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CIVIL PROCEDURE SY 2009-2010 Transfer in interest

148133 October 8,2008 (Kur)
Judge Bonifacio
Indemnity
CASE LIST: 158997 October 6,2008 (Ely)

Rules as to fees Indigent

GR 165147 July 9, 2008 Phil. First Insurance (Din) 150108 January 28,2008 (Maine)
173002 July 4, 2008 (Ritz)
177703 January 28, 2008 (Pia) Venue
160653 July 23,2008 (Joco)
Estoppel by laches
140476 June 14,2008 (Da) Summary Procedure
AM RTJ 06-1631 September 30,2008 (Kip)
Writ of Amparo
182434 June 17,2008 (Rish) Petition for relief (where to file)
182718 July 26,2009 (Miggy Lazaro)
Jurisdiction on possession/ownership of real property
174346 September 12,2008 (Jaewoo) Filing of affidavits and papers
155553 August 26,2008 (Ange)
Rehabilitation case is a special proceeding
164479 February 13,2008 (Ari) Counterclaim not subject to collateral attack
159494 July 31,2008 (Ange)
Litis Pendentia 143581 January 7,2008 (Ange)
163175 June 27,2008 (Kurush)

Misjoinder of causes of action * No digest for:

166662 June 27,2008 (Macy) SECURITIES AND EXCHANGE COMMISSION v. INTERPORT RESOURCES CORPORATION, G.R. No. 135808,
GR 173192 April 18,2008 (Ely) October 6, 2008
164521 December 18,2008 (Maine)
* These cannot be found:
Venue in personam GR 161317 March 14, 2008
154096 August 22,2008 (Joco) GR 182718 July 26, 2009

Appeal
177898 August 13,2008 (Kip)

Lawyer not a real party in interest

151983 July 31,2008 (Miggy Lazaro)

Real party in interest

161317 March 14,2008 (Da---i have yet to double check the citation on this one)
161317 July 16,2008 (Ritz)
154080 January 25,2008 (Pia)
151016 August 6,2008 (Din)

Intervention
175989 February 4,2008 (Rish)
156052 February 13,2008 (Jaewoo)
135808 October 6,2008 (Ari)

Substitution
149787 June 18,2008 (Macy)

PHILIPPINE FIRST INSURANCE CO., INC v PYRAMID LOGISTICS AND TRUCKING
CORPORATION
G.R. No. 165147 July 9, 2008
(docket fees)
Facts:
Petitioners filed a MTD against Pyramid on the ground that they failed to pay the correct docket
fees.
Pyramid had filed in the RTC an action for specific performance and damages. In their original
complaint it failed to allege the amount of damages sought to be recovered. In their amended
complaint, it alleged the damages for recovery in the body of the complaint but not in the prayer.
As a result, it only paid a minimal amount of docket fees.
Petitioners saw this as a deliberate attempt to evade payment of docket fees and thus filed the
aforementioned MTD.
Pyramid filed its Opposition, alleging that if there was a mistake in the assessment of the docket
fees, the trial court was not precluded from acquiring jurisdiction over the complaint as “it has the
authority to direct the mistaken party to complete the docket fees in the course of the
proceedings.”
RTC ruled in favor of Pyramid.
CA ruled in favor of Petitioners.
Issues:
 Whether Pyramid which filed a complaint, denominated as
one for specific performance and damages, against petitioners RTC paid the correct docket
fee?
 If in the negative, whether the complaint should be dismissed
or Pyramid can still be ordered to pay the fee?
Ruling: Pyramid failed to pay the correct docket fees, they are ordered to pay the correct fees
within a reasonable time.
Ratio:
 As will be noted, the requirement in Circular No. 7 that complaints,
petitions, answers, and similar pleadings should specify the amount of damages being
prayed for not only in the body of the pleading but also in the prayer, has not been altered.
 What has been revised is the rule that subsequent “amendment of
the complaint or similar pleading will not thereby vest jurisdiction in the Court, much less the
payment of the docket fee based on the amount sought in the amended pleading,” the trial
court now being authorized to allow payment of the fee within a reasonable time but in no
case beyond the applicable prescriptive period or reglementary period.
 Moreover, a new rule has been added, governing the awards of
claims not specified in the pleading – i.e., damages arising after the filing of the complaint or
similar pleading – as to which the additional filing fee therefore shall constitute a lien on the
judgment
 Two situations may arise. One is where the complaint or similar
pleading sets out a claim purely for money and damages and there is no statement of the
amounts being claimed. In this event the rule is that the pleading will “not be accepted nor
admitted, or shall otherwise be expunged from the record.” In other words, the complaint or
pleading may be dismissed, or the claims as to which amounts are unspecified may be
expunged, although as aforestated the Court may, on motion, permit amendment of the
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complaint and payment of the fees provided the claim has not in the meantime become time-
barred.
 The other is where the pleading does specify the amount of every
claim, but the fees paid are insufficient; and here again, the rule now is that the court may
allow a reasonable time for the payment of the prescribed fees, or the balance thereof, and
upon such payment, the defect is cured and the court may properly take cognizance of the
action, unless in the meantime prescription has set in and consequently barred the right of
action.
 While it is true that the determination of certain damages x x x is
left to the sound discretion of the court, it is the duty of the parties claiming such damages
to specify the amount sought on the basis of which the court may make a proper
determination, and for the proper assessment of the appropriate docket fees. The
exception contemplated as to claims not specified or to claims although specified are left for
determination of the court is limited only to any damages that may arise after the filing of the
complaint or similar pleading for then it will not be possible for the claimant to specify nor
speculate as to the amount thereof.
BAUTISTA V. UNANGST (GR 173002, July 4, 2008)
FACTS:
 Petitioner Benjamin Bautista filed a complaint for specific performance or recovery of possession,
for sum of money, for consolidation of ownership and damages against respondent Shirley Unangst
and other unnamed persons before the RTC due to respondent’s failure to repurchase the property
within the stipulated period by virtue of their previous agreement.
 RTC: ruled in favor of petitioner.
 Respondents failed to interpose a timely appeal. However, respondent Unangst filed a petition for
relief pursuant to Section 38 of the 1997 Rules on Civil Procedure. She argued that she learned of the
decision of the RTC only on September 6, 2004 when she received a copy of the motion for execution
filed by petitioner.
 Petitioner, on the other hand, moved for the dismissal of respondent's petition on the ground that the
latter paid an insufficient sum of P200.00 as docket fees.
 It appears that respondent Unangst initially paid P200.00 as docket fees as this was the amount
assessed by the Clerk of Court of the RTC. Said amount was insufficient as the proper filing fees
amount to P1,715.00. Nevertheless, the correct amount was subsequently paid by said respondent
on February 22, 2005.
 In their comment, respondents countered that they should not be faulted for paying deficient docket
fees as it was due to an erroneous assessment of the Clerk of Court.
 The RTC granted the petition for relief. Subsequently, it directed respondents to file a notice of
appeal within twenty-four (24) hours from receipt of the order. Accordingly, on February 23, 2005,
respondents filed their notice of appeal.
 Petitioner insisted, among others, that although the petition for relief of respondents was filed on
time, the proper filing fees for said petition were paid beyond the 60-day reglementary period. He
posited that jurisdiction is acquired by the court over the action only upon full payment of prescribed
docket fees.
 CA: reversed
ISSUE: w/n respondent was able to perfect an appeal via Petition for Relief To Be Able to Appeal
Judgment even when the proper docket fees were paid beyond the period prescribed to bring such
action.
HELD: Yes. Failure to pay the proper docket fees was due to a justifiable reason.

 Respondent contends that the belated payment of proper docket fees was not due to their fault but
to the improper assessment by the Clerk of Court. Respondent asserts the ruling of the CA that the
court may extend the time for the payment of the docket fees if there is a justifiable reason for the
failure to pay the correct amount. Moreover, respondent argues that petitioner failed to contest the
RTC Order dated February 21, 2004 that allowed the payment of supplementary docket fees.
Petitioner failed to file a motion for reconsideration or a petition for certiorari to the higher court to
question said order.
 We agree with respondents. Their failure to pay the correct amount of docket fees was due to a
justifiable reason.
 The right to appeal is a purely statutory right. Not being a natural right or a part of due process, the
right to appeal may be exercised only in the manner and in accordance with the rules provided
therefore. For this reason, payment of the full amount of the appellate court docket and other lawful
fees within the reglementary period is mandatory and jurisdictional. Nevertheless, as this Court ruled
in Aranas v. Endona, the strict application of the jurisdictional nature of the above rule on payment
of appellate docket fees may be mitigated under exceptional circumstances to better serve the
interest of justice. It is always within the power of this Court to suspend its own rules, or to except a
particular case from their operation, whenever the purposes of justice require it.
 In not a few instances, the Court relaxed the rigid application of the rules of procedure to afford the
parties the opportunity to fully ventilate their cases on the merits. This is in line with the time-
honored principle that cases should be decided only after giving all parties the chance to argue their
causes and defenses. For, it is far better to dispose of a case on the merit which is a primordial end,
rather than on a technicality, if it be the case, that may result in injustice. The emerging trend in the
rulings of this Court is to afford every party-litigant the amplest opportunity for the proper and just
determination of his cause, free from the constraints of technicalities.
 As early as 1946, in Segovia v. Barrios, the Court ruled that where an appellant in good faith paid less
than the correct amount for the docket fee because that was the amount he was required to pay by
the clerk of court, and he promptly paid the balance, it is error to dismiss his appeal because "(e)very
citizen has the right to assume and trust that a public officer charged by law with certain duties
knows his duties and performs them in accordance with law. To penalize such citizen for relying upon
said officer in all good faith is repugnant to justice."
 Technicality and procedural imperfections should thus not serve as bases of decisions. In that way,
the ends of justice would be better served. For, indeed, the general objective of procedure is to
facilitate the application of justice to the rival claims of contending parties, bearing always in mind
that procedure is not to hinder but to promote the administration of justice.
Arriola v. Arriola (January 28, 2008)
Facts:
John Nabor C. Arriola (respondent) filed Special Civil Action against Vilma G. Arriola and Anthony Ronald
G. Arriola (petitioners) for judicial partition of the properties of decedent Fidel Arriola (the decedent
Fidel). Respondent is the son of decedent Fidel with his first wife Victoria C. Calabia, while petitioner
Anthony is the son of decedent Fidel with his second wife, petitioner Vilma.
The RTC rendered a decision, which became final, ordering the partition of the parcel of land covered by
Transfer Certificate of Title No. 383714 (84191) left by the decedent Fidel S. Arriola by and among his
heirs John Nabor C. Arriola, Vilma G. Arriola and Anthony Ronald G. Arriola, in equal shares of one-third
(1/3) each without prejudice to the rights of creditors or mortgagees thereon, if any.
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As the parties failed to agree on how to partition among them the land covered by TCT No. 383714
(subject land), respondent sought its sale through public auction, and petitioners acceded to it.
Accordingly, the RTC ordered the public auction of the subject land. The public auction sale was
scheduled on May 31, 2003 but it had to be reset when petitioners refused to include in the auction the
house (subject house) standing on the subject land. This prompted respondent to file with the RTC an
Urgent Manifestation and Motion for Contempt of Court, praying that petitioners be declared in
contempt. The RTC denied the Motion and also denied a Motion for Reconsideration of the respondents.
Respondent filed with the CA a Petition for Certiorari where he sought to have the RTC Orders set aside,
and prayed that he be allowed to proceed with the auction of the subject land including the subject
house. The CA granted the Petition for Certiorari and denied petitioner’s Motion for Reconsideration,
hence this petition for Certiorari under Rule 45 of the Rules of Court.
Issue: W/N petition for Certiorari should be granted on the sole ground that the CA erred in holding that
the RTC committed grave abuse of discretion in denying the motion for contempt of court?
Held: The assailed CA Decision and Resolution must be modified for reasons other than those advanced
by petitioners. The contempt proceeding initiated by respondent was one for indirect contempt.
Section 4, Rule 71 of the Rules of Court prescribes the procedure for the institution of proceedings for
indirect contempt. Under the aforecited second paragraph of the Rules, the requirements for initiating an
indirect contempt proceeding are a) that it be initiated by way of a verified petition and b) that it should
fully comply with the requirements for filing initiatory pleadings for civil actions. The provisions of the
Rules are worded in very clear and categorical language. In case where the indirect contempt charge is
not initiated by the courts, the filing of a verified petition which fulfills the requirements on initiatory
pleadings is a prerequisite. Beyond question now is the mandatory requirement of a verified petition in
initiating an indirect contempt proceeding.
The RTC erred in taking jurisdiction over the indirect contempt proceeding initiated by respondent. The
latter did not comply with any of the mandatory requirements of Section 4, Rule 71. He filed a mere
Urgent Manifestation and Motion for Contempt of Court, and not a verified petition. He likewise did not
conform with the requirements for the filing of initiatory pleadings such as the submission of a
certification against forum shopping and the payment of docket fees. Thus, his unverified motion should
have been dismissed outright by the RTC.
WRIT OF AMPARO
TAPUZ vs. DEL ROSARIO, G.R. No. 182484, June 17, 2008
Brion, J.:
Facts: Petitioners were the defendants in the forcible entry case filed by private
respondent Spouses Gregorio and Ma. Lourdes Sanson before the MCTC of
Buruanga-Malay, Aklan. After due proceedings, the MCTC rendered a decision in
favor of Sps. Sanson, ordering petitioners to vacate the subject property. During
the appeal, the RTC issued a preliminary mandatory injunction authorizing the
immediate implementation of the MCTC Decision. Petitioners filed a motion for

