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SECOND DIVISION

[G.R. No. 138855. October 29, 2002]


LAMBERTO CASALLA, petitioner, vs. PEOPLE OF THE PHILIPPINES, and MILAGROS S. ESTEVANES, respondents.
RESOLUTION
QUISUMBING, J.:
This petition for review on certiorari assails the decision[1] dated November 17, 1998, and the resolution[2] dated May 25, 1999
of the Court of Appeals in CA-G.R. SP No. 37031, denying petitioners appeal as well as motion for reconsideration for lack of
merit.
The facts, as summarized by the Court of Appeals from the records, are as follows:
The facts, as disclosed by the record, show that petitioner Lamberto Casalla issued two (2) Bank of Commerce checks in payment
of the obligation of his wife, TERESITA CASALLA, to private respondent MILAGROS SANTOS-ESTEVANES, in order to avert a court
litigation. The two (2) checks, however, were dishonored by the drawee bank for reason of insufficiency of funds.
Subsequently, private respondent filed two (2) criminal complaints against petitioner for violation of the Bouncing Checks Law
(BP 22). The cases were docketed as Criminal Case Nos. 11844 and 11845 and raffled to Branch 68 of the Metropolitan Trial
Court (MTC) of Pasig City.
On September 22, 1994, the MTC of Pasig City rendered a decision convicting the accused (petitioner herein) of the crime
charged on two (2) counts.
Aggrieved by the decision of the trial court, petitioner interposed an appeal to the Regional Trial Court (RTC) of Pasig City, which
was raffled to Branch 261 thereof presided upon by public respondent judge.
On January 18, 1995, the court a quo rendered its decision affirming the judgment of the lower court with the modification that
appropriate subsidiary imprisonment be imposed on the accused in case of insolvency (Annex "H", Petition; pp. 24-28, ibid.).
Dissatisfied with the decision of the court a quo, petitioner filed a motion for reconsideration on February 8, 1995 (Annex "I",
Petition; pp. 29-30, ibid.).
In an Order dated February 9, 1995, the lower court denied the motion for reconsideration on account of the absence of a notice
of hearing and because the issues raised therein have already been passed upon in its decision (Annex "J", Petition; p. 31, ibid.).
On February 22, 1995, petitioner filed a second motion for reconsideration (Annex "K", Petition; pp. 32-33, ibid.).
On February 24, 1995, private respondent filed with the RTC a motion for the issuance of a writ of execution (Annex "L", Petition;
pp. 34-36, ibid.).
Opposition to the motion for the issuance of a writ of execution was filed by petitioner on March 3, 1995 (Annex M, Petition; pp.
37-38, ibid.).
In an Order dated March 13, 1995, the court a quo denied petitioners second motion for reconsideration and granted the motion
for the issuance of a writ of execution (Annex A, Petition; p. 14, ibid.).
On March 21, 1995, a writ of execution was issued by the court directing public respondent Deputy Sheriff Jose R. Santos to cause
the execution of the judgment (Annex B, Petition; p. 15, ibid.).[3]
Petitioner interposed an appeal via a petition for review with prayer for preliminary injunction and/or temporary restraining
order. On November 17, 1998, the appellate court promulgated its decision denying the appeal for lack of merit.[4]
In its decision, the Court of Appeals noted that the petition before it did not contain a statement of material dates showing the
timeliness of the petition. It also maintained that the petition was filed out of time, because the motion to reconsider the decision
of the trial court did not contain a notice of hearing. Hence, being a mere scrap of paper, it did not interrupt the period for filing
the petition before the appellate court, and the period had lapsed before the petition was filed. It also ruled that petitioners
second motion was not only a prohibited pleading but it was also filed out of time. Petitioners motion for reconsideration before
the Court of Appeals was denied.[5] Hence, the present petition, raising the following errors:
I
THAT THE REQUIREMENT ON NOTICE OF HEARING DOES NOT APPLY IN PETITIONERS MOTION FOR RECONSIDERATION.
II
THAT THE REGIONAL TRIAL COURT HAS NO AUTHORITY TO ISSUE A WRIT OF EXECUTION.[6]
Petitioner argues that the requirement of a notice of hearing does not apply to the motion for reconsideration he filed before
Branch 261 of the Regional Trial Court of Pasig City, as said court was acting only in its appellate jurisdiction, the proceedings
therein being summary in nature. He further asserts that said trial court gravely abused its discretion when it issued the writ of
execution, because it was the court of origin, the Metropolitan Trial Court of Pasig City, Branch 68, which had the authority to
issue the writ.
For our resolution now is whether or not the Court of Appeals erred in denying the petition for review and the subsequent
motion for reconsideration.
Petitioner received a copy of the decision of the Regional Trial Court on February 1, 1995. From that date, he had 15 days, or
until February 16, 1995, to file a motion for reconsideration. On February 8, 1995, petitioner did file a motion for reconsideration
of the trial courts decision. The motion, however, lacked a notice of hearing.
We have ruled in a number of cases that the requirements laid down in the Rules of Court, that the notice of hearing shall be
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directed to the parties concerned and shall state the time and place for the hearing of the motion, are mandatory. If not religiously
complied with, they render the motion pro forma. As such the motion is a useless piece of paper that will not toll the running of
the prescriptive period.[7]
Under the present rules, the notice of hearing is expressly made a requirement.[8] In the instant case, it is undisputed that the
motion for reconsideration filed by petitioner with the Regional Trial Court did not contain any notice of hearing. It was therefore
pro forma; hence, it did not suspend the running of the prescriptive period.[9] This defect was not cured by the filing of a second
motion for reconsideration, which is prohibited under the rules.[10]
Petitioner claims that the requirement of a notice of hearing did not apply to the motion for reconsideration he filed before the
Regional Trial Court, since it was acting only in its appellate jurisdiction. This is error, as the Rules of Court apply to all courts,
except as otherwise provided by the Supreme Court.[11] Regional Trial Courts are not precluded from conducting hearings on
matters on which the parties need to be heard, even in the exercise of their appellate jurisdiction.
Additionally, to assail the RTCs issuance of a writ of execution, petitioner filed a petition for review under Rule 45 with the Court
of Appeals. This was improper. What it should have filed was a petition for certiorari under Rule 65 of the 1997 Rules of Civil
Procedure. Under the Rules, no appeal may be taken from an order denying a motion for new trial or reconsideration and an
order of execution. Instead, where the judgment or final order may not be appealed, the appropriate recourse is a special civil
action under Rule 65.[12] Thus, the appellate court did not err in denying said petition for review.
WHEREFORE, the instant petition is DENIED for lack of merit. The decision dated November 17, 1998 and the resolution dated
May 25, 1999, of the Court of Appeals in CA-G.R. SP No. 37031 are AFFIRMED. Costs against petitioner.
SO ORDERED.

Republic of the
Supreme Court
Manila
EN BANC
GOVERNMENT SERVICE INSURANCE SYSTEM G.R. No. 180291
(GSIS) and WINSTON F. GARCIA, in his
capacity as PRESIDENT and GENERAL Present:
MANAGER
CORONA, C.J.,
of the GSIS,
CARPIO,
Petitioners,
CARPIO MORALES,
- versus -
VELASCO, JR.,
DINNAH VILLAVIZA, ELIZABETH DUQUE,
NACHURA,
ADRONICO A. ECHAVEZ,
LEONARDO-DE CASTRO,
RODEL RUBIO, ROWENA THERESE B. GRACIA,
PILAR LAYCO, and ANTONIO JOSE LEGARDA, BRION,

Respondents. PERALTA,

BERSAMIN,

DEL CASTILLO,

ABAD,

VILLARAMA, JR.,

PEREZ, and

MENDOZA, JJ.

Promulgated:

July 27, 2010

x ------------------------------------------------------------------------------------------------------- x
DECISION

2
MENDOZA, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to reverse and set aside the August 31,
2007 Decision[1] of the Court of Appeals (CA), in CA-G.R. SP No. 98952, dismissing the petition for certiorari of Government
Service Insurance System (GSIS) assailing the Civil Service Commissions Resolution No. 062177.

THE FACTS:

Petitioner Winston Garcia (PGM Garcia), as President and General Manager of the GSIS, filed separate formal charges against
respondents Dinnah Villaviza, Elizabeth Duque, Adronico A. Echavez, Rodel Rubio, Rowena Therese B. Gracia, Pilar Layco, and
Antonio Jose Legarda for Grave Misconduct and/or Conduct Prejudicial to the Best Interest of the Service pursuant to the Rules
of Procedure in Administrative Investigation (RPAI) of GSIS Employees and Officials, III, D, (1, c, f) in relation to Section 52A (3),
(20), Rule IV, of the Uniform Rules on Administrative Cases in the Civil Service (URACCS), in accordance with Book V of the
Administrative Code of 1987, committed as follows:

That on 27 May 2005, respondent, wearing red shirt together with some employees, marched to or appeared
simultaneously at or just outside the office of the Investigation Unit in a mass demonstration/rally of protest
and support for Messrs. Mario Molina and Albert Velasco, the latter having surreptitiously entered the GSIS
premises;
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That some of these employees badmouthed the security guards and the GSIS management and defiantly raised
clenched fists led by Atty. Velasco who was barred by Hearing Officer Marvin R. Gatpayat in an Order dated 24
May 2005 from appearing as counsel for Atty. Molina pursuant to Section 7 (b) (2) of R.A. 6713 otherwise
known as the Code of Conduct and Ethical Standards for Public Officials and Employees;
That respondent, together with other employees in utter contempt of CSC Resolution No. 021316, dated 11
October 2002, otherwise known as Omnibus Rules on Prohibited Concerted Mass Actions in the Public Sector
caused alarm and heightened some employees and disrupted the work at the Investigation Unit during office
hours.[2]
This episode was earlier reported to PGM Garcia, through an office memorandum dated May 31, 2005, by the Manager of the
GSIS Security Department (GSIS-SD), Dennis Nagtalon. On the same day, the Manager of the GSIS Investigation Unit (GSIS-IU),
Atty. Lutgardo Barbo, issued a memorandum to each of the seven (7) respondents requiring them to explain in writing and under
oath within three (3) days why they should not be administratively dealt with.[3]

Respondents Duque, Echavez, Rubio, Gracia, Layco, and Legarda, together with two others, submitted a letter-explanation to Atty.
Barbo dated . Denying that there was a planned mass action, the respondents explained that their act of going to the office of the
GSIS-IU was a spontaneous reaction after learning that their former union president was there. Aside from some of them wanting
to show their support, they were interested in that hearing as it might also affect them. For her part, respondent Villaviza
submitted a separate letter explaining that she had a scheduled pre-hearing at the GSIS-IU that day and that she had informed
her immediate supervisor about it, attaching a copy of the order of pre-hearing. These letters were not under oath.[4]

PGM Garcia then filed the above-mentioned formal charges for Grave Misconduct and/or Conduct Prejudicial to the Best Interest
of the Service against each of the respondents, all dated June 4, 2005. Respondents were again directed to submit their written
answers under oath within three (3) days from receipt thereof.[5] None was filed.

On June 29, 2005, PGM Garcia issued separate but similarly worded decisions finding all seven (7) respondents guilty of the
charges and meting out the penalty of one (1) year suspension plus the accessory penalties appurtenant thereto.

