G.R. No.

L-66620 September 24, 1986

REMEDIO V. FLORES, petitioner,

vs.
HON. JUDGE HEILIA S. MALLARE-PHILLIPPS, IGNACIO BINONGCAL & FERNANDO
CALION, respondents.

Lucio A. Dixon for respondent F. Calion.

FERIA, J.:

The Court rules that the application of the totality rule under Section 33(l) of Batas Pambansa Blg.
129 and Section 11 of the Interim Rules is subject to the requirements for the permissive joinder of
parties under Section 6 of Rule 3 which provides as follows:

Permissive joinder of parties.-All persons in whom or against whom any right to relief
in respect to or arising out of the same transaction or series of transactions is alleged
to exist, whether jointly, severally, or in the alternative, may, except as otherwise
provided in these rules, join as plaintiffs or be joined as defendants in one complaint,
where any question of law or fact common to all such plaintiffs or to all such
defendants may arise in the action; but the court may make such orders as may be
just to prevent any plaintiff or defendant from being embarrassed or put to expense in
connection with any proceedings in which he may have no interest.

Petitioner has appealed by certiorari from the order of Judge Heilia S. Mallare-Phillipps of the
Regional Trial Court of Baguio City and Benguet Province which dismissed his complaint for lack of
jurisdiction. Petitioner did not attach to his petition a copy of his complaint in the erroneous belief that
the entire original record of the case shall be transmitted to this Court pursuant to the second
paragraph of Section 39 of BP129. This provision applies only to ordinary appeals from the regional
trial court to the Court of Appeals (Section 20 of the Interim Rules). Appeals to this Court by petition
for review on certiorari are governed by Rule 45 of the Rules of Court (Section 25 of the Interim
Rules).

However, the order appealed from states that the first cause of action alleged in the complaint was
against respondent Ignacio Binongcal for refusing to pay the amount of P11,643.00 representing
cost of truck tires which he purchased on credit from petitioner on various occasions from August to
October, 1981; and the second cause of action was against respondent Fernando Calion for
allegedly refusing to pay the amount of P10,212.00 representing cost of truck tires which he
purchased on credit from petitioner on several occasions from March, 1981 to January, 1982.

On December 15, 1983, counsel for respondent Binongcal filed a Motion to Dismiss on the ground of
lack of jurisdiction since the amount of the demand against said respondent was only P11,643.00,
and under Section 19(8) of BP129 the regional trial court shall exercise exclusive original jurisdiction
if the amount of the demand is more than twenty thousand pesos (P20,000.00). It was further
averred in said motion that although another person, Fernando Calion, was allegedly indebted to
petitioner in the amount of P10,212.00, his obligation was separate and distinct from that of the other
respondent. At the hearing of said Motion to Dismiss, counsel for respondent Calion joined in moving
for the dismissal of the complaint on the ground of lack of jurisdiction. Counsel for petitioner opposed
the Motion to Dismiss. As above stated, the trial court dismissed the complaint for lack of jurisdiction.

Petitioner maintains that the lower court has jurisdiction over the case following the "novel" totality
rule introduced in Section 33(l) of BP129 and Section 11 of the Interim Rules.

The pertinent portion of Section 33(l) of BP129 reads as follows:

... Provided,That where there are several claims or causes of action between the
same or different parties, embodied in the same complaint, the amount of the
demand shall be the totality of the claims in all the causes of action, irrespective of
whether the causes of action arose out of the same or different transactions. ...

Section 11 of the Interim Rules provides thus:

Application of the totality rule.-In actions where the jurisdiction of the court is
dependent on the amount involved, the test of jurisdiction shall be the aggregate sum
of all the money demands, exclusive only of interest and costs, irrespective of
whether or not the separate claims are owned by or due to different parties. If any
demand is for damages in a civil action, the amount thereof must be specifically
alleged.

Petitioner compares the above-quoted provisions with the pertinent portion of the former rule under
Section 88 of the Judiciary Act of 1948 as amended which reads as follows:

... Where there are several claims or causes of action between the same parties
embodied in the same complaint, the amount of the demand shall be the totality of
the demand in all the causes of action, irrespective of whether the causes of action
arose out of the same or different transactions; but where the claims or causes of
action joined in a single complaint are separately owned by or due to different
parties, each separate claim shall furnish the jurisdictional test. ...

and argues that with the deletion of the proviso in the former rule, the totality rule was reduced to
clarity and brevity and the jurisdictional test is the totality of the claims in all, not in each, of the
causes of action, irrespective of whether the causes of action arose out of the same or different
transactions.

This argument is partly correct. There is no difference between the former and present rules in cases
where a plaintiff sues a defendant on two or more separate causes of action. In such cases, the
amount of the demand shall be the totality of the claims in all the causes of action irrespective of
whether the causes of action arose out of the same or different transactions. If the total demand
exceeds twenty thousand pesos, then the regional trial court has jurisdiction. Needless to state, if the
causes of action are separate and independent, their joinder in one complaint is permissive and not
mandatory, and any cause of action where the amount of the demand is twenty thousand pesos or
less may be the subject of a separate complaint filed with a metropolitan or municipal trial court.

On the other hand, there is a difference between the former and present rules in cases where two or
more plaintiffs having separate causes of action against a defendant join in a single complaint.
Under the former rule, "where the claims or causes of action joined in a single complaint are
separately owned by or due to different parties, each separate claim shall furnish the jurisdictional
test" (Section 88 of the Judiciary Act of 1948 as amended, supra). This was based on the ruling in
the case of Vda. de Rosario vs. Justice of the Peace, 99 Phil. 693. As worded, the former rule
applied only to cases of permissive joinder of parties plaintiff. However, it was also applicable to
cases of permissive joinder of parties defendant, as may be deduced from the ruling in the case
of Brillo vs. Buklatan, thus:

Furthermore, the first cause of action is composed of separate claims against several
defendants of different amounts each of which is not more than P2,000 and falls
under the jurisdiction of the justice of the peace court under section 88 of Republic
Act No, 296. The several claims do not seem to arise from the same transaction or
series of transactions and there seem to be no questions of law or of fact common to
all the defendants as may warrant their joinder under Rule 3, section 6. Therefore, if
new complaints are to be filed in the name of the real party in interest they should be
filed in the justice of the peace court. (87 Phil. 519, 520, reiterated in Gacula vs.
Martinez, 88 Phil. 142, 146)

Under the present law, the totality rule is applied also to cases where two or more plaintiffs having
separate causes of action against a defendant join in a single complaint, as well as to cases where a
plaintiff has separate causes of action against two or more defendants joined in a single complaint.
However, the causes of action in favor of the two or more plaintiffs or against the two or more
defendants should arise out of the same transaction or series of transactions and there should be a
common question of law or fact, as provided in Section 6 of Rule 3.