reconsideration from the said order, while private respondents filed a motion for
demolition.
Petitioners' motion was subsequently denied and the RTC issued the Order of
Demolition which was questioned by petitioners before the CA, Cebu. Meanwhile,
the Sheriff issued the notice to vacate and for demolition.
Petitioners filed a petition for certiorari and for the issuance of the writs of amparo
and habeas data against respondents Judge, Sheriff, PNP, CA and Sps. Sanson. They
claimed that they were in prior possession of the subject property; that private
respondents intruded thereto on April 19, 2006 by employing "armed men bare to
the waist" who trained and fired their 12 gauge shotguns at petitioners,
removed the barbed wire fence put up to prevent intruders and burned 2 of their
houses. In support of the petition, they attached sworn and unsworn
affidavits of alleged disinterested witnesses.
Issue: Whether or not the petition for writ of amparo is sufficient in form and substance.
Ruling: The writ of amparo is intended to address violations of or threats to the rights to
life, liberty or security, as an extraordinary and independent remedy beyond those
available under the prevailing Rules, or as a remedy supplemental to these Rules,
and not to protect concerns that are purely property or commercial and shall not
be issued on amorphous and uncertain grounds. Consequently, the Rule on the
Writ of Amparo – in line with the extraordinary character of the writ and the
reasonable certainty that its issuance demands – requires that every petition for
the issuance of the writ must be supported by justifying allegations of fact, to wit:
“(a) The personal circumstances of the petitioner;
(b) The name and personal circumstances of the respondent responsible for the
threat, act or omission, or, if the name is unknown or uncertain, the respondent
may be described by an assumed appellation;
(c) The right to life, liberty and security of the aggrieved party violated or
threatened with violation by an unlawful act or omission of the respondent, and
how such threat or violation is committed with the attendant circumstances
detailed in supporting affidavits;
(d) The investigation conducted, if any, specifying the names, personal
circumstances, and addresses of the investigating authority or individuals, as well
as the manner and conduct of the investigation, together with any report;
(e) The actions and recourses taken by the petitioner to determine the fate or
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whereabouts of the aggrieved party and the identity of the person responsible for
the threat, act or omission; and
(f) The relief prayed for.
The petition may include a general prayer for other just and equitable reliefs.”
The writ shall issue if the Court is preliminarily satisfied with the prima facie
existence of the ultimate facts determinable from the supporting affidavits that
detail the circumstances of how and to what extent a threat to or violation of the
rights to life, liberty and security of the aggrieved party was or is being committed.
From the sworn and unsworn statements submitted in support of the petition, it is
apparent that property issues are the overriding consideration as the petition
traces its roots to questions of physical possession of the property disputed by the
private parties. If at all, issues relating to the right to life or to liberty are
concerned only to the extent of the alleged occurrence of past violence. On the
other hand, the right to security is alleged only to the extent of the threats and
harassments implied from the presence of “armed men bare to the waist” and the
alleged pointing and firing of weapons. The supporting affidavits do not
compellingly show that the threat to the rights to life, liberty and security of the
petitioners is imminent or is continuing.
Under the foregoing legal and factual situations, the alleged violent incidents
appear to be purely property-related and focused on the disputed land rather than
on acts of terrorism that pose a continuing threat to the persons of the petitioners.
Thus, if the petitioners wish to seek redress and hold the alleged perpetrators
criminally accountable, the proper remedy is to institute an ordinary criminal
prosecution rather than a recourse to the extraordinary remedy of the writ of
amparo.
Moreover, the writ of amparo should not issue when it will inordinately interfere
with the appeal process. Where, as in this case, there is an ongoing civil process
dealing directly with the possessory dispute and the reported acts of violence and
harassment, there is no point in instituting a separate petition for writ of amparo in
the absence of a clear prima facie showing that the right to life, liberty or security is
immediately in danger or threatened, or that the danger or threat is continuing.
Nonetheless, there is no legal bar to an application for the issuance of the writ, in
a proper case, by motion in a pending case on appeal or on certiorari, applying by
analogy the provisions on the co-existence of the writ with a separately filed
criminal case.
JURISDICTION ON POSSESSION/ OWNERSHIP OF REAL PROPERTY
FERNANDA GEONZON VDA. DE BARRERA AND JOHNNY OCO, JR., PETITIONERS, VS. HEIRS OF VICENTE
LEGASPI, REPRESENTED BY PEDRO LEGASPI, RESPONDENTS. [G.R. No. 174346, September 12, 2008]
Facts:

- Petitioner OCO, claiming to be connected with peace officer and accompanied by CAFGU
members forcibly took the possession of 0.95 hec land of respondent legaspi.
- Respondent filed Reconveyance of Possession with Preliminary Mandatory Injunction and
Damages against petitioner in the RTC.
- Petitioner questions the jurisdiction of RTC since the assessed valued of the land is P11,000 as
declared in tax declaration.
- RTC denied the objection to the jurisdiction as what determines jurisdiction is facts alleged in
the complaint and not those alleged in the answer of the defendants.
- In the complaint, the present estimated value of the land is stated as P50,000.
Issue:
W/N RTC has jurisdiction.
Otherwise put,
W/N Jurisdiction involving real properties is determined by the allegation in the information
Held: NO
- BP129 provides MTC has exclusive original jurisdiction in all civil actions which involve title to,
or possession of, real property, or any interest therein where the assessed value of the
property or interest therein does not exceed Twenty thousand pesos (P20,000.00)
- Assessed value is understood to be "the worth or value of property established by taxing
authorities on the basis of which the tax rate is applied. Commonly, however, it does not
represent the true or market value of the property."
- The subject land has an assessed value of P11,160 as reflected in Tax Declaration No. 7565, a
common exhibit of the parties. The bare claim of respondents that it has a value of P50,000
thus fails. The case, therefore, falls within the exclusive original jurisdiction of the municipal
trial court.
- It was error then for the RTC to take cognizance of the complaint based on the allegation that
"the present estimated value [of the land is] P50,000," which allegation is, oddly, handwritten
on the printed pleading. The estimated value, commonly referred to as fair market value, is
entirely different from the assessed value of the property.
SPECIAL PROCEEDING
Rombe Eximtrade vs. Asiatrust Development Bank (GR 164479, February 13, 2008)
Facts:
1. In 2002, Rombe, Inc. filed a Petition for Declaration of a State of Suspension of Payments with
Approval of Proposed Rehabilitation Plan with Branch 7, RTC of Malolos.
2. On May 3, 2002, the RTC issued a Stay Order suspending all enforcement of all claims against
Rombe in accordance with the Interim Rules of Procedure of Corporate Rehabilitation.
3. The creditors of Rombe, including Asiatrust opposed the Petition of Rombe Inc.
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4. On September 24, 2002, the RTC issued an order dismissing the Petition of Rombe and the
Stay Order issued on May 3, 2002 was lifted.
5. The RTC concluded that Rombe made numerous material misrepresentations such as
overvaluing and misdeclaring its assets, and in fact it was insolvent.
6. Rombe did not appeal, and Asiatrust initiated foreclosure proceedings against Rombe’s
properties.
7. On Devember 17, 2002, Rombe filed a Complaint for Annulment of Documents and Damages
with Prayer for a Temporary Restraining Order and Injunction, to forestall the foreclosure. This
was raffled off to Branch 15, RTC of Malolos.
8. On January 8, 2003, The RTC Branch 15 granted the writ of preliminary injunction in favor of
Rombe and rejected the Motion for Reconsideration filed by Asiatrust.
9. Asiatrust filed a petition for certiorari with the court of appeals. The CA granted the petition of
Asiatrust, saying that the Stay Order was already lifted and the TRO interfered with and set
aside the earlier order of the RTC, Branch 7.
Issue:
Whether or not the writ of preliminary injunction issued by Branch 15 interferes or affects the
earlier September 24, 2002 Order of Branch 7
DecisIon:
No, the writ of preliminary injunction issued by Branch 15 does not affect in any way the
earlier September 24, 2002 Order of Branch 7.
First, the rehabilitation case is distinct and dissimilar from the annulment of foreclosure case,
in that the first case is a special proceeding while the second is a civil action.
A civil action is one by which a party sues another for the enforcement or protection of a right
or the prevention or redress of a wrong. Strictly speaking, it is only in civil actions that one speaks of a
cause of action. A cause of action is defined as the act or omission by which a party violates a right of
another. Thus, in the annulment of foreclosure case, the cause of action of Rombe is the act of Asiatrust
in foreclosing the mortgage on Rombe’s properties by which the latter’s right to the properties was
allegedly violated.
On the other hand, the rehabilitation case is treated as a special proceeding. It is one that
seeks to establish the status of a party or a particular fact. Thus, a petition for rehabilitation need not
state a cause of action and, hence, Rombe’s contention that the two cases have distinct causes of action
is incorrect. (Ari: Rombe won, but not because the two cases have distinct causes of action)
Second, the two cases are different with respect to their nature, purpose, and the reliefs
sought. The rehabilitation case is a special proceeding which is summary and non-adversarial in nature.
The annulment of foreclosure case is an ordinary civil action governed by the regular rules of procedure
under the 1997 Rules of Civil Procedure.
The purpose of the rehabilitation case and the reliefs prayed for by Rombe are the suspension
of payments because it “foresees the impossibility of meeting its debts when they respectively fall
due,”and the approval of its proposed rehabilitation plan. The objective and the reliefs sought by Rombe

