominga Street, Pasay City." This was the same address written on YASCO's letters and several commercial documents in the possession of Roxas (Decision, p. 12; Rollo, p. 48). Cdpr In the case of Garcia, the Court of Appeals said that he gave Pasay City as his address in three letters which he sent to Roxas' brothers and sisters (Decision, p. 12; Rollo, p. 47). The appellate court held that Roxas was led by petitioners to believe that their residence is in Pasay City and that he had relied upon those representations (Decision, p. 12; Rollo, p. 47). Cdpr

The Court of Appeals erred in holding that the venue was improperly laid in Cebu City. In the Regional Trial Courts, all personal actions are commenced and tried in the province or city where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff [Sec. 2(b) Rule 4, Revised Rules of Court]. There are two plaintiffs in the case at bench: a natural person and a domestic corporation. Both plaintiffs aver in their complaint that they are residents of Cebu City, thus: cdll "1.1Plaintiff Young Auto Supply Co., Inc. ("YASCO") is a domestic corporation duly organized and existing under Philippine laws with principal place of business at M.J. Cuenco Avenue, Cebu City. It also has a branch office at 1708 Dominga Street, Pasay City, Metro Manila. "Plaintiff Nemesio Garcia is of legal age, married, Filipino citizen and with business address at Young Auto Supply Co., Inc., M.J. Cuenco Avenue, Cebu City. . . ." (Complaint, p. 1; Rollo, p. 81). The Article of Incorporation of YASCO (SEC Reg. No. 22083) states: "THIRD.That the place where the principal office of the corporation is to be established or located is at Cebu City, Philippines (as amended on December 20, 1980 and further amended on December 20, 1984)" (Rollo, p. 273). A corporation has no residence in the same sense in which this term is applied to a natural person. But for practical purposes, a corporation is in a metaphysical sense a resident of the place where its principal office is located as stated in the articles of incorporation (Cohen v. Benquet Commercial Co., Ltd., 34 Phil. 526 [1916] Clavecilla Radio System v. Antillon, 19 SCRA 379 [1967]). The Corporation Code precisely requires each corporation to specify in its articles of incorporation the "place where the principal office of the corporation is to be located which must be within the Philippines" (Sec. 14 [3]). The purpose of this requirement is to fix the residence of a corporation in a definite place, instead of allowing it to be ambulatory. LibLex In Clavecilla Radio System v. Antillon, 19 SCRA 379 ([1967]), this Court explained why actions cannot be filed against a corporation in any place where the corporation maintains its branch offices. The Court ruled that to allow an action to be instituted in any place where the corporation has branch offices, would create confusion and work untold inconvenience to said entity. By the same token, a corporation cannot be allowed to file personal actions in a place other than its principal place of business unless such a place is also the residence of a co-plaintiff or a defendant. Cdpr If it was Roxas who sued YASCO in Pasay City and the latter questioned the venue on the ground that its principal place of business was in Cebu City, Roxas could argue that YASCO was in estoppel because it misled Roxas to believe that Pasay City was its principal place of business. But this is not the case before us. prLL

With the finding that the residence of YASCO for purposes of venue is in Cebu City, where its principal place of business is located, it becomes unnecessary to decide whether Garcia is also a resident of Cebu City and whether Roxas was in estoppel from questioning the choice of Cebu City as the venue. WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals appealed from is SET ASIDE and the Order dated February 8, 1991 of the Regional Trial Court is REINSTATED.

SO ORDERED. ANICETO G. SALUDO, JR., petitioner, vs. AMERICAN EXPRESS INTERNATIONAL, INC., and/or IAN T. FISH and DOMINIC MASCRINAS, respondents.

respondents be adjudged to pay him, jointly and severally, actual, moral and exemplary damages, and attorney's fees. In their answer, respondents specifically denied the allegations in the complaint. Further, they raised the affirmative defenses of lack of cause of action and improper venue. On the latter, respondents averred that the complaint should be dismissed on the ground that venue was improperly laid because none of the parties was a resident of Leyte. They alleged that respondents were not residents of Southern Leyte. Moreover, notwithstanding the claim in his complaint, petitioner Saludo was not allegedly a resident thereof as evidenced by the fact that his community tax certificate, which was presented when he executed the complaint's verification and certification of non-forum shopping, was issued at Pasay City. To buttress their contention, respondents pointed out that petitioner Saludo's complaint was prepared in Pasay City and signed by a lawyer of the said city. Respondents prayed for the dismissal of the complaint a quo. Thereafter, respondents filed an Opposition to Ex-Parte Motion (to Set Case for Pre-Trial) and Motion for Preliminary Hearing (on Affirmative Defense of Improper Venue) to which petitioner Saludo filed his Comments and/or Objections to the Affirmative Defense of Improper Venue. He asserted that any allegation refuting his residency in Southern Leyte was baseless and unfounded considering that he was the congressman of the lone district thereof at the time of the filing of his complaint. He urged the court a quo to take judicial notice of this particular fact. As a member of Congress, he possessed all the qualifications prescribed by the Constitution including that of being a resident of his district. He was also a member of the Integrated Bar of the Philippines-Southern Leyte Chapter, and has been such ever since his admission to the Bar. His community tax certificate was issued at Pasay City only because he has an office thereat and the office messenger obtained the same in the said city. In any event, the community tax certificate is not determinative of one's residence. In the Order dated September 10, 2001, the court a quo denied the affirmative defenses interposed by respondents. It found the allegations of the complaint sufficient to constitute a cause of action against respondents. The court a quolikewise denied respondents' affirmative defense that venue was improperly laid. It reasoned, thus: . . . [T]he fact alone that the plaintiff at the time he filed the complaint was and still is, the incumbent Congressman of the Lone District of Southern Leyte with residence at Ichon, Macrohon, Southern Leyte, is enough to dispell any and all doubts about his actual residence. As a high-ranking government official of the province, his residence there can be taken judicial notice of. As such his personal, actual and physical habitation or his actual residence or place of abode can never be in some other place but in Ichon, Macrohon, Southern Leyte. It is correctly stated by the plaintiff, citing the case of Core v. Core, 100 Phil. 321 that, "residence, for purposes of fixing venue of an action, is synonymous with domicile. This is defined as the permanent home, the place to which, whenever absent for business or pleasure, one intends to return, and depends on the facts and circumstances, in the sense that they disclose intent. A person can have but one domicile at a time. A man can have but one domicile for one and the same purpose at any time, but he may have numerous places of residence. Venue could be at place of his residence. (Masa v. Mison, 200 SCRA 715 [1991]) 3 Respondents sought the reconsideration thereof but the court a quo denied the same in the Order dated January 2, 2002. They then filed with the appellate court a petition for certiorari and prohibition alleging grave abuse of discretion on the part of the presiding judge of the court a quo in issuing the September 10, 2001 and January 2, 2002 Orders. Upon respondents' posting of a bond, the appellate court issued on March 14, 2002 a temporary restraining order which enjoined the presiding judge of the court a quo from conducting further proceedings in Civil Case No. R-3172. TAcSCH On May 22, 2003, the appellate court rendered the assailed decision granting respondents' petition for certiorari as it found that venue was improperly laid. It directed the court a quo to vacate and set aside its Orders dated September 10, 2001 and January 2, 2002, and enjoined the presiding judge thereof from further proceeding in the case, except to dismiss the complaint.

DECISION

CALLEJO, SR., J p: Before the Court is the Petition for Review on Certiorari filed by Aniceto G. Saludo, Jr. seeking to reverse and set aside the Decision 1 dated May 22, 2003 of the Court of Appeals in CA-G.R. SP No. 69553. The assailed decision directed the Regional Trial Court (RTC) of Maasin City, Southern Leyte, Branch 25 thereof, to vacate and set aside its Orders dated September 10, 2001 and January 2, 2002 in Civil Case No. R-3172, and enjoined the presiding judge 2 thereof from conducting further proceedings in said case, except to dismiss the complaint filed therewith on ground of improper venue. The petition also seeks to reverse and set aside the appellate court's Resolution dated August 14, 2003 denying the motion for reconsideration of the assailed decision. The factual and procedural antecedents are as follows: Aniceto G. Saludo, Jr. filed a complaint for damages against the American Express International, Inc. (AMEX) and/or its officers Ian T. Fish, Vice-President and Country Manager, and Dominic Mascrinas, Head of Operations, with the RTC of Maasin City, Southern Leyte. The case was raffled to Branch 25 of the said court. The complaint alleged, inter alia, that plaintiff (herein petitioner Saludo) "is a Filipino citizen, of legal age, and a member of the House of Representatives and a resident of Ichon, Macrohon, Southern Leyte, Philippines." On the other hand, defendant (herein respondent AMEX, Inc.) "is a corporation doing business in the Philippines and engaged in providing credit and other credit facilities and allied services with office address at 4th floor, ACE Building, Rada Street, Legaspi Village, Makati City." The other defendants (herein respondents Fish and Mascrinas) are officers of respondent AMEX, and may be served with summons and other court processes at their office address. The complaint's cause of action stemmed from the alleged wrongful dishonor of petitioner Saludo's AMEX credit card and the supplementary card issued to his daughter. The first dishonor happened when petitioner Saludo's daughter used her supplementary credit card to pay her purchases in the United States some time in April 2000. The second dishonor occurred when petitioner Saludo used his principal credit card to pay his account at the Hotel Okawa in Tokyo, Japan while he was there with other delegates from the Philippines to attend the Congressional Recognition in honor of Mr. Hiroshi Tanaka. The dishonor of these AMEX credit cards were allegedly unjustified as they resulted from respondents' unilateral act of suspending petitioner Saludo's account for his failure to pay its balance covering the period of March 2000. Petitioner Saludo denied having received the corresponding statement of account. Further, he was allegedly wrongfully charged for late payment in June 2000. Subsequently, his credit card and its supplementary cards were canceled by respondents on July 20, 2000. CHcTIA Petitioner Saludo claimed that he suffered great inconvenience, wounded feelings, mental anguish, embarrassment, humiliation and besmirched political and professional standing as a result of respondents' acts which were committed in gross and evident bad faith, and in wanton, reckless and oppressive manner. He thus prayed that