On appeal, the Civil Service Commission (CSC) found the respondents guilty of the lesser offense of Violation of Reasonable Office
Rules and Regulations and reduced the penalty to reprimand. The CSC ruled that respondents were not denied their right to due
process but there was no substantial evidence to hold them guilty of Conduct Prejudicial to the Best Interest of the Service.
Instead,

x x x. The actuation of the appellants in going to the IU, wearing red shirts, to witness a public hearing cannot be
considered as constitutive of such offense. Appellants (respondents herein) assembly at the said office to express
support to Velasco, their Union President, who pledged to defend them against any oppression by the GSIS
management, can be considered as an exercise of their freedom of expression, a constitutionally guaranteed
right.[6] x x x
PGM Garcia sought reconsideration but was denied. Thus, PGM Garcia went to the Court of Appeals via a Petition for Review
under Rule 43 of the Rules on Civil Procedure.[7] The CA upheld the CSC in this wise:

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The Civil Service Commission is correct when it found that the act sought to be punished hardly falls within the
definition of a prohibited concerted activity or mass action. The petitioners failed to prove that the supposed
concerted activity of the respondents resulted in work stoppage and caused prejudice to the public service. Only
about twenty (20) out of more than a hundred employees at the main office, joined the activity sought to be
punished. These employees, now respondents in this case, were assigned at different offices of the petitioner
GSIS. Hence, despite the belated claim of the petitioners that the act complained of had created substantial
disturbance inside the petitioner GSIS premises during office hours, there is nothing in the record that could
support the claim that the operational capacity of petitioner GSIS was affected or reduced to substantial
percentage when respondents gathered at the Investigation Unit. Despite the hazy claim of the petitioners that
the gathering was intended to force the Investigation Unit and petitioner GSIS to be lenient in the handling of
Atty. Molinas case and allow Atty. Velasco to represent Atty. Molina in his administrative case before petitioner
GSIS, there is likewise no concrete and convincing evidence to prove that the gathering was made to demand or
force concessions, economic or otherwise from the GSIS management or from the government. In fact, in the
separate formal charges filed against the respondents, petitioners clearly alleged that respondents marched to
or appeared simultaneously at or just outside the office of the Investigation Unit in a mass demonstration/rally
of protest and support for Mssrs. Mario Molina and Albert Velasco, the latter surreptitiously entered the GSIS
premises. Thus, petitioners are aware at the outset that the only apparent intention of the respondents in going
to the IU was to show support to Atty. Mario Molina and Albert Velasco, their union officers. The belated assertion
that the intention of the respondents in going to the IU was to disrupt the operation and pressure the GSIS
administration to be lenient with Atty. Mario Molina and Albert Velasco, is only an afterthought.[8]
Not in conformity, PGM Garcia is now before us via this Petition for Review presenting the following:

STATEMENT OF THE ISSUES


I
WHETHER AN ADMINISTRATIVE TRIBUNAL MAY APPLY SUPPLETORILY THE PROVISIONS OF THE RULES
OF COURT ON THE EFFECT OF FAILURE TO DENY THE ALLEGATIONS IN THE COMPLAINT AND FAILURE
TO FILE ANSWER, WHERE THE RESPONDENTS IN THE ADMINISTRATIVE PROCEEDINGS DID NOT FILE
ANY RESPONSIVE PLEADING TO THE FORMAL CHARGES AGAINST THEM.
II
WHETHER THE RULE THAT ADMINISTRATIVE DUE PROCESS CANNOT BE EQUATED WITH DUE PROCESS
IN JUDICIAL SENSE AUTHORIZES AN ADMINISTRATIVE TRIBUNAL TO CONSIDER IN EVIDENCE AND GIVE
FULL PROBATIVE VALUE TO UNNOTARIZED LETTERS THAT DID NOT FORM PART OF THE CASE RECORD.
III
WHETHER A DECISION THAT MAKES CONCLUSIONS OF FACTS BASED ON EVIDENCE ON RECORD BUT
MAKES A CONCLUSION OF LAW BASED ON THE ALLEGATIONS OF A DOCUMENT THAT NEVER FORMED
PART OF THE CASE RECORDS IS VALID.
IV
WHETHER FURTHER PROOF OF SUSBTANTIAL REDUCTION OF THE OPERATIONAL CAPACITY OF AN
AGENCY, DUE TO UNRULY MASS GATHERING OF GOVERNMENT EMPLOYEES INSIDE OFFICE PREMISES
AND WITHIN OFFICE HOURS, IS REQUIRED TO HOLD THE SAID EMPLOYEES LIABLE FOR CONDUCT
PREJUDICIAL TO THE BEST INTEREST OF THE SERVICE PURSUANT TO CSC RESOLUTION NO. 021316.
V
WHETHER AN UNRULY MASS GATHERING OF TWENTY EMPLOYEES, LASTING FOR MORE THAN AN HOUR
DURING OFFICE HOURS, INSIDE OFFICE PREMISES AND WITHIN A UNIT TASKED TO HEAR AN
ADMINISTRATIVE CASE, TO PROTEST THE PROHIBITION AGAINST THE APPEARANCE OF THEIR LEADER
AS COUNSEL IN THE SAID ADMINISTRATIVE CASE, FALLS WITHIN THE PURVIEW OF THE
CONSTITUTIONAL GUARANTEE TO FREEDOM OF EXPRESSION AND PEACEFUL ASSEMBLY.
VI
WHETHER THE CONCERTED ABANDONMENT OF EMPLOYEES OF THEIR POSTS FOR MORE THAN AN
HOUR TO HOLD AN UNRULY PROTEST INSIDE OFFICE PREMISES ONLY CONSTITUTES THE
ADMINISTRATIVE OFFENSE OF VIOLATION OF REASONABLE OFFICE RULES AND REGULATIONS.[9]
The Court finds no merit in the petition.

Petitioners primarily question the probative value accorded to respondents letters of explanation in response to the
memorandum of the GSIS-IU Manager. The respondents never filed their answers to the formal charges. The petitioners argue
that there being no answers, the allegations in the formal charges that they filed should have been deemed admitted pursuant
to Section 11, Rule 8 of the Rules of Court which provides:

SECTION 11. Allegations not specifically denied deemed admitted. Material averment in the complaint, other than
those as to the amount of liquidated damages, shall be deemed admitted when not specifically denied.
Allegations of usury in a complaint to recover usurious interest are deemed admitted if not denied specifically
and under oath.
According to the petitioners, this rule is applicable to the case at bench pursuant to Rule 1, Section 4 of the Rules of Court which
reads:

SECTION 4. In what cases not applicable. These Rules shall not apply to election cases, land registration, cadastral,
naturalization and insolvency proceedings, and other cases not herein provided for, except by analogy or in a
suppletory character and whenever practicable and convenient. (underscoring supplied)
The Court does not subscribe to the argument of the petitioners. Petitioners own rules, Rule XI, Section 4 of the GSIS Amended
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Policy and Procedural Guidelines No. 178-04, specifically provides:

If the respondent fails to file his Answer within five (5) working days from receipt of the Formal Charge for the
supporting evidence, when requested, he shall be considered to have waived his right to file an answer and the
PGM or the Board of Trustees, in proper cases, shall render judgment, as may be warranted by the facts and
evidence submitted by the prosecution.
A perusal of said section readily discloses that the failure of a respondent to file an answer merely translates to a waiver of his
right to file an answer. There is nothing in the rule that says that the charges are deemed admitted. It has not done away with the
burden of the complainant to prove the charges with clear and convincing evidence.

It is true that Section 4 of the Rules of Court provides that the rules can be applied in a suppletory character. Suppletory is defined
as supplying deficiencies.[10] It means that the provisions in the Rules of Court will be made to apply only where there is an
insufficiency in the applicable rule. There is, however, no such deficiency as the rules of the GSIS are explicit in case of failure to
file the required answer. What is clearly stated there is that GSIS may render judgment as may be warranted by the facts and
evidence submitted by the prosecution.

Even granting that Rule 8, Section 11 of the Rules of Court finds application in this case, petitioners must remember that there
remain averments that are not deemed admitted by the failure to deny the same. Among them are immaterial allegations and
incorrect conclusions drawn from facts set out in the complaint.[11] Thus, even if respondents failed to file their answer, it does
not mean that all averments found in the complaint will be considered as true and correct in their entirety, and that the
forthcoming decision will be rendered in favor of the petitioners. We must not forget that even in administrative proceedings, it
is still the complainant, or in this case the petitioners, who have the burden of proving, with substantial evidence, the allegations
in the complaint or in the formal charges.[12]

A perusal of the decisions of the CA and of the CSC will reveal that the case was resolved against petitioners based, not
on the absence of respondents evidence, but on the weakness of that of the petitioners. Thus, the CA wrote:

Petitioners correctly submitted the administrative cases for resolution without the respondents respective
answer to the separate formal charges in accordance with Section 4, Rule XI of the RPAI. Being in full control of
the administrative proceeding and having effectively prevented respondents from further submitting their
responsive answer and evidence for the defense, petitioners were in the most advantageous position to prove
the merit of their allegations in the formal charges. When petitioner Winston Garcia issued those similarly
worded decisions in the administrative cases against the respondents, it is presumed that all evidence in their
favor were duly submitted and justly considered independent of the weakness of respondents evidence in view
of the principle that the burden of proof belongs to the one who alleges and not the one who denies.[13]
On the merits, what needs to be resolved in the case at bench is the question of whether or not there was a violation of Section
5 of CSC Resolution No. 02-1316. Stated differently, whether or not respondents actions on May 27, 2005 amounted to a
prohibited concerted activity or mass action. Pertinently, the said provision states:

Section 5. As used in this Omnibus Rules, the phrase prohibited concerted activity or mass action shall be
understood to refer to any collective activity undertaken by government employees, by themselves or through
their employees organizations, with intent of effecting work stoppage or service disruption in order to realize
their demands of force concession, economic or otherwise, from their respective agencies or the government.
It shall include mass leaves, walkouts, pickets and acts of similar nature. (underscoring supplied)
In this case, CSC found that the acts of respondents in going to the GSIS-IU office wearing red shirts to witness a public
hearing do not amount to a concerted activity or mass action proscribed above. CSC even added that their actuations can be
deemed an exercise of their constitutional right to freedom of expression. The CA found no cogent reason to deviate therefrom.

As defined in Section 5 of CSC Resolution No. 02-1316 which serves to regulate the political rights of those in the
government service, the concerted activity or mass action proscribed must be coupled with the intent of effecting work stoppage
or service disruption in order to realize their demands of force concession. Wearing similarly colored shirts, attending a public
hearing at the GSIS-IU office, bringing with them recording gadgets, clenching their fists, some even badmouthing the guards
and PGM Garcia, are acts not constitutive of an (i) intent to effect work stoppage or service disruption and (ii) for the purpose of
realizing their demands of force concession.

Precisely, the limitations or qualifications found in Section 5 of CSC Resolution No. 02-1316 are there to temper and focus the
application of such prohibition. Not all collective activity or mass undertaking of government employees is prohibited.
Otherwise, we would be totally depriving our brothers and sisters in the government service of their constitutional right to

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freedom of expression.

Government workers, whatever their ranks, have as much right as any person in the land to voice out their protests against what
they believe to be a violation of their rights and interests. Civil Service does not deprive them of their freedom of expression. It
would be unfair to hold that by joining the government service, the members thereof have renounced or waived this basic liberty.
This freedom can be reasonably regulated only but can never be taken away.