in the annulment of foreclosure case are, among others, to annul the unilateral increase in the interest
rate and to cancel the auction of the mortgaged properties.
Third, it cannot be argued that the RTC, Branch 15 intervened with the rehabilitation case
before the RTC, Branch 7 when the former issued the January 8, 2003 injunctive writ since the
rehabilitation petition was already dismissed on September 24, 2002, which eventually attained finality.
After September 2002, there was no rehabilitation case pending before any court to speak of. Hence, the
Malolos, Bulacan RTC, Branch 15 did not commit grave abuse of discretion in issuing the January 8, 2003
Order.
LITIS PENDENTIA
CITY OF MAKATI v. MUNICIPALITY OF TAGUIG- LITIS PENDENTIA (GR 163175; June 27, 2008)
The fact that there is no absolute identity of parties in both cases will not preclude the application of the
rule of litis pendentia, since only substantial and not absolute identity of parties is required for litis
pendentia to lie.
This case involves a boundary dispute between the City of Makati and Municipality of Taguig
which arose pursuant to certain laws thus: Proclamation Nos. 2475 and 518 which transferred to the City
of Makati certain parts of Fort Bonifacio that were allegedly within the boundary of the Municipality of
Taguig and the issuance of Special Patents by then President Fidel Ramos which conveyed certain “tracts
of land of the public domain situated in Barangay Fort Bonifacio, Municipality of Taguig, Metro Manila”.
The aforesaid proclamations prompted the Municipality of Taguig (Taguig) to file in the RTC of
Pasig City, Branch 153, an action for judicial confirmation of its territory and boundary limits against the
Municipality (now City) of Makati (Makati). The complaint was docketed as Civil Case No. 63896
On the other hand the City of Makati filed a petition for prohibition and mandamus (with
prayer for temporary restraining order and/or preliminary injunction) against the respondents herein
before the RTC of Makati, Branch 141. The case was docketed as Civil Case No. 96-554. The main
purpose of which according to the City of Makati is to nullify the Special Patents because it was issued in
grave abuse of discretion.
Taguig moved to dismiss Civil Case No. 96-554 on the ground that there is another action (CC
63896) pending between the same parties for the same cause.
Makati insists that what they seek is a nullification of Special Patent Nos. 3595 and 3596 and
that the issue boils down to whether or not then President Ramos committed grave abuse of discretion in
issuing Special Patent Nos. 3595 and 3596, hence making the reliefs prayed for in the two cases different.
One for nullification of special patents the other for judicial confirmation of territory.
The court held that what petitioners wish to nullify is not Special Patent Nos. 3595 and 3596,
but the wordings therein that the property is located in the Municipality of Taguig. To do so would entail
going into the issue of boundaries of Makati and Taguig, which is the issue in Civil Case No. 63896.
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Moreover it ruled that the fact that there is no absolute identity of parties in both cases will not preclude
the application of the rule of litis pendentia, since only substantial and not absolute identity of parties is
required for litis pendentia to lie. (Note: litis pendentia is a Latin term which literally means "a pending
suit." It is variously referred to in some decisions as lis pendens and auter action pendant.)
AUTOCORP GROUP and PETER Y. RODRIGUEZ v. INTRA STRATA ASSURANCE
CORPORATION (ISAC) and BUREAU OF CUSTOMS G.R. No. 166662 June 27,
2008
(is under misjoinder of cause but the case does not cover that issue; misjoinder of parties)
Facts:
ISAC issued bonds to guarantee compliance by petitioners with their undertaking with the BOC
to re-export the imported vehicles within the given period and pay the taxes and/or duties due
thereon. In turn, petitioners agreed, as surety, to indemnify ISAC for the liability the latter may
incur on the said bonds
Petitioner Autocorp Group failed to re-export the items guaranteed by the bonds and/or liquidate
the entries or cancel the bonds, and pay the taxes and duties pertaining to the said items
despite repeated demands made by the BOC, as well as by ISAC. By reason thereof, the BOC
considered the two bonds, with a total face value of P1,034,649.00, forfeited
ISAC filed an action against petitioners to recover the sum of money. ISAC impleaded the BOC
"as a necessary party plaintiff in order that the reward of money or judgment shall be adjudged
unto the said necessary plaintiff.
Issue: Whether or not BOC was improperly impleaded by ISAC.
Ruling: No. BOC is a necessary party in the case at bar, and should not be dropped as a party to
the present case.
Ratio:
 The misjoinder of parties does not warrant the dismissal of the
action. Section 11, Rule 3 of the Rules of Court explicitly states:
SEC. 11. Misjoinder and non-joinder of parties.—Neither misjoinder nor non-joinder
of parties is ground for dismissal of an action . Parties may be dropped or added
by order of the court on motion of any party or on its own initiative at any stage of the
action and on such terms as are just. Any claim against a misjoined party may be
severed and proceeded with separately.
Consequently, the purported misjoinder of the BOC as a party cannot result in the dismissal
of the case.
 A necessary party is defined in Section 8, Rule 3 of the Rules of
Court as follows:
SEC. 8. Necessary party.—A necessary party 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.
The subject matter of the case is the liability of Autocorp Group to the BOC, which ISAC is
also bound to pay as the guarantor who issued the bonds therefor. Clearly, there would be
no complete settlement of the subject matter of the case at bar – the liability of Autocorp
Group to the BOC – should Autocorp Group be merely ordered to pay its obligations with the
BOC to ISAC. BOC is, therefore, a necessary party in the case at bar, and should not be
dropped as a party to the present case.

 It can only be conceded that there was an irregularity in the
manner the BOC was joined as a necessary party in the case. As the BOC, through the
Solicitor General, was not the one who initiated the case, and neither was its consent
obtained for the filing of the same, it may be considered an unwilling co-plaintiff of ISAC in
said action. The proper way to implead the BOC as a necessary party to Civil Case No. 95-
1584 should have been in accordance with Section 10, Rule 3 of the Rules of Court, viz:
SEC. 10. Unwilling co-plaintiff.— If the consent of any party who should be joined as
plaintiff can not be obtained, he may be made a defendant and the reason therefor
shall be stated in the complaint.
BACALSO v. PADIGOS (GR 173192, April 18, 2008)
Facts:
 The case at bar involves a parcel of land located in Inayawan, Cebu, covered by OCT in the
name of the following 13 co-owners.
Fortunata Padigos (Fortunata)
Felix Padigos (Felix)
Wenceslao Padigos (Wenceslao)
Maximiano Padigos (Maximiano)
Geronimo Padigos (Geronimo)
Macaria Padigos
Simplicio Padigos (Simplicio)
Ignacio Padigos (Ignacio)
Matilde Padigos
Marcelo Padigos
Rustica Padigos
Raymunda Padigos
Antonino Padigos
 Maximo,Flaviano, Gaudencio, Domingo, and Victoria, who are among the herein respondents,
filed before the RTC a Complaint, against Rosendo and Rodrigo who are among the herein
petitioners, for quieting of title, declaration of nullity of documents, recovery of possession,
and damages.
 The therein plaintiffs-herein respondents Maximo and Flaviano claimed that they are children
of the deceased co-owner Simplicio; that respondents Gaudencio and Domingo are children
of the deceased co-owner Ignacio; and that respondent Victoria and respondent Lilia P.
Gabison (Lilia) are grandchildren of the late co-owner Fortunata.
 Respondents also alleged that the therein defendants-petitioners Rosendo and Rodrigo are
heirs of Alipio Bacalso, Sr. (Alipio, Sr.) who, during his lifetime, secured Tax Declaration
covering the lot without any legal basis; that Rosendo and Rodrigo have been leasing portions
of the lot to persons who built houses thereon, and Rosendo has been living in a house built
on a portion of the lot; and that demands to vacate and efforts at conciliation proved futile,
prompting them to file the complaint at the RTC.
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 In their Answer, petitioners Rosendo and Rodrigo claimed that their father Alipio, Sr.
purchased via deeds of sale the shares in the lot of Fortunata, Simplicio, Wenceslao,
Geronimo, and Felix from their respective heirs, and that Alipio, Sr. acquired the shares of the
other co-owners of the lot by extraordinary acquisitive prescription through continuous, open,
peaceful, and adverse possession thereof in the concept of an owner since 1949.
 By way of Reply and Answer to the Defendants' Counterclaim, herein respondents Gaudencio,
Maximo, Flaviano, Domingo, and Victoria alleged that the deeds of sale on which Rosendo and
Rodrigo base their claim of ownership of portions of the lot are spurious, but assuming that
they are not, laches had set in against Alipio, Sr.; and that the shares of the other co-owners of
the lot cannot be acquired through laches or prescription.
 Gaudencio, Maximo, Flaviano, Domingo, and Victoria, filed an Amended Complaint impleading
as additional defendants Alipio, Sr.'s other heirs. Still later, Gaudencio et al. filed a Second
Amended Complaint, impleading as additional plaintiffs the other heirs of registered co-owner
Maximiano.
 In their Answer to the Second Amended Complaint, petitioners contended that the Second
Amended Complaint should be dismissed in view of the failure to implead other heirs of the
other registered owners of the lot who are indispensable parties.
 A Third Amended Complaint was thereafter filed impleading as additional plaintiffs the heirs
of Wenceslao.
 After trial, RTC decided in favor in the therein plaintiffs-herein respondents, declaring them to
be entitled to the ownership and possession of the lot in litigation and declaring as null and
void the Deeds of Absolute Sale in question.
 The defendants-herein petitioners Bacalsos appealed. Meanwhile, the trial court, on
respondents' Motion for Execution Pending Appeal, issued a writ of execution which was
implemented by, among other things, demolishing the houses constructed on the lot.
 Court of Appeals affirmed the trial court's decision.
ISSUE:
1.) Whether the Second Amended Complaint is valid and legal, even if not all indispensable
parties are impleaded or joined . . .
. . . when [it] wittingly overlooked the most potent, unescapable and indubitable fact or
circumstance which proved the continuous possession of Lot No. 3781 by the defendants and
their predecessors in interest, Alipio Bacalso [Sr.] and/or when it sanctioned impliedly the
glaring arbitrary RTC order of the demolition of the over 40 years old houses, situated on Lot
No. 3781 Cebu Cad., belonging to the old lessees, long allowed to lease or stay thereat for
many years, by Alipio Bacalso [Sr.], father and [predecessor] in interest of the defendants,
now the herein Petitioners. The said lessees were not even joined as parties in this case, much
less were they given a chance to air their side before their houses were demolished, in gross
violation of the due process clause provided for in Sec. 1[,] Art. III of the Constitution . . .
 Respondents admit that Teodulfo Padigos (Teodulfo), an heir of Simplicio, was not
impleaded. They contend, however, that the omission did not deprive the trial court of

jurisdiction because Article 487 of the Civil Code states that "[a]ny of the co-owners may bring
an action in ejectment."
HELD:
 Respondents' contention does not lie. The action is for quieting of title, declaration of nullity
of documents, recovery of possession and ownership, and damages.
 Arcelona v. Court of Appeals defines indispensable parties under Section 7 of Rule 3, Rules of
Court as follows: [P]arties-in-interest without whom there can be no final determination of an
action. As such, they must be joined either as plaintiffs or as defendants. The general rule with
reference to the making of parties in a civil action requires, of course, the joinder of all
necessary parties where possible, and the joinder of all indispensable parties under any and
all conditions, their presence being a sine qua non for the exercise of judicial power. It is
precisely "when an indispensable party is not before the court (that) the action should be
dismissed." The absence of an indispensable party renders all subsequent actions of the court
null and void for want of authority to act, not only as to the absent parties but even as to
those present.
 The absence then of an indispensable party renders all subsequent actions of a court null and
void for want of authority to act, not only as to the absent party but even as to those present.
 Failure to implead indispensable parties aside, the resolution of the case hinges on a
determination of the authenticity of the documents on which petitioners in part anchor their
claim to ownership of the lot.
 Respondents are guilty of laches - the negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to assert it has either
abandoned it or declined to assert it. Even a registered owner may be barred from recovering
possession of property by virtue of laches.
 Upon the other hand, petitioners have been vigilant in protecting their rights over the lot,
which their predecessor-in-interest Alipio, Sr. had declared in his name for tax purposes as
early as 1960, and for which he had been paying taxes until his death in 1994, by continuing to
pay the taxes thereon.
Respondents having failed to establish their claim by preponderance of evidence, their action for quieting
of title, declaration of nullity of documents, recovery of possession, and damages must fail.
Allandale Sportsline Inc. and Melbarose R. Sasot v. The Good Development Corporation(G.R. No.
164521, December 18, 2008)
Facts: Allandale Sportsline (ASI) obtained a loan from Good Development (GDC) under a Promissory
Note. The Promissory Note provides that the loan is payable in installments with interest. In case of
default in the payment of any installment, the entire balance of the obligation shall become immediately
due and payable. To provide additional security, ASI executed in favor of GDC a Deed of Mortgage which
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states that if the Motgagors failed to comply with any of the terms of the promissory note and the
mortgage contract, the mortgagee shall automatically have the absolute right without need of prior
notice or demand to judicially or extrajudicially foreclose the mortgage. GDC demanded that ASI pay the
unpaid balance or surrender the mortgaged chattels.
When no payment was made, GDC filed with the RTC a Complaint for Replevin and/or Sum of Money
with Damages. The alternative reliefs prayed for include foreclosure of the mortgaged property or
payment of the loan.
ASI filed their Answer with Counterclaim and claimed that they repeatedly tendered payment of the
unpaid balance, but GDC rejected their efforts for no valid reason; that the unreasonable refusal of GDC
to accept their tender of payment relieved them of their loan obligation.
RTC issued writs of replevin and GDC disclosed that after it obtained possession of the properties subject
of the writs of replevin, it caused the auction sale of some of them and realized proceeds.
Issues:
1st issue: Whether or not ASI’s check payment became a valid tender of payment;
2nd issue: Whether or not ASI is liable for the unpaid balance of the loan;
Ruling:
1st issue: Tender of payment, without more, produces no effect; rather, tender of payment must be
followed by a valid consignation in order to produce the effect of payment and extinguish an obligation.
If refused without just cause, the tender of payment will discharge the debtor of the obligation to pay but
only after a valid consignation of the sum due shall have been made with the proper court.
The tender of payment of ASI not having been followed by a valid consignation, it produced no effect
whatsoever.
2nd issue:
The reliefs prayed for in GDC’s Complaint are in the alternative: delivery of the mortgaged properties
preparatory to foreclosure or payment of the unpaid loan.
There is no doubt that ASI had effectively elected the remedy of extra-judicial foreclosure of the
mortgage security over the remedy of collection of the unpaid loan.
The RTC was aware that respondent had elected one remedy. In its Decision, it cited the fact that some of
the mortgaged properties which were delivered to ASI by means of the Writs of Replevin had been sold