The appellate court explained that the action filed by petitioner Saludo against respondents is governed by Section 2, Rule 4 of the Rules of Court. The said rule on venue of personal actions basically provides that personal actions may be commenced and tried where plaintiff or any of the principal plaintiffs resides, or where defendant or any of the principal defendants resides, at the election of plaintiff. Venue was improperly laid in the court a quo, according to the appellate court, because not one of the parties was a resident of Southern Leyte. Specifically, it declared that petitioner Saludo was not a resident thereof. The appellate court pronounced that, for purposes of venue, the residence of a person is his personal, actual or physical habitation, or his actual residence or place of abode, which may not necessarily be his legal residence or domicile provided he resides therein with continuity and consistency. 4 The appellate court quoted the following discussion in Koh v. Court of Appeals 5 where the Court distinguished the terms "residence" and "domicile" in this wise: . . . [T]he term domicile is not exactly synonymous in legal contemplation with the term residence, for it is [an] established principle in Conflict of Laws that domicile refers to the relatively more permanent abode of a person while residence applies to a temporary stay of a person in a given place. In fact, this distinction is very well emphasized in those cases where the Domiciliary Theory must necessarily supplant the Nationality Theory in cases involving stateless persons. xxx xxx xxx "There is a difference between domicile and residence. Residence is used to indicate a place

opined that under the rules, the possible choices of venue are Pasay City or Makati City, or any place in the National Capital Judicial Region, at the option of petitioner Saludo. It stressed that while the choice of venue is given to plaintiff, said choice is not left to his caprice and cannot deprive a defendant of the rights conferred upon him by the Rules of Court. 9 Further, fundamental in the law governing venue of actions that the situs for bringing real and personal civil actions is fixed by the rules to attain the greatest possible convenience to the party litigants by taking into consideration the maximum accessibility to them i.e., to both plaintiff and defendant, not only to one or the other of the courts of justice. 10 The appellate court concluded that the court a quo should have given due course to respondents' affirmative defense of improper venue in order to avoid any suspicion that petitioner Saludo's motive in filing his complaint with the court a quowas only to vex and unduly inconvenience respondents or even to wield influence in the outcome of the case, petitioner Saludo being a powerful and influential figure in the said province. The latter circumstance could be regarded as a "specie of forum shopping" akin to that in Investors Finance Corp. v. Ebarle 11 where the Court mentioned that the filing of the civil action before the court in Pagadian City "was a specie of forum shopping" considering that plaintiff therein was an influential person in the locality. The decretal portion of the assailed Decision dated May 22, 2003 of the appellate court reads: UPON THE VIEW WE TAKE OF THIS CASE, THUS, the challenged orders must be, as they hereby are, VACATED and SET ASIDE and the respondent judge, or any one acting in his place or stead, is instructed and enjoined to desist from further proceeding in the case, except to dismiss it. The temporary restraining order earlier issued is hereby converted into a writ of preliminary injunction, upon the posting this time by petitioners [herein respondents], within five (5) days from receipt of this decision, of a bond in the amount of Five Million Pesos (P5,000,000.00), to answer for all damages that private respondent [herein petitioner] may sustain by reason of the issuance of such injunction should the Court finally decide that petitioners are not entitled thereto. Private respondent, if he so minded, may refile his case for damages before the Regional Trial Court of Makati City or Pasay City, or any of the Regional Trial Courts of the National Capital Judicial Region. Without costs. SO ORDERED. 12 Petitioner Saludo sought the reconsideration of the said decision but the appellate court, in the Resolution dated August 14, 2003, denied his motion for reconsideration. Hence, he filed the instant petition for review with the Court alleging that: The Court of Appeals, (Special Fourth Division), in promulgating the afore-mentioned Decision and Resolution, has decided a question of substance in a way probably not in accord with law or with applicable decisions of this Honorable Court. cCAIDS (a)the Court of Appeals erred in not taking judicial notice of the undisputed fact that herein petitioner is the incumbent congressman of the lone district of Southern Leyte and as such, he is a residence (sic) of said district; (b)the Court of Appeals erred in dismissing the complaint on the basis of improper venue due to the alleged judicial admission of herein petitioner; (c)the Court of Appeals in dismissing the complaint ignored applicable decisions of this Honorable Court; and

of abode, whether permanent or temporary; domicile denotes a fixed permanent residence to which when absent, one has the intention of returning. A man may have a residence in one place and a domicile in another. Residence is not domicile, but domicile is residence coupled with intention to remain for an unlimited time. A man can have but one domicile for one and

the same purpose at any time, but he may have numerous places of residence. His place of residence generally is his place of domicile, but is not by any means, necessarily so since no length of residence without intention of remaining will constitute domicile." 6 (Italicized for emphasis)

In holding that petitioner Saludo is not a resident of Maasin City, Southern Leyte, the appellate court referred to his community tax certificate, as indicated in his complaint's verification and certification of non-forum shopping, which was issued at Pasay City. Similarly, it referred to the same community tax certificate, as indicated in his complaint for deportation filed against respondents Fish and Mascrinas. Under Republic Act No. 7160, 7 the community tax certificate shall be paid in the place of residence of the individual, or in the place where the principal office of the juridical entity is located. 8 It also pointed out that petitioner Saludo's law office, which was also representing him in the present case, is in Pasay City. The foregoing circumstances were considered by the appellate court as judicial admissions of petitioner Saludo which are conclusive upon him and no longer required proof. HICEca The appellate court chided the court a quo for stating that as incumbent congressman of the lone district of Southern Leyte, judicial notice could be taken of the fact of petitioner Saludo's residence thereat. No evidence had yet been adduced that petitioner Saludo was then the congressman of Southern Leyte and actual resident of Ichon, Macrohon of the said province. The appellate court held that, based on his complaint, petitioner Saludo was actually residing in Pasay City. It faulted him for filing his complaint with the court a quo when the said venue is inconvenient to the parties to the case. It

(d)the Court of Appeals erred in deciding that herein petitioner violated the rules on venue, and even speculated that herein petitioner's motive in filing the complaint in Maasin City was only to vex the respondents. 13 In gist, the sole substantive issue for the Court's resolution is whether the appellate court committed reversible error in holding that venue was improperly laid in the court a quo in Civil Case No. R-3172 because not one of the parties, including petitioner Saludo, as plaintiff therein, was a resident of Southern Leyte at the time of filing of the complaint. The petition is meritorious. Petitioner Saludo's complaint for damages against respondents before the court a quo is a personal action. As such, it is governed by Section 2, Rule 4 of the Rules of Courts which reads: SEC. 2.Venue of personal actions. All other actions may be commenced and tried where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff. The choice of venue for personal actions cognizable by the RTC is given to plaintiff but not to plaintiff's caprice because the matter is regulated by the Rules of Court. 14 The rule on venue, like other procedural rules, is designed to insure a just and orderly administration of justice, or the impartial and evenhanded determination of every action and proceeding.15 The option of plaintiff in personal actions cognizable by the RTC is either the place where defendant resides or may be found, or the place where plaintiff resides. If plaintiff opts for the latter, he is limited to that place. 16 Following this rule, petitioner Saludo, as plaintiff, had opted to file his complaint with the court a quo which is in Maasin City, Southern Leyte. He alleged in his complaint that he was a member of the House of Representatives and a resident of Ichon, Macrohon, Southern Leyte to comply with the residency requirement of the rule. However, the appellate court, adopting respondents' theory, made the finding that petitioner Saludo was not a resident of Southern Leyte at the time of the filing of his complaint. It hinged the said finding mainly on the fact that petitioner Saludo's community tax certificate, indicated in his complaint's verification and certification of non-forum shopping, was issued at Pasay City. That his law office is in Pasay City was also taken by the appellate court as negating petitioner Saludo's claim of residence in Southern Leyte. The appellate court committed reversible error in finding that petitioner Saludo was not a resident of Southern Leyte at the time of the filing of his complaint, and consequently holding that venue was improperly laid in the court a quo. InDangwa Transportation Co., Inc. v. Sarmiento, 17 the Court had the occasion to explain at length the meaning of the term "resides" for purposes of venue, thus: In Koh v. Court of Appeals, we explained that the term "resides" as employed in the rule on venue on personal actions filed with the courts of first instance means the place of abode, whether permanent or temporary, of the plaintiff or the defendant, as distinguished from "domicile" which denotes a fixed permanent residence to which, when absent, one has the intention of returning. TSHEIc "It is fundamental in the law governing venue of actions (Rule 4 of the Rules of Court) that the situs for bringing real and personal civil actions are fixed by the rules to attain the greatest convenience possible to the parties-litigants by taking into consideration the maximum accessibility to them of the courts of justice. It is, likewise, undeniable that the

term domicile is not exactly synonymous in legal contemplation with the termresidence, for it is an established principle in Conflict of Laws that domicile refers to the relatively more permanent abode of a person while residence applies to a temporary stay of a person in a given place. In fact, this distinction is very well emphasized in those cases where the Domiciliary Theory must necessarily supplant the Nationality Theory in cases involving stateless persons. "This Court held in the case of Uytengsu v. Republic, 50 O.G. 4781, October, 1954, reversing its previous stand in Larena v. Ferrer, 61 Phil. 36, and Nuval v. Guray, 52 Phil. 645, that 'There is a difference between domicile and residence. Residence is used to indicate

a place of abode, whether permanent or temporary; domicile denotes a fixed permanent residence to which when absent, one has the intention of returning. A man may have a residence in one place and a domicile in another. Residence is not domicile, but domicile is residence coupled with the intention to remain for an unlimited time. A man can have but one domicile for one and the same purpose at
any time, but he may have numerous places of residence. His place of residence generally is his place of domicile, but is not by any means, necessarily so since no length of residence without intention of remaining will constitute domicile.' (Italicized for emphasis)