A review of PGM Garcias formal charges against the respondents reveals that he himself was not even certain
whether the respondents and the rest of the twenty or so GSIS employees who were at the GSIS-IU office that
fateful day marched there or just simply appeared there simultaneously.[14] Thus, the petitioners were not
even sure if the spontaneous act of each of the twenty or so GSIS employees on May 27, 2005 was a concerted
one. The report of Manager Nagtalon of the GSIS-SD which was the basis for PGM Garcias formal charges
reflected such uncertainty. Thus,

Of these red shirt protesters, only Mr. Molina has official business at the Investigation Unit during this time. The
rest abandoned their post and duties for the duration of this incident which lasted until 10:55 A.M. It was also
observed that the protesters, some of whom raised their clenched left fists, carefully planned this illegal action
as evident in their behavior of arrogance, defiance and provocation, the presence of various recording gadgets
such as VCRs, voice recorders and digital cameras, the bad mouthing of the security guards and the PGM, the
uniformity in their attire and the collusion regarding the anomalous entry of Mr. Albert Velasco to the premises
as reported earlier.[15]
The said report of Nagtalon contained only bare facts. It did not show respondents unified intent to effect disruption or stoppage
in their work. It also failed to show that their purpose was to demand a force concession.

In the recent case of GSIS v. Kapisanan ng mga Manggagawa sa GSIS,[16] the Court upheld the position of petitioner GSIS because
its employees, numbering between 300 and 800 each day, staged a walkout and participated in a mass protest or demonstration
outside the GSIS for four straight days. We cannot say the same for the 20 or so employees in this case. To equate their wearing
of red shirts and going to the GSIS-IU office for just over an hour with that four-day mass action in Kapisanan ng mga
Manggagawa sa GSIS case and to punish them in the same manner would most certainly be unfair and unjust.

Recent analogous decisions in the , while recognizing the governments right as an employer to lay down certain standards of
conduct, tend to lean towards a broad definition of public concern speech which is protected by their First Amendment. One
such case is that of Scott v. Meters.[17] In said case, the New York Transit Authority (NYTA), responsible for operation of s mass
transit service, issued a rule prohibiting employees from wearing badges or buttons on their uniforms. A number of union
members wore union buttons promoting their opposition to a collective bargaining agreement. Consequently, the NYTA tried to
enforce its rule and threatened to subject these union members to discipline. The court, though recognizing the governments
right to impose reasonable restrictions, held that the NYTAs rule was unconstitutionally overboard.

In another case, Communication Workers of America v. Ector County Hospital District,[18] it was held that,

A county hospital employees wearing of a Union Yes lapel pin during a union organization drive constituted
speech on a matter of public concern, and the countys proffered interest in enforcing the anti-adornment
provision of its dress code was outweighed by the employees interest in exercising his First Amendment speech
and associational rights by wearing a pro-union lapel button.[19]
Thus, respondents freedom of speech and of expression remains intact, and CSCs Resolution No. 02-1316 defining what a
prohibited concerted activity or mass action has only tempered or regulated these rights. Measured against that definition,
respondents actuations did not amount to a prohibited concerted activity or mass action. The CSC and the CA were both correct
in arriving at said conclusion.

WHEREFORE, the assailed August 31, 2007 Decision of the Court of Appeals as well as its October 16, 2007 Resolution in CA
G.R. SP No. 98952 are hereby AFFIRMED.

SO ORDERED.

G.R. No. L-45543 May 17, 1939


SURIGAO MINE EXPLORATION CO., INC., plaintiff-appellant,
vs.
C. HARRIS, SURIGAO-MAINIT MINING SYNDICATE, SURIGAO CONSOLIDATED MINING CO., INC., OTTO WEBER, ET AL.,
defendants-appellees.
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Hipolito Alo for appellant.
Vicente J. Francisco for appellees.
LAUREL, J.:
On October 24, 1935, the original complaint in this case was filed in the Court of First Instance of Surigao in which the plaintiff,
a domestic private corporation domiciled in Cebu, sought a judicial pronouncement (a) adjudging the plaintiff to be the owner
and possessor of the fourteen placer mining claims mentioned in the complaint and located in the barrio of Tubod, municipality
of Mainit, Province of Surigao; (b) annulling the forty-three lode mining claims of the defendants, C. Harris, Surigao-Mainit
Mining Syndicate, Surigao Consolidated Mining Co., Inc., and Otto Weber, and cancelling the registration of said lode claims in
the records of the mining recorder of Surigao and in all other official records; (c) prohibiting the defendants and their agents,
employees and laborers from interfering with plaintiff's ownership and possession of its placer claims; (d) sentencing the
defendants to pay jointly and severally to the plaintiff the sum of P47,000 by way of damages; (e) assessing the costs of the action
against the defendants; and (f) awarding the plaintiff such other proper, just and equitable relief. The theory of the plaintiff,
under the complaint, is that it is the owner by purchase of the aforesaid placer claims and that the lode claims complained of
were staked and located by the defendants on plaintiff's placer claims after the latter had been validly and duly staked and
located by the plaintiff or its grantors and predecessors in interest.
On November 23, 1935, the defendants C. Harris, Surigao-Mainit Mining Syndicate, Surigao Consolidated Mining Co., Inc., and
Otto Weber demurred to the complaint on the grounds (1) that there was a misjoinder of parties in that Otto Weber had been
included as defendant; (2) that the complaint did not state facts sufficient to constitute a cause of action, because it merely
alleged that the plaintiff was the owner by purchase of the placer claims named therein; and (3) that the complaint was
ambiguous and unintelligible. On January 9, 1936 the Court of First Instance of Surigao entered an order finding merit in the
third ground of the demurrer and requiring the plaintiff to amend its complaint so as to contain a detailed description of its
placer claims.
On January 13, 1936 an amended complaint was filed to which another demurrer was interposed on January 22, 1936. In the
order of January 27, 1936 the Court of First Instance of Surigao overruled the demurrer and required the defendants to file their
answer within the reglementary period. Pursuant to the order of the Court of First Instance of Surigao of June 5, 1936, the
plaintiff filed, on June 11, 1936, a third amended complaint in which, additional to C. Harris, Surigao-Mainit Mining Syndicate,
Surigao Consolidated Mining Co., Inc., and Otto Weber, the original defendants, thirty-two other individual's were included as
parties defendant. In this third amended complaint the placer claims alleged to be owned by the plaintiff were reduced to eleven,
and the relief prayed for was about the same as that asked in the original complaint, although the amount sought to be recovered
as damages was increased to P49,000.
On August 3, 1936 the defendants, other than Surigao-Mainit Mining Syndicate, Surigao Consolidated Mining Co., Inc., and Otto
Weber, filed an answer, which was amended on September 10, 1936, containing a general denial, setting up five special defenses
and praying that the location of the alleged placer claims described in paragraph 4 of the third amended complaint and of any
placer claim which might be shown in the trial to have been located by the plaintiff or its predecessors in interest illegally and in
fraud of the government, be declared null and void and that the registration of said claims in the office of the mining recorder of
Surigao be ordered cancelled.
On August 24, 1936 the defendants Surigao-Mainit Mining Syndicate, Surigao Consolidated Mining Co., Inc., and Otto Weber filed
an answer containing a general denial, five special defenses and a counterclaim in the sum of P40,000 and praying the Court of
First Instance of Surigao (a) to declare the nullity of the registration in the office of the mining recorder of Surigao of the placer
claims specified in paragraphs 3 and 4 of the third amended complaint and to order the cancellation of said registration; (b) to
declare the defendants the lawful owners and possessors of the of the lode claims enumerated in paragraph 6 of the third
amended complaint; (c) to restrain the plaintiff and its agents, employees and laborers from interfering with the ownership,
possession and enjoyment of the defendants of their lode claims; and (d) to sentence the plaintiff to pay to the defendants the
sum of P40,000 as damages.
In the course of the adduction of plaintiff's evidence in the Court of First Instance of Surigao, Exhibits O and O-1 to O-9 were
presented. With the exception of Exhibit O-7, all of said exhibits are deeds of sale in favor of the plaintiff covering, among others,
the placer claims here in question and bear dates posterior to October 24, 1935, the date of the filing of the original complaint.
Exhibit 0-7 is a deed of sale executed by Pablo S. Atillo in favor of Maximo Borromeo on January 23, 1935. A perusal of this Exhibit
O-7 in connection with Exhibit O-9 reveals the fact that the mining claims conveyed by Maximo Borromeo to the plaintiff under
said Exhibit O-9, dated December 21, 1935, were the same claims acquired by Maximo Borromeo under Exhibit O-7.
Whereupon, before the plaintiff could close its evidence, the defendants moved for the dismissal of the complaint on the ground
that, when the action was commenced, plaintiff's right of action had not yet accrued, since, under its own Exhibits O and O-1 to
O-9, the plaintiff did not become the owner of the claims in dispute until after the original complaint was filed in the Court of
First Instance of Surigao on October 24, 1935.
The present appeal is from the order of the Court of First Instance of Surigao entered on September 12, 1936 dismissing the
complaint, with costs against the plaintiff, the latter alleging that the trial court erred and abused its discretion in so ordering
the dismissal of the complaint.
No pretense is here made by the plaintiff-appellant that it became the owner and possessor of the claims in question by virtue
of muniments of title other than Exhibits O and O-1 to O-9, and this appeal will be disposed of on the assumption that the alleged
rights of the appellant to said claims had been conferred solely by said Exhibits O and O-1 to O-9. In other words, this case must
be decided on the premise that the deeds of sale in favor of the appellant were executed after the filing of the original complaint.
Exhibit O-7, executed on January 23, 1935, will not affect the situation, for the reason that said exhibit evidences a deed of sale
in favor of Maximo Borromeo, who conveyed the claims acquired by him thereunder to the plaintiff by virtue of Exhibit O-9,
executed on December 21, 1935, or after the filing of the original complaint.
Subject to certain qualifications, and except as otherwise provided by law, an action commenced before the cause of action has