on auction, and acknowledged that the proceeds from said auction sale should be deducted from the
loan account of ASI.
The Court held that the remedies available to any mortgage creditor are alternative, not cumulative or
successive, there exists only one cause of action for a single breach of that obligation. Plaintiff, then,
cannot split up his single cause of action by filing a complaint for payment of the debt, and thereafter
another complaint for foreclosure of the mortgage. If he does so, the filing of the first complaint will bar
the subsequent complaint. By allowing the creditor to file two separate complaints simultaneously or
successively, one to recover his credit and another to foreclose his mortgage, it will, in effect, be
authorizing him plural redress for a single breach of contract at so much cost to the courts and with so
much vexation and oppression to the debtor.
By causing the auction sale of the mortgaged properties, GDC effectively adopted and pursued the
remedy of extra-judicial foreclosure, using the writ of replevin as a tool to get hold of the mortgaged
properties. There was no more legal basis to grant GDC the relief of collecting the unpaid balance from
AIS. However, another effect of its election of the remedy of extra-judicial foreclosure is that whatever
deficiency remains after applying the proceeds of the auction sale to the total loan obligation may still be
recovered by respondent.
But to recover any deficiency after foreclosure, the rule is that a mortgage creditor must institute an
independent civil action.
VENUE IN PERSONAM
MARCOS-ARANETA vs CA (GR 154096, AUGUST 22, 2008)
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.
 Petitioner Irene Marcos-Araneta alleges that 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.
When petitioner requested for the reconveyance of said 65% stockholdings, the Benedicto Group
refused.
 In March 2000, petitioner 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). A motion to dismiss was filed for both complaints, alleging
among others improper venue, failure to state a cause of action and that SEC has jurisdiction over
intra-corporate disputes and not the RTC.
 Upon Benedicto’s motion, both cases were consolidated.
 During the preliminary proceedings on the motion to dismiss, a Joint Affidavit of Gilmia B. Valdez,
Catalino A. Bactat, and Conchita R. Rasco (who all attested being employed as household staff at
the Marcos’ Mansion in Brgy. Lacub, Batac, Ilocos Norte) was presented to support the claim of
improper venue. The Joint Affidavit states that Irene did not maintain residence in said place as she
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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. Petitioner presented her
PhP 5 community tax certificate (CTC) issued on “11/07/99” in Curimao, Ilocos Norte to support her
claimed residency in Batac, Ilocos Norte.
 In the meantime, on May 15, 2000, Benedicto died and was substituted by his wife, Julita C.
Benedicto, and daughter Francisca.
 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.
 Petitioner filed an MR. Pending such MR, petitioner filed a motion to admit amended complaint,
putting additional plaintiffs as petitioner’s new trustees, all from Ilocos Norte. Subsequently, the MR
was denied but the amended complaint was admitted by the RTC and defendants were ordered to
answer the complaint.
 Julita and Francisca moved to dismiss the amended complaint, but said motion was denied. Thus,
they filed their answer to avoid being declared in default.
 On the same day, they filed a petition for certiorari with the CA which was subsequently granted.
The amended complaints were accordingly dismissed.
 Petitioner’s MR was denied by the CA.
 Hence, this petition for review.
Issue: W/N venue was properly laid.
Held: No, venue was improperly laid. Petition dismissed.
 In a personal action, the plaintiff seeks the recovery of personal property, the enforcement of a
contract, or the recovery of damages. 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, petitioner seeks to
compel recognition of the trust arrangement she has with the Benedicto Group. It is an action in
personam, 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. The Court held
that as to petitioner, she is not a resident of Batac, as such she cannot opt for Batac as venue of her
reconveyance complaint. The CTC she presented is of no moment, anyone can easily secure a CTC.
 As to petitioner’s co-plaintiffs, although they are residents of Batac Ilocos Norte, the Court held that
venue was still improperly laid. The additional plaintiffs, as new trustees of petitioner, serve only as
mere representatives of petitioner. 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. The
real party in interest is still petitioner Irene Marcos-Araneta. 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. As such, the subject civil cases ought to
be commenced and prosecuted at the place where Irene resides.
 Another Issue: There is substantial compliance with the verification and certification of non-forum
shopping in Julita and Francisca’s petition. Verification is, under the Rules, not a jurisdictional but

merely a formal requirement which the court may motu proprio direct a party to comply with or
correct. Regarding the certificate of non-forum shopping, the general rule is that all the petitioners
or plaintiffs in a case should sign it. As has been ruled by the Court, the signature of any of the
principal petitioners or principal parties, as Francisca is in this case, would constitute a substantial
compliance with the rule on verification and certification of non-forum shopping.
 Another Issue: The CA, in the exercise of its certiorari jurisdiction 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.
 There are some other issues in this case.
Appeal
Sigma Homebuilding Corporation vs. Inter-Alia Management Corporation
(GR 177898, August 13, 2008)
This is a case for annulment of sale, cancellation of titles, reconveyance and damages filed by Sigma
against Inter-Alia, Intercon Fund Resources Corporation, Hasting Realty and Development Corporation,
Development Bank of Rizal (DBR) and Register of Deeds of the Province of Cavite.
Facts:
Sigma alleged in its complaint that its real properties located in Tanza, Cavite were sold by Augusto
Parcero, its AVP, to Inter-Alia without its knowledge and consent and without the required board
resolution. Inter-Alia sold them to DBR which in turn sold them to Intercon which conveyed them to
Hastings.
Hastings filed a motion to dismiss for failure to state a cause of action, among others. It alleged that
Pacero was authorized to sell the real properties concerned as could be gleaned upon the cancelled TCTs
presented by Sigma. It further alleged that the petitioner might not even be a real party in interest to the
subsequent successive transfers.
RTC dismissed the complaint for failure to state a cause of action. CA affirmed. MR denied. SC dismissed
petition for certiorari for failure to show reversible error. MR denied.
Subsequently, Sigma filed with CA a petition for annulment of order for lack of jurisdiction of the RTC
under Rule 47. CA denied. The CA noted that Sigma ad already availed of the remedy of ordinary appeal
under Rules 41 and 45. MR denied.
Another petition for certiorari was filed before the SC. SC denied it for late filing. MR denied with finality
and the judgment became final and executory. Entry of judgment was made.
Sigma filed a letter-appeal. It raised deprivation of due process when RTC dismissed the complaint
against other respondents.
Issue: Merit of the letter-appeal.
Held:
Letter-appeal is without merit. It is a second MR which is prohibited under the Rules and worse, it was
filed after the entry of judgment. Further, Sigma cannot allege deprivation of due process because the
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title to the real properties is now vested with Hastings. There was no need to implead the other
respondents. The other respondents are not even real parties in interest. Only Sigma and Hasting are the
ones who stood to be benefited or injured by the judgment.
Furthermore, Sigma could no longer avail of a petition of annulment of judgment for it already availed of
its remedy of appeal. The remedy may not be invoked where the party has availed himself of the remedy
of new trial, appeal, petition for relief or other appropriate remedy and lost , or where he has failed to
avail himself of those remedies through his own fault or negligence.
JOSE MAX S. ORTIZ v. SAN MIGUEL CORPORATION
G.R. No. 151983-84, July 31, 2008
(Lawyer not real party in interest)
Facts:
Petitioner is a member of the Philippine Bar who represented the complainants in 2 NLRC
Cases instituted against herein private respondent San Miguel Corporation sometime in 1992
and 1993.
Petitioner is suing the respondents for additional attorney’s fees. He prays that the court affirm
the award of attorney's fees equivalent to 10% of the monetary award adjudged by the NLRC in
its decisions in the 2 aforementioned cases.
Issue: Whether Petitioner is a real party in interest?
Ruling: It is beyond cavil that the petitioner is not the real party in interest.
Ratio:
It is elementary that it is only in the name of a real party in interest that a civil suit may be
prosecuted.[43] Section 2, Rule 3 of the 1997 Revised 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.
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.
The afore-quoted rule has two requirements: 1) to institute an action, the plaintiff must be the
real party in interest; and 2) the action must be prosecuted in the name of the real party in
interest. Necessarily, the purposes of this provision are 1) to prevent the prosecution of actions
by persons without any right or title to or interest in the case; 2) to require that the actual party
entitled to legal relief be the one to prosecute the action; 3) to avoid a multiplicity of suits; and 4)
to discourage litigation and keep it within certain bounds, pursuant to sound public policy.
Not being the party to whom the NLRC awarded the attorney's fees, neither is the petitioner the
proper party to question the non-awarding of the same by the appellate court.