"We note that the law on venue in Courts of First Instance (Section 2, of Rule 4, Rules of Court) in referring to the parties utilizes the words 'resides or may be found,' and not 'is domiciled,' thus: 'Sec. 2(b) Personal actions All other actions may be commenced and tried where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff.' (Italicized for emphasis) "Applying the foregoing observation to the present case, We are fully convinced that private respondent Coloma's protestations of domicile in San Nicolas, Ilocos Norte, based on his manifested intention to return there after the retirement of his wife from government service to justify his bringing of an action for damages against petitioner in the C.F.I. of Ilocos Norte, is entirely of no moment since what is of paramount importance is where he actually resided or where he may be found at the time he brought the action, to comply substantially with the requirements of Sec. 2(b) of Rule 4, Rules of Court, on venue of personal actions." ( Koh v. Court of Appeals, supra, pp. 304-305.) The same construction of the word "resides" as used in Section 1, Rule 73, of the Revised Rules of Court, was enunciated in Fule v. Court of Appeals, et al. (G.R. No. L-40502) and Fule v. Hon. Ernani C. Pao, et al. (G.R. No. L-42670), decided on November 29, 1976. Thus, this Court, in the aforecited cases, stated: "2.But, the far-ranging question is this: What does the term 'resides' mean? Does it refer to the actual residence or domicile of the decedent at the time of his death? We lay down the doctrinal rule that the term 'resides' connotes ex vi termini 'actual residence' as distinguished from 'legal residence or domicile.' This term 'resides,' like the terms 'residing' and 'residence' is elastic and should be interpreted in the light of the object or purposes of the statute or rule in which it is employed. In the application of venue statutes and rules Section 1, Rule

73 of the Revised Rules of Court is of such nature residence rather than domicile is the significant factor. Even where the statute uses the word 'domicile' still it is construed as meaning residence and not domicile in the technical sense. Some cases make a distinction between the terms 'residence' and 'domicile' but as generally used in statutes fixing venue, the terms are synonymous, and convey the same meaning as the term 'inhabitant.' In other words, 'resides' should be viewed or understood in its popular sense, meaning, the personal, actual or physical habitation of a person, actual residence or place of abode. It signifies physical presence in a place and actual stay thereat. In this popular sense, the term means merely residence, that is, personal residence, not legal residence or domicile. Residence simply requires bodily presence as an inhabitantin a given place, while domicile requires bodily presence in that place and also an intention to make it one's domicile. No particular length of time of residence is required though; however, the residence must be more than temporary." 18 There is no dispute that petitioner Saludo was the congressman or the representative of the lone district of Southern Leyte at the time of filing of his complaint with the court a quo. Even the appellate court admits this fact as it states that "it may be conceded that private respondent ever so often travels to Maasin City, Southern Leyte, because he is its representative in the lower house." 19 As a member of the House of Representatives, petitioner Saludo was correctly deemed by the court a quo as possessing the requirements for the said position, 20 including that he was then a resident of the district which he was representing, i.e., Southern Leyte. Significantly, for purposes of election law, the term "residence" is synonymous with "domicile," thus: . . . [T]he Court held that "domicile" and "residence" are synonymous. The term "residence," as used in the election law, imports not only an intention to reside in a fixed place but also personal presence in that place, coupled with conduct indicative of such intention. "Domicile" denotes a fixed permanent residence to which when absent for business or pleasure, or for like reasons, one intends to return. . . . 21 It can be readily gleaned that the definition of "residence" for purposes of election law is more stringent in that it is equated with the term "domicile." Hence, for the said purpose, the term "residence" imports "not only an intention to reside in a fixed place but also personal presence in that place, coupled with conduct indicative of such intention." 22When parsed, therefore, the term "residence" requires two elements: (1) intention to reside in the particular place; and (2) personal or physical presence in that place, coupled with conduct indicative of such intention. As the Court elucidated, "the place where a party actually or constructively has a permanent home, where he, no matter where he may be found at any given time, eventually intends to return and remain, i.e., his domicile, is that to which the Constitution refers when it speaks of residence for the purposes of election law." 23 On the other hand, for purposes of venue, the less technical definition of "residence" is adopted. Thus, it is understood to mean as "the personal, actual or physical habitation of a person, actual residence or place of abode. It signifies physical presence in a place and actual stay thereat. In this popular sense, the term means merely residence, that is, personal residence, not legal residence or domicile. Residence simply requires bodily presence as an inhabitant in a given place, while domicile requires bodily presence in that place and also an intention to make it one's domicile." 24 Since petitioner Saludo, as congressman or the lone representative of the district of Southern Leyte, had his residence (or domicile) therein as the term is construed in relation to election laws, necessarily, he is also deemed to have had his residence therein for purposes of venue for filing personal actions. Put in another manner, Southern Leyte, as the domicile of petitioner Saludo, was also his residence, as the term is understood in its popular sense. This is because "residence is not domicile, but domicile is residence coupled with the intention to remain for an unlimited time."

Reliance by the appellate court on Koh v. Court of Appeals 25 is misplaced. Contrary to its holding, 26 the facts of the present case are not similar to the facts therein. In Koh, the complaint was filed with the Court of First Instance in San Nicolas, Ilocos Norte by plaintiff who admitted that he was a resident of Kamias, Quezon City. Save for the fact that he grew up in San Nicolas, Ilocos Norte and that he manifested the intent to return there after retirement, plaintiff therein had not established that he was actually a resident therein at the time of the filing of his complaint. Neither did he establish that he had his domicile therein because although he manifested the intent to go back there after retirement, the element of personal presence in that place was lacking. To reiterate, domicile or residence, as the terms are taken as synonyms, imports "not only an intention to reside in a fixed place but also personal presence in that place, coupled with conduct indicative of such intention." 27 In contrast, petitioner Saludo was the congressman or representative of Southern Leyte at the time of filing of his complaint with the court a quo. Absent any evidence to the contrary, he is deemed to possess the qualifications for the said position, including that he was a resident therein. And following the definition of the term "residence" for purposes of election law, petitioner Saludo not only had the intention to reside in Southern Leyte, but he also had personal presence therein, coupled with conduct indicative of such intention. The latter element, or his bodily presence as an inhabitant in Southern Leyte, was sufficient for petitioner Saludo to be considered a resident therein for purposes of venue. The following ratiocination of the court a quo is apt: Residence in civil law is a material fact, referring to the physical presence of a person in a place. A person can have two or more residences, such as a country residence and a city residence. (Quetulio v. Ruiz, S.C. Off. Gaz. 156, Commentaries and Jurisprudence in Civil Law, Vol. 1, page 211, Tolentino). Residence is acquired by living in a place; on the other hand, domicile can exist without actually living in the place. The important thing for domicile is that, once residence has been established in one place, there be an intention to stay there permanently, even if residence is also established in some other place. Thus, if a person lives with his family habitually in Quezon City, he would have his domicile in Quezon City. If he also has a house for vacation purposes in the City of Baguio, and another house in connection with his business in the City of Manila, he would have residence in all three places (Tolentino, Commentaries and Jurisprudence on Civil Law, Vol. 1, Page 212, 1990 Edition) so that one[']s legal residence or domicile can also be his actual, personal or physical residence or habitation or place of abode if he stays there with intention to stay there permanently. cSIHCA In the instant case, since plaintiff has a house in Makati City for the purpose of exercising his profession or doing business and also a house in Ichon, Macrohon, Southern Leyte, for doing business and/or for election or political purposes where he also lives or stays physically, personally and actually then he can have residences in these two places. Because it would then be preposterous to acknowledge and recognize plaintiff Aniceto G. Saludo, Jr. as congressman of Southern Leyte without also recognizing him as actually, personally and physically residing thereat, when such residence is required by law. 28

The fact then that petitioner Saludo's community tax certificate was issued at Pasay City is of no moment because granting arguendo that he could be considered a resident therein, the same does not preclude his having a residence in Southern Leyte for purposes of venue. A man can have but one domicile for one and the same purpose at any time, buthe may have numerous places of residence. 29

That petitioner Saludo was the congressman or representative of the lone district of Southern Leyte at the time of the filing of his complaint was admitted as a fact by the court a quo. In this connection, it consequently held that, as such, petitioner Saludo's residence in Southern Leyte, the district he was the representing, could be taken judicial notice of. The court a quocannot be faulted for doing so because courts are allowed "to take judicial notice of matters which are of public knowledge, or are capable of unquestionable demonstration, or ought to be known to judges because of their judicial functions." 30 Courts are likewise bound to take judicial notice, without the introduction of evidence, of the law in force in the Philippines, 31 including its Constitution. The concept of "facts of common knowledge" in the context of judicial notice has been explained as those facts that are "so commonly known in the community as to make it unprofitable to require proof, and so certainly known to as to make it indisputable among reasonable men." 32 Moreover, "though usually facts of 'common knowledge' will be generally known throughout the country, it is sufficient as a basis for judicial notice that they be known in the local community where the trial court sits." 33 Certainly, the fact of petitioner Saludo being the duly elected representative of Southern Leyte at the time could be properly taken judicial notice of by the court a quo, the same being a matter of common knowledge in the community where it sits. Further, petitioner Saludo's residence in Southern Leyte could likewise be properly taken judicial notice of by the court a quo. It is bound to know that, under the Constitution, one of the qualifications of a congressman or representative to the House of Representatives is having a residence in the district in which he shall be elected. In fine, petitioner Saludo's act of filing his complaint with the court a quo cannot be characterized as a "specie of forum-shopping" or capricious on his part because, under the rules, as plaintiff, he is precisely given this option. Finally, respondents' claim that the instant petition for review was not properly verified by petitioner Saludo deserves scant consideration. Section 4, Rule 7 of the Rules of Court reads: Sec. 4.Verification. Except when otherwise specifically required by law or rule, pleadings need not be under oath, verified or accompanied by affidavit. 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. A pleading required to be verified which contains a verification based on "information and belief," or upon "knowledge, information and belief," or lacks proper verification, shall be treated as an unsigned pleading. Petitioner Saludo's verification and certification of non-forum shopping states that he has "read the contents thereof [referring to the petition] and the same are true and correct of my own personal knowledge and belief and on the basis of the records at hand." The same clearly constitutes substantial compliance with the above requirements of the Rules of Court. WHEREFORE, premises considered, the petition is GRANTED. The Decision dated May 22, 2003 and Resolution dated August 14, 2003 of the Court of Appeals in CA-G.R. SP No. 69553 are REVERSED and SET ASIDE. The Orders dated September 10, 2001 and January 2, 2002 of the Regional Trial Court of Maasin City, Southern Leyte, Branch 25 thereof, in Civil Case No. R-3172 are REINSTATED. SO ORDERED.