The difference between the former and present rules in cases of permissive joinder of parties may
be illustrated by the two cases which were cited in the case of Vda. de Rosario vs. Justice of the
Peace (supra) as exceptions to the totality rule. In the case of Soriano y Cia vs. Jose (86 Phil. 523),
where twenty-nine dismissed employees joined in a complaint against the defendant to collect their
respective claims, each of which was within the jurisdiction of the municipal court although the total
exceeded the jurisdictional amount, this Court held that under the law then the municipal court had
jurisdiction. In said case, although the plaintiffs' demands were separate, distinct and independent of
one another, their joint suit was authorized under Section 6 of Rule 3 and each separate claim
furnished the jurisdictional test. In the case of International Colleges, Inc. vs. Argonza (90 Phil. 470),
where twenty-five dismissed teachers jointly sued the defendant for unpaid salaries, this Court also
held that the municipal court had jurisdiction because the amount of each claim was within, although
the total exceeded, its jurisdiction and it was a case of permissive joinder of parties plaintiff under
Section 6 of Rule 3.

Under the present law, the two cases above cited (assuming they do not fall under the Labor Code)
would be under the jurisdiction of the regional trial court. Similarly, in the abovecited cases of Brillo
vs. Buklatan and Gacula vs. Martinez (supra), if the separate claims against the several defendants
arose out of the same transaction or series of transactions and there is a common question of law or
fact, they would now be under the jurisdiction of the regional trial court.

In other words, in cases of permissive joinder of parties, whether as plaintiffs or as defendants,

under Section 6 of Rule 3, the total of all the claims shall now furnish the jurisdictional test. Needless
to state also, if instead of joining or being joined in one complaint separate actions are filed by or
against the parties, the amount demanded in each complaint shall furnish the jurisdictional test.

In the case at bar, the lower court correctly held that the jurisdictional test is subject to the rules on
joinder of parties pursuant to Section 5 of Rule 2 and Section 6 of Rule 3 of the Rules of Court and
that, after a careful scrutiny of the complaint, it appears that there is a misjoinder of parties for the
reason that the claims against respondents Binongcal and Calion are separate and distinct and
neither of which falls within its jurisdiction.

WHEREFORE, the order appealed from is affirmed, without pronouncement as to costs.

SO ORDERED.

G.R. No. 164801 June 30, 2006

PHILIPPINE NATIONAL BANK, Petitioner,

vs.
HEIRS OF ESTANISLAO MILITAR AND DEOGRACIAS MILITAR, represented by TRANQUILINA
MILITAR, Respondents.

x---------------------------------x

G.R. No. 165165 June 30, 2006

SPOUSES JOHNNY LUCERO AND NONA ARIETE, Petitioners,

vs.
HEIRS OF ESTANISLAO MILITAR, DEOGRACIAS MILITAR, and TRANQUILINA MILITAR
(deceased), now represented by AZUCENA MILITAR, FREDDIE MILITAR, EDUARDO MILITAR,
ROMEO L. MILITAR, NELLY LY BOLANIO, LETICIA LY and DELIA LY SI ASOYCO, Respondents.

RESOLUTION

YNARES-SANTIAGO, J.:

Before us are the motions for reconsideration filed by petitioners Philippine National Bank (PNB) in
G.R. No. 164801 and Spouses Johnny Lucero and Nona Ariete (Lucero Spouses) in G.R. No.
165165 seeking a reconsideration of our August 18, 2005 Decision in these consolidated cases
which affirmed in toto the June 4, 2004 Decision and August 4, 2004 Resolution of the Court of
Appeals in CA-G.R. CV No. 54831 holding that both petitioners PNB and the Lucero Spouses were
not mortgagee and buyers in good faith, respectively.
In their separate motions for reconsideration, both petitioners PNB and the Lucero Spouses in the
main assert that they were mortgagee and buyers for value in good faith, respectively. Thus, the
Lucero Spouses pray that we "take a second hard look at the facts and circumstances of the case."
Respondents however argue that PNB cannot be considered a mortgagee in good faith as it failed to
inspect the disputed property when offered to it as security for the loan, which could have led it to
discover the forged instruments of sale. Similarly, the Lucero Spouses cannot be regarded as
innocent purchasers for value, respondents claim, as they failed to inquire from the occupants of the
disputed property the status of the property. Before revisiting the facts and circumstances of the
instant case, a review of existing jurisprudence may be expedient in resolving the twin motions for
reconsideration.

In Cabuhat v. Court of Appeals, we said that "it is well-settled that even if the procurement of a
certificate of title was tainted with fraud and misrepresentation, such defective title may be the
source of a completely legal and valid title in the hands of an innocent purchaser for value. Thus

Where innocent third persons, relying on the correctness of the certificate of title thus issued, acquire
rights over the property the court cannot disregard such rights and order the total cancellation of the
certificate. The effect of such an outright cancellation would be to impair public confidence in the
certificate of title, for everyone dealing with property registered under the Torrens system would have
to inquire in every instance whether the title has been regularly or irregularly issued. This is contrary
to the evident purpose of the law. Every person dealing with registered land may safely rely on the
correctness of the certificate of title issued therefor and the law will in no way oblige him to go behind
the certificate to determine the condition of the property.1

Cabuhat was later invoked by Clemente v. Razo2 and Velasquez, Jr. v. Court of
Appeals.3 Accordingly, in Lim v. Chuatoco we said that "it is a familiar doctrine that a forged or
fraudulent document may become the root of a valid title, if the property has already been
transferred from the name of the owner to that of the forger. This doctrine serves to emphasize that a
person who deals with registered property in good faith will acquire good title from a forger and be
absolutely protected by a Torrens title. In the final analysis, the resolution of this case depends on
whether the petitioners are purchasers in good faith."4

In a litany of cases, we have defined a purchaser in good faith as one who buys property of another
without notice that some other person has a right to, or interest in, such property and pays full and
fair price for the same at the time of such purchase or before he has notice of the claim or interest of
some other person in the property.5

Thus, as a general rule, where the land sold is in the possession of a person other than the vendor,
the purchaser must go beyond the certificate of title and make inquiries concerning the actual
possessor. A buyer of real property which is in possession of another must be wary and investigate
the rights of the latter. Otherwise, without such inquiry, the buyer cannot be said to be in good faith
and cannot have any right over the property.6 We explained this principle in Consolidated Rural Bank
(Cagayan Valley), Inc. v. Court of Appeals and also held therein that this rule likewise applies to
mortgagees of real property7

As this Court explained in the case of Spouses Mathay v. Court of Appeals:

Although it is a recognized principle that a person dealing on a registered land need not go beyond
its certificate of title, it is also a firmly settled rule that where there are circumstances which would
put a party on guard and prompt him to investigate or inspect the property being sold to him, such as
the presence of occupants/tenants thereon, it is of course, expected from the purchaser of a valued
piece of land to inquire first into the status or nature of possession of the occupants, i.e., whether or
not the occupants possess the land en concepto de dueo, in the concept of the owner. As is the
common practice in the real estate industry, an ocular inspection of the premises involved is a
safeguard a cautious and prudent purchaser usually takes. Should he find out that the land he
intends to buy is occupied by anybody else other than the seller who, as in this case, is not in actual
possession, it would then be incumbent upon the purchaser to verify the extent of the occupants
possessory rights. The failure of a prospective buyer to take such precautionary steps would mean
negligence on his part and would thereby preclude him from claiming or invoking the rights of a
"purchaser in good faith."