In addition, when the complainants executed their respective Deeds of Release, Waiver and
Quitclaim, petitioner already received attorney's fees equivalent to 10% of the amounts paid to
the complainants in accordance with the Deeds, as evidenced by several cash vouchers and
checks payable to petitioner and signed by his representative. Even petitioner himself admitted
this fact. This would show that petitioner has been compensated for the services he rendered
the complainants.
Real party in interest
ALLEGRIA V. DRILON (GR 161317, July 16,2008)
FACTS:
 Gabriel Drilon, husband of respondent Eustaquia Drilon, applied for the issuance of titles over the
properties. Title was then issued in the name of Gabriel Drilon.
 Spouses Drilon sold the properties to Respondent Spouses Ybiosa.
 Drilon and Spouses Ybiosa demanded that Petitioners Allegria vacate the said properties. This
prompted petitioners to file an Action for Reconveyance and Declaration of Nullity of the sale of the
said lots. They alleged that Gabriel Drilon obtained the free patents through fraud since he made it
appear in his application that he had continuously occupied and cultivated the said lots.
 Petitioner further claimed that the sale of the lots was void because the sale was made within 5
years from the issuance of the patents. They alleged that Spouses Ybiosa were in bad faith when
they bought the properties as they were fully aware that petitioners were actually and continuously
occupying, cultivating and claiming portions of the properties.
 RTC: dismissed the complaint.
 CA: Affirmed the decision.
ISSUE: W/n petitioners have a legal personality to file a case for reconveyance.
HELD: No. Decision is affirmed.
 Section 2, Rule 3 of the Rules of Court provides that every action must be prosecuted or defended
in the name of the real party-in-interest, or in the name of one who stands to be benefited or
injured by the judgment in the suit. A suit filed by one who is not a real party-in-interest must be
dismissed.
 The Court held that an applicant for a free patent cannot be considered a party-in-interest with
personality to file an action for reconveyance.
 In point is De la Peña v. Court of Appeals, which likewise involved an action for reconveyance and
annulment of title on the ground that the free patent and title over a parcel of land were allegedly
obtained through fraud. Like the present case, the petitioner in De la Peña claimed that private
respondent fraudulently stated in his application for free patent that “the land applied for is not
claimed or occupied by any other person.” The Court ruled that petitioner had no standing to file
the case since reconveyance is a remedy granted only to the owner of the property alleged to be
erroneously titled in another’s name. In such instances, it is the State which is the proper party to
file suit.
 Further, Section 101 of Commonwealth Act No. 141 provides that actions for reversion of public
lands fraudulently awarded must be instituted by the Solicitor General in the name of the Republic
of the Philippines.
 Thus, in Garingan v. Garingan, the Court held that only the State may file a case for cancellation
of title due to the grantee’s violation of the conditions imposed by law.
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 Petitioners, however, argue that although it is only the government that may institute reversion
proceedings, they as persons whose rights are affected by the assailed sale may pray for the
declaration of nullity of the sale.
 Petitioners invoke Arsenal v. IAC and claim that under the ruling of the Court, the sale of a
homestead land within the prohibited period is void, and that third persons affected by the void
contract may set up its nullity.
 Petitioners reliance on Arsenal is misplaced. Arsenal involved the double sale of a homestead
property. The homestead grantee sold the property during the prohibited period. Afterwards, the
grantee again sold the same property, and title to the homestead property was issued to the second
buyer. The first buyer sought to annul the title of the second buyer. The second buyer merely
raised the nullity of the first sale but did not seek to annul the title of the homestead grantee for
selling the property within the prohibited period.
 The factual circumstances of the present case are clearly different from Arsenal. Here, petitioners
filed an action for reconveyance on the ground that titles to the properties were obtained through
fraud. Moreover, petitioners seek to have the titles of the Drilons annulled for selling the
properties during the prohibited period. As found by the trial court, petitioners have not shown any
proof of title over the properties. They are not even applicants for free patent over the
properties.
 Thus, petitioners have no legal personality to file a case for reconveyance.
Canete, et al., v. Genuino Ice Company (GR 154080, January 22, 2008)
Facts:
This petition for review on certiorari seeks to set aside the Decision of the Court of Appeals dated
January 9, 2002. Records show that petitioners filed a complaint for cancellation of title to property
covered by 5 Transfer Certificates of Title (TCT). Petitioners alleged that said titles are spurious, fictitious
and were issued “under mysterious circumstances,” considering that the holders thereof – including their
predecessors-in-interest – were never in actual, adverse and physical possession of the property,
rendering them ineligible to acquire title to the said property under the Friar Lands Act. Petitioners also
sought to nullify Original Certificate of Title (OCT) No. 614 from which the foregoing titles sought to be
cancelled originated or were derived. Respondent filed a motion to dismiss on the ground that the
complaint states no cause of action because petitioners are not real parties-in-interest; that no relief may
be granted as a matter of law; and that petitioners failed to exhaust administrative remedies, but it was
denied by the trial court. Respondent moved for reconsideration but the same was denied.
Petitioners filed a “Second Amended Complaint” which sought to annul, in addition to the titles already
alleged in the original complaint, 4 TCTs. The trial court denied respondent’s motion to dismiss the
Second Amended Complaint. Its motion for reconsideration was likewise denied, hence, respondent filed
a petition for certiorari with the Court of Appeals. The appellate court granted respondent’s petition for
certiorari and dismissed petitioners’ Second Amended Complaint for failure to state a cause of action.
Hence, the instant petition.
Issues: THAT THE COURT OF APPEALS ERRED IN DECLARING THAT THE COMPLAINT FILED BY THE
PETITIONERS WITH THE REGIONAL TRIAL COURT OF QUEZON CITY IN CIVIL CASE NO. Q-99-36483 DOES
NOT STATE A VALID CAUSE OF ACTION; THAT THE COURT OF APPEALS ERRED IN DECLARING THAT THE
PETITIONERS ARE NOT REAL PARTIES IN INTEREST; THAT THE COURT OF APPEALS ERRED IN APPLYING THE
DOCTRINE OF "EXHAUSTION OF ADMINISTRATIVE REMEDIES"; and, THAT THE COURT OF APPEALS ACTED

WITH GRAVE ABUSE OF DISCRETION AND DENIED PETITIONERS’ RIGHT TO DUE PROCESS WHEN IT
DISMISSED THEIR COMPLAINT.
Held: Petition DENIED.
The subject lots are part of the Piedad Estate, Quezon City, a Friar Land acquired on December 23, 1903
by the Philippine Government from the Philippine Sugar Estates Development Company, Ltd., La Sociedad
Agricola de Ultramar, the British-Manila Estate Company, Ltd., and the Recoleto Order of the Philippine
Islands, as indicated in Public Act No. 1120 (Friar Lands Act) enacted on April 26, 1904. One who acquires
land under the Friar Lands Act, as well as his successors-in-interest, may not claim successional rights to
purchase by reason of occupation from time immemorial, as this contravenes the historical fact that friar
lands were bought by the Government of the Philippine Islands, pursuant to an Act of Congress of the
United States, approved on July 1, 1902, not from individual persons but from certain companies, a
society and a religious order.
The question of whether or not a complaint states a cause of action against a defendant or the action is
premature is one of law. The trial court can consider all the pleadings filed, including annexes, motions
and the evidence on record. However in so doing, the trial court does not rule on the truth or falsity of
such documents. It merely includes such documents in the hypothetical admission. Any review of a
finding of lack of cause of action based on these documents would not involve a calibration of the
probative value of such pieces of evidence but would only limit itself to the inquiry of whether the law
was properly applied given the facts and these supporting documents. Therefore, what would inevitably
arise from such a review are pure questions of law, and not questions of fact.
Considering the foregoing, it is not difficult to see the need for particularity and incipient substantiation
in the petitioners’ Second Amended Complaint.
First, their initial claim that OCT 614 – of which all the other subject titles are derivatives – is null and
void, has been proven wrong. As has been held in Pinlac and other cases, OCT 614 did legally exist and
was previously issued in the name of the Philippine Government in 1910 under the provisions of Act 496.
Second, the Ad Hoc Committee of the then Ministry of Natural Resources, which was specifically tasked
to investigate the historical background of the Piedad Estate, found that as early as the period prior to
the Second World War, all lots in the Piedad Estate had already been disposed of.
Third, the Piedad Estate has been placed under the Torrens system of land registration, which means that
all lots therein are titled.
Fourth, as held in the Balicudiong case, one who acquires land under the Friar Lands Act, as well as his
successors-in-interest, may not claim successional rights to purchase by reason of occupation from time
immemorial, which means that petitioners’ claimed actual, adverse, peaceful and continuous possession
of the subject property is really of no moment unless it is shown that their predecessors-in-interest were
actual settlers and occupants at the time said lands were acquired by the Government, and whose rights
were not disregarded even though they were in occupation of the same before the government acquired
the land; yet, no period of time in relation to adverse possession is alleged.
Petitioners’ Second Amended Complaint betrays no more than an incomplete narration of facts
unsupported by documentary or other exhibits; the allegations therein partake of conclusions of law
unsupported by a particular averment of circumstances that will show why or how such inferences or
conclusions were arrived at. In the absence of specific averments, the complaint is defective, for it
12
presents no basis upon which the court should act, or for the defendant to meet it with an intelligent
answer.
As to the second issue raised, petitioners claim that they are bona fide occupants of the subject property
within the contemplation of the Friar Lands Act, having allegedly been in actual, adverse, peaceful and
continuous possession of the property, although it is not stated for how long and since when. In their
second amended complaint, they seek judgment –
(4) Declaring the plaintiffs as bona fide occupants of the property in litigation pursuant to the
provisions of the Friar Lands Act and other existing laws. (Emphasis supplied)
They do not pray to be declared owners of the subject property – despite their alleged adverse
possession – but only to be adjudged as the "bona fide occupants" thereof. In other words, petitioners
concede the State’s ownership of the property.
Being so, petitioners may not be considered the real parties in interest for the purpose of maintaining the
suit for cancellation of the subject titles. The Court of Appeals is correct in declaring that only the State,
through the Solicitor General, may institute such suit.
Under Rule 3, Section 2 of the Rules of Court, 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. The
interest of the party must also be personal and not one based on a desire to vindicate the constitutional
right of some third and unrelated party. Real interest, on the other hand, means a present substantial
interest, as distinguished from a mere expectancy or a future, contingent, subordinate, or consequential
interest.32
If petitioners are to be believed, they would possess a mere inchoate interest in the properties covered
by the subject titles, a mere expectancy conditioned upon the fact that if the questioned titles are
cancelled and the property is reverted to the State, they would probably or possibly be given preferential
treatment as qualified buyers or lessees of the property under the Friar Lands Act. But this certainly is
not the "interest" required by law that grants them license or the personality to prosecute their case.
Only to the State does the privilege belong.
On the issue of exhaustion of administrative remedies, suffice it to state that since petitioners do not
possess the necessary interest to prosecute the case for cancellation of title in the courts, neither do they
have the right to pursue administrative remedies outside thereof. They are not the owners; nor are they
qualified applicants therefor. It has not been shown by their complaint that they have previously taken
steps to avail of the benefits under the Friar Lands Act, since all they seek, should the questioned titles be
nullified, is to be declared bona fide occupants of the property covered by the questioned titles. Neither
is there any indication that they possess the qualifications necessary to enable them to avail of the
preference granted under the Act.
Finally, there is no merit in petitioners’ contention that respondent belatedly filed the petition for
certiorari with the Court of Appeals, and that the appellate court gravely abused its discretion when it
entertained and resolved the same.
The Order of the trial court dated January 3, 2001 denying respondent’s motion to dismiss the Second
Amended Complaint was received by the respondent on January 16, 2001. Respondent filed a motion for

reconsideration on January 18, 2001 which was denied on February 28, 2001. Respondent received the
order denying its motion for reconsideration on March 27, 2001. On the same day, it filed a Notice to File
Petition for Certiorari. On April 2, 2001, the petition for certiorari was filed with the Court of Appeals.
Clearly, the same was timely filed hence, the appellate court correctly entertained the same.
SPOUSES SOFRONIO SANTOS and NATIVIDAD SANTOS, FROILAN SANTOS, CECILIA
M. MACASPAC, and
R TRANSPORT CORPORATION v. HEIRS OF DOMINGA LUSTRE, namely TARCISIO
MANIQUIZ, TERESITA BURGOS, FLORITA M. REYES and LERMIE MANIQUIZ
G.R. No. 151016 August 6, 2008
(is under the issue of real party in interest but case doesn’t tackle such issue; identity of parties)
Facts:
There are 2 cases involved here.
1. Civil Case No. 1330: A case filed by Cecilia Macaspac and Tarcisio Maniquiz, both
heirs of Dominga Lustre against Froilan M. Santos for Complaint for Declaration of the
Inexistence of Contract, Annulment of Title, Reconveyance and Damages. This referred to
the land that Dominga sold to Natividad Santos when she was alive. Natividad Santos later
transferred the property to Froilan.
2. Civil Case No. 2115: Dominga Lustre’s other heirs, namely, Eusebio Maniquiz,
Teresita Burgos, Tarcisio Maniquiz, Florita M. Reyes and Lermie Maniquiz filed a Complaint
for Annulment of Transfer Certificate of Title and Deed of Absolute Sale against spouses
Sofronio and Natividad Santos, Froilan Santos, Cecilia M. Macaspac, R Transport
Corporation, and the Register of Deeds of Cabanatuan City, with the same RTC. Cecilia
Macaspac, plaintiff in the first civil case was impleaded as defendant because she refused
to join the other heirs as plaintiffs. The subject matter of the case was the same property
abovementioned.
The defendants filed a MTD on the ground of litis pendentia.
RTC denied MTD.
Issue: Whether there is identity of parties in the two cases and thus barring the second action on
the ground of litis pendentia.
Ruling: No, there is actually no identity of parties because the plaintiff in Civil Case No. 1330
does not, in fact, share a common interest with the plaintiffs in Civil Case No. 2115.
Ratio:
As pointed out by petitioners, plaintiffs in both cases are the heirs of Dominga Lustre; they are
therefore co-owners of the property. However, the fact of being a co-owner does not necessarily
mean that a plaintiff is acting for the benefit of the co-ownership when he files an action
respecting the co-owned property. Co-owners are not parties inter se in relation to the property
owned in common. The test is whether the “additional” party, the co-owner in this case, acts in
the same capacity or is in privity with the parties in the former action
Notably, plaintiff Cecilia Macaspac in Civil Case No. 1330 filed the complaint seeking the
reconveyance of the property to her, and not to Dominga Lustre or her heirs. This is a clear act
of repudiation of the co-ownership which would negate a conclusion that she acted in privity with
the other heirs or that she filed the complaint in behalf of the co-ownership. In contrast,
respondents were evidently acting for the benefit of the co-ownership when they filed the
complaint in Civil Case No. 2115 wherein they prayed that TCT No. NT-50384 in the name of
Dominga Lustre be reinstated, or a new certificate of title be issued in her name.
13
The determination of whether there is identity of parties rests on the commonality of the parties’
interest, regardless of whether they are indispensable parties or not. The issue of whether the
additional parties are indispensable parties or not acquires real significance only when
considering the validity of the judgment that will be rendered in the earlier case. This is so,
because if the additional parties are indispensable parties, then no valid judgment can be
rendered against them in the earlier case in which they did not participate, and this will foreclose
the application of res judicata which requires the existence of a final judgment.
Without question, a co-owner may bring an action to recover the co-owned property without the
necessity of joining all the other co-owners as co-plaintiffs because the suit is deemed to be
instituted for the benefit of all. In such case, the other heirs are merely necessary parties.
Parenthetically, the inclusion among the defendants of Cecilia Macaspac, who refused to join the
other heirs as plaintiffs in Civil Case No. 2115, was not actually necessary.
However, if the action is for the benefit of the plaintiff alone, as in Civil Case No. 1330, the action
will not prosper unless he impleads the other co-owners who are indispensable parties. The
absence of an indispensable party renders all subsequent actions of the court null and void for
want of authority to act, not only as to the absent parties but even as to those present. The trial
court does not acquire jurisdiction over the indispensable parties who are not impleaded in the
case, and judgment thereon cannot be valid and binding against them. A decision that is null
and void for want of jurisdiction on the part of the trial court is not a decision in contemplation of
law; hence, it can never become final and executory.
Intervention
GSIS vs. NOCOM, G.R. No. 175989, February 4, 2008
Sandoval-Gutierrez, J.:
Facts: Bengson Commercial Buildings, Inc. (BENGSON) was awarded P31M as costs of suit
in the RTC's April 6, 1995 Order. Atty. Rogelio Terrado, the lawyer of the adverse
party (GSIS), received a copy of the Order on the same date but did not file a
motion for reconsideration thereof. Hence, the RTC issued an Order of Execution.
After receipt of the Order of Execution, GSIS filed an omnibus motion praying for
relief from the RTC's April 6, 1995 Order on the ground that Atty. Terrado had been
absent without official leave since April 6, 1995 and that his gross negligence
should not bind the GSIS. The RTC denied the motion which GSIS elevated on
certiorari to the CA which, however, dismissed the petition.
Meanwhile, on December 16, 1998, the RTC issued an Order directing the issuance
of an alias writ of execution to satisfy the award of RTC's Sheriff garnished 6.2
million Class "A" shares of stock of San Miguel Corporation (SMC) owned by the
GSIS, which were sold at public auction to BENGSON as the sole bidder. BENGSON
then transferred and assigned 2,406,666 SMC Class "A" shares to respondent