EDGAR SAN LUIS, petitioner, vs. FELICIDAD SAN LUIS, respondent.

[G.R. No. 134029. February 6, 2007] RODOLFO SAN LUIS, petitioner, vs. FELICIDAD SAGALONGOS alias FELICIDAD SAN LUIS,respondent.

DECISION

YNARES-SANTIAGO, J p: Before us are consolidated petitions for review assailing the February 4, 1998 Decision 1 of the Court of Appeals in CA-G.R. CV No. 52647, which reversed and set aside the September 12, 1995 2 and January 31, 1996 3 Resolutions of the Regional Trial Court of Makati City, Branch 134 in SP. Proc. No. M-3708; and its May 15, 1998 Resolution 4 denying petitioners' motion for reconsideration. The instant case involves the settlement of the estate of Felicisimo T. San Luis (Felicisimo), who was the former governor of the Province of Laguna. During his lifetime, Felicisimo contracted three marriages. His first marriage was with Virginia Sulit on March 17, 1942 out of which were born six children, namely: Rodolfo, Mila, Edgar, Linda, Emilita and Manuel. On August 11, 1963, Virginia predeceased Felicisimo. Five years later, on May 1, 1968, Felicisimo married Merry Lee Corwin, with whom he had a son, Tobias. However, on October 15, 1971, Merry Lee, an American citizen, filed a Complaint for Divorce 5 before the Family Court of the First Circuit, State of Hawaii, United States of America (U.S.A.), which issued a Decree Granting Absolute Divorce and Awarding Child Custody on December 14, 1973. 6 On June 20, 1974, Felicisimo married respondent Felicidad San Luis, then surnamed Sagalongos, before Rev. Fr. William Meyer, Minister of the United Presbyterian at Wilshire Boulevard, Los Angeles, California, U.S.A. 7 He had no children with respondent but lived with her for 18 years from the time of their marriage up to his death on December 18, 1992. Thereafter, respondent sought the dissolution of their conjugal partnership assets and the settlement of Felicisimo's estate. On December 17, 1993, she filed a petition for letters of administration 8 before the Regional Trial Court of Makati City, docketed as SP. Proc. No. M-3708 which was raffled to Branch 146 thereof. Respondent alleged that she is the widow of Felicisimo; that, at the time of his death, the decedent was residing at 100 San Juanico Street, New Alabang Village, Alabang, Metro Manila; that the decedent's surviving heirs are respondent as legal spouse, his six children by his first marriage, and son by his second marriage; that the decedent left real properties, both conjugal and exclusive, valued at P30,304,178.00 more or less; that the decedent does not have any unpaid debts. Respondent prayed that the conjugal partnership assets be liquidated and that letters of administration be issued to her. TAaIDH On February 4, 1994, petitioner Rodolfo San Luis, one of the children of Felicisimo by his first marriage, filed a motion to dismiss 9 on the grounds of improper venue and failure to state a cause of action. Rodolfo claimed that the petition for letters of administration should have been filed in the Province of Laguna because this was

Felicisimo's place of residence prior to his death. He further claimed that respondent has no legal personality to file the petition because she was only a mistress of Felicisimo since the latter, at the time of his death, was still legally married to Merry Lee. On February 15, 1994, Linda invoked the same grounds and joined her brother Rodolfo in seeking the dismissal 10 of the petition. On February 28, 1994, the trial court issued an Order 11 denying the two motions to dismiss. Unaware of the denial of the motions to dismiss, respondent filed on March 5, 1994 her opposition 12 thereto. She submitted documentary evidence showing that while Felicisimo exercised the powers of his public office in Laguna, he regularly went home to their house in New Alabang Village, Alabang, Metro Manila which they bought sometime in 1982. Further, she presented the decree of absolute divorce issued by the Family Court of the First Circuit, State of Hawaii to prove that the marriage of Felicisimo to Merry Lee had already been dissolved. Thus, she claimed that Felicisimo had the legal capacity to marry her by virtue of paragraph 2, 13 Article 26 of the Family Code and the doctrine laid down in Van Dorn v. Romillo, Jr. 14 Thereafter, Linda, Rodolfo and herein petitioner Edgar San Luis, separately filed motions for reconsideration from the Order denying their motions to dismiss. 15 They asserted that paragraph 2, Article 26 of the Family Code cannot be given retroactive effect to validate respondent's bigamous marriage with Felicisimo because this would impair vested rights in derogation of Article 256 16 of the Family Code. On April 21, 1994, Mila, another daughter of Felicisimo from his first marriage, filed a motion to disqualify Acting Presiding Judge Anthony E. Santos from hearing the case. On October 24, 1994, the trial court issued an Order 17 denying the motions for reconsideration. It ruled that respondent, as widow of the decedent, possessed the legal standing to file the petition and that venue was properly laid. Meanwhile, the motion for disqualification was deemed moot and academic 18 because then Acting Presiding Judge Santos was substituted by Judge Salvador S. Tensuan pending the resolution of said motion. Mila filed a motion for inhibition 19 against Judge Tensuan on November 16, 1994. On even date, Edgar also filed a motion for reconsideration 20 from the Order denying their motion for reconsideration arguing that it does not state the facts and law on which it was based. On November 25, 1994, Judge Tensuan issued an Order 21 granting the motion for inhibition. The case was reraffled to Branch 134 presided by Judge Paul T. Arcangel. On April 24, 1995, 22 the trial court required the parties to submit their respective position papers on the twin issues of venue and legal capacity of respondent to file the petition. On May 5, 1995, Edgar manifested 23 that he is adopting the arguments and evidence set forth in his previous motion for reconsideration as his position paper. Respondent and Rodolfo filed their position papers on June 14, 24 and June 20, 25 1995, respectively. On September 12, 1995, the trial court dismissed the petition for letters of administration. It held that, at the time of his death, Felicisimo was the duly elected governor and a resident of the Province of Laguna. Hence, the petition should have been filed in Sta. Cruz, Laguna and not in Makati City. It also ruled that respondent was without legal capacity to file the petition for letters of administration because her marriage with Felicisimo was bigamous, thus, void ab initio. It found that the decree of absolute divorce dissolving Felicisimo's marriage to Merry Lee was not valid in the Philippines and did not bind Felicisimo who was a Filipino citizen. It also ruled that paragraph 2, Article 26 of the Family Code cannot be retroactively applied because it would impair the vested rights of Felicisimo's legitimate children. CDTHSI

Respondent moved for reconsideration 26 and for the disqualification 27 of Judge Arcangel but said motions were denied.28 Respondent appealed to the Court of Appeals which reversed and set aside the orders of the trial court in its assailed Decision dated February 4, 1998, the dispositive portion of which states: WHEREFORE, the Orders dated September 12, 1995 and January 31, 1996 are hereby REVERSED and SET ASIDE; the Orders dated February 28 and October 24, 1994 are REINSTATED; and the records of the case is REMANDED to the trial court for further proceedings. 29 The appellate court ruled that under Section 1, Rule 73 of the Rules of Court, the term "place of residence" of the decedent, for purposes of fixing the venue of the settlement of his estate, refers to the personal, actual or physical habitation, or actual residence or place of abode of a person as distinguished from legal residence or domicile. It noted that although Felicisimo discharged his functions as governor in Laguna, he actually resided in Alabang, Muntinlupa. Thus, the petition for letters of administration was properly filed in Makati City. The Court of Appeals also held that Felicisimo had legal capacity to marry respondent by virtue of paragraph 2, Article 26 of the Family Code and the rulings in Van Dorn v. Romillo, Jr. 30 and Pilapil v. Ibay-Somera. 31 It found that the marriage between Felicisimo and Merry Lee was validly dissolved by virtue of the decree of absolute divorce issued by the Family Court of the First Circuit, State of Hawaii. As a result, under paragraph 2, Article 26, Felicisimo was capacitated to contract a subsequent marriage with respondent. Thus With the well-known rule express mandate of paragraph 2, Article 26, of the Family Code of the Philippines, the doctrines in Van Dorn, Pilapil, and the reason and philosophy behind the enactment of E.O. No. 227, there is no justiciable reason to sustain the individual view sweeping statement of Judge Arc[h]angel, that "Article 26, par. 2 of the Family Code, contravenes the basic policy of our state against divorce in any form whatsoever." Indeed, courts cannot deny what the law grants. All that the courts should do is to give force and effect to the express mandate of the law. The foreign divorce having been obtained by the Foreigner on December 14, 1992, 32 the Filipino divorcee, "shall . . . have capacity to remarry under Philippine laws". For this reason, the marriage between the deceased and petitioner should not be denominated as "a bigamous marriage. Therefore, under Article 130 of the Family Code, the petitioner as the surviving spouse can institute the judicial proceeding for the settlement of the estate of the deceased. . . . 33

Edgar, Linda, and Rodolfo filed separate motions for reconsideration 34 which were denied by the Court of Appeals. On July 2, 1998, Edgar appealed to this Court via the instant petition for review on certiorari. 35 Rodolfo later filed a manifestation and motion to adopt the said petition which was granted. 36 In the instant consolidated petitions, Edgar and Rodolfo insist that the venue of the subject petition for letters of administration was improperly laid because at the time of his death, Felicisimo was a resident of Sta. Cruz, Laguna. They contend that pursuant to our rulings in Nuval v. Guray 37 and Romualdez v. RTC, Br. 7, Tacloban City, 38"residence" is synonymous with "domicile" which denotes a fixed permanent residence to which when absent, one intends to return. They claim that a person can only have one domicile at any given time. Since Felicisimo never changed his domicile, the petition for letters of administration should have been filed in Sta. Cruz, Laguna.