7
accrued is prematurely brought and should be dismissed, provided an objection on this ground is properly and seasonably
interposed. The fact that the cause of action accrues after the action is commenced and while it is pending is of no moment. In
the present case, timely objection was made by counsel for the appellees upon discovery of the immaturity of the action a a result
of the presentation by plaintiff-appellant of certain exhibits hereinabove mentioned. The date when a civil action is deemed
commenced is determined by section 389 of the Code of Civil Procedure. Without the need of commenting on this section in
relation to allied sections of the same Code, it is sufficient to observe that here summons was issued by the Court of First Instance
of Surigao on October 25, 1935 and was served on the defendants C. Harris, Surigao-Mainit Mining Syndicate and Surigao
Consolidated Mining Co., Inc., on October 28, 1935, and on the defendant Otto Weber on November 11, 1935. Under section 389,
which was taken from section 405 of the Code of Civil Procedure of California, the action is deemed commenced upon the "filing
of a complaint in the office of the clerk of the court in which the action is to be instituted" (Sotelo vs. Dizon, G.R. No. 46492,
promulgated April 26, 1939, and authorities therein cited). The original complaint was filed in the present case on October 24,
1935. But although it be assumed that, under said section 389, the date or dates of the issuance and service of the summons
might affect the true date of the commencement of the action, the points is of no legal consequence because whether the date of
the filing of the original complaint, or the date of the issuance of the summons, or the date of the service of said summons, is
considered as the time of the commencement of the suit, it is clear that any of said dates is anterior to those of Exhibits O and O-
1 to O-9.
Notwithstanding divergence of authorities and the apparent confusion that has arisen in the country of origin of our procedural
system, we believe that certain principles are well settled. Primarily, the right to amend a pleading is not an absolute and
unconditional right. It is to be allowed in furtherance of justice under a sound judicial discretion. This judicial discretion, upon
the other hand, is of course not without any restriction. The cause of action must exist at the time the action was begun, and the
plaintiff will not be allowed by an amendment to introduce a cause of action which had no existence when the action was
commenced. As soon as an action is brought and the complaint is filed, the proceedings thus initiated are not subject to the
arbitrary control of the parties or of the court, but must be dealt with in accordance with recognized rules of pleading and
practice. Amendments "must be such, and only such, as are necessary to promote the completion of the action begun — all
parties necessary for that purpose may come or be brought into it, and so also, any and all such amendments may be made as to
the cause of action, as may be necessary to its completeness in all respects. But neither general principles of practice, nor the
statute providing for amendments, authorize amendments that reach beyond these purposes. Especially, the court has no
authority to allow such amendments as to parties, or as to the cause of action, as make new, or substancially a new action, unless
by the consent of the parties. Indeed, this would not be to amend, in any proper sense, but to substitute a new action by order,
for and in place of a pending one, which the court cannot do. General principles of procedure, and, as well, the statutory
regulations upon the subject, contemplate and intend that an action shall embrace but one litigation or matter, and only such
parties, matters and things, as are necessary, germane, and incident to it, except that several causes of action may be united in
the same action, as specially provided by statute. Any other rule or method would certainly be subversive of orderly and
intelligent procedure, and lead to intolerable confusion, as well as injustice to litigants. (Grant vs. Burgwyn, 88 N.C., 95; Merrill
vs. Merrill, 92 N.C., 657; McNair vs. Commissioners, 93 N.C., 364; Ely vs. Early, 94 N.C., 1.)" (Clendenin vs. Turner [1887], 96 N.C.,
304, 306.)
It is a rule of law to which there is, perhaps, no exception, either at law or in equity, that to recover at all there must be some
cause of action at the commencement of the suit. As observed by counsel for appellees, there are reasons of public policy why
there should be no needless haste in bringing up litigation, and why people who are in no default and against whom there is as
yet no cause of action should not be summoned before the public tribunals to answer complaints which are groundless. We say
groundless because if the action is immature, it should not be entertained, and an action prematurely brought is a groundless
suit.
It is true, that an amended complaint and the answer thereto take the place of the originals which are thereby regarded as
abandoned (Reynes vs. Compañia General de Tabacos [1912], 21 Phil., 416; Ruyman and Farris vs. Director of Lands [1916], 34
Phil., 428) and that "the complaint and answer having been superseded by the amended complaint and the answer thereto, and
the answer to the original complaint not having been presented in evidence as an exhibit, the trial court was not authorized to
take it into account." (Bastida vs. Menzi & Co. [1933], 58 Phil., 188.) But in none of these cases or in any other case have we held
that if a right of action did not exist when the original complaint was filed, one could be created by filing an amended complaint.
In some jurisdictions in the United States what was termed an "imperfect cause of action" could be perfected by suitable
amendment (Brown vs. Galena Mining & Smelting Co., 32 Kan., 528; Hooper vs. City of Atlanta, 26 Ga. App., 221) and this is
virtually what we also permitted in Banzon and Rosauro vs. Sellner ([1933], 58 Phil., 453); Asiatic Petroleum Co. vs. Veloso
([1935], 62 Phil., 683); and recently in Ramos vs. Gibbon (38 Off. Gaz., 241). That, however, which is no cause of action whatsoever
cannot by amendment or supplemental pleading be converted into a cause of action: Nihil de re accrescit ei qui nihil in re quando
jus accresceret habet.
We are therefore of the opinion, and so hold, that unless the plaintiff has a valid and subsisting cause of action at the time his
action is commenced, the defect cannot be cured or remedied by the acquisition or accrual of one while the action is pending,
and a supplemental complaint or an amendment setting up such after-accrued cause of action is not permissible (Cf. Compañia
gral. de Tabacos vs. Araza [1907], 7 Phil., 455; Santos vs. Marquez [1909], 13 Phil., 207; Barretto vs. Lane [1915], 29 Phil., 487;
National Bank vs. De la Viña [1924], 46 Phil., 63; Hodges vs. Locsin [1933], 58 Phil., 607; Limpangco vs. Mercado [1908], 10 Phil.,
508).
The order appealed from is affirmed, without prejudice, with costs against the appellant. So ordered.

G.R. No. 198680 July 8, 2013


HEIRS OF MAGDALENO YPON, NAMELY, ALVARO YPON, ERUDITA Y. BARON, CICERO YPON, WILSON YPON, VICTOR YPON,
AND HINIDINO Y. PEÑALOSA, PETITIONERS,
vs.
GAUDIOSO PONTERAS RICAFORTE A.K.A. "GAUDIOSO E. YPON," AND THE REGISTER OF DEEDS OF TOLEDO CITY,

8
RESPONDENTS.
RESOLUTION
PERLAS-BERNABE, J.:
This is a direct recourse to the Court from the Regional Trial Court of Toledo City, Branch 59 (RTC), through a petition for review
on certiorari1 under Rule 45 of the Rules of Court, raising a pure question of law. In particular, petitioners assail the July 27,
20112 and August 31, 20113 Orders of the RTC, dismissing Civil Case No. T-2246 for lack of cause of action.
The Facts

On July 29, 2010, petitioners, together with some of their cousins,4 filed a complaint for Cancellation of Title and Reconveyance
with Damages (subject complaint) against respondent Gaudioso Ponteras Ricaforte a.k.a. "Gaudioso E. Ypon" (Gaudioso),
docketed as Civil Case No. T-2246.5 In their complaint, they alleged that Magdaleno Ypon (Magdaleno) died intestate and
childless on June 28, 1968, leaving behind Lot Nos. 2-AA, 2-C, 2-F, and 2-J which were then covered by Transfer Certificates of
Title (TCT) Nos. T-44 and T-77-A.6 Claiming to be the sole heir of Magdaleno, Gaudioso executed an Affidavit of Self-Adjudication
and caused the cancellation of the aforementioned certificates of title, leading to their subsequent transfer in his name under
TCT Nos. T-2637 and T-2638,7 to the prejudice of petitioners who are Magdaleno’s collateral relatives and successors-in-
interest.8
In his Answer, Gaudioso alleged that he is the lawful son of Magdaleno as evidenced by: (a) his certificate of Live Birth; (b) two
(2) letters from Polytechnic School; and (c) a certified true copy of his passport. 9 Further, by way of affirmative defense, he
claimed that: (a) petitioners have no cause of action against him; (b) the complaint fails to state a cause of action; and (c) th e
case is not prosecuted by the real parties-in-interest, as there is no showing that the petitioners have been judicially declared as
Magdaleno’s lawful heirs.10
The RTC Ruling

On July 27, 2011, the RTC issued the assailed July 27, 2011 Order, 11 finding that the subject complaint failed to state a cause of
action against Gaudioso. It observed that while the plaintiffs therein had established their relationship with Magdaleno in a
previous special proceeding for the issuance of letters of administration,12 this did not mean that they could already be
considered as the decedent’s compulsory heirs. Quite the contrary, Gaudioso satisfactorily established the fact that he is
Magdaleno’s son – and hence, his compulsory heir – through the documentary evidence he submitted which consisted of: (a) a
marriage contract between Magdaleno and Epegenia Evangelista; (b) a Certificate of Live Birth; (c) a Letter dated February 19,
1960; and (d) a passport.13
The plaintiffs therein filed a motion for reconsideration which was, however, denied on August 31, 2011 due to the counsel’s
failure to state the date on which his Mandatory Continuing Legal Education Certificate of Compliance was issued. 14

Aggrieved, petitioners, who were among the plaintiffs in Civil Case No. T-2246,15 sought direct recourse to the Court through
the instant petition.
The Issue Before the Court
The core of the present controversy revolves around the issue of whether or not the RTC’s dismissal of the case on the ground
that the subject complaint failed to state a cause of action was proper.
The Court’s Ruling
The petition has no merit.

Cause of action is defined as the act or omission by which a party violates a right of another. 16 It is well-settled that the existence
of a cause of action is determined by the allegations in the complaint.17 In this relation, a complaint is said to assert a sufficient
cause of action if, admitting what appears solely on its face to be correct, the plaintiff would be entitled to the relief prayed
for.18Accordingly, if the allegations furnish sufficient basis by which the complaint can be maintained, the same should not be
dismissed, regardless of the defenses that may be averred by the defendants.19
As stated in the subject complaint, petitioners, who were among the plaintiffs therein, alleged that they are the lawful heirs of
Magdaleno and based on the same, prayed that the Affidavit of Self-Adjudication executed by Gaudioso be declared null and void
and that the transfer certificates of title issued in the latter’s favor be cancelled. While the foregoing allegations, if admitted to
be true, would consequently warrant the reliefs sought for in the said complaint, the rule that the determination of a decedent’s
lawful heirs should be made in the corresponding special proceeding20 precludes the RTC, in an ordinary action for cancellation
of title and reconveyance, from granting the same. In the case of Heirs of Teofilo Gabatan v. CA,21 the Court, citing several other
precedents, held that the determination of who are the decedent’s lawful heirs must be made in the proper special proceeding
for such purpose, and not in an ordinary suit for recovery of ownership and/or possession, as in this case:
Jurisprudence dictates that the determination of who are the legal heirs of the deceased must be made in the proper special
proceedings in court, and not in an ordinary suit for recovery of ownership and possession of property.1âwphi1 This must take
precedence over the action for recovery of possession and ownership. The Court has consistently ruled that the trial court cannot
make a declaration of heirship in the civil action for the reason that such a declaration can only be made in a special proceeding.
Under Section 3, Rule 1 of the 1997 Revised Rules of Court, a civil action is defined as one by which a party sues another for the
enforcement or protection of a right, or the prevention or redress of a wrong while a special proceeding is a remedy by which a

9
party seeks to establish a status, a right, or a particular fact. It is then decisively clear that the declaration of heirship can be
made only in a special proceeding inasmuch as the petitioners here are seeking the establishment of a status or right.
In the early case of Litam, et al. v. Rivera, this Court ruled that the declaration of heirship must be made in a special proceeding,
and not in an independent civil action. This doctrine was reiterated in Solivio v. Court of Appeals x x x:
In the more recent case of Milagros Joaquino v. Lourdes Reyes, the Court reiterated its ruling that matters relating to the rights
of filiation and heirship must be ventilated in the proper probate court in a special proceeding instituted precisely for the
purpose of determining such rights. Citing the case of Agapay v. Palang, this Court held that the status of an illegitimate child
who claimed to be an heir to a decedent's estate could not be adjudicated in an ordinary civil action which, as in this case, was
for the recovery of property.22 (Emphasis and underscoring supplied; citations omitted)
By way of exception, the need to institute a separate special proceeding for the determination of heirship may be dispensed with
for the sake of practicality, as when the parties in the civil case had voluntarily submitted the issue to the trial court and already
presented their evidence regarding the issue of heirship, and the RTC had consequently rendered judgment thereon, 23 or when
a special proceeding had been instituted but had been finally closed and terminated, and hence, cannot be re-opened.24
In this case, none of the foregoing exceptions, or those of similar nature, appear to exist. Hence, there lies the need to institute
the proper special proceeding in order to determine the heirship of the parties involved, ultimately resulting to the dismissal of
Civil Case No. T-2246.
Verily, while a court usually focuses on the complaint in determining whether the same fails to state a cause of action, a court
cannot disregard decisions material to the proper appreciation of the questions before it. 25 Thus, concordant with applicable
jurisprudence, since a determination of heirship cannot be made in an ordinary action for recovery of ownership and/or
possession, the dismissal of Civil Case No. T-2246 was altogether proper. In this light, it must be pointed out that the RTC erred
in ruling on Gaudioso’s heirship which should, as herein discussed, be threshed out and determined in the proper special
proceeding. As such, the foregoing pronouncement should therefore be devoid of any legal effect.
WHEREFORE, the petition is DENIED. The dismissal of Civil Case No. T-2246 is hereby AFFIRMED, without prejudice to any
subsequent proceeding to determine the lawful heirs of the late Magdaleno Ypon and the rights concomitant therewith.
SO ORDERED.