Mariano A. Nocom, evidenced by a Memorandum of Agreement and Deed of
Assignment executed on August 24, 1999 .
The GSIS' motion for reconsideration from the December 16, 1998 Order having
been denied, it filed with the Supreme Court a petition for certiorari to annul the
RTC's orders, which was referred to the CA which, in turn, dismissed the same. On
certiorari, the Supreme Court reversed and set aside the April 6, 1995 Order,
among others, and remanded the case to the RTC to proceed to hear and
determine the case as if a timely motion for new trial or reconsideration has been
granted by it.
In the course of the proceedings, a motion for intervention was filed by respondent
Nocom, attaching thereto his Complaint-in-Intervention, which was admitted
despite GSIS' opposition. GSIS elevated the matter on certiorari to the CA which
dismissed the petition. Hence, the instant petition.
Issue: Whether or not the CA erred in holding that respondent Nocom has a right to
intervene.
Ruling: Section 1, Rule 19 of the 1997 Rules of Civil Procedure, as amended, provides for
the parameters before a person, not a party to a case, can intervene, thus:
"SEC. 1. Who may intervene. – A person who has a legal
interest in the matter in litigation, or in the success of
either of the parties, or an interest against both, or is so
situated as to be adversely affected by a distribution or
other disposition of property in the custody of the court
or of an officer thereof, may with leave of court, be
allowed to intervene in the action. The court shall
consider whether or not the intervention will unduly
delay or prejudice the adjudication of the rights of the
original parties, and whether or not the intervenor’s
rights may be fully protected in a separate proceeding."
In Alfelor vs. Halasan, it was held that an intervention is valid when a person has:
(1) a legal interest in the matter in litigation; (2) or in the success of any of the
parties; (3) or an interest against the parties; (4) or when he is so situated as to be
adversely affected by a distribution or disposition of property in the custody of the
court or an officer thereof.
In Perez vs. Court of Appeals, the Supreme Court ruled that the legal interest which
entitles a person to intervene must be in the matter in litigation and of such direct
14
and immediate character that the intervenor will either gain or lose by direct legal
operation and effect of judgment.
In the instant case, respondent Nocom has a clear interest in the outcome of the
case before the trial court considering the transfer and assignment to him by
BENGSON of the 2,406,666 SMC Class “A” shares, which form part of the shares of
stock sold to BENGSON to satisfy the costs of suit awarded to it by the RTC in its
April 6, 1995 Order. The Court of Appeals, therefore, did not err in ruling that
respondent’s motion for intervention was in order.
SOCIAL JUSTICE SOCIETY, ET AL. VS. JOSE L. ATIENZA, JR. (G.R. No. 156052, March 7, 2007 )
Facts:
- City of Manila enacted an ordinance reclassifying certain areas from industrial land to
commercial land
- Among the businesses situated in the area are the so-called "Pandacan Terminals" of the oil
companies Caltex (Philippines), Inc., Petron Corporation and Pilipinas Shell Petroleum
Corporation
- Ordinance provides that the prohibited businesses shall cease and desist operation within
6months from enactment of the ordinance.
- Subsequently, DOE and City of Manila entered into MOU with the oil companies in which they
agreed that "the scaling down of the Pandacan Terminals [was] the most viable and
practicable option."
- Petitioners filed an action for mandamus praying that Mayor Atienza be compelled to enforce
Ordinance No. 8027 and order the immediate removal of the terminals of the oil companies
- SC ruled that local govt has ministerial duty to enforce all laws and ordinances. Since MOU
already expired at the time the case was decided, City of Manila should enforce the ordinance
- DOE and Oil companies filed motion to intervene and filed MR to the SC ruling
Issues
W/N Intervention valid?
Held: Yes – on the ground of interest of justice
The following are the requisites for intervention of a non-party:
(1) Legal interest
(a) in the matter in controversy; or
(b) in the success of either of the parties; or
(c) against both parties; or
(d) person is so situated as to be adversely affected by a distribution or other
disposition of property in the custody of the court or of an officer thereof;
(2) Intervention will not unduly delay or prejudice the adjudication of rights of original
parties;
(3) Intervenor’s rights may not be fully protected in a separate proceeding and

(4) The motion to intervene may be filed at any time before rendition of judgment by the
trial court.
- In the case at bar, the last requisite is absent: judgment was already rendered by the trial
court
- The Court, however, has recognized exceptions to Section 2, Rule 19 in the interest of
substantial justice
o The rule on intervention, like all other rules of procedure, is intended to make the
powers of the Court fully and completely available for justice. It is aimed to
facilitate a comprehensive adjudication of rival claims overriding technicalities on
the timeliness of the filing thereof.
- The oil companies assert that they have a legal interest in this case because the
implementation of Ordinance No. 8027 will directly affect their business and property rights.
- Be that as it may, although their motion for intervention was not filed on time, we will allow it
because they raised and presented novel issues and arguments that were not considered by
the Court in its March 7, 2007 decision. After all, the allowance or disallowance of a motion to
intervene is addressed to the sound discretion of the court before which the case is pending.
JUDGE ANTONIO C. SUMALJAG v SPOUSES DIOSDIDIT and MENENDEZ M. LITERATO;
and MICHAELES MAGLASANG RODRIGO.
G.R. No. 149787 June 18, 2008
(substitution)
Facts:
Decedent Josefa (vendor) in her lifetime filed a case against her sister (vendee) for nullity of the
deed of sale of real property.
When she died, the counsel who represented her moved to have the petitioner Sumaljag
substitute decedent in the case alleging that before Josefa died she had executed a Quitclaim
Deed in favor of Remismundo D. Maglasang who in turn sold it to petitioner.
RTC denied motion for substitution and instead asked Michaeles, heir of Josefa to appear.
Issue: Whether or not petitioner was subrogated to the rights of Josefa over the property under
litigation at the time she died.
Ruling:
Ratio:
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.
15
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.
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, 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. 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.
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.
TRANSFER OF INTEREST NOT AN INDISPENSABLE PARTY
Heritage v. CIAC and Uy doing business under the name EDC (GR 148133, OCOTBER 8, 2008)
TRANSFEREE OF INTEREST NOT AN INDESPENSABLE PARTY; BOUND BY COURTS DECISION DESPITE NON-
INCLUSION
Public Estates Authority and EDC entered into a contract wherein the latter was to perform a
landscaping project for the former. However, EDC could not accomplish its work in time because of the
presence of squatters in the land. It was the duty of PEA to evict the squatters. As a consequence
thereof, EDC incurred damages (it had to rent out the landscaping equipments for a longer time, etc.).