Petitioners also contend that respondent's marriage to Felicisimo was void and bigamous because it was performed during the subsistence of the latter's marriage to Merry Lee. They argue that paragraph 2, Article 26 cannot be retroactively applied because it would impair vested rights and ratify the void bigamous marriage. As such, respondent cannot be considered the surviving wife of Felicisimo; hence, she has no legal capacity to file the petition for letters of administration. The issues for resolution: (1) whether venue was properly laid, and (2) whether respondent has legal capacity to file the subject petition for letters of administration. DScTaC The petition lacks merit. Under Section 1, 39 Rule 73 of the Rules of Court, the petition for letters of administration of the estate of Felicisimo should be filed in the Regional Trial Court of the province "in which he resides at the time of his death." In the case ofGarcia Fule v. Court of Appeals, 40 we laid down the doctrinal rule for determining the residence as contradistinguished from domicile of the decedent for purposes of fixing the venue of the settlement of his estate: [T]he term "resides" connotes ex vi termini "actual residence" as distinguished from "legal residence or domicile." This term "resides," like the terms "residing" and "residence," is elastic and should be interpreted in the light of the object or purpose of the statute or rule in which it is employed. In the application of venue statutes and rules Section 1, Rule 73 of the Revised Rules of Court is of such nature residence rather thandomicile is the significant factor. Even where the statute uses the word "domicile" still it is construed as meaning residence and not domicile in the technical sense. Some cases make a distinction between the terms "residence" and "domicile" but as generally used in statutes fixing venue, the terms are synonymous, and convey the same meaning as the term "inhabitant." In other words, "resides" should be viewed or understood in its popular sense, meaning, the personal, actual or physical habitation of a person, actual residence or place of abode. It signifies physical presence in a place and actual stay thereat. In this popular sense, the term means merely residence, that is, personal residence, not legal residence or domicile. Residence simply requires bodily presence as an inhabitant in a given place, while domicile requires bodily presence in that place and also an intention to make it one's domicile. No particular length of time of residence is required though; however, the residence must be more than temporary. 41 (Emphasis supplied) STIcEA It is incorrect for petitioners to argue that "residence," for purposes of fixing the venue of the settlement of the estate of Felicisimo, is synonymous with "domicile." The rulings in Nuval and Romualdez are inapplicable to the instant case because they involve election cases. Needless to say, there is a distinction between "residence" for purposes of election laws and "residence" for purposes of fixing the venue of actions. In election cases, "residence" and "domicile" are treated as synonymous terms, that is, the fixed permanent residence to which when absent, one has the intention of returning. 42 However, for purposes of fixing venue under the Rules of Court, the "residence" of a person is his personal, actual or physical habitation, or actual residence or place of abode, which may not necessarily be his legal residence or domicile provided he resides therein with continuity and consistency. 43 Hence, it is possible that a person may have his residence in one place and domicile in another. In the instant case, while petitioners established that Felicisimo was domiciled in Sta. Cruz, Laguna, respondent proved that he also maintained a residence in Alabang, Muntinlupa from 1982 up to the time of his death. Respondent submitted in evidence the Deed of Absolute Sale 44 dated January 5, 1983 showing that the deceased purchased the aforesaid property. She also presented billing statements 45 from the Philippine Heart Center and Chinese General Hospital for the period August to December 1992 indicating the address of Felicisimo at "100 San Juanico, Ayala Alabang, Muntinlupa." Respondent also presented proof of membership of the deceased in the Ayala Alabang Village Association 46 and Ayala Country Club, Inc., 47 letter-envelopes 48 from 1988 to 1990 sent by the deceased's children to him at his Alabang address, and the deceased's calling cards 49 stating that his home/city

address is at "100 San Juanico, Ayala Alabang Village, Muntinlupa" while his office/provincial address is in "Provincial Capitol, Sta. Cruz, Laguna." From the foregoing, we find that Felicisimo was a resident of Alabang, Muntinlupa for purposes of fixing the venue of the settlement of his estate. Consequently, the subject petition for letters of administration was validly filed in the Regional Trial Court 50 which has territorial jurisdiction over Alabang, Muntinlupa. The subject petition was filed on December 17, 1993. At that time, Muntinlupa was still a municipality and the branches of the Regional Trial Court of the National Capital Judicial Region which had territorial jurisdiction over Muntinlupa were then seated in Makati City as per Supreme Court Administrative Order No. 3. 51 Thus, the subject petition was validly filed before the Regional Trial Court of Makati City. Anent the issue of respondent Felicidad's legal personality to file the petition for letters of administration, we must first resolve the issue of whether a Filipino who is divorced by his alien spouse abroad may validly remarry under the Civil Code, considering that Felicidad's marriage to Felicisimo was solemnized on June 20, 1974, or before the Family Code took effect on August 3, 1988. In resolving this issue, we need not retroactively apply the provisions of the Family Code, particularly Art. 26, par. (2) considering that there is sufficient jurisprudential basis allowing us to rule in the affirmative. The case of Van Dorn v. Romillo, Jr. 52 involved a marriage between a foreigner and his Filipino wife, which marriage was subsequently dissolved through a divorce obtained abroad by the latter. Claiming that the divorce was not valid under Philippine law, the alien spouse alleged that his interest in the properties from their conjugal partnership should be protected. The Court, however, recognized the validity of the divorce and held that the alien spouse had no interest in the properties acquired by the Filipino wife after the divorce. Thus: In this case, the divorce in Nevada released private respondent from the marriage from the standards of American law, under which divorce dissolves the marriage. As stated by the Federal Supreme Court of theUnited States in Atherton vs. Atherton, 45 L. Ed. 794, 799: "The purpose and effect of a decree of divorce from the bond of matrimony by a competent jurisdiction are to change the existing status or domestic relation of husband and wife, and to free them both from the bond. The marriage tie, when thus severed as to one party, ceases to bind either. A husband without a wife, or a wife without a husband, is unknown to the law. When the law provides, in the nature of a penalty, that the guilty party shall not marry again, that party, as well as the other, is still absolutely freed from the bond of the former marriage." Thus, pursuant to his national law, private respondent is no longer the husband of petitioner. He would have no standing to sue in the case below as petitioner's husband entitled to exercise control over conjugal assets. As he is bound by the Decision of his own country's Court, which validly exercised jurisdiction over him, and whose decision he does not repudiate, he is estopped by his own representation before said Court from asserting his right over the alleged conjugal property. 53 As to the effect of the divorce on the Filipino wife, the Court ruled that she should no longer be considered married to the alien spouse. Further, she should not be required to perform her marital duties and obligations. It held: To maintain, as private respondent does, that, under our laws, petitioner has to be consideredstill married to private respondent and still subject to a wife's obligations under Article 109, et. seq. of the Civil Code cannot be just. Petitioner should not be obliged to live together with, observe respect and fidelity, and render support to private respondent. The latter should not continue to be one of her heirs with possible

rights to conjugal property. She should not be discriminated against in her own country if the ends of justice are to be served. 54 (Emphasis added) AcaEDC This principle was thereafter applied in Pilapil v. Ibay-Somera 55 where the Court recognized the validity of a divorce obtained abroad. In the said case, it was held that the alien spouse is not a proper party in filing the adultery suit against his Filipino wife. The Court stated that "the severance of the marital bond had the effect of dissociating the former spouses from each other, hence the actuations of one would not affect or cast obloquy on the other." 56

Records of the proceedings of the Family Code deliberations showed that the intent of Paragraph 2 of Article 26, according to Judge Alicia Sempio-Diy, a member of the Civil Code Revision Committee, is to avoid the absurd situation where the Filipino spouse remains married to the alien spouse who, after obtaining a divorce, is no longer married to the Filipino spouse. Interestingly, Paragraph 2 of Article 26 traces its origin to the 1985 case of Van Dorn v. Romillo, Jr. The Van Dorn case involved a marriage between a Filipino citizen and a foreigner. The Court held therein that a divorce decree validly obtained by the alien spouse is valid in the Philippines, and consequently, the Filipino spouse is capacitated to remarry under Philippine law. 63 (Emphasis added) As such, the Van Dorn case is sufficient basis in resolving a situation where a divorce is validly obtained abroad by the alien spouse. With the enactment of the Family Code and paragraph 2, Article 26 thereof, our lawmakers codified the law already established through judicial precedent. HAaECD Indeed, when the object of a marriage is defeated by rendering its continuance intolerable to one of the parties and productive of no possible good to the community, relief in some way should be obtainable. 64 Marriage, being a mutual and shared commitment between two parties, cannot possibly be productive of any good to the society where one is considered released from the marital bond while the other remains bound to it. Such is the state of affairs where the alien spouse obtains a valid divorce abroad against the Filipino spouse, as in this case. Petitioners cite Articles 15 65 and 17 66 of the Civil Code in stating that the divorce is void under Philippine law insofar as Filipinos are concerned. However, in light of this Court's rulings in the cases discussed above, the Filipino spouse should not be discriminated against in his own country if the ends of justice are to be served. 67 In Alonzo v. Intermediate Appellate Court, 68 the Court stated: But as has also been aptly observed, we test a law by its results; and likewise, we may add, by its purposes. It is a cardinal rule that, in seeking the meaning of the law, the first concern of the judge should be to discover in its provisions the intent of the lawmaker. Unquestionably, the law should never be interpreted in such a way as to cause injustice as this is never within the legislative intent. An indispensable part of that intent, in fact, for we presume the good motives of the legislature, is to render justice. Thus, we interpret and apply the law not independently of but in consonance with justice. Law and justice are inseparable, and we must keep them so. To be sure, there are some laws that, while generally valid, may seem arbitrary when applied in a particular case because of its peculiar circumstances. In such a situation, we are not bound, because only of our nature and functions, to apply them just the same, in slavish obedience to their language. What we do instead is find a balance between the word and the will, that justice may be done even as the law is obeyed. As judges, we are not automatons. We do not and must not unfeelingly apply the law as it is worded, yielding like robots to the literal command without regard to its cause and consequence. "Courts are apt to err by sticking too closely to the words of a law," so we are warned, by Justice Holmes again, "where these words import a policy that goes beyond them." xxx xxx xxx