This Rule equally applies to mortgagees of real property. In the case of Crisostomo v. Court of
Appeals the Court held

It is a well-settled rule that a purchaser or mortgagee cannot close his eyes to facts which should put
a reasonable man upon his guard, and then claim that he acted in good faith under the belief that
there was no defect in the title of his vendor or mortgagor. His mere refusal to believe that such
defect exists, or his willful closing of his eyes to the possibility of the existence of a defect in the
vendors or mortgagors title, will not make him an innocent purchaser or mortgagee for value, if it
afterwards develops that the title was in fact defective, and it appears that he had such notice of the
defects as would have led to its discovery had he acted with the measure of a prudent man in like
situation.

Accordingly, for a purchaser of a property in the possession of another to be in good faith, he must
exercise due diligence, conduct an investigation, and weigh the surrounding facts and circumstances
like what any prudent man in a similar situation would do. In Domalanta v. Commission on
Elections8 we noted the use in other jurisdictions of the terms "man of reasonable caution" 9 and
"ordinarily prudent and cautious man."10 These terms, we said, are legally synonymous and their
reference is not to a person with training in law such as a prosecutor or a judge but to the average
man on the street. It ought to be emphasized that the average man weighs facts and circumstances
without resorting to the calibration of our technical rules of evidence of which his knowledge is nil.
Rather, he relies on the calculus of common sense of which all reasonable men have an abundance.
And, "[b]y law and jurisprudence, a mistake upon a doubtful or difficult question of law may properly
be the basis of good faith."11

On the other hand, a mortgagee, particularly a bank or financial institution whose business is
impressed with public interest, is expected to exercise more care and prudence than a private
individual in its dealings, even those involving registered lands.12 In Sunshine Finance and
Investment Corp. v. Intermediate Appellate Court we presumed that an investment and financing
corporation "is experienced in its business. Ascertainment of the status and condition of properties
offered to it as security for loans it extends must be a standard and indispensable part of its
operations. Surely, it cannot simply rely on an examination of a Torrens certificate to determine what
the subject property looks like as its condition is not apparent in the document. The land might be in
a depressed area. There might be squatters on it. It might be easily inundated. It might be an interior
lot, without convenient access. These and other similar factors determine the value of the property
and so should be of practical concern to the (investment and financing corporation)." 13

In fine, the diligence with which the law requires the individual or a corporation at all times to govern
a particular conduct varies with the nature of the situation in which one is placed, and the importance
of the act which is to be performed.14

Similarly, in ascertaining good faith, or the lack of it, which is a question of intention, courts are
necessarily controlled by the evidence as to the conduct and outward acts by which alone the inward
motive may, with safety, be determined. Good faith, or want of it, is capable of being ascertained only
from the acts of one claiming its presence, for it is a condition of the mind which can be judged by
actual or fancied token or signs.15 Good faith, or want of it, is not a visible, tangible fact that can be
seen or touched, but rather a state or condition of mind which can only be judged by actual or
fancied token or signs.16 Good faith connotes an honest intention to abstain from taking
unconscientious advantage of another.17 Accordingly, in University of the East v. Jader we said that
"[g]ood faith connotes an honest intention to abstain from taking undue advantage of another, even
though the forms and technicalities of law, together with the absence of all information or belief of
facts, would render the transaction unconscientious."18

Withal, in Sigaya v. Mayuga the Court said that "good faith consists in the possessors belief that the
person from whom he received the thing was the owner of the same and could convey his title. Good
faith, while it is always to be presumed in the absence of proof to the contrary, requires a well
founded belief that the person from whom title was received was himself the owner of the land, with
the right to convey it. There is good faith where there is an honest intention to abstain from taking
any unconscientious advantage of another. Otherwise stated, good faith is the opposite of fraud and
it refers to the state of mind which is manifested by the acts of the individual concerned."19

Contrastingly, in Magat, Jr. v. Court of Appeals the Court explained that "[b]ad faith does not simply
connote bad judgment or negligence. It imports a dishonest purpose or some moral obliquity and
conscious doing of wrong. It means a breach of a known duty through some motive or interest or ill
will that partakes of the nature of fraud."20In Arenas v. Court of Appeals the Court held that the
determination of whether one acted in bad faith is evidentiary in nature. 21 Thus "[s]uch acts (of bad
faith) must be substantiated by evidence."22 Indeed, the unbroken jurisprudence is that "[b]ad faith
under the law cannot be presumed; it must be established by clear and convincing evidence. 23

All told, the ascertainment of good faith, or lack of it, and the determination of whether due diligence
and prudence were exercised or not, are questions of fact. And while settled is the principle that this
Court is not a trier of facts24 and the general rule is that the determination of whether or not a buyer
or mortgagee is in good faith is generally outside the province of this Court to determine in a petition
for review,25 inGabriel v. Spouses Mabanta we said that "[t]his rule, however, is not an iron-clad rule.
In Floro v. Llenado we enumerated the various exceptions and one which finds application to the
present case is when the findings of the Court of Appeals are contrary to those of the trial
court."26 Thus, in Clemente v. Razo we held that "the issue of whether or not one is an innocent
purchaser for value is a question of fact which, as a rule, is not for this Court to determine. In the
same breath, however, there are recognized exceptions to such rule, not the least of which is when,
as in this case, the findings of the Court of Appeals are contrary to that of the trial court." 27

In the instant case, the trial court which had the sole opportunity to observe first hand the demeanor
of witnesses and consider the relative weight of the evidence presented, concluded that "Philippine
National Bank and Spouses Johnny Lucero and Nona Ariete are purchasers in good faith."
Respondent appellate court however found that neither the PNB nor the Lucero Spouses can be
regarded as buyers in good faith as they failed to inquire from the possessors the status of the
disputed property. We thus go back to the records of the case and the substantiated allegations.

We begin with petitioner PNB. While it may be true that the bank could not have known the forgery
committed by the Jalbuna Spouses at the time the disputed property was mortgaged to it, still it
could not be completely exonerated from any liability arising from its apparent omission, if not
negligence, to further investigate the nature of the possession or the title of the respondents who
were the alleged occupants of the property. PNB did not present any witness before the trial court
who had personal knowledge of whether or not the bank had conducted the requisite ocular
inspection or investigation before accepting the property as security for the loan of the Jalbuna
Spouses.