FAUSTINO REYES, ESPERIDION G.R. No. 162956


REYES, JULIETA C. RIVERA, and
EUTIQUIO DICO, JR.,
Petitioners,
Present:
PUNO, C.J., Chairperson,
- versus - CARPIO,
CORONA,
*AZCUNA, and
LEONARDO-DE CASTRO, JJ.
PETER B. ENRIQUEZ, for himself
and Attorney-in-Fact of his daughter Promulgated:
DEBORAH ANN C. ENRIQUEZ, and
SPS. DIONISIO FERNANDEZ and
CATALINA FERNANDEZ,
Respondents. April 10, 2008
x------------------------------------------------x

DECISION

PUNO, C.J.:
This case is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court from the decision of the Court of
Appeals (CA) dated September 29, 2003 in CA G.R. CV No. 68147, entitled Peter B. Enriquez, et al. v. Faustino Reyes, et al.,
reversing the decision of the Regional Trial Court (RTC) of Cebu City, Branch XI dated June 29, 2000, which dismissed the
complaint filed by the respondents herein.[1]

The subject matter of the present case is a parcel of land known as Lot No. 1851 Flr-133 with an aggregate area of 2,017 square
meters located in Talisay, Cebu.[2]

10
According to petitioners Faustino Reyes, Esperidion Reyes, Julieta C. Rivera, and Eutiquio Dico, Jr., they are the lawful heirs of
Dionisia Reyes who co-owned the subject parcel of land with Anacleto Cabrera as evidenced by Transfer Certificate of Title (TCT)
No. RT-3551 (T-8070). On April 17, 1996, petitioners executed an Extrajudicial Settlement with Sale of the Estate of Dionisia
Reyes (the Extra Judicial Settlement) involving a portion of the subject parcel of land. On March 21, 1997, the petitioners and the
known heirs of Anacleto Cabrera executed a Segregation of Real Estate and Confirmation of Sale (the Segregation and
Confirmation) over the same property. By virtue of the aforestated documents, TCT No. RT-35551 (T-8070) was cancelled and
new TCTs were issued: (1) TCT No. T-98576 in the name of Anacleto Cabrera covering Lot 1851-A; (2) TCT No. T-98577 covering
Lot 1851-B in the name of petitioner Eutiquio Dico, Jr.; (3) TCT No. T-98578 covering Lot 1851-C in the name of petitioner
Faustino Reyes; (4) TCT No. T-98579 covering Lot 1851-D in the name of petitioner Esperidion Reyes; (5) TCT No. T-98580
covering Lot 1851-E in the name of petitioner Julieta G. Rivera; (6) TCT No. T-98581 covering Lot 1851-F in the name of Felipe
Dico; and (7) TCT No. T-98582 covering Lot 1851-G in the name of Archimedes C. Villaluz.[3]

Respondents Peter B. Enriquez (Peter) for himself and on behalf of his minor daughter Deborah Ann C. Enriquez (Deborah Ann),
also known as Dina Abdullah Enriquez Alsagoff, on the other hand, alleges that their predecessor-in-interest Anacleto Cabrera
and his wife Patricia Seguera Cabrera (collectively the Spouses Cabrera) owned pro-indiviso share in the subject parcel of land
or 1051 sq. m. They further allege that Spouses Cabrera were survived by two daughters Graciana, who died single and without
issue, and Etta, the wife of respondent Peter and mother of respondent Deborah Ann who succeeded their parents rights and
took possession of the 1051 sq. m. of the subject parcel of land. During her lifetime, Graciana sold her share over the land to Etta.
Thus, making the latter the sole owner of the one-half share of the subject parcel of land. Subsequently, Etta died and the property
passed on to petitioners Peter and Deborah Ann by virtue of an Extra-Judicial Settlement of Estate. On June 19, 1999, petitioners
Peter and Deborah Ann sold 200 sq. m. out of the 1051 sq. m. for P200,000.00 to Spouses Dionisio and Catalina Fernandez
(Spouses Fernandez), also their co-respondents in the case at bar. After the sale, Spouses Fernandez took possession of the said
area in the subject parcel of land.[4]

When Spouses Fernandez, tried to register their share in the subject land, they discovered that certain documents prevent them
from doing so: (1) Affidavit by Anacleto Cabrera dated March 16, 1957 stating that his share in Lot No. 1851, the subject property,
is approximately 369 sq. m.; (2) Affidavit by Dionisia Reyes dated July 13, 1929 stating that Anacleto only owned of Lot No. 1851,
while 302.55 sq. m. belongs to Dionisia and the rest of the property is co-owned by Nicolasa Bacalso, Juan Reyes, Florentino
Reyes and Maximiano Dico; (3) Extra-Judicial Settlement with Sale of the Estate of Dionisia Reyes dated April 17, 1996; (4)
certificates of title in the name of the herein petitioners; and (5) Deed of Segregation of Real Estate and Confirmation of Sale
dated March 21, 1997 executed by the alleged heirs of Dionisia Reyes and Anacleto Cabrera. Alleging that the foregoing
documents are fraudulent and fictitious, the respondents filed a complaint for annulment or nullification of the aforementioned
documents and for damages. [5] They likewise prayed for the repartition and resubdivision of the subject property.[6]

The RTC, upon motion of the herein petitioners, dismissed the case on the ground that the respondents-plaintiffs were actually
seeking first and foremost to be declared heirs of Anacleto Cabrera since they can not demand the partition of the real property
without first being declared as legal heirs and such may not be done in an ordinary civil action, as in this case, but through a
special proceeding specifically instituted for the purpose.[7]

On appeal, the Court of Appeals (CA) reversed the RTC and directed the trial court to proceed with the hearing of the case.[8]
The Motion for Reconsideration filed by the herein petitioners was similarly denied.[9]

Hence this petition.

The primary issue in this case is whether or not the respondents have to institute a special proceeding to determine their status
as heirs of Anacleto Cabrera before they can file an ordinary civil action to nullify the affidavits of Anacleto Cabrera and Dionisia
Reyes, the Extra-Judicial Settlement with the Sale of Estate of Dionisia Reyes, and the Deed of Segregation of Real Estate and
Confirmation of Sale executed by the heirs of Dionisia Reyes and the heirs of Anacleto Cabrera, as well as to cancel the new
transfer certificates of title issued by virtue of the above-questioned documents.

11
We answer in the affirmative.

An ordinary 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.[10] A special proceeding, on the other hand, is a remedy by which a party seeks to establish a status, a right
or a particular fact.[11]

The Rules of Court provide that only a real party in interest is allowed to prosecute and defend an action in court.[12] A real
party in interest is the one who stands to be benefited or injured by the judgment in the suit or the one entitled to the avails
thereof.[13] Such interest, to be considered a real interest, must be one which is present and substantial, as distinguished from
a mere expectancy, or a future, contingent, subordinate or consequential interest.[14] A plaintiff is a real party in interest when
he is the one who has a legal right to enforce or protect, while a defendant is a real party in interest when he is the one who has
a correlative legal obligation to redress a wrong done to the plaintiff by reason of the defendants act or omission which had
violated the legal right of the former.[15] The purpose of the rule is to protect persons against undue and unnecessary
litigation.[16] It likewise ensures that the court will have the benefit of having before it the real adverse parties in the
consideration of a case.[17] Thus, a plaintiffs right to institute an ordinary civil action should be based on his own right to the
relief sought.

In cases wherein alleged heirs of a decedent in whose name a property was registered sue to recover the said property through
the institution of an ordinary civil action, such as a complaint for reconveyance and partition,[18] or nullification of transfer
certificate of titles and other deeds or documents related thereto,[19] this Court has consistently ruled that a declaration of
heirship is improper in an ordinary civil action since the matter is within the exclusive competence of the court in a special
proceeding. [20] In the recent case of Portugal v. Portugal-Beltran,[21] the Court had the occasion to clarify its ruling on the
issue at hand, to wit:

The common doctrine in Litam, Solivio and Guilas in which the adverse parties are putative heirs to the estate of a decedent or
parties to the special proceedings for its settlement is that if the special proceedings are pending, or if there are no special
proceedings filed but there is, under the circumstances of the case, a need to file one, then the determination of, among
other issues, heirship should be raised and settled in said special proceedings. Where special proceedings had been
instituted but had been finally closed and terminated, however, or if a putative heir has lost the right to have himself declared in
the special proceedings as co-heir and he can no longer ask for its re-opening, then an ordinary civil action can be filed for his
declaration as heir in order to bring about the annulment of the partition or distribution or adjudication of a property or
properties belonging to the estate of the deceased.[22]
In the instant case, while the complaint was denominated as an action for the Declaration of Non-Existency[sic], Nullity of Deeds,
and Cancellation of Certificates of Title, etc., a review of the allegations therein reveals that the right being asserted by the
respondents are their right as heirs of Anacleto Cabrera who they claim co-owned one-half of the subject property and not merely
one-fourth as stated in the documents the respondents sought to annul. As correctly pointed out by the trial court, the ruling in
the case of Heirs of Guido Yaptinchay v. Hon. Roy del Rosario[23] is applicable in the case at bar. In the said case, the
petitioners therein, claiming to be the legal heirs of the late Guido and Isabel Yaptinchay filed for annulment of the transfer
certificates of title issued in the name of Golden Bay Realty Corporation on the ground that the subject properties rightfully
belong to the petitioners predecessor and by virtue of succession have passed on to them. In affirming the trial court therein,
this Court ruled:

...(T)he plaintiffs who claimed to be the legal heirs of the said Guido and Isabel Yaptinchay have not shown any proof or even a
semblance of it except the allegations that they are the legal heirs of the aforementioned Yaptinchays that they have been
declared the legal heirs of the deceased couple. Now, the determination of who are the legal heirs of the deceased couple must
be made in the proper special proceedings in court, and not in an ordinary suit for reconveyance of property. This must take
precedence over the action for reconveyance.[24]
In the same manner, the respondents herein, except for their allegations, have yet to substantiate their claim as the legal
heirs of Anacleto Cabrera who are, thus, entitled to the subject property. Neither is there anything in the records of this
case which would show that a special proceeding to have themselves declared as heirs of Anacleto Cabrera had been
instituted. As such, the trial court correctly dismissed the case for there is a lack of cause of action when a case is instituted
by parties who are not real parties in interest. While a declaration of heirship was not prayed for in the complaint, it is
clear from the allegations therein that the right the respondents sought to protect or enforce is that of an heir of one of

12
the registered co-owners of the property prior to the issuance of the new transfer certificates of title that they seek to
cancel. Thus, there is a need to establish their status as such heirs in the proper forum.