Likewise, in Quita v. Court of Appeals, 57 the Court stated that where a Filipino is divorced by his naturalized foreign spouse, the ruling in Van Dorn applies. 58 Although decided on December 22, 1998, the divorce in the said case was obtained in 1954 when the Civil Code provisions were still in effect. The significance of the Van Dorn case to the development of limited recognition of divorce in the Philippines cannot be denied. The ruling has long been interpreted as severing marital ties between parties in a mixed marriage and capacitating the Filipino spouse to remarry as a necessary consequence of upholding the validity of a divorce obtained abroad by the alien spouse. In his treatise, Dr. Arturo M. Tolentino cited Van Dorn stating that "if the foreigner obtains a valid foreign divorce, the Filipino spouse shall have capacity to remarry under Philippine law." 59 In Garcia v. Recio, 60 the Court likewise cited the aforementioned case in relation to Article 26. 61 In the recent case of Republic v. Orbecido III, 62 the historical background and legislative intent behind paragraph 2, Article 26 of the Family Code were discussed, to wit:

Brief Historical Background

On July 6, 1987, then President Corazon Aquino signed into law Executive Order No. 209, otherwise known as the "Family Code," which took effect on August 3, 1988. Article 26 thereof states: All marriages solemnized outside the Philippines in accordance with the laws in force in the country where they were solemnized, and valid there as such, shall also be valid in this country, except those prohibited under Articles 35, 37, and 38. On July 17, 1987, shortly after the signing of the original Family Code, Executive Order No. 227 was likewise signed into law, amending Articles 26, 36, and 39 of the Family Code. A second paragraph was added to Article 26. As so amended, it now provides: ART. 26.All marriages solemnized outside the Philippines in accordance with the laws in force in the country where they were solemnized, and valid there as such, shall also be valid in this country, except those prohibited under Articles 35(1), (4), (5) and (6), 36, 37 and 38.

Where a marriage between a Filipino citizen and a foreigner is validly celebrated and a divorce is thereafter validly obtained abroad by the alien spouse capacitating him or her to remarry, the Filipino spouse shall have capacity to remarry under Philippine law. (Emphasis
supplied) xxx xxx xxx

Legislative Intent

More than twenty centuries ago, Justinian defined justice "as the constant and perpetual wish to render every one his due." That wish continues to motivate this Court when it assesses the facts and the law in every case brought to it for decision. Justice is always an essential ingredient of its decisions. Thus when the facts warrants, we interpret the law in a way that will render justice, presuming that it was the intention of the lawmaker, to begin with, that the law be dispensed with justice. 69 Applying the above doctrine in the instant case, the divorce decree allegedly obtained by Merry Lee which absolutely allowed Felicisimo to remarry, would have vested Felicidad with the legal personality to file the present petition as Felicisimo's surviving spouse. However, the records show that there is insufficient evidence to prove the validity of the divorce obtained by Merry Lee as well as the marriage of respondent and Felicisimo under the laws of the U.S.A. InGarcia v. Recio, 70 the Court laid down the specific guidelines for pleading and proving foreign law and divorce judgments. It held that presentation solely of the divorce decree is insufficient and that proof of its authenticity and due execution must be presented. Under Sections 24 and 25 of Rule 132, a writing or document may be proven as a public or official record of a foreign country by either (1) an official publication or (2) a copy thereof attested by the officer having legal custody of the document. If the record is not kept in the Philippines, such copy must be (a) accompanied by a certificate issued by the proper diplomatic or consular officer in the Philippine foreign service stationed in the foreign country in which the record is kept and (b) authenticated by the seal of his office. 71 With regard to respondent's marriage to Felicisimo allegedly solemnized in California, U.S.A., she submitted photocopies of the Marriage Certificate and the annotated text 72 of the Family Law Act of California which purportedly show that their marriage was done in accordance with the said law. As stated in Garcia, however, the Court cannot take judicial notice of foreign laws as they must be alleged and proved. 73 Therefore, this case should be remanded to the trial court for further reception of evidence on the divorce decree obtained by Merry Lee and the marriage of respondent and Felicisimo. Even assuming that Felicisimo was not capacitated to marry respondent in 1974, nevertheless, we find that the latter has the legal personality to file the subject petition for letters of administration, as she may be considered the coowner of Felicisimo as regards the properties that were acquired through their joint efforts during their cohabitation. TIEHDC Section 6, 74 Rule 78 of the Rules of Court states that letters of administration may be granted to the surviving spouse of the decedent. However, Section 2, Rule 79 thereof also provides in part: SEC. 2.Contents of petition for letters of administration. A petition for letters of administration must be filed by an interested person and must show, as far as known to the petitioner: . . . . An "interested person" has been defined as one who would be benefited by the estate, such as an heir, or one who has a claim against the estate, such as a creditor. The interest must be material and direct, and not merely indirect or contingent. 75 In the instant case, respondent would qualify as an interested person who has a direct interest in the estate of Felicisimo by virtue of their cohabitation, the existence of which was not denied by petitioners. If she proves the validity of the divorce and Felicisimo's capacity to remarry, but fails to prove that her marriage with him was validly performed under the laws of the U.S.A., then she may be considered as a co-owner under Article 144 76 of the Civil Code. This provision governs the property relations between parties who live together as husband and wife without the benefit of marriage, or their marriage is void from the beginning. It provides that the property acquired by either or both of them through their work or industry or their wages and salaries shall be governed by the rules on coownership. In a co-ownership, it is not necessary that the property be acquired through their joint labor, efforts and

industry. Any property acquired during the union is prima facie presumed to have been obtained through their joint efforts. Hence, the portions belonging to the co-owners shall be presumed equal, unless the contrary is proven. 77

Meanwhile, if respondent fails to prove the validity of both the divorce and the marriage, the applicable provision would be Article 148 of the Family Code which has filled the hiatus in Article 144 of the Civil Code by expressly regulating the property relations of couples living together as husband and wife but are incapacitated to marry. 78 In Saguid v. Court of Appeals, 79 we held that even if the cohabitation or the acquisition of property occurred before the Family Code took effect, Article 148 governs. 80 The Court described the property regime under this provision as follows: The regime of limited co-ownership of property governing the union of parties who are not legally capacitated to marry each other, but who nonetheless live together as husband and wife, applies to properties acquired during said cohabitation in proportion to their respective contributions. Co-ownership will only be up to the extent of the proven actual contribution of money, property or industry. Absent proof of the extent thereof, their contributions and corresponding shares shall be presumed to be equal. xxx xxx xxx In the cases of Agapay v. Palang, and Tumlos v. Fernandez, which involved the issue of coownership of properties acquired by the parties to a bigamous marriage and an adulterous relationship, respectively, we ruled that proof of actual contribution in the acquisition of the property is essential. . . . As in other civil cases, the burden of proof rests upon the party who, as determined by the pleadings or the nature of the case, asserts an affirmative issue. Contentions must be proved by competent evidence and reliance must be had on the strength of the party's own evidence and not upon the weakness of the opponent's defense. . . . 81 In view of the foregoing, we find that respondent's legal capacity to file the subject petition for letters of administration may arise from her status as the surviving wife of Felicisimo or as his co-owner under Article 144 of the Civil Code or Article 148 of the Family Code. WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals reinstating and affirming the February 28, 1994 Order of the Regional Trial Court which denied petitioners' motion to dismiss and its October 24, 1994 Order which dismissed petitioners' motion for reconsideration is AFFIRMED. Let this case be REMANDED to the trial court for further proceedings. SO ORDERED. UNITED OVERSEAS BANK PHILS. (formerly WESTMONT BANK), petitioner, vs. ROSEMOOR MINING & DEVELOPMENT CORP. and DRA. LOURDES PASCUAL, respondents.

DECISION

TINGA, J p: We resolve these two consolidated cases which, though with distinct courts of origin, pertain to issues stemming from the same loan transaction. The antecedent facts follow. Respondent Rosemoor Mining and Development Corporation (Rosemoor), a Philippine mining corporation with offices at Quezon City, applied for and was granted by petitioner Westmont Bank 1 (Bank) a credit facility in the total amount of P80 million consisting of P50,000,000.00 as long term loan and P30,000,000.00 as revolving credit line. 2 To secure the credit facility, a lone real estate mortgage agreement was executed by Rosemoor and Dr. Lourdes Pascual (Dr. Pascual), Rosemoor's president, as mortgagors in favor of the Bank as mortgagee in the City of Manila. 3 The agreement, however, covered six (6) parcels of land located in San Miguel, Bulacan 4 (Bulacan properties), all registered under the name of Rosemoor, 5 and two (2) parcels of land 6 situated in Gapan, Nueva Ecija (Nueva Ecija properties), owned and registered under the name of Dr. Pascual. 7 Rosemoor subsequently opened with the Bank four (4) irrevocable Letters of Credit (LCs) totaling US$1,943,508.11. 8 To cover payments by the Bank under the LCs, Rosemoor proceeded to draw against its credit facility and thereafter executed promissory notes amounting collectively to P49,862,682.50. 9 Two (2) other promissory notes were also executed by Rosemoor in the amounts of P10,000,000.00 and P3,500,000.00, respectively, to be drawn from its revolving credit line. 10 Rosemoor defaulted in the payment of its various drawings under the LCs and promissory notes. In view of the default, the Bank caused the extrajudicial foreclosure of the Nueva Ecija properties on 22 May 1998 and the Bulacan properties on 10 August 1998. The Bank was the highest bidder on both occasions. 11 On 8 October 1999, the Bank caused the annotation of the Notarial Certificate of Sale covering the Nueva Ecija properties on the certificates of title concerned. Later, on 16 March 2001, the Notarial Certificate of Sale covering the Bulacan properties was annotated on the certificates of title of said properties. 12 The foregoing facts led to Rosemoor's filing of separate complaints against the Bank, one before the Regional Trial Court of Manila (Manila RTC) and the other before the Regional Trial Court of Malolos, Bulacan (Malolos RTC). aSIATD