Perhaps PNB inordinately relied on the presumption of regularity in its compliance with the
requirements for the Extrajudicial Foreclosure of Mortgage, such as the publication of the notice of
auction sale, and assumed that the burden of proof was on the respondents to prove that the bank
was remiss in its obligation. Perhaps too, the bank assumed that its presumed compliance with the
foregoing requirements was sufficient to operate as a constructive notice to all those claiming
ownership of or a right to possess the mortgaged property, or those who would be adversely affected
by the impending foreclosure sale. It does not however alter the fact that the only witness presented
by PNB merely inherited from his predecessor the records relating to the account of the Jalbuna
Spouses, and hence had no personal knowledge of whether or not an ocular inspection was in fact
conducted on the property. Thus

Atty. Baares:

Q Did you not know whether there was an inspector who made the inspection of the property?

A I do not know.28

xxxx

Q So, is it safe to conclude now that you do not know whether Philippine National Bank sent some
inspectors to Lot 3017-B before the loan

Court:

Answered, he did not know. How will he know?

Atty. Baares:
That will be all, Your Honor.29

Indeed, had petitioner PNB conducted an ocular inspection as it claims, it would have found out that
the mortgagors, Spouses Jalbuna, were not in actual possession of the property but herein
respondents and their predecessors-in-interest, which information should have put it on inquiry as to
the real status of the property. Consequently, petitioner PNB should have inquired into the
circumstances of the possession by herein respondents and their predecessors in interest.

In fine, there is no showing that petitioner PNB, a banking institution, which is expected to exercise
more care and prudence in its dealings involving registered land, ascertained the status and
condition of the property being offered to it as a security for the loan before it approved the loan.
Hence, we therefore find that there is no reversible error committed by the Court of Appeals in
finding that PNB could not be considered a mortgagee in good faith.

We now go to petitioners Lucero Spouses. The Lucero Spouses knew from the very beginning that
the disputed property was occupied by third parties. They resided in the adjoining property. Thus,
they went beyond the title of petitioner PNB, and upon inquiry, were made to believe that the partial
occupation by private respondents of the disputed property was merely being tolerated by the rightful
owner. Accordingly, before the trial court, petitioner Nona A. Lucero testified that

Atty. Posecion:

Q Did your mother not tell you that the Militar family has been residing in the land so that it would be
difficult if you buy the land?

A No, because I will make (the) transaction (with) the Philippine National Bank, not (with) the Militars.

Q So that you disregarded whatever right the Militars have over the land, right?

A No, because the vendee/buyer has the authority to make expenses for all the squatters. 30

The Lucero Spouses also knew that petitioner PNB had already acquired the property in a
foreclosure sale and that petitioner PNB had in fact transferred the title to its name for almost five
years already. Their belief that petitioner PNB thereafter had the right to transfer title over the
disputed property was strengthened by the fact that they similarly consolidated their ownership over
the adjoining property after buying it from respondent Romeo Militar and assuming his loan with
petitioner PNB.31

The reliance of the Lucero Spouses, who never participated in the auction sale, on the right of
petitioner PNB which had the title in its name for almost five years already is not totally misplaced.
On June 5, 1975 the disputed property was mortgaged to petitioner PNB. Some three years later, on
September 5, 1978, the mortgaged property was extrajudicially foreclosed when the mortgagors
defaulted in the payment of their loan obligation, with petitioner PNB as the sole and highest bidder
for P119,961.36. Some four years thereafter, or on November 11, 1982, a deed of sale was executed
in favor of petitioner PNB after the mortgagors failed to redeem the disputed property. On December
6, 1982, title over the disputed property was issued to petitioner PNB. Thus, presented during trial
were, among others, the Affidavit of Publication of Sheriffs Notice of Sale at Public Auction showing
that petitioner PNB complied with the law on extrajudicial foreclosure of mortgage; 32 the Certificate of
Sale at Public Auction of September 5, 1978 issued in favor of petitioner PNB as the highest bidder
in the auction sale of the lot covering the disputed property;33 and the Certification of September 27,
1994 issued by the Register of Deeds of Iloilo stating that title to the lot covering the disputed
property was issued in favor of PNB.34 All told, it took almost eight years for petitioner PNB to
consolidate its title over the disputed property from the time it was mortgaged to it.
lawphil.net

The Lucero Spouses purchased the disputed property from petitioner PNB as an acquired asset
for P229,000.00 and only on November 9, 1987, or some nine years after it extrajudicially foreclosed
the property, and some five years after title was transferred to it. Hence, we cannot really say that
they acquired the property in bad faith; on the other hand, we are more convinced, if not for fairness,
equity and justice, that they acquired the disputed property in good faith and for a valuable
consideration on the basis of the clean title of the bank.

And between the bank whose proof of ownership is the title acquired after years of foreclosure
proceedings and sale, and the supposed tolerated occupation of herein respondents whose rights
are dubious, and at best vague, petitioners Lucero Spouses cannot be faulted for considering
petitioner PNB as having a better right over herein respondents and could very well rely on the title
of the bank. After all, even this Court has "take(n) judicial notice of the uniform practice of financing
institutions to investigate, examine and assess the real property offered as security for any loan
application."35 It must be remembered that the prudence required of the Lucero Spouses is not that
of a person with training in law, but rather that of an average man who "weighs facts and
circumstances without resorting to the calibration of our technical rules of evidence of which his
knowledge is nil."36 Hence, petitioners Lucero Spouses bought the disputed property with the honest
belief that petitioner PNB was its rightful owner and could convey title to the property. They can
therefore be considered as buyers in good faith as they have exercised due diligence required under
the circumstances.

Also, nowhere in the records does it show that the Lucero Spouses were in bad faith. Neither were
private respondents able to prove it, much less were they able to establish it by clear and convincing
evidence as required by the rules. On the contrary, the trial court found that the Lucero Spouses
acted in good faith "since they bought the lot in question from defendant, Philippine National
Bank."37 They could rely on what appears on the face of the Certificate of Title in light of the
attendant circumstances, especially after considering that the requirements for the extrajudicial
foreclosure of mortgage such as publication and notice appear to have been religiously complied
with by PNB.

In contrast, we find, after a meticulous scrutiny of the records, that the respondents are not entirely
blameless. They have not established their right or interest in the property aside from their belated
and unsubstantiated allegation that they were the successors-in-interest of Deogracias, Glicerio,
Tomas and Caridad, all surnamed Militar. Deogracias died on March 17, 1964, Glicerio on March 22,
1939, Tomas on August 20, 1959, and Caridad on April 29, 1957. Since the deaths of their alleged
predecessors-in-interest, respondents have not shown that they have taken even the initial steps to
have the property registered in their names. Nor have they even alleged that they paid any real
property tax on the disputed property like any real owner should do. For this would have put them on
notice that the said property has been registered in the name of a third party.