EDC filed an action for damages with the Construction Industry Arbitration Commission (CIAC) against
PEA. After filing, PEA, defendants therein transferred all its rights under the contract to HERITAGE.
Heritage filed with the Court of Appeals a petition for Preliminary injunction with a prayer for a TRO to
restrain the CIAC from exercising jurisdiction over the dispute. Subsequently, the CA, by Resolution dated
April 7, 2000, issued the TRO Heritage prayed for. The CIAC received a copy of the Resolution on the same
day.
Previously, however, the CIAC already finished the hearing of the case and the same was
already submitted for decision as of April 4, 2000 or one day before the filing of the petition in CA-G.R. SP
No. 58124 with the CA.
Thereafter, the Decision in CIAC was promulgated on May 16, 2000 in favor of EDC. PEA and
EDC both appealed to the CA. The cases were consolidated. The CA then issued a Joint Decision dated
September 25, 2000, denying due course to the petitions. In a Joint Resolution dated April 25, 2001, the
CA affirmed its Joint Decision. Then an appeal was made in the SC docketed as G.R. Nos. 147933-34
entitled Public Estates Authority v. Uy. The Court affirmed the CA’s Joint Decision and Resolution,
dismissing PEA’s appeal.
Petitioner claims that it is an indispensable party to the proceedings before the CIAC as the
assignee of the PEA of the latter’s rights, interests, and obligations in the Heritage Park Project. Thus, its
non-inclusion in the proceedings before the CIAC deprived the latter of jurisdiction over the case. In other
words, Heritage alleges that a court may lose jurisdiction over a case based on the subsequent actions of
the parties
Being a transferee of the interests of PEA over the Project during the pendency of the case
before the CIAC, it is bound by the proceedings in like manner as PEA. This Court has declared in a
number of decisions that a transferee pendente lite stands in exactly the same position as its
predecessor-in-interest, the original defendant, and is bound by the proceedings had in the case before
the property was transferred to it. It is a proper but not an indispensable party as it would in any event
be bound by the judgment against his predecessor. This would follow even if it is not formally included
as a defendant through an amendment of the complaint. Verily, the non-inclusion of Heritage in the
proceedings before the CIAC is of no moment as the Rules of Court specifically allows the proceedings to
proceed with the original parties while binding the transferee.
Side issue: Did CIAC violate the TRO with the “promulgation” of the Decision during the
effectivity of the TRO?
Yes it did. Such violation, however, was attended by good faith considering that the CIAC
made sure that the Decision would only be released after the expiration of the TRO. Thus, no sanction
will be meted out to the CIAC in this instance. Promulgation is defined as “the delivery of the decision to
the clerk of court for filing and publication.” It refers to the delivery of the decision to the clerk of court
for filing in the book of entries and publication. CIAC received the TRO issued by the CA on April 7, 2000.
It was effective for 60 days or until June 7, 2000. CIAC still promulgated its decision on May, 16, 2000
despite the TRO. Hence there is a violation.
16
INDEMNITY
FORT BONIFACIO DEVELOPMENT CORPORATION (FBDC) v. YLLAS LENDING CORPORATION and JOSE S.
LAURAYA, in his official capacity as President (GR158997, October 6, 2008)
The Facts
 FBDC executed a lease contract in favor of Tirreno, Inc. (Tirreno) over a unit at
the Entertainment Center – Phase 1 of the Bonifacio Global City in Taguig.
Pertinent sections in their contract is sec. 20, which states that the LESSOR has the right to immediately
terminate the contract upon written notice to the LESSEE in case of default by the latter; and sec. 22
which establishes a lien for the LESSOR and that upon the termination of the Contract the LESSOR shall
have the right to retain possession of the properties of the LESSEE used or situated in the Leased
Premises and the LESSOR can offset the prevailing value of such properties against any unpaid rentals,
charges and/or damages.
 Tirreno began to default in its lease payments in 1999 and Tirreno was already in arrears
by P5,027,337.91; so, FBDC and Tirreno entered into a settlement agreement.
 Despite the execution of the settlement agreement, FBDC found need to send Tirreno a
written notice of termination dated 19 September 2000 due to Tirreno’s alleged failure to settle its
outstanding obligations.
 On 29 September 2000, FBDC entered and occupied the leased premises. FBDC also
appropriated the equipment and properties left by Tirreno pursuant to Section 22 of their Contract of
Lease as partial payment for Tirreno’s outstanding obligations.
 Tirreno filed an action for forcible entry against FBDC before the MTC. Tirreno also filed a
complaint for specific performance with a prayer for the issuance of a temporary restraining order and/or
a writ of preliminary injunction against FBDC before the RTC.
 The RTC dismissed Tirreno’s complaint for forum-shopping.
 Yllas Lending Corporation (respondents) caused the sheriff of Branch 59 of the trial court to
serve an alias writ of seizure against FBDC.
 FBDC found out that respondents filed a complaint for Foreclosure of Chattel Mortgage
with Replevin against Tirreno and other defendants.
 Respondents alleged that they lent a total of P1.5 million to Tirreno and the other defendants
and that they executed a Deed of Chattel Mortgage in favor of respondents as security for the loan. The
furniture, fixtures, equipments found in the leased property by Tirreno were covered by the Chattel
Mortgage.
 Tirreno warranted the respondents the former was the absolute owner of the properties
subject of the mortgage and that no existing transaction or documents affecting the same previously
presented for, and/or pending transaction.
 Despite FBDC’s service upon him of an affidavit of title and third party claim, the sheriff
proceeded with the seizure of certain items from FBDC’s premises. The sheriff’s partial return indicated
the seizure of the following items from FBDC.
 FBDC questioned the propriety of the seizure and delivery of the properties to respondents
without an indemnity bond before the trial court. FBDC argued that when respondents
and Tirreno entered into the chattel mortgage agreement on 9 November 2000, Tirreno no longer owned
the mortgaged properties as FBDC already enforced its lien on 29 September 2000.
The Issues
FBDC alleges that the trial court erred in the following:

1. Dismissing FBDC’s third party claim upon the trial court’s erroneous interpretation that FBDC has no
right of ownership over the subject properties because Section 22 of the contract of lease is void for
being a pledge and a pactum commissorium;
2. Denying FBDC intervention on the ground that its proper remedy as third party claimant over the
subject properties is to file a separate action; and
3. Depriving FBDC of its properties without due process of law when the trial court erroneously
dismissed FBDC’s third party claim, denied FBDC’s intervention, and did not require the posting of an
indemnity bond for FBDC’s protection.
The Ruling of the Court
The petition has merit. Sec. 22 is not a case of pactum commissorium.
Intervention versus Separate Action
 Respondents posit that the right to intervene, although permissible, is not an absolute right
and that FBDC’s proper remedy is not intervention but the filing of a separate action.
 FBDC, on the other hand, insists that a third party claimant may vindicate his rights over
properties taken in an action for replevin by intervening in the replevin action itself.
 We agree with FBDC.
 The timing of the filing of the third party claim is important because the timing determines
the remedies that a third party is allowed to file. A third party claimant under Section 16 of Rule 39
(Rules of Civil Procedure) may vindicate his claim to the property in a separate action, because
intervention is no longer allowed as judgment has already been rendered. A third party claimant under
Section 14 of Rule 57 (Rules of Civil Procedure), on the other hand, may vindicate his claim to the
property by intervention because he has a legal interest in the matter in litigation.
 FBDC exercised its lien to Tirreno’s properties even before respondents and Tirreno executed
their Deed of Chattel Mortgage. FBDC is adversely affected by the disposition of the properties seized by
the sheriff. Moreover, FBDC’s intervention in the present case will result in a complete adjudication of
the issues brought about by Tirreno’s creation of multiple liens on the same properties and subsequent
default in its obligations.
17
the insurance business. Jorge Valdez (Valdez), respondent, was a former unit manager of Tokio Marine
pursuant to a Unit Management Contract entered into between them. Valdez filed a complaint for
damages against Tokio and its corporate officers. He alleged therein that Tokio violated the terms of the
Unit Management Contract by refusing to pay him his commissions and bonuses. Criminal cases were
also filed against the corporate officers of Tokio. Eventually, Valdez filed with the trial court an "Urgent Ex
Parte Motion For Authority To Litigate As Indigent Plaintiff.
The trial court allowed Valdez to litigate as pauper there being sufficient showing that he is an indigent.
The Court therefore directed the Clerk of Court to accept the complaint for filing without payment of
filing fees which amount, however, shall constitute a lien upon any judgment to be rendered in favor of
the plaintiff.
Tokio filed a motion to dismiss the complaint due to non-payment of docket fees.
The trial court issued an Order denying the motion to dismiss. Tokio filed a petition for certiorari with
prayer for a temporary restraining order and preliminary injunction with the Court of Appeals assailing
the Order of the trial court denying the motion to dismiss.
The Court of Appeals then issued a Resolution directing the issuance of a writ of preliminary injunction
restraining the trial court from conducting further proceedings. Valdez filed with the Court of Appeals an
"Urgent Notice of Taking of Deposition Upon Oral Examination.” Tokio filed with the Court of Appeals a
petition to cite Valdez in contempt of court. Tokio alleged therein that in filing with the appellate court an
urgent notice of taking his deposition, Valdez violated the preliminary injunction issued by the said court.
The deposition of Valdez was taken.

Sheriff’s Indemnity Bond

Issues: 1st issue: Whether or not the complaint should be dismissed for non-payment of docket fees
 FBDC laments the failure of the trial court to require respondents to file an
indemnity bond for FBDC’s protection.
 Pursuant to Section 14 of Rule 57, the sheriff is not obligated to turn over to respondents the 2nd issue: Whether or not Valdez engaged in forum shopping
properties subject of this case in view of respondents’ failure to file a bond. The bond in Section 14 of
Rule 57 is different from the bond in Section 3 of the same rule. Under Section 14 of Rule 57, the
purpose of the bond is to indemnify the sheriff against any claim by the intervenor to the property seized 3rd issue: Whether or not Valdez is guilty of contempt of court
or for damages arising from such seizure, which the sheriff was making and for which the sheriff was
directly responsible to the third party. Section 3, Rule 57, on the other hand, refers to the attachment Ruling: 1st issue: Complaint should not be dismissed. Courts acquire jurisdiction over any case only upon
bond to assure the return of defendant’s personal property or the payment of damages to the defendant
payment of the prescribed docket fee. The exception is provided in the Rules of Court.
if the plaintiff’s action to recover possession of the same property fails, in order to protect the plaintiff’s
right of possession of said property, or prevent the defendant from destroying the same during
the pendency of the suit. To be entitled to the exemption, the litigant shall execute an affidavit that he and his immediate family do
 Because of the absence of the indemnity bond in the present case, FBDC may also hold the not earn a gross income exceeding an amount double the monthly minimum wage of an employee nor
sheriff for damages for the taking or keeping of the properties seized from FBDC. they own any real property with the fair value of more than P300,000, supported by an affidavit of a
disinterested person attesting to the truth of the litigant's affidavit. The current tax declaration, if any,
shall be attached to the litigant's affidavit.
Indigent

Tokio Marine Malayan Insurance v. Jorge Valdez (G.R. No. 150108, January 28, 2008) In the case at bar, Tokio maintains that Valdez's ex parte motion to litigate as an indigent is defective since
it was not accompanied or supported by the affidavits of his children or the immediate members of his
Facts: Tokio Marine Malayan Insurance Company (Tokio), petitioner, is a domestic corporation engaged in family. The argument lacks merit. The Rules of Court clearly states that it is the litigant alone who shall

execute the affidavit. The Rule does not require that all members of the litigant's immediate family must
likewise execute sworn statements in support of the petition.
2nd issue: Valdez did not commit forum shopping when he filed the criminal cases against the corporate
officers of Tokio. 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."
Valdez stated in his certification that he has not heretofore commenced any other action or proceeding
involving the same issues in the Supreme Court, the Court of Appeals, or any other tribunal or agency,
except the criminal case for SWINDLING and for FALSIFICATION BY PRIVATE INDIVIDUALS OF PRIVATE
DOCUMENTS to be filed before the Makati Prosecutor's Office and that to the best of his knowledge no
such other action is pending in the Supreme Court and Court of Appeals.
The foregoing certification is substantial compliance with the Rule and Valdez even manifested before the
trial court that he actually filed criminal cases.
3rd issue: The deposition of Valdez did not violate the injunction issued by the Court of Appeals and does
not constitute indirect contempt of court.
Before one may be convicted of indirect contempt, there must be compliance with the following
requisites: (a) a charge in writing to be filed; (b) an opportunity for respondent to comment thereon
within such period as may be fixed by the court; and (c) an opportunity to be heard by himself or by
counsel. Records show that these requirements were complied with.
The charge for indirect contempt should be dismissed, because Valdez’s deposition was done in good
faith. What triggered the holding of the deposition was to clarify any misunderstanding in the previous
depositions.
VENUE
LEGASPI vs. REPUBLIC (GR 160653, July 23, 2008)
Facts:
 In June 1997, Jesusito Legaspi, owner of J.D. Legaspi Construction, entered into a Construction
Agreement with Social Security System for the construction of its branch office, a four-storey
building in Baguio City, with a contract price of P88,348,533.74.
 However, the Philippine Peso collapsed against the US Dollar resulting in price increase of imported materials to be used in
the project. Petitioner incurred expenses more than the original contract price, informed respondent of his difficulty in
meeting his obligations and requested for an adjustment in the contract price which was denied by respondent.
 Thus, petitioner filed a complaint for payment of sum of money plus damages with RTC Makati.
 Instead of filing an answer, respondent through OSG, filed a motion to dismiss claiming that venue was improperly laid
because the Construction Agreement provided that all actions may be brought before the proper court in Quezon City
and that petitioner waived any other venue. Respondent also claims that petitioner has no cause of action; that an
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increase in the contract price is an amendment to the contract which is not allowed in bidded government contracts, esp
since there is a no escalation clause.
 RTC denied the Motion to Dismiss. RTC held that venue was properly laid since petitioner’s action was not based on the
Construction Agreement but that it was a collection suit for the increase in the price of imported materials and
equipment furnished and installed to complete the construction. It was also based on Art 1267 providing for price
adjustment.
 Respondent filed petition for certiorari with CA which was granted. RTC was ordered to dismiss case.
 Motion for reconsideration was denied by the CA.
 Hence, this petition for certiorari under Rule 45 with the SC.
Issue: W/N venue was properly laid.
Held: No, venue was improperly laid. Petition denied for lack of merit.
 Petitioner argues that his cause of action does not depend upon the Construction Agreement but
on Art. 1267 providing for price adjustment due to extraordinary peso devaluation; the action being
personal in nature, it is governed by Rule 4 Section 2 of the RoC which provides that he has the
option to file the action where he or respondent resides.
 Respondent argues that while the action is based on Art. 1267, the same emanated from the
Construction Agreement hence the restrictive provision on venue applies. Respondent also claims
that petitioner has no cause of action against them.
 As a general rule, venue of personal actions is governed by Rule 4 Sec 2 of the RoC. However,
parties are not precluded from agreeing in writing on an exclusive venue. Written stipulations as to
venue may either be restrictive or permissive, and determined by the intent of the parties. In the
absence of qualifying or restrictive words such as “exclusively,” “waiving for this purpose any other venue,”
“shall only” preceding the designation of venue, “to the exclusion of the other courts,” or words of similar import, the
stipulation should be deemed as merely an agreement on an additional forum, not as limiting venue to the specified
place.
 The Construction Agreement provides that ” All actions and controversies that may arise from this Agreement… may be
brought by the parties before the proper courts in Quezon City where the main office of the CLIENT is located, the
CONTRACTOR hereby expressly waiving any other venue.”
 As such, venue is specific. The action must be filed in Quezon City only.
 The Court also held that the action, although anchored on Art. 1267, clearly originates from the Construction Agreement.
Petitioner is requesting for a price adjustment; he is assailing the no escalation clause. Resort to the Construction
Agreement will be made to determine whether or not he is entitled to such price adjustment. Therefore, the provision on
venue applies.
 As to the argument on cause of action, the Court agrees with the CA that petitioner has cause of action against
respondent. The complaint filed by petitioner sets forth the ultimate facts upon which his claim for price adjustment is
based. The complaint does not have to establish or allege facts proving the existence of a cause of action at the outset, as
this will have to be done at the trial on the merits of the case
Summary Procedure
Santos v. Judge Tanciongco (AM RTJ 06-1631, September 30, 2008)
Facts:

Fenina Santos initiated an administrative case against Judge Erasto Tanciongco for manifest bias,
partiality, and neglect of duty. According to Santos, she and her husband filed and action for forcible
entry, TRO ,and injuction against Dominador Jimenez, Maria Jimenez, Herminia Salenga Tan, and Purita
Salenga Pinpin.
Santos accused Judge Tanciongco of uncalled for liberality in accepting defendants’ Answer filed beyong
the reglamentary 10-day period. She also alleged that the judge reset the hearing several times
notwithstanding her pleas to cause the appearance of the defendants in court. She then moved for the
court to render judgment. Instead the judge suggested for the resetting of the hearing of the case.
When the counsel for the defendants eventually appeared for the first time in court, Santos manifested
that her counsel had withdrawn from the case and inquired about the outcome of her motion to render
judgment. However, the judge ordered the start of the preliminary hearing. The motion to strike out
answer in the comment of Santos was not acted upon.
Judge Tanciongco maintained that he conducted the hearings in accordance with the law and that he
observed due process and that the delays were attributable to non-appearance of counsel and the
parties. He further maintained that he did not act on the motion to render judgment because he wanted
the parties to settle the dispute amicably. With respect to the motion to strike out answer, he said that
the filing of the pre-trial brief by the complainant was tantamount to abandonment of the motion.
The investigating judge, Judge Jose Fernando found Judge Tanciongco guilty of gross ignorance of the law
and inefficiency tantamount to neglect of duty.
Issue: Nabayaran kaya?
Is the judge guilty?
Held:
Partly yes and no. From the records, the complaint was filed on December 16, 2003. Summons were
issued on January 7, 2004. The defendants averred in their Answer that they received the complaint on
January 15. The Answer shows that it was prepared on January 26 and verified the next day. Obviously,
the 10-day reglamentary period has already elapsed. Rules on summary procedure must apply in the case
and under Section 6 Rule 70, the defendants had 10 days to answer. Failure to comply with the
reglamentary period, the court may, motu proprio, render judgment if warranted by the facts alleged in
the complaint. The rule is elementary and the ignorance of the judge constitutes gross ignorance of the
law.
The filing of the pre-trial brief is not tantamount to abandonment of the motion to strike out answer.
The leniency of the judge also transgressed the constitutional right of the complainant to a speedy
disposition of her case. The failure to act on the motion constitutes gross inefficiency.
Partiality and manifest bias must be proved by clear and convincing evidence and not mere suspicion.
Mere allegations of Santos failed to discharge her burden of proving them. She did not present her sister
and relatives who allegedly saw the defendants and the judge in a restaurant.
FILING OF AFFIDAVITS AND PAPERS
Reyes vs. Heirs of Daez (GR 155553 August 26, 2008)
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FACTS: Daez filed an Ejectment case against Reyes. Reyes is a tenant and an actual occupant of
apartment units on a verbal lease agreement on a monthly basis. Sometime in 1996, the city engineer
required the restructuring of the buildings. For the purpose of effecting the necessary restructuring of
the buildings, Daez required Reyes through a formal notice to vacate the apartment. However, despite
demands, Reyes failed and refused to vacate, hence the ejectment case.
MeTC demanded Reyes to vacate. They appealed to the RTC claiming that an examination of the
complaint would show MeTC’s lack of jurisdiction, but the RTC affirmed the decision of the MeTC.
On appeal to CA, Reyes for the first time raised that the position paper submitted by Daez in the MTC was
not verified and that they failed to submit direct testimony, in violation of the rule on Summary
Procedure, thereby making the decisions of the lower courts merely founded on hearsay evidence. CA
still rendered a decision affirming RTC’s ruling.
ISSUE: Reyes claims that the CA committed GADALEJ when it decided to affirm the decision despite the
failure to submit their affidavit of direct testimony and their position paper was unverified, in contrast
with the mandate of the law that all decisions of the court shall be supported with evidence. Should the
courts follow the rules on Summary Procedure requiring that affidavits be submitted and position papers
be verified?
HELD: Petition has no merit. Reyes failed to show that the CA committed any reversible error in the
assailed decision and resolution. Petitioners failed to show that the court’s factual findings are not based
on substantial evidence or that their decisions are contrary to applicable law and jurisprudence.
COUNTERCLAIM NOT COLLATERAL ATTACK
Pasino vs. Monterroyo (GR 159494 July 31, 2008)
FACTS: Land dispute allegedly owned by petitioners where a homestead patent was issued in their favor,
however, they claim that they did not receive the order for homestead from the Director of Lands ,
hence, petitioners were not able to register the land. Despite failure to register, they still claim that they
have continuously possessed and cultivated the land. Respondents on the other hand are also claiming
the same land, alleging open, continuous, exclusive and notorious possession.
An action for recovery of possession was filed by petitioner against respondent, respondent in turn filed a
counterclaim claiming ownership of the land.
RTC ruled in favor of respondent and dismissed the counterclaim of the defendants. They ruled that the
respondent’s counterclaim stands on the same footing as an independent action. Thus, it is not subject to
collateral attack on petitioner’s title. Furthermore, the court ruled that the counterclaims were filed
within 1 year from the grant of petitioner’s title.
CA ruled that the validity of petitioner’s titles could be attacked in a counterclaim. They said that
respondent’s counterclaim was a compulsory counterclaim.

ISSUE: Is a counterclaim filed by respondent claiming ownership over the land a collateral or direct
attack?
HELD: It is already settled that a counterclaim is considered an original complaint and as such, the attack
on the title in a case originally for recovery of possession cannot be considered as a collateral attack on
the title.
This is because when respondent files a counterclaim against petitioner claiming ownership over the land
and seeking damages, the question on the validity of the title can be considered a direct attack on the
same since,
“A counterclaim is considered a complaint, only this time, it is the original defendant who
becomes the plaintiff. It stands on the same footing as if it were an independent action.”
Counterclaims
KOREA TECHNOLOGIES VS. HON. LERMA (G.R. 143581, January 7, 2008)
FACTS: Petitioner Korea Technologies Co., Ltd. (KOGIES) is a Korean corporation engaged in the supply
and installation of LPG while private respondent Pacific General Steel Manufacturing Corp. (PGSMC) is a
domestic corporation.
On March 5, 1997, PGSMC and KOGIES executed a Contract where KOGIES would set up an LPG Cylinder
Manufacturing Plant in Carmona, Cavite. On April 7, 1997, the parties executed, in Korea, an amendment
to the contract amending the terms of payment. The amendment stipulated that KOGIES will ship the
machinery and facilities necessary for manufacturing LPG cylinders for which PGSMC would pay USD
1,224,000. KOGIES would install and initiate the operation of the plant for which PGSMC bound itself to
pay USD 306,000 upon the plant’s production.
As months passed, the initial operation could not be conducted as PGSMC encountered financial
difficulties affecting the supply of materials, thus forcing the parties to agree that KOGIES would be
deemed to have completely complied with the terms and conditions of the March 5, 1997 contract.
In addition, PGSMC issued two post dated checks for the remaining balance of USD306,000 for the
installation and initial operation of the plant. When KOGIES deposited the checks, these were dishonored
for the reason "PAYMENT STOPPED." Thus, on May 8, 1998, KOGIES sent a demand letter to PGSMC
threatening criminal action for violation of BP22 in case of nonpayment. On the same date, the wife of
PGSMC’s President faxed a letter to KOGIES’ President complaining that KOGIES delivered a different
brand of hydraulic press from that agreed upon and it had not delivered several equipment parts already
20
paid for.
PGSMC replied that the two checks it issued KOGIES were fully funded but the payments were stopped
for reasons previously made known to KOGIES.
Subsequently, PGSMC informed KOGIES that PGSMC was canceling their Contract on the ground that
KOGIES had altered the quantity and lowered the quality of the machineries and equipment it delivered
to PGSMC. PGSMC then filed a complaint for estafa with the court against the president of KOGIES.
On July 3, 1998, KOGIES filed a Complaint for Specific Performance. It alleged that, PGSMC had initially
admitted that the checks that were stopped were not funded but later on claimed that it stopped
payment of the checks for the reason that "their value was not received" as the former allegedly
breached their contract by "altering the quantity and lowering the quality of the machinery and
equipment" installed in the plant and failed to make the plant operational although it earlier certified to
the contrary as shown in a Certificate.
PGSMC filed its Answer with Compulsory Counterclaim asserting that it had the full right to dismantle
and transfer the machineries and equipment because it had paid for them in full as stipulated in the
contract; that KOGIES was not entitled to the P 9,000,000 covered by the checks for failing to completely
install and make the plant operational; and that KOGIES was liable for damages amounting to P 4,500,000
for altering the quantity and lowering the quality of the machineries and equipment. Moreover, they
averred that it has already paid rent.
KOGIES filed a motion to dismiss and sought dismissal of PGSMC’s counterclaims, but the motion was
denied because PGSMC’s compulsory counterclaims are counterclaims which fell within the requisites of
compulsory counterclaims.
Appeal was made to the CA, it ruled on favor of PGSMC and ruled in addition, that the nonpayment of
docket fees and non-attachment of a certificate of non-forum shopping by PGSMC were not fatal
because the counterclaims of PGSMC were compulsory ones and payment of docket fees was not
required since the Answer with counterclaim was not an initiatory pleading. For the same reason, the
CA said a certificate of non-forum shopping was also not required.
KOGIES strongly argues that when PGSMC filed the counterclaims, it should have paid docket fees and
filed a certificate of non-forum shopping, and that its failure to do so was a fatal defect.
ISSUE: Whether the court erred in decreeing that PGSMC’s counterclaims were compulsory
counterclaims hence no necessitating the payment of docket fees and the certification of non-forum
shopping.
HELD:
KOGIES is wrong. The counterclaims of PGSMC were incorporated in its Answer with Compulsory
Counterclaim in accordance with Section 8 of Rule 11, 1997 Revised Rules of Civil Procedure, the rule
that was effective at the time the Answer with Counterclaim was filed. Sec. 8 on existing counterclaim or
cross-claim states, "A compulsory counterclaim or a cross-claim that a defending party has at the time he
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files his answer shall be contained therein."

On July 17, 1998, at the time PGSMC filed its Answer incorporating its counterclaims against KOGIES, it
was not liable to pay filing fees for said counterclaims being compulsory in nature. We stress, however,
that effective August 16, 2004 under Sec. 7, Rule 141, as amended by A.M. No. 04-2-04-SC, docket fees
are now required to be paid in compulsory counterclaim or cross-claims.

As to the failure to submit a certificate of forum shopping, PGSMC’s Answer is not an initiatory pleading
which requires a certification against forum shopping. The Answer is a responsive pleading, hence, the
courts a quo did not commit reversible error in denying KOGIES’ motion to dismiss PGSMC’s compulsory
counterclaims.