WHEREFORE, plaintiff Rosemoor Mining & Development Corporation respectfully prays that, after trial of the issues, this court promulgate judgment 1.Directing Westmont to render an accounting of the loan account of Rosemoor under the Long Term Loan Facility and the Revolving Credit Line at least up to the dates of foreclosure of Rosemoor's mortgaged properties on May 22, 1998 and August 18, 1998, showing among others (a) the sums of money paid by Rosemoor or otherwise debited from its deposit account in payment of the loans it had obtained from Westmont to cover the cost of the machinery to be imported under the Unpaid LCs and under LC No. 97-058 for the tiling plant, as well as for working capital, and (b) all interests, penalties and charges imposed on the loans pertaining to the Unpaid LCs and LC No. 97-058 and for which Westmont had foreclosed Rosemoor's and Dra. Pascual's real estate mortgage; (c) the amount of import and customs duties, demurrage, storage and other fees which Rosemoor had paid or which was otherwise debited from Rosemoor's deposit account, in connection with the importation of the tiling plant and as a consequence of the non-release thereof by Westmont; 2.Ordering all the defendants jointly and severally to pay to Rosemoor, by way of actual damages, the dollar equivalent of the amounts in (1) (a), (b) and (c) at the exchange rate prevailing at the time of the opening of the LCs; 3.Ordering defendants jointly and severally to pay to Rosemoor actual damages for operational losses suffered by Rosemoor due to its failure to use the tiling plaint which Westmont had refused to release to Rosemoor, in such amount as may be proven at the trial; 4.Directing the defendants jointly and severally to pay, by way of correction for the public good, exemplary damages in the amount of P500,000.00 each; 5.Ordering defendants jointly and severally to indemnify Rosemoor in the sum of P350,000.00, representing attorney's fees and litigation expenses incurred by Rosemoor for the protection and enforcement of its rights and interests. Plaintiff prays for further and other relief as may be just and equitable under the circumstances. 19 On 15 August 2002, the Bank filed another motion to dismiss the Second Amended Complaint on the ground of forum-shopping since, according to it, Rosemoor had filed another petition earlier on 11 March 2002 before the Malolos RTC. 20The Bank contended that as between the action before the Manila RTC and the petition before the Malolos RTC, there is identity of parties, rights asserted, and reliefs prayed for, the relief being founded on the same set of facts. The Bank further claimed that any judgment that may be rendered in either case will amount to res judicata in the other case. 21Still, the Manila RTC denied the motion to dismiss. 22 It also denied the Bank's motion for reconsideration of the order of denial. 23 The Bank challenged the Manila RTC's denial of the Bank's second motion to dismiss before the Court of Appeals, through a petition for certiorari. The appellate court dismissed the petition in a Decision dated 26 February 2004. 24 The Bank filed a motion for reconsideration which, however, was denied through a Resolution dated 30 April 2004. 25 In the Petition for Review on Certiorari in G.R. No. 163521, the Bank argues that the Court of Appeals erred in holding that no forum-shopping attended the actions brought by Rosemoor. 26

The Manila Case (G.R. No. 163521)

On 5 August 1998, Rosemoor and Dr. Pascual filed a Complaint, originally captioned as one for "Damages, Accounting and Release of Balance of Loan and Machinery and for Injunction" before the Manila RTC. 13 Impleaded as defendants were the Bank and Notary Public Jose Sineneng, whose office was used to foreclose the mortgage. 14 The complaint was twice amended, the caption eventually reflecting an action for "Accounting, Specific Performance and Damages." 15Through the amendments, Pascual was dropped as a plaintiff while several officers of the Bank were included as defendants. 16 The Bank moved for the dismissal of the original and amended complaints on the ground that the venue had been improperly laid. 17 The motion was denied by the trial court through an Omnibus Resolution dated 24 January 2000. 18 Rosemoor's prayer in the Second Amended Complaint, which was filed in November of 1999, reads as follows:

The Malolos Case (G.R. No. 159669)

After the complaint with the Manila RTC had been lodged, on 11 March 2002, Rosemoor and Dr. Pascual filed another action against the Bank, this time before the Malolos RTC. Impleaded together with the Bank as respondent was the Register of Deeds for the Province of Bulacan in the Petition for Injunction with Damages, with Urgent Prayer for Temporary Restraining Order and/or Preliminary Injunction. 27 In the Malolos case, Rosemoor and Dr. Pascual alleged that the redemption period for the Bulacan properties would expire on 16 March 2002. They claimed that the threatened consolidation of titles by the Bank is illegal, stressing that the foreclosure of the real estate mortgage by the Bank was fraudulent and without basis, 28 as the Bank had made them sign two blank forms of Real Estate Mortgage and several promissory notes also in blank forms. It appeared later, according to Rosemoor and Dr. Pascual, that the two Real Estate Mortgage blank forms were made as security for two loans, one for P80 million and the other for P48 million, when the total approved loan was only for P80 million. The Bank later released only the amount of P10 million out of the P30 million revolving credit line, to the prejudice of Rosemoor, they added. 29 The Petition's prayer reads as follows: WHEREFORE, premises considered, it is most respectfully prayed that this Honorable Court 1.Issue ex-parte a temporary restraining order before the matter could be heard on notice to restrain and enjoin respondent BANK from proceeding with its threatened consolidation of its titles over the subject properties of petitioner Rosemoor in San Miguel, Bulacan covered by TCT Nos. 42132; 42133; 42134; 42135; 42136 and RT 34569 (T-222448) on March 16, 2002 or at any time thereafter; that the respondent Register of Deeds for the Province of Bulacan be enjoined and restrained from registering any document(s) submitted and/or to be submitted by respondent BANK consolidating its titles over the above-named properties of petitioner Rosemoor in San Miguel, Bulacan; and likewise, that the Register of Deeds for the province of Bulacan be restrained and enjoined from canceling the titles of Rosemoor over its properties, namely, TCT Nos. 42132; 42133; 42134; 42135; 42136 and RT 34569 (T222448); 2.That after due notice, a writ of preliminary injunction be issued upon the posting of a bond in such amount as may be fixed by this Court; 3.That after due hearing and trial, judgment be rendered in favor of petitioners and against respondent BANK a.Permanently enjoining respondent BANK from proceeding with the consolidation of its titles to the subject properties of Rosemoor covered by TCT Nos. 42132; 42133; 42134; 42135; 42136 and RT 34569 (T-222448); and permanently restraining respondent Register of Deeds for the Province of Bulacan from registering any document(s) submitted and/or to be submitted by respondent BANK consolidating its titles over the abovenamed properties of petitioner Rosemoor in San Miguel, Bulacan; and likewise, that the Register of Deeds for the province of Bulacan be restrained and enjoined from cancelling the titles of Rosemoor over its properties, namely, TCT Nos. 42132; 42133; 42134; 42135; 42136 and RT 34569 (T-222448);

b.Declaring the foreclosures of Real Estate Mortgages on the properties of petitioners Rosemoor and Dra. Pascual to be null and void; c.Recognizing the ownership in fee simple of the petitioners over their properties above-mentioned; d.Awarding to petitioners the damages prayed for, including attorney's fees and costs and expenses of litigation. IaSAHC Petitioners pray for such other reliefs and remedies as may be deemed just and equitable in the premises. 30 As it did before the Manila RTC, the Bank filed a motion to dismiss on 26 March 2002 on the ground that Rosemoor had engaged in forum-shopping, adverting to the pending Manila case. 31 The Bank further alleged that Dr. Pascual has no cause of action since the properties registered in her name are located in Nueva Ecija. The Malolos RTC denied the motion to dismiss in an Order dated 13 May 2002. 32 In the same Order, the Malolos RTC directed the Bank to file its answer to the petition within five (5) days from notice. 33 Despite receipt of the Order on 21 May 2002, the Bank opted not to file its answer as it filed instead a motion for reconsideration on 5 June 2002. 34 Meanwhile, Rosemoor and Dr. Pascual moved to declare the Bank in default for its failure to timely file its answer. 35 On 10 September 2002, the Malolos RTC issued an order denying the Bank's motion for reconsideration for lack of merit and at the same time declaring the Bank in default for failure to file its answer. 36 Hence, the Bank filed a second petition for certiorari before the Court of Appeals, where it assailed the Orders dated 13 May 2002 and 10 September 2002 of the Malolos RTC. During the pendency of this petition for certiorari, the Malolos RTC decided the Malolos case on the merits in favor of Rosemoor. 37 The decision in the Malolos case was also appealed to the Court of Appeals. 38 Based on these developments, the appellate court considered the prayer for preliminary injunction as moot and academic and proceeded with the resolution of the petition, by then docketed as CA-G.R. SP No. 73358, on the merits. The appellate court dismissed the petition in a Decision dated 20 June 2003. 39Undaunted, the Bank filed the petition in G.R. No. 159669 before this Court. The two petitions before this Court have been consolidated. We find one common issue in G.R. No. 159669 and G.R. No. 163521 whether Rosemoor committed forum-shopping in filing the two cases against the Bank. The other issues for resolution were raised in G.R. No. 159669, pertaining as they do to the orders issued by the Malolos RTC. These issues are whether the action to invalidate the foreclosure sale was properly laid with the Malolos RTC even as regards the Nueva Ecija properties; whether it was proper for the Malolos RTC to declare the Bank in default; and whether it was proper for the Malolos RTC to deny the Bank's motion to dismiss through a minute resolution. 40