Thus, to reiterate for emphasis, the Deed of Sale which transferred the property to the Spouses
Jalbuna was executed on April 24, 1975. Clearly, respondents had more than enough time and
opportunity from the death of their ascendants to institute proceedings to have the property
adjudicated to them, if indeed it was true that they were the lawful heirs of Deogracias, Glicerio,
Tomas and Caridad, and were the new owners of the property by succession. This, they did not do.
If they did, the forgery allegedly committed by the Jalbuna Spouses which resulted in the Deed of
Absolute Sale of April 24, 1975 could not have been committed or pushed through and the Lucero
Spouses, as a consequence, would not have been induced to buy the property.

The Jalbuna Spouses acquired title to the property on April 29, 1975. From that time on the doctrine
of "constructive notice" was already in effect against all persons claiming any title or interests in the
property adverse to the registered owners.38

On June 5, 1975, the Spouses Jalbuna mortgaged the property to PNB. On the same date, the
mortgage was registered with the Register of Deeds of Iloilo City. Again, from that date, the
respondents were deemed to have "constructive notice" of the registration.

Philippine National Bank foreclosed the mortgage on September 5, 1978. The Notice of Extrajudicial
Foreclosure of Mortgage was published in a newspaper of general circulation. The publication
likewise operated as "constructive notice" to all persons who would be adversely affected by the
impending foreclosure of the property. A Certificate of Sale over the property was issued in favor of
PNB as the highest bidder in the auction sale. The Certificate of Sale was again registered and
annotated in the title of the property. Again, the respondents had "constructive notice" of the
registration.

On November 11, 1982, PNB consolidated its title to the property and a Deed of Sale was issued in
its favor. On December 6, 1982, a Transfer Certificate of Title was issued in favor of PNB.
Respondents should likewise be charged with notice of such fact. Since that time up to November 9,
1987 when the property was sold to the Lucero Spouses, or for five (5) long years, the property was
an acquired asset of the bank. During this time it can be deduced that it was the bank who paid the
real estate taxes and who appeared as owner in the tax declarations and other documents
pertaining to the property.

It would appear that it was PNB who exercised acts of ownership over the property during the five-
year period, not the respondents who are now claiming to be the owners. There is no evidence of
any act of ownership exercised by the respondents, such as payment of taxes and introduction of
improvements which would have shown, by preponderance of evidence, the right of ownership to or
interest in the property, aside form their occupation thereof by mere tolerance. Since the death of
their predecessors, there has not even been a showing that respondents verified, inquired or
investigated with the Register of Deeds or the Assessors Office as to the status of the property. If
only respondents have been more vigilant in the enforcement of their alleged rights and interests,
the property would not have been sold to third persons who paid valuable consideration thereto. Far
from being vigilant, however, respondents have shown sheer disinterest in their claim to the property,
thus leading to the well-founded conclusion that their claimed ownership rights are not anchored in
reality. Vigilantibus sed non dormientibus jura subveniunt. The law aids the vigilant, not those who
slumber on their rights.
1avvphil.net

More. On November 9, 1987, the property was sold by PNB to the petitioners Lucero Spouses and a
Transfer Certificate of Title was issued in their name on November 11, 1987. The respondents
however filed their Complaint for reconveyance and damages only on October 2, 1989, or nearly two
(2) years after title to the property was issued in favor of the Lucero Spouses. Respondents in fact
amended their complaint three (3) times, the last one on December 26, 1994. Clearly, the actuations
of respondents were not normal for those claiming in good faith legitimate ownership over a parcel of
land sufficient to make third persons conclude that their claim is well-founded as against the
registered owner, in this case, PNB. Indeed, respondents were frozen in the shackles of inactivity for
too long. They bestirred themselves for their long slumber after the Lucero Spouses started to
recover possession of the property which is a mere incident to the ownership that they have already
gained. In essence, the respondents slept on their rights, and hence, must suffer the consequences
of their passivity and inaction.

WHEREFORE, the August 18, 2005 Decision of this Court is hereby MODIFIED. The Motion for
Reconsideration of the Philippine National Bank is DENIED WITH FINALITY. However, the Motion
for Reconsideration of the Spouses Johnny Lucero and Nona Ariete is GRANTED, and the October
18, 1995 Decision of the Regional Trial Court of Iloilo, Br. 38, in Civil Case No. 18836 insofar as it
holds Spouses Johnny Lucero and Nona Ariete as innocent purchasers for value in good faith is
REINSTATED and their title to Lot 3017-B under TCT No. 76938 issued on November 11, 1987 is
declared and so confirmed as VALID.

SO ORDERED.
 NIEVES PLASABAS and MARCOS G.R. No. 166519
MALAZARTE,
Petitioners, Present:

YNARES-SANTIAGO, J.,
Chairperson,
- versus - CARPIO MORALES,*
CHICO-NAZARIO,
NACHURA, and
PERALTA, JJ.
COURT OF APPEALS (Special Former
Ninth Division), DOMINADOR LUMEN, Promulgated:
and AURORA AUNZO,
Respondents. March 31, 2009

x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:

Assailed in this petition for review on certiorari under Rule 45 of the Rules of
Court are the May 12, 2004 Decision [1] of the Court of Appeals (CA) in CA-G.R.
CV No. 43085 and the December 1, 2004 Resolution [2] denying reconsideration of
the challenged decision.
The pertinent facts and proceedings follow.

In 1974, petitioners[3] filed a complaint for recovery of title to property with

damages before the Court of First Instance (now, Regional Trial Court [RTC]) of
Maasin, Southern Leyte against respondents. The case was docketed as Civil Case
No. R-1949. The property subject of the case was a parcel of coconut land in
Canturing, Maasin, Southern Leyte, declared under Tax Declaration No. 3587 in
the name of petitioner Nieves with an area of 2.6360 hectares. [4] In their complaint,
petitioners prayed that judgment be rendered confirming their rights and legal title
to the subject property and ordering the defendants to vacate the occupied portion
and to pay damages.[5]

Respondents, for their part, denied petitioners allegation of ownership and

possession of the premises, and interposed, as their main defense, that the subject
land was inherited by all the parties from their common ancestor, Francisco
Plasabas.[6]

Revealed in the course of the trial was that petitioner Nieves, contrary to her
allegations in the complaint, was not the sole and absolute owner of the land.
Based on the testimonies of petitioners witnesses, the property passed on from
Francisco to his son, Leoncio; then to Jovita Talam, petitioner Nieves grandmother;
then to Antonina Talam, her mother; and then to her and her siblingsJose, Victor
and Victoria.[7]

After resting their case, respondents raised in their memorandum the argument that
the case should have been terminated at inception for petitioners failure to implead
indispensable parties, the other co-owners Jose, Victor and Victoria.