Furthermore, in Portugal,[25] the Court held that it would be superfluous to still subject the estate to administration
proceedings since a determination of the parties' status as heirs could be achieved in the ordinary civil case filed because it
appeared from the records of the case that the only property left by the decedent was the subject matter of the case and that the
parties have already presented evidence to establish their right as heirs of the decedent. In the present case, however, nothing
in the records of this case shows that the only property left by the deceased Anacleto Cabrera is the subject lot, and neither had
respondents Peter and Deborah Ann presented any evidence to establish their rights as heirs, considering especially that it
appears that there are other heirs of Anacleto Cabrera who are not parties in this case that had signed one of the questioned
documents. Hence, under the circumstances in this case, this Court finds that a determination of the rights of respondents Peter
and Deborah Ann as heirs of Anacleto Cabrera in a special proceeding is necessary.

IN VIEW WHEREOF, the petition is GRANTED. The decision of the Court of Appeals is hereby REVERSED and the decision of
the Regional Trial Court dated June 29, 2000 DISMISSING the complaint is REINSTATED.

SOLOIL, INC., G.R. No. 174806


Petitioner,
Present:
CARPIO, J., Chairperson,
NACHURA,
- versus - PERALTA,
ABAD, and
MENDOZA, JJ.
PHILIPPINE COCONUT AUTHORITY, Promulgated:
Respondent. August 11, 2010
x-----------------------------------------------------------x
DECISION

CARPIO, J.:

The Case

This is a petition for review of the 12 May 2006 Decision and the 10 October 2006 Resolution of the Court of Appeals in CA-G.R.
CV No. 69629. The 12 May 2006 Decision vacated the 29 September 2000 Decision of the Regional Trial Court (Branch 84) of
Quezon City in Civil Case No. Q-95-25834. The 10 October 2006 Resolution denied petitioners motion for reconsideration.
The Antecedent Facts
Petitioner Soloil, Inc. (Soloil) is a domestic corporation engaged in the exportation of copra, crude coconut oil, and other coconut
products. Respondent Philippine Coconut Authority (PCA) is a government owned and controlled corporation created under
Presidential Decree No. 232, otherwise known as the Law Creating A Philippine Coconut Authority, mandated to promote the
rapid development of the coconut and palm oil industry in the country.
In January 1995, the Office of the Government Corporate Counsel sent by registered mail a final demand letter addressed to
Soloil for the payment of the latters overdue fees to PCA for the domestic sale of coconut products. Soloil still did not pay the
fees.
On 6 December 1995, PCA filed in the Regional Trial Court (Branch 84) of Quezon City a complaint alleging that Soloil refused to
pay the PCA fees. PCA further claimed that as of 31 December 1994, Soloils overdue account had reached P403,543.29.
In its answer, Soloil raised the defense that PCAs demand for the payment of PCA fees based on domestic sales had no factual
basis as Soloil never engaged in the domestic sale of coconut products.
The case was set for pre-trial. However, for failure of the parties to settle the case amicably, pre-trial was terminated. Trial on the
merits ensued.
PCA presented its lone witness, Trade Control Examiner Victoria Evangelista. Evangelista testified that she was in charge of
monitoring Soloils export sales transactions and that she was the one who prepared Soloils Summary of Outstanding PCA Fee
Obligations attached as Annex A of the complaint. PCA then presented itemized schedules of Soloils outstanding PCA fee
obligations as well as certified reports of the marine cargo surveyor showing that Soloil made export shipments without paying
the requisite PCA fees.
13
On the other hand, Soloil presented its sole witness, Assistant Vice-President for Trading and Administration Fernando Uy. Uy
testified that Soloil had no record of any domestic sale of coconut products. On cross-examination, Uy admitted Soloil purchased
copra in the course of its business of exporting coconut products.
In their respective memoranda, the parties raised the following issues: (1) whether the complaint stated a cause of action; and
(2) if so, whether Soloil was liable to pay PCA fees in the amount of P403,543.29.
The Ruling of the RTC
In its 29 September 2000 Decision, the RTC ruled PCA failed to prove that the claimed amount of unpaid PCA fees was from
Soloils domestic sale of coconut products. The RTC held that only the amount of P509.66 with interest of P147.23 was duly
proven to be from Soloils domestic sale of coconut products. The decretal portion of the RTC Decision reads:

WHEREFORE, in view of the foregoing, judgment is rendered ordering the defendant Southern Leyte Oil Mill, Inc. to pay to
plaintiff the amount of P509.66 plus interest of P147.23 as of November 30, 1993 plus interest of 14% per annum until fully
paid.
SO ORDERED.
PCA appealed to the Court of Appeals insisting that Soloil was liable to pay PCA fees on its purchases of copra for both domestic
and export sale of coconut products.

The Ruling of the Court of Appeals

The appellate court held that PCA fees attached upon purchase of copra by copra exporters. The Court of Appeals pointed out
that there was no distinction whether the purchase was for domestic or for export sale of coconut products. In its 12 May 2006
Decision, the Court of Appeals granted PCAs appeal. The dispositive portion of the Decision of the Court of Appeals reads:

WHEREFORE, the instant appeal is GRANTED. The Decision of September 29, 2000 of the Regional Trial Court of Quezon City,
Branch 84 in Civil Case No. Q-95-25834 is deemed VACATED and a new one ENTERED ordering the defendant-appellee to pay
the plaintiff-appellant the amount of P403,543.29 representing PCA fees as of December 31, 1994 with interest of 14% per
annum beginning January 1995 until fully paid. Costs of suit against the defendant-appellee.
SO ORDERED.
Soloil filed a motion for reconsideration, which the Court of Appeals denied for lack of merit in its 10 October 2006 Resolution.

Hence, the instant petition for review.

The Issues

The issues for resolution are (1) whether the complaint, alleging non-payment of PCA fees due on Soloils domestic sale of coconut
products, sufficiently stated a cause of action when evidence adduced during trial consisted of Soloils export sale of coconut
products; and (2) if so, whether Soloil was liable for the amount of P403,543.29 representing PCA fees as of 31 December 1994.

The Courts Ruling

The petition has no merit.

Petitioner Soloil belabors the fact that the complaint alleged non-payment of PCA fees on Soloils domestic sale of coconut
products while the attached annexes showing Soloils unpaid PCA fees did not indicate whether the amounts due were from
domestic or from export sale of coconut products. Soloil maintains it never had any domestic sale of coconut products as its sales
were all for export. Soloil argues that the complaint should have been dismissed for lack of cause of action and the RTC should
not have allowed PCA, despite Soloils vehement objection, to adduce evidence pertaining to export sales.
Respondent PCA counters that the complaint sufficiently established that PCA was mandated by law to impose and collect PCA
fees for every kilo of copra purchased by copra exporters such as Soloil. PCA insists that PCA fees attached upon Soloils purchase
of copra whether such purchase was for domestic or for export sale of coconut products.

Rule 2 of the Rules of Court defines a cause of action as:

Sec. 2. Cause of action, defined. A cause of action is the act or omission by which a party violates a right of another.
The essential elements of a cause of action are (1) a right in favor of the plaintiff by whatever means and under whatever law it
arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or

14
omission on the part of such defendant in violation of the right of the plaintiff or constituting a breach of the obligation of the
defendant to the plaintiff for which the latter may maintain an action for recovery of damages or other appropriate relief.

The complaint in this case, paragraph 4 in particular, contained the following averments:

4. To defray its operating expenses plaintiff is authorized under P.D. 1854 entitled Authorizing An Adjustment of the Funding
Support of the Philippine Coconut Authority and Instituting a Procedure for the Management of Such Fund to impose and
collect a fee of three centavos for every kilo of copra or its equivalent in copra terms of other coconut products delivered to
and/or purchased by copra exporters, oil millers, desiccators, and other end-users of coconut products. This fee is otherwise
known as PCA fee; (Emphasis supplied)
This portion of the complaint together with the attached annexes showing Soloils unpaid PCA fees sufficiently constituted a
cause of action in this case, namely (1) under P.D. 1854, PCA has a right to collect PCA fees in the amount of three centavos for
every kilo of copra purchased by copra exporters; (2) Soloil, as a copra exporter, is legally bound to pay PCA fees; and (3) Soloils
non-payment of PCA fees is in violation of PCAs right to collect the same.
In determining whether a complaint states a cause of action, the trial court can consider all the pleadings filed, including annexes,
motions, and the evidence on record. The focus is on the sufficiency, not the veracity, of the material allegations. Moreover, the
complaint does not have to establish facts proving the existence of a cause of action at the outset; this will have to be done at the
trial on the merits of the case.
The fact that the complaint specifically mentioned assessed PCA fees due on Soloils domestic sale of coconut products did not
preclude a cause of action for PCA fees due on Soloils export sale of coconut products. PCA sufficiently alleged on paragraph 4 of
the complaint that PCA fees attached upon purchase of copra by copra exporters, such as Soloil, whether for domestic or for
export sale of coconut products.
Presidential Decree No. 1468, otherwise known as the Revised Coconut Industry Code, granted PCA the power to impose and
collect PCA fees to defray its operating expenses, thus:
Sec. 3. Power. In the implementation of the declared national policy, the Authority [PCA] shall have the following powers and
functions:
xxxx
k) To impose and collect, under such rules that it may promulgate, a fee of ten centavos for every one hundred kilos of
desiccated coconut, to be paid by the desiccating factory, coconut oil to be paid by the oil mills, and copra to be paid by the
exporters, which shall be used exclusively to defray its operating expenses; (Emphasis supplied)
Presidential Decree No. 1854, otherwise known as the Law Authorizing an Adjustment of the Funding Support of the Philippine
Coconut Authority and Instituting a Procedure for the Management of such Fund, increased such PCA fees to three centavos per
kilo of copra or husked nuts or their equivalent in other coconut products delivered to and/or purchased by copra exporters, oil
millers, desiccators, and other end-users of coconut products, to wit:
Section 1. The PCA fee imposed and collected pursuant to the provisions of R.A. No. 1145 and Sec. 3(k), Article II of P.D. 1468, is
hereby increased to three centavos per kilo of copra or husked nuts or their equivalent in other coconut products delivered
to and/or purchased by copra exporters, oil millers, desiccators, and other end-users of coconut products. The fee shall be
collected under such rules that PCA may promulgate, and shall be paid by said copra exporters, oil millers, desiccators,
and other end-users of coconut products, receipt of which shall be remitted to the National Treasury on a quarterly basis.
(Emphasis supplied)
Under P.D. 1854, PCA fees automatically attach upon purchase of copra by copra exporters, such as Soloil in this case. The law
does not distinguish whether the purchase of copra is for domestic or for export sale of coconut products. When the law does
not distinguish, neither should we. However, the law expressly requires that the PCA fees shall be paid by said copra exporters
for copra purchased by copra exporters.
The Summary of Outstanding PCA Fee Obligations, attached as Annex A of the complaint, contains itemized schedules of Soloils
outstanding PCA fee obligations in the total amount of P403,543.29 as of 31 December 1994. It was duly prepared by Trade
Control Examiner Victoria Evangelista, reviewed by Trade Control Examiner II Sylvia Carpio, certified correct by Supervising
Trade Industry and Development Specialist Jennifer Lumawag, and finally noted by Manager Zenaida Leoncio. Under Section 3
paragraph (m), Rule 131 of the Rules of Court, the Summary of Outstanding PCA Fee Obligations enjoys the presumption of
regularity in the performance of official duties absent any evidence that it was made in violation of any relevant law or regulation.
As to the appropriate penalty for late payment of PCA fees, P.D. 1468 and P.D. 1854 authorized PCA to collect PCA fees under such
rules as it may promulgate. Pursuant to this mandate, PCA issued Administrative Order No. 001, Series of 1983 fixing the interest
rate for PCA fees paid after the due date at 14% per annum, thus:
15
Sec. 6 Sanctions. For any violation of the provisions of these Rules, the Authority [PCA] may impose any or all of the following
sanctions:
1. Interest equal to fourteen percent (14%) per annum of the PCA Fee paid after the due date thereof;
Fully supported as it is by law and the evidence on record, we find no reason to disturb the appellate courts Decision ordering
Soloil to pay PCA the amount of P403,543.29 representing PCA fees as of 31 December 1994 with interest at the rate of 14% per
annum beginning January 1995, when final demand was made, until fully paid.
P.D. 1468 and P.D. 1854 enabled PCA to have a self-sustaining funding system precisely to allow it to defray its own operating
expenses without regular financial support from the government. The imposition of PCA fees is intended to provide PCA with
adequate financial resources to carry out its mandate of promoting the rapid growth of the countrys coconut industry while
making coconut farmers direct beneficiaries of this growth. Soloil, as a copra exporter, cannot evade its legal obligation to pay
PCA fees on the lame pretext that it never engaged in domestic sale of coconut products or worse, that the complaint for collection
of PCA fees failed to state a cause of action.
WHEREFORE, we DENY the petition. We AFFIRM the 12 May 2006 Decision and the 10 October 2006 Resolution of the Court
of Appeals in CA-G.R. CV No. 69629.