Forum-Shopping
The central issue in these consolidated cases is whether Rosemoor committed forum-shopping in filing the Malolos case during the pendency of the Manila case. The essence of forum-shopping is the filing of multiple suits involving the same parties for the same cause of action, either simultaneously or successively, for the purpose of obtaining a favorable judgment. 41 The elements of forumshopping are: (a) identity of parties, or at least such parties as represent the same interests in both actions; (b) identity of rights asserted and reliefs prayed for, the reliefs being founded on the same facts; and (c) the identity with respect to the two preceding particulars in the two cases is such that any judgment rendered in the pending cases, regardless of which party is successful, amount to res judicata in the other case. 42

As to the existence of identity of parties, several bank officers and employees impleaded in the Amended Complaint in the Manila case were not included in the Malolos case. These bank officers and employees were sued in Manila in their personal capacity. A finding of negligence or bad faith in their participation in the preparation and execution of the loan agreement would render them personally liable. Dr. Pascual, on the other hand, was included as petitioner only in the Malolos case because it involved properties registered in her name. As correctly pointed out by the Court of Appeals, Dr. Pascual is a real party-in-interest in the Malolos case because she stood to benefit or suffer from the judgment in the suit. Dr. Pascual, however, was not included as plaintiff in the Manila case because her interest therein was not personal but merely in her capacity as officer of Rosemoor. SCEDAI As regards the identity of rights asserted and reliefs prayed for, the main contention of Rosemoor in the Manila case is that the Bank had failed to deliver the full amount of the loan, as a consequence of which Rosemoor demanded the remittance of the unreleased portion of the loan and payment of damages consequent thereto. 43 In contrast, the Malolos case was filed for the purpose of restraining the Bank from proceeding with the consolidation of the titles over the foreclosed Bulacan properties because the loan secured by the mortgage had not yet become due and demandable.44 While the right asserted in the Manila case is to receive the proceeds of the loan, the right sought in the Malolos case is to restrain the foreclosure of the properties mortgaged to secure a loan that was not yet due. Moreover, the Malolos case is an action to annul the foreclosure sale that is necessarily an action affecting the title of the property sold. 45 It is therefore a real action which should be commenced and tried in the province where the property or part thereof lies. 46 The Manila case, on the other hand, is a personal action 47 involving as it does the enforcement of a contract between Rosemoor, whose office is in Quezon City, and the Bank, whose principal office is in Binondo, Manila. 48 Personal actions may be commenced and tried where the plaintiff or any of the principal plaintiffs resides, or where the defendants or any of the principal defendants resides, at the election of the plaintiff. 49 It was subsequent to the filing of the Manila case that Rosemoor and Dr. Pascual saw the need to secure a writ of injunction because the consolidation of the titles to the mortgaged properties in favor of the Bank was in the offing. But then, this action can only be commenced where the properties, or a portion thereof, is located. Otherwise, the petition for injunction would be dismissed for improper venue. Rosemoor, therefore, was warranted in filing the Malolos case and cannot in turn be accused of forum-shopping. Clearly, with the foregoing premises, it cannot be said that respondents committed forum-shopping.

The venue of the action for the nullification of the foreclosure sale is properly laid with the Malolos RTC although two of the properties together with the Bulacan properties are situated in Nueva Ecija. Following the above-quoted provision of the Rules of Court, the venue of real actions affecting properties found in different provinces is determined by the singularity or plurality of the transactions involving said parcels of land. Where said parcels are the object of one and the same transaction, the venue is in the court of any of the provinces wherein a parcel of land is situated. 52 Ironically, the Bank itself correctly summarized the applicable jurisprudential rule in one of the pleadings before the Court. 53 Yet the Bank itself has provided the noose on which it would be hung. Resorting to deliberate misrepresentation, the Bank stated in the same pleading that "the Bulacan and Nueva Ecija [p]roperties were not the subject of one single real estate mortgage contract." 54 In the present case, there is only one proceeding sought to be nullified and that is the extra-judicial mortgage foreclosure sale. And there is only one initial transaction which served as the basis of the foreclosure sale and that is the mortgage contract. Indeed, Rosemoor, through Dr. Pascual, executed a lone mortgage contract where it undertook to "mortgage the land/real property situated in Bulacan and Nueva Ecija," with the list of mortgaged properties annexed thereto revealing six (6) properties in Bulacan and two (2) properties in Nueva Ecija subject of the mortgage. This apparent deliberate misrepresentation cannot simply pass without action. The real estate mortgage form supplied to Rosemoor is the Bank's standard pre-printed form. Yet the Bank perpetrated the misrepresentation. Blame must be placed on its doorstep. But as the Bank's pleading was obviously prepared by its counsel, the latter should also share the blame. A lawyer shall not do any falsehood, nor consent to the doing of any in court; nor shall he mislead, or allow the Court to be misled by any artifice. 55 Both the Bank's president and counsel should be made to explain why they should not be sanctioned for contempt of court. EaDATc

Propriety of Default Order

The Court of Appeals did not touch upon the soundness or unsoundness of the order of default although it is one of the orders assailed by the Bank. However, the silence of the appellate court on the issue does not improve the legal situation of the Bank. To recall, the Bank filed a motion to dismiss the Malolos case. The Malolos RTC denied the motion in an Order dated 13 May 2002. 56 In the same Order, the Malolos RTC directed the Bank to file its answer to the petition within five (5) days from the receipt of the Order. 57 The Bank received a copy of the Order on 21 May 2002. Instead of filing an answer, the Bank filed a motion for reconsideration but only on 5 June 2002. 58 The motion for reconsideration 59 could not have tolled the running of the period to answer for two reasons. One, it was filed late, nine (9) days after the due date of the answer. Two, it was a mere rehash of the motion to dismiss; hence,pro forma in nature. Thus, the Malolos RTC did not err in declaring the Bank in default.

Action to nullify foreclosure sale of mortgaged properties in Bulacan and Nueva Ecija before the Malolos RTC
The Bank challenges the Malolos RTC's jurisdiction over the action to nullify the foreclosure sale of the Nueva Ecija properties along with the Bulacan properties. This question is actually a question of venue and not of jurisdiction, 50which, if improperly laid, could lead to the dismissal of the case. 51 The rule on venue of real actions is provided in Section 1, Rule 4 of the 1997 Rules of Civil Procedure, which reads in part: Section 1.Venue of Real Actions. Actions affecting title to or possession of real property, or interest therein, shall be commenced and tried in the proper court which has jurisdiction over the area wherein the real property involved, or a portion thereof, is situated. xxx xxx xxx

Deviation from the Prescribed Content of an Order Denying a Motion to Dismiss

Finally, the Bank questions the Malolos RTC's Order dated 13 May 2002 denying its motion to dismiss on the ground that it is contrary to law and jurisprudence because it had failed to apprise the Bank of the legal basis for the denial.

The Bank adverts to the content requirement of an order denying a motion to dismiss prescribed by Sec. 3, Rule 16 of the Rules of Court. The Court in Lu Ym v. Nabua 60 made a thorough discussion on the matter, to quote: Sec. 3, Rule 16 of the Rules provides: Sec. 3.Resolution of motion. After the hearing, the court may dismiss the action or claim, deny the motion or order the amendment of the pleading. The court shall not defer the resolution of the motion for the reason that the ground relied upon is not indubitable. In every case, the resolution shall state clearly and distinctly the reasons therefor. xxx xxx xxx Further, it is now specifically required that the resolution on the motion shall clearly and distinctly state the reasons therefor. This proscribes the common practice of perfunctorily dismissing the motion for "lack of merit." Such cavalier dispositions can often pose difficulty and misunderstanding on the part of the aggrieved party in taking recourse therefrom and likewise on the higher court called upon to resolve the same, usually on certiorari. 61 The questioned order of the trial court denying the motion to dismiss with a mere statement that there are justiciable questions which require a full blown trial falls short of the requirement of Rule 16 set forth above. Owing to the terseness of its expressed justification, the challenged order ironically suffers from undefined breadth which is a hallmark of imprecision. With its unspecific and amorphous thrust, the issuance is inappropriate to the grounds detailed in the motion to dismiss. AEDHST While the requirement to state clearly and distinctly the reasons for the trial court's resolutory order under Sec. 3, Rule 16 of the Rules does call for a liberal interpretation, especially since jurisprudence dictates that it is decisions on cases submitted for decision that are subject to the stringent requirement of specificity of rulings under Sec. 1, Rule 36 62 of the Rules, the trial court's order in this case leaves too much to the imagination. (Emphasis supplied.) 63 The assailed order disposed of the motion to dismiss in this wise: xxx xxx xxx After a careful scrutiny of the grounds cited in the Motion to Dismiss and the arguments en contra contained in the Opposition thereto and finding the Motion to Dismiss to be not well taken as grounds cited are not applicable to the case at bar, the Court hereby DENIES the instant Motion to Dismiss. xxx xxx xxx 64 Clearly, the subject order falls short of the content requirement as expounded in Lu Ym v. Nabua. Despite the aberration, however, the Bank was not misled, though it could have encountered difficulties or inconvenience because of it. Comprehending, as it did, that the Malolos RTC did not share its position that Rosemoor had engaged in forum-shopping, it went to great lengths to impress upon the Court of Appeals that there was indeed forum-

shopping on Rosemoor's part. But the appellate court did not likewise agree with the Bank as it soundly debunked the forum-shopping charge. In fact, the same forum-shopping argument has been fully ventilated before the Court but we are utterly unimpressed as we made short shrift of the argument earlier on. In the ultimate analysis, therefore, the trial court's blunder may be overlooked as it proved to be harmless. WHEREFORE, the Decisions of the Court of Appeals dated 26 February 2004 in CA-G.R. SP No. 76934 and dated 20 June 2003 in CA-G.R SP No. 73358 are AFFIRMED. Petitioner United Overseas Bank, Phils. and its counsel, Siguion Reyna Montecillo & Ongsiako Law Offices, are given ten (10) days from notice to EXPLAIN why they should not be held in contempt of court for making a misrepresentation before the Court as adverted to in this Decision. Cost against petitioner. SO ORDERED.