In its April 19, 1993 Order,[8] the trial court, without ruling on the merits, dismissed
the case without prejudice, thus:

This Court, much as it wants to decide the instant case on the merits,
being one of the old inherited cases left behind, finds difficulty if not
impossibility of doing so at this stage of the proceedings when both
parties have already rested their cases. Reluctantly, it agrees with the
defendants in the observation that some important indispensable
consideration is conspicuously wanting or missing.

It is not the Courts wish to turn its back on the crucial part of the case,
which is the pronouncement of the judgment to settle the issues raised in
the pleadings of the parties once and for all, after all the time, effort and
expense spent in going through the trial process.

But, rules are rules. They have to be followed, to arrive at a fair and just
verdict. Section 7, Rule 3 of the Rules of Court provides:

x x x Compulsory joinder of indispensable parties. Parties

in interest without whom no final determination can be had
of an action shall be joined either as plaintiffs or
defendants.

What the Court wants to say here is that the instant case should have
been dismissed without prejudice a long time ago for lack of cause of
action as the plaintiffs spouses Marcos Malazarte and Nieves Plasabas
Malazarte have no complete legal personality to sue by themselves alone
without joining the brothers and sisters of Nieves who are as
INDISPENSABLE as the latter in the final determination of the
case. Not impleading them, any judgment would have no effectiveness.

They are that indispensable that a final decree would necessarily affect
their rights, so that the Court cannot proceed without their
presence. There are abundant authorities in this regard. Thus

The general rule with reference to the making of parties in

a civil action requires the joinder of all indispensable
parties under any and all conditions, their presence being a
sine qua non of the exercise of judicial power. (Borlasa v.
Polistico, 47 Phil. 345, 348) For this reason, our Supreme
Court has held that when it appears of record that there are
other persons interested in the subject matter of the
litigation, who are not made parties to the action, it is the
duty of the court to suspend the trial until such parties are
made either plaintiffs or defendants. (Pobre, et al. v.
Blanco, 17 Phil. 156). x x x Where the petition failed to
join as party defendant the person interested in sustaining
the proceeding in the court, the same should be dismissed.
 x x x When an indispensable party is not before the court,
the action should be dismissed. (People, et al. v. Rodriguez,
et al., G.R. Nos. L-14059-62, September 30, 1959) (sic)

Parties in interest without whom no final determination can

be had of an action shall be joined either as plaintiffs or
defendants. (Sec. 7, Rule 3, Rules of Court). The burden of
procuring the presence of all indispensable parties is on the
plaintiff. (39 Amjur [sic] 885). The evident purpose of the
rule is to prevent the multiplicity of suits by requiring the
person arresting a right against the defendant to include
with him, either as co-plaintiffs or as co-defendants, all
persons standing in the same position, so that the whole
matter in dispute may be determined once and for all in one
litigation. (Palarca v. Baginsi, 38 Phil. 177, 178).

An indispensable party is a party who has such an interest

in the controversy or subject matter that a final adjudication
cannot be made, in his absence, without inquiring or
affecting such interest; a party who has not only an interest
of such a nature that a final decree cannot be made without
affecting his interest or leaving the controversy in such a
condition that its final determination may be wholly
inconsistent with equity and good conscience. (67 C.J.S.
892).Indispensable parties are those without whom no
action can be finally determined. (Sanidad v. Cabataje, 5
Phil. 204)

WHEREFORE, IN VIEW OF ALL THE FOREGOING

CONSIDERATIONS, both the complaint and the counterclaim in the
instant case are ordered DISMISSED without prejudice. No
pronouncement as to costs.

SO ORDERED.[9]

Aggrieved, petitioners elevated the case to the CA. In the challenged May 12, 2004
Decision,[10] the appellate court affirmed the ruling of the trial court. The CA,
further, declared that the non-joinder of the indispensable parties would violate the
principle of due process, and that Article 487 of the Civil Code could not be
applied considering that the complaint was not for ejectment, but for recovery of
title or a reivindicatory action.[11]

With their motion for reconsideration denied in the further assailed December 1,
2004 Resolution,[12] petitioners filed the instant petition.

The Court grants the petition and remands the case to the trial court for disposition
on the merits.

Article 487 of the Civil Code provides that any one of the co-owners may bring an
action for ejectment. The article covers all kinds of actions for the recovery of
possession, including an accion publiciana and a reivindicatory action. A co-owner
may file suit without necessarily joining all the other co-owners as co-plaintiffs
because the suit is deemed to be instituted for the benefit of all. Any judgment of
the court in favor of the plaintiff will benefit the other co-owners, but if the
judgment is adverse, the same cannot prejudice the rights of the unimpleaded co-
owners.[13]

With this disquisition, there is no need to determine whether petitioners complaint

is one for ejectment or for recovery of title. To repeat, Article 487 of the Civil Code
applies to both actions.

Thus, petitioners, in their complaint, do not have to implead their co-owners as

parties. The only exception to this rule is when the action is for the benefit of the
plaintiff alone who claims to be the sole owner and is, thus, entitled to the
possession thereof. In such a case, the action will not prosper unless the plaintiff
impleads the other co-owners who are indispensable parties.[14]

Here, the allegation of petitioners in their complaint that they are the sole
owners of the property in litigation is immaterial, considering that they
acknowledged during the trial that the property is co-owned by Nieves and her
siblings, and that petitioners have been authorized by the co-owners to pursue the
case on the latters behalf.[15] Impleading the other co-owners is, therefore, not
mandatory, because, as mentioned earlier, the suit is deemed to be instituted for the
benefit of all.
 In any event, the trial and appellate courts committed reversible error when
they summarily dismissed the case, after both parties had rested their cases
following a protracted trial commencing in 1974, on the sole ground of failure to
implead indispensable parties. The rule is settled that the non-joinder of
indispensable parties is not a ground for the dismissal of an action. The remedy is
to implead the non-party claimed to be indispensable. Parties may be added by
order of the court on motion of the party or on its own initiative at any stage of the
action and/or at such times as are just. If petitioner refuses to implead an
indispensable party despite the order of the court, the latter may dismiss the
complaint/petition for the plaintiffs/petitioner's failure to comply therewith.[16]

WHEREFORE, premises considered, the instant petition is GRANTED,

and the case is REMANDED to the trial court for appropriate proceedings. The
trial court is further DIRECTED to decide on the merits of the civil case WITH
DISPATCH.

SO ORDERED.
CHRISTINE CHUA G.R. No. 151900
Petitioner,
Present:
PUNO, J.
Chairman,
- versus - AUSTRIA-MARTINEZ,
CALLEJO,
TINGA, and
CHICO-NAZARIO, JJ.
JORGE TORRES and
ANTONIO BELTRAN,
Respondents. August 30, 2005
x---------------------------------------------------------------------x

DECISION

TINGA, J.:

The Court settles an issue, heretofore undecided, on whether

the absence of the signature in the required verification and
certification against forum-shopping of a party misjoined as a
plaintiff is a valid ground for the dismissal of the complaint. We rule
in the negative.
The relevant facts in this Petition for Review are culled from the
records.