[ G.R. No. 201892, July 22, 2015 ]

NORLINDA S. MARILAG, PETITIONER, VS. MARCELINO B. MARTINEZ, RESPONDENT.

DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari[1] are the Decision[2] dated November 4, 2011 and the Resolution[3] dated May
14, 2012 of the Court of Appeals (CA) in CA-G.R. CV No. 81258 which recalled and set aside the Orders dated November 3, 2003[4]
and January 14, 2004[5] of the Regional Trial Court (RTC) of Las Piñas City, Branch 202 (court a quo) in Civil Case No. 98-0156,
and reinstated the Decision[6] dated August 28, 2003 directing petitioner Norlinda S. Marilag (petitioner) to return to
respondent Marcelino B. Martinez (respondent) the latter's excess payment, plus interest, and to pay attorney's fees and the
costs of suit.
The Facts

On July 30, 1992, Rafael Martinez (Rafael), respondent's father, obtained from petitioner a loan in the amount of P160,000.00,
with a stipulated monthly interest of five percent (5%), payable within a period of six (6) months. The loan was secured by a real
estate mortgage over a parcel of land covered by Transfer Certificate of Title (TCT) No. T-208400. Rafael failed to settle his
obligation upon maturity and despite repeated demands, prompting petitioner to file a Complaint for Judicial Foreclosure of Real
Estate Mortgage before the RTC of Imus, Cavite, Branch 90[7] (RTC-Imus) on November 10, 1995,[8] docketed as Civil Case No.
1208-95 Gudicial foreclosure case).

Rafael failed to file his answer and, upon petitioner's motion, was declared in default. After an ex parte presentation of
petitioner's evidence, the RTC-Imus issued a Decision[9] dated January 30, 1998, (January 30, 1998 Decision) in the foreclosure
case, declaring the stipulated 5% monthly interest to be usurious and reducing the same to 12% per annum (p.a.). Accordingly,
it ordered Rafael to pay petitioner the amount of P229,200.00, consisting of the principal of P160,000.00 and accrued interest
of P59,200.00 from July 30, 1992 to September 30, 1995.[10] Records do not show that this Decision had already attained finality.

Meanwhile, prior to Rafael's notice of the above decision, respondent agreed to pay Rafael's obligation to petitioner which was
pegged at P689,000.00. After making a total payment of P400,000.00,[11] he executed a promissory note[12] dated February
20, 1998 (subject PN), binding himself to pay on or before March 31, 1998 the amount of P289,000.00, "representing the balance
of the agreed financial obligation of [his] father to [petitioner]."[13] After learning of the January 30, 1998 Decision, respondent
refused to pay the amount covered by the subject PN despite demands, prompting petitioner to file a complaint[14] for sum of
money and damages before the court a quo on July 2, 1998, docketed as Civil Case No. 98-0156 (collection case).

Respondent filed his answer,[15] contending that petitioner has no cause of action against him. He averred that he has fully
settled Rafael's obligation and that he committed a mistake in paying more than the amount due under the loan, i.e., the amount
of P229,200.00 as adjudged by the RTC-Imus in the judicial foreclosure case which, thus, warranted the return of the excess
payment. He therefore prayed for the dismissal of the complaint, and interposed a compulsory counterclaim for the release of
the mortgage, the return of the excess payment, and the payment of moral and exemplary damages, attorney's fees and litigation
expenses.[16]
The Court A Quo's Ruling

In a Decision[17] dated August 28, 2003 (August 28, 2003 Decision), the court a quo denied recovery on the subject PN. It found
that the consideration for its execution was Rafael's indebtedness to petitioner, the extinguishment of which necessarily results
in the consequent extinguishment of the cause therefor. Considering that the RTC-Imus had adjudged Rafael liable to petitioner
only for the amount of P229,200.00, for which a total of P400,000.00 had already been paid, the court a quo found no valid or

16
compelling reason to allow petitioner to recover further on the subject PN. There being an excess payment of P171,000.00, it
declared that a quasi-contract (in the concept of solutio indebiti) exists between the parties and, accordingly, directed petitioner
to return the said amount to respondent, plus 6% interest p.a.[18] reckoned from the date of judicial demand[19] on August 6,
1998 until fully paid, and to pay attorney's fees and the costs of suit.[20]

In an Order[21] dated November 3, 2003 (November 3, 2003 Order), however, the court a quo granted petitioner's motion for
reconsideration, and recalled and set aside its August 28, 2003 Decision. It declared that the causes of action in the collection
and foreclosure cases are distinct, and respondent's failure to comply with his obligation under the subject PN justifies petitioner
to seek judicial relief. It further opined that the stipulated 5% monthly interest is no longer usurious and is binding on
respondent considering the suspension of the Usury Law pursuant to Central Bank Circular 905, series of 1982. Accordingly, it
directed respondent to pay the amount of P289,000.00 due under the subject PN, plus interest at the legal rate reckoned from
the last extra-judicial demand on May 15, 1998, until fully paid, as well as attorney's fees and the costs of suit.[22]

Aggrieved, respondent filed a motion for reconsideration[23] which was denied in an Order[24] dated January 14, 2004,
prompting him to elevate the matter to the CA.[25]
The CA Ruling

In a Decision[26] dated November 4, 2011, the CA recalled and set aside the court a quo's November 3, 2003 and January 14,
2004 Orders, and reinstated the August 28, 2003 Decision. It held that the doctrine of res judicata finds application in the instant
case,[27] considering that both the judicial foreclosure and collection cases were filed as a consequence of the non-payment
ofRafael's loan, which was the principal obligation secured by the real estate mortgage and the primary consideration for the
execution of the subject PN. Since res judicata only requires substantial, not actual, identity of causes of action and/or identity
of issue,[28] it ruled that the judgment in the judicial foreclosure case relating to Rafael's obligation to petitioner is final and
conclusive on the collection case.

Petitioner's motion for reconsideration was denied in a Resolution[29] dated May 14, 2012; hence, this petition.
The Issue Before the Court

The essential issue for the Court's resolution is whether or not the CA committed reversible error in upholding the dismissal of
the collection case.
The Court's Ruling

The petition lacks merit.

A case is barred by prior judgment or res judicata when the following elements concur: (a) the judgment sought to bar the new
action must be final; (b) the decision must have been rendered by a court having jurisdiction over the subject matter and the
parties; (c) the disposition of the case must be a judgment on the merits; and (d) there must be as between the first and second
action, identity of parties, subject matter, and causes of action.[30]

After a punctilious review of the records, the Court finds the principle of res judicata to be inapplicable to the present case. This
is because the records are bereft of any indication that the August 28, 2003 Decision in the judicial foreclosure case had already
attained finality, evidenced, for instance, by a copy of the entry of judgment in the said case. Accordingly, with the very first
element of res judicata missing, said principle cannot be made to obtain.

This notwithstanding, the Court holds that petitioner's prosecution of the collection case was barred, instead, by the principle of
litis pendentia in view of the substantial identity of parties and singularity of the causes of action in the foreclosure and collection
cases, such that the prior foreclosure case barred petitioner's recourse to the subsequent collection case.

To lay down the basics, litis pendentia, as a ground for the dismissal of a civil action, refers to that situation wherein
another action is pending between the same parties for the same cause of action, such that the second action becomes
unnecessary and vexatious. For the bar of litis pendentia to be invoked, the following requisites must concur: (a) identity of
parties, or at least such parties as represent the same interests in both actions; (b) identity of rights asserted and relief prayed
for, the relief being founded on the same facts; and (c) the identity of the two preceding particulars is such that any judgment
rendered in the pending case, regardless of which party is successful would amount to res judicata in the other.[31] The
underlying principle of litis pendentia is the theory that a party is not allowed to vex another more than once regarding the same
subject matter and for the same cause of action. This theory is founded on the public policy that the same subject matter should
not be the subject of controversy in courts more than once, in order that possible conflicting judgments may be avoided for the
sake of the stability of the rights and status of persons, and also to avoid the costs and expenses incident to numerous suits.[32]
Consequently, a party will not be permitted to split up a single cause of action and make it a basis for several suits as the whole
cause must be determined in one action.[33] To be sure, splitting a cause of action is a mode of forum shopping by filing
multiple cases based on the same cause of action, but with different prayers, where the round of dismissal is litis
pendentia for res judicata, as the case may be).[34]

In this relation, it must be noted that the question of whether a cause of action is single and entire or separate is not always easy
to determine and the same must often be resolved, not by the general rules, but by reference to the facts and circumstances of
the particular case. The true rule, therefore, is whether the entire amount arises from one and the same act or contract
which must, thus, be sued for in one action, or the several parts arise from distinct and different acts or contracts, for
which a party may maintain separate suits.[35]

17
In loan contracts secured by a real estate mortgage, the rule is that the creditor-mortgagee has a single cause of action against
the debtor mortgagor, i.e., to recover the debt, through the filing of a personal action for collection of sum of money or the
institution of a real action to foreclose on the mortgage security. The two remedies are alternative,[36] not cumulative or
successive,[37] and each remedy is complete by itself. Thus, if the creditor-mortgagee opts to foreclose the real estate mortgage,
he waives the action for the collection of the unpaid debt,[38] except only for the recovery of whatever deficiency may remain
in the outstanding obligation of the debtor-mortgagor after deducting the bid price in the public auction sale of the
mortgaged properties.[39] Accordingly, a deficiency judgment shall only issue after it is established that the mortgaged
property was sold at public auction for an amount less than the outstanding obligation.

In the present case, records show that petitioner, as creditor mortgagee, instituted an action for judicial foreclosure pursuant to
the provisions of Rule 68 of the Rules of Court in order to recover on Rafael's debt. In light of the foregoing discussion, the
availment of such remedy thus bars recourse to the subsequent filing of a personal action for collection of the same debt, in this
case, under the principle of litis pendentia, considering that the foreclosure case only remains pending as it was not shown to
have attained finality.