On 24 October 2001, a complaint for damages was lodged

before the Regional Trial Court (RTC) of Caloocan City, Branch 126.
[1]
The complaint was filed by Christine Chua, herein petitioner,
impleading her brother Jonathan Chua as a necessary co-plaintiff.
Named as defendants in the suit were herein respondents Jorge
Torres and Antonio Beltran. Torres was the owner of the 9th Avenue
Caltex Service Center (Caltex Service Center), while Beltran was an
employee of the said establishment as the head of its Sales and
Collection Division.[2]

The complaint alleged that on 3 April 2000, Jonathan Chua issued

in favor of the Caltex Service Center his personal Rizal Commercial
Banking Corporation (RCBC) Check No. 0412802 in the amount of
Nine Thousand Eight Hundred Forty Nine Pesos and Twenty
Centavos (P9,849.20) in payment for purchases of diesel oil.
However, the check was dishonored by the drawee bank when
presented for payment on the ground that the account was closed.
Beltran then sent petitioner a demand letter informing her of the
dishonor of the check and demanding the payment thereof.
Petitioner ignored the demand letter on the ground that she was not
the one who issued the said check.

Without bothering to ascertain who had actually issued the

check, Beltran instituted against petitioner a criminal action for
violation of Batas Pambansa Bilang 22 (B.P. 22). Subsequently, a
criminal information was filed against petitioner with the
Metropolitan Trial Court (MTC) of Caloocan City, Branch 50. [3] The
MTC then issued a warrant of arrest against petitioner. The police
officers tasked with serving the warrant looked for her in her
residence, in the auto repair shop of her brother, and even at the
Manila Central University were she was enrolled as a medical
student, all to the alleged embarrassment and social humiliation of
petitioner.[4]

Beltrans purported negligence amounted to either malicious

prosecution or serious defamation in prosecuting petitioner
resulting from the issuance of a check she herself did not draw, and
served cause for a claim of moral damages. On the other hand,
Torres, as employer of Beltran, was alleged to have failed to observe
the diligence of a good father of the family to prevent the damage
suffered by petitioner. Exemplary damages and attorneys fees were
likewise sought, thus bringing the
aggregate total of damages claimed to Two Million Pesos
(P2,000,000.00), plus costs of suit. [5]

Significantly, while Jonathan Chua was named as a plaintiff to

the suit, it was explicitly qualified in the second paragraph of the
complaint that he was being impleaded here-in as a necessary
party-plaintiff.[6] There was no allegation in the complaint of any
damage or injury sustained by Jonathan, and the prayer therein
expressly named petitioner as the only party to whom respondents
were sought to recompense.[7] Neither did Jonathan Chua sign any
verification or certification against forum-shopping, although
petitioner did sign an attestation, wherein she identified herself as
the principal plaintiff.[8]

Upon motion of respondents, the RTC ordered the dismissal of

the complaint[9] on the ground that Jonathan Chua had not
executed a certification against forum-shopping. The RTC stressed
that Section 5, Rule 7 of the Rules of Civil Procedure, the rule
requiring the

certification, makes no distinction whether the plaintiff required to

execute the certification is a principal party, a nominal party or a
necessary party. Instead, the provision requires that a plaintiff or
principal party who files a complaint or initiatory pleading execute
such certification. Jonathan Chua, being a plaintiff in this case,
was obliged to execute or sign such certification. [10] Hence, his
failure to do so in violation of the mandatory rule requiring the
certification against forum-shopping constituted valid cause for the
dismissal of the petition.[11]

After the RTC denied the motion for reconsideration [12] lodged
by petitioner, the matter was elevated directly to this Court by way
of petition for review under Rule 45, raising a purely legal question,
[13]
cast, if somewhat unwieldily, as whether or not a co-plaintiff
impleaded only as a necessary party, who however has no claim for
relief or is not asserting any claim for relief in the complaint, should
also make a certification against forum shopping.[14]

Preliminarily, it bears noting that Jonathan Chua did not sign

as well any verification to the complaint, ostensibly in violation of
Section 7, Rule 4 of the Rules of Civil Procedure. The RTC failed to
mention such fact, as does petitioner in her present petition. In
their arguments before this Court, respondents do refer in passing
to the verification requirement[15], but do not place any particular
focus thereto. The verification requirement is separate from the
certification requirement.[16] It is noted that as a matter of practice,
the verification is usually accomplished at the same time as the
certification against forum-shopping; hence the customary
nomenclature, Verification and Certification of Non Forum-
Shopping or its variants. For this reason, it is quite possible that
the RTC meant to assail as well the failure of Jonathan Chua to
verify the complaint.

The verification requirement is significant, as it is intended to

secure an assurance that the allegations in the pleading are true
and correct and not the product of the imagination or a matter of
speculation, and that the pleading is filed in good faith. [17] The
absence of a proper verification is cause to treat the pleading as
unsigned and dismissible.[18] It would be as well that the Court
discuss whether under the circumstances, Jonathan Chua is also
required to execute a verification in respect to petitioners complaint.

Having established the proper parameters of the petition, we

proceed to the core issues. We find the petition has merit, although
we appreciate the situation differently from petitioner. Our decision
proceeds from the fundamental premise that Jonathan Chua was
misjoined as a party plaintiff in this case.

It is elementary that it is only in the name of a real party in

interest that a civil suit may be prosecuted. [19] Under Section 2, Rule
3 of the Rules of Civil Procedure, 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. "Interest" within the
meaning of the rule means material interest, an interest in issue
and to be affected by the decree, as distinguished from mere
interest in the question involved, or a mere incidental interest.
[20]
One having no right or interest to protect cannot invoke the
jurisdiction of the court as a party plaintiff in an action. [21] To
qualify a person to be a real party in interest in whose name an
action must be prosecuted, he must appear to be the present real
owner of the right sought to enforced.[22]

The subject complaint does not allege any rights of Jonathan

Chua violated by respondents, present any rights of his to be
enforced, or seek in his behalf any rights to the avails of suit. In
short, Jonathan claims nothing, and for nothing, in the subject
complaint. If he alone filed the complaint, it would have been
dismissed on the ground that the complaint states no cause of
action, instituted as it was by a person who was not a real party in
interest.

But was it proper for petitioner to have even impleaded

Jonathan as a co-plaintiff in the first place? Petitioner alleged in her
complaint that Jonathan was a necessary party, and remains
consistent to that claim even before this Court. She however fails to
demonstrate how Jonathan can be considered as a necessary party,
other than by noting that he was the one who really
issued the check in controversy.[23] Such fact, if proven, may
establish the malice of respondents in filing the criminal case
against petitioner for violation of B.P. 22, but does not create the
need to require Jonathans participation as a necessary party.

Section 8, Rule 7 of the Rules of Civil Procedure defines a

necessary party as 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.[24] Necessary parties are those whose
presence is necessary to adjudicate the whole controversy, but
whose interests are so far separable that a final decree can be made
in their absence without affecting them.[25]

An example of a necessary party may be found in Seno v.

Mangubat.[26] Petitioner therein sold her property through a deed of
sale to three vendees. Two of the vendees then sold their shares to
the third buyer, who then sold the property to another set of
persons. Thereafter, petitioner, who claimed that the true intent of
the first sale was an equitable mortgage, filed a complaint seeking
the reformation of the deed of sale and the annulment of the second
sale. The question arose whether the two vendees who had since
disposed of their shares should be considered as indispensable
parties or necessary parties. In concluding that they were only
necessary parties, the Court reasoned:

In the present case, there are no rights of defendants Andres

Evangelista and Bienvenido Mangubat to be safeguarded if the sale
should be held to be in fact an absolute sale nor if the sale is held to
be an equitable mortgage. Defendant Marcos Mangubat became the
absolute owner of the subject property by virtue of the sale to him of
the shares of the aforementioned defendants in the property. Said
defendants no longer have any interest in the subject property.
However, being parties to the instrument sought to be reformed,
their presence is necessary in order to settle all the possible
issues of the controversy. Whether the disputed sale be declared an
absolute sale or an equitable mortgage, the rights of all the
defendants will have been amply protected. Defendants-spouses
Luzame in any event may enforce their rights against defendant
Marcos Mangubat.[27]

In Seno, the persons deemed by the Court as necessary parties may

have had already disposed of their interests in the property.
However, should the lower court therein grant the prayer for the
reformation of the deed of sale, the ruling will undoubtedly have an
effect on such parties, on matters such as the purchase price which
they may have received, and on whatever transmission of rights that
may have occurred between them and the vendor.

In contrast, Jonathan Chua does not stand to be affected should

the RTC rule either favorably or unfavorably of the complaint. This
is due to the nature of the cause of action of the complaint, which
alleges an injury personal to petitioner, and the relief prayed for,
which is to be adjudicated solely to petitioner. There is no allegation
in the complaint alleging any violation or omission of any right of
Jonathan, either arising from contract or from law.

It may be so that Jonathan may be called to testify by his

sister, in order to prove the essential allegation that she did not
issue the check in question, and perhaps such testimony would be
vital to petitioners cause of action. But this does not mean that
Jonathan should be deemed a necessary party, as such
circumstance would merely place him in the same class as those
witnesses whose testimony would be necessary to prove the
allegations of the complaint. But the fact remains that Jonathan
would stand unaffected by the final ruling on the complaint. The
judicial confirmation or rejection of the allegations therein, or grant
or denial of the reliefs prayed for will not infringe on or augment any
of his rights under the law. If there would be any effect to Jonathan
of the RTCs ultimate decision on the complaint, it would be merely
emotional, arising from whatever ties of kinship he may retain
towards his sister, and no different from whatever effects that may
be similarly sustained on petitioners immediate family.
Since we are unconvinced by petitioners basic premise that
Jonathan was a necessary party, it is unnecessary to directly settle
the issue as couched by petitioner of whether or not a co-plaintiff
impleaded only as a necessary party, who however has no claim for
relief or is not asserting any claim for relief in the complaint, should
also make a certification against forum shopping.[28] We can note, as
the RTC did, that Section 5, Rule 7 of the 1997 Rules of Civil
Procedure makes no distinctions that would expressly exempt a
necessary party from executing the certification against forum
shopping. Nonetheless, there are dimensions to the matter,
heretofore unraised, that may unsettle a strict application of the
rule, such as if the necessary party is impleaded as a plaintiff or
counterclaimant without his knowledge or against his will.[29] But
these circumstances relevant to a necessary party are not present
in this case, and thus require no further comment upon for now.

Instead, what the Court may rule upon is whether the absence of
the signature of the person misjoined as a party-plaintiff in either
the verification page or certification against forum-shopping is
ground for the dismissal of the action. We rule that it is not so, and
that the RTC erred in dismissing the instant complaint. There is no
judicial precedent affirming or rejecting such a view, but we are
comfortable with making such a pronouncement. A misjoined party
plaintiff has no business participating in the case as a plaintiff in
the first place, and it would make little sense to require the
misjoined party in complying with all the requirements expected of
plaintiffs.
At the same time, Section 11, Rule 3 of the 1997 Rules of Civil
Procedure states:

Neither misjoinder nor non-joinder of parties is ground for

dismissal of an action. Parties may be dropped or added by order of
the court on motion of any party or on its own initiative at any stage
of the action and on such terms as are just. Any claim against a
misjoined party may be severed and proceeded with separately.[30]

Clearly, misjoinder of parties is not fatal to the complaint. The rule

prohibits dismissal of a suit on the ground of non-joinder or
misjoinder of parties.[31] Moreover, the dropping of misjoined parties
from the complaint may be done motu proprio by the court, at any
stage, without need for a motion to such effect from the adverse
party.[32] Section 11, Rule 3 indicates that the misjoinder of parties,
while erroneous, may be corrected with ease through amendment,
without further hindrance to the prosecution of the suit.

It should then follow that any act or omission committed by a

misjoined party plaintiff should not be cause for impediment to the
prosecution of the case, much less for the dismissal of the suit.
After all, such party should not have been included in the first
place, and no efficacy should be accorded to whatever act or
omission of
the party.[33] Since the misjoined party plaintiff receives no
recognition from the court as either an indispensable or necessary
party-plaintiff, it then follows that whatever action or inaction the
misjoined party may take on the verification or certification against
forum-shopping is inconsequential. Hence, it should not have
mattered to the RTC that Jonathan Chua had failed to sign the
certification against forum-shopping, since he was misjoined as a
plaintiff in the first place. The fact that Jonathan was misjoined is
clear on the face of the complaint itself, and the error of the RTC in
dismissing the complaint is not obviated by the fact that the adverse
party failed to raise this point. After all, the RTC could have motu
proprio dropped Jonathan as a plaintiff, for the reasons above-stated
which should have been evident to it upon examination of the
complaint.

There may be a school of thought that would nonetheless find some

satisfaction in petitioners woes before the RTC, as it was her error in
the first place of wrongfully impleading her brother as a party
plaintiff which ultimately served as cause for the dismissal of the
complaint. The blame may in the final analysis lie with petitioner,
yet we should not construe the rules of procedure to quench an
unnecessary thirst to punish at the expense of the intellectual
integrity of the rules. For our Rules of Court do not regard the
misjoinder of parties as an error of fatal consequence, and the
logical extension of this principle is to consider those procedural
acts or omissions of misjoined parties as of similar import.

WHEREFORE, the Petition is GRANTED. The Orders dated 3

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

SO ORDERED.