While the ensuing collection case was anchored on the promissory note executed by respondent who was not the original debtor,
the same does not constitute a separate and distinct contract of loan which would have given rise to a separate cause of action
upon breach. Notably, records are bereft of any indication that respondent's agreement to pay Rafael's loan obligation and the
execution of the subject PN extinguished by novation[40] the contract of loan between Rafael and petitioner, in the absence of
express agreement or any act of equal import. Well-settled is the rule that novation is never presumed, but must be clearly and
unequivocally shown. Thus, in order for a new agreement to supersede the old one, the parties to a contract must expressly agree
that they are abrogating their old contract in favor of a new one,[41] which was not shown here.

On the contrary, it is significant to point out that: (a) the consideration for the subject PN was the same consideration that
supported the original loan obligation of Rafael; (b) respondent merely assumed to pay Rafael's remaining unpaid balance in the
latter's behalf, i.e., as Rafael's agent or representative;[42] and (c) the subject PN was executed after respondent had assumed to
pay Rafael's obligation and made several payments thereon. Case law states that the fact that the creditor accepts payments from
a third person, who has assumed the obligation, will result merely in the addition of debtors, not novation, and the creditor may
enforce the obligation against both debtors.[43] For ready reference, the subject PN reads in full:
February 20, 1998

PROMISSORY NOTE

P289,000.00

I, MARCELINO B. MARTINEZ, son of Mr. RAFAEL MARTINEZ, of legal age, Filipino, married and a resident of No. 091
Anabu I-A, Imus, Cavite, by these presents do hereby specifically and categorically PROMISE, UNDERTAKE and bind
myself in behalf of my father, to pay to Miss NORLINDA S. MARILAG, Mortgagee-Creditor of my said father, the
sum of TWO HUNDRED EIGHTY NINE THOUSAND PESOS (P289,000.00), Philippine Currency, on or before MARCH
31, 1998, representing the balance of the agreed financial obligation of my said father to her. (Emphases
supplied)

Executed at Pamplona I, Las Piñas City, Metro Manila, this 20th day of February, 1998.

Sgd.
MARCELINO B. MARTINEZ
Promissor[44]

Petitioner's contention that the judicial foreclosure and collection cases enforce independent rights[45] must, therefore, fail
because the Deed of Real Estate Mortgage[46] and the subject PN both refer to one and the same obligation, i.e., Rafael's loan
obligation. As such, there exists only one cause of action for a single breach of that obligation. Petitioner cannot split her cause
of action on Rafael's unpaid loan obligation by filing a petition for the judicial foreclosure of the real estate mortgage covering
the said loan, and, thereafter, a personal action for the collection of the unpaid balance of said obligation not comprising a
deficiency arising from foreclosure, without violating the proscription against splitting a single cause of action, where the ground
for dismissal is either res judicata or litis pendentia, as in this case.

As elucidated by this Court in the landmark case of Bachrach Motor Co., Inc. v. Icarangal.[47]
For non-payment of a note secured by mortgage, the creditor has a single cause of action against the debtor.
This single cause of action consists in the recovery of the credit with execution of the security. In other words, the
creditor in his action may make two demands, the payment of the debt and the foreclosure of his mortgage. But
both demands arise from the same cause, the non-payment of the debt, and, for that reason, they constitute a single
cause of action. Though the debt and the mortgage constitute separate agreements, the latter is subsidiary
to the former, and both refer to one and the same obligation. Consequently, there exists only one cause of
action for a single breach of that obligation. Plaintiff, then, by applying the rule above stated, 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, we 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. (Emphases and underscoring

18
supplied)

Further on the point, the fact that no foreclosure sale appears to have been conducted is of no moment because the remedy of
foreclosure of mortgage is deemed chosen upon the filing of the complaint therefor.[48] In Suico Rattan & Buri Interiors, Inc. v.
CA,[49] it was explained:
x x x x In sustaining the rule that prohibits mortgage creditors from pursuing both the remedies of a personal action
for debt or a real action to foreclose the mortgage, the Court held in the case of Bachrach Motor Co., Inc. v. Esteban
Icarangal, et al. that a rule which would authorize the plaintiff to bring a personal action against the debtor and
simultaneously or successively another action against the mortgaged property, would result not only in multiplicity
of suits so offensive to justice and obnoxious to law and equity, but also in subjecting the defendant to the vexation
of being sued in the place of his residence or of the residence of the plaintiff, and then again in the place where the
property lies. Hence, a remedy is deemed chosen upon the filing of the suit for collection or upon the filing
of the complaint in an action for foreclosure of mortgage, pursuant to the provisions of Rule 68 of the Rules
of Court. As to extrajudicial foreclosure, such remedy is deemed elected by the mortgage creditor upon filing of the
petition not with any court of justice but with the office of the sheriff of the province where the sale is to be made,
in accordance with the provisions of Act No. 3135, as amended by Act No. 4118. (Emphases supplied)

As petitioner had already instituted judicial foreclosure proceedings over the mortgaged property, she is now barred from
availing herself of an ordinary action for collection, regardless of whether or not the decision in the foreclosure case had
attained finality. In fine, the dismissal of the collection case is in order. Considering, however, that respondent's claim for return
of excess payment partakes of the nature of a compulsory counterclaim and, thus, survives the dismissal of petitioner's collection
suit, the same should be resolved based on its own merits and evidentiary support.[50]

Records show that other than the matter of interest, the principal loan obligation and the payments made were not disputed by
the parties. Nonetheless, the Court finds the stipulated 5% monthly interest to be excessive and unconscionable. In a plethora of
cases, the Court has affirmed that stipulated interest rates of three percent (3%) per month and higher are excessive,
iniquitous, unconscionable, and exorbitant,[51] hence, illegal[52] and void for being contrary to morals.[53] In Agner v.
BPI Family Savings Bank, Inc.,[54] the Court had the occasion to rule:
Settled is the principle which this Court has affirmed in a number of cases that stipulated interest rates of three
percent (3%) per month and higher are excessive, iniquitous, unconscionable, and exorbitant. While Central Bank
Circular No. 905-82, which took effect on January 1, 1983, effectively removed the ceiling on interest rates for both
secured and unsecured loans, regardless of maturity, nothing in the said circular could possibly be read as granting
carte blanche authority to lenders to raise interest rates to levels which would either enslave their borrowers or
lead to a hemorrhaging of their assets. Since the stipulation on the interest rate is void for being contrary to
morals, if not against the law, it is as if there was no express contract on said interest rate; thus, the interest
rate may be reduced as reason and equity demand. (Emphases supplied)

As such, the stipulated 5% monthly interest should be equitably reduced to 1% per month or 12% p.a. reckoned from the
execution of the real estate mortgage on July 30, 1992. In order to determine whether there was any overpayment as claimed by
respondent, we first compute the interest until January 30, 1998[55] when he made a payment in the amount of P300,000.00 on
Rafael's loan obligation. Accordingly, the amount due on the loan as of the latter date is hereby computed as follows:
Principal P160,000.00
Interest from 07/30/1992 to
Add:
01/30/1998
(P160,000.00 X 12% X 5.5
105,600.00
yrs.)
Amount due on the loan P265,600.00
Less: Payment made on 01/30/98 ( 300,000.00)
Overpayment as of 01/30/98 (P 34,400.00)[56]
Thus, as of January 30, 1998, only the amount of P265,600.00 was due under the loan contract, and the receipt of an amount
more than that renders petitioner liable for the return of the excess. Respondent, however, made further payment in the amount
of P100,000.00[57] on the belief that the subject loan obligation had not yet been satisfied. Such payments were, therefore,
clearly made by mistake, giving rise to the quasi-contractual obligation of solutio indebiti under Article 2154[58] in relation to
Article 2163[59] of the Civil Code. Not being a loan or forbearance of money, an interest of 6% p.a. should be imposed on the
amount to be refunded and on the damages and attorney's fees awarded, if any, computed from the time of demand[60] until its
satisfaction.[61] Consequently, petitioner must return to respondent the excess payments in the total amount of P134,400.00,
with legal interest at the rate of 6% p.a. from the filing of the Answer on August 6, 1998[62] interposing a counterclaim for such
overpayment, until fully settled.

However, inasmuch as the court a quo failed to state in the body of its decision the factual or legal basis for the award of attorney's
fees to the respondent, as required under Article 2208[63] of the New Civil Code, the Court resolves to delete the same. The rule
is well-settled that the trial court must clearly state the reasons for awarding attorney's fees in the body of its decision, not
merely in its dispositive portion, as the appellate courts are precluded from supplementing the bases for such award.[64]

Finally, in the absence of showing that the court a quo's award of the costs of suit in favor of respondent was patently
capricious,[65] the Court finds no reason to disturb the same.

WHEREFORE, the petition is DENIED. The Decision dated November 4, 2011 and the Resolution dated May 14, 2012 of the Court
of Appeals in CA-G.R. CV No. 81258 reinstating the court a quo's Decision dated August 28, 2003 in Civil Case No. 98-0156 are
19
hereby AFFIRMED with the MODIFICATIONS: (a) directing petitioner Norlinda S. Marilag to return to respondent Marcelino B.
Martinez the latter's excess payments in the total amount of P134,400.00, plus legal interest at the rate of 6% p.a. from the filing
of the Answer on August 6, 1998 until full satisfaction; and (b) deleting the award of attorney's fees.

SO ORDERED.

[G.R. No. 140746. March 16, 2005]


PANTRANCO NORTH EXPRESS, INC., and ALEXANDER BUNCAN, petitioners, vs. STANDARD INSURANCE COMPANY, INC., and
MARTINA GICALE, respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari assailing the Decision[1] dated July 23 1999 and Resolution[2] dated November
4, 1999 of the Court of Appeals in CA-G.R. CV No. 38453, entitled Standard Insurance Company, Inc., and Martina Gicale vs.
PANTRANCO North Express, Inc., and Alexander Buncan.
In the afternoon of October 28, 1984, Crispin Gicale was driving the passenger jeepney owned by his mother Martina Gicale,
respondent herein. It was then raining. While driving north bound along the National Highway in Talavera, Nueva Ecija, a
passenger bus, owned by Pantranco North Express, Inc., petitioner, driven by Alexander Buncan, also a petitioner, was trailing
behind. When the two vehicles were negotiating a curve along the highway, the passenger bus overtook the jeepney. In so doing,
the passenger bus hit the left rear side of the jeepney and sped away.
Crispin reported the incident to the Talavera Police Station and respondent Standard Insurance Co., Inc. (Standard), insurer of
the jeepney. The total cost of the repair was P21,415.00, but respondent Standard paid only P8,000.00. Martina Gicale shouldered
the balance of P13,415.00.
Thereafter, Standard and Martina, respondents, demanded reimbursement from petitioners Pantranco and its driver Alexander
Buncan, but they refused. This prompted respondents to file with the Regional Trial Court (RTC), Branch 94, Manila, a complaint
for sum of money.
In their answer, both petitioners specifically denied the allegations in the complaint and averred that it is the Metropolitan Trial
Court, not the RTC, which has jurisdiction over the case.
On June 5, 1992, the trial court rendered a Decision[3] in favor of respondents Standard and Martina, thus:
WHEREFORE, and in view of the foregoing considerations, judgment is hereby rendered in favor of the plaintiffs, Standard
Insurance Company and Martina Gicale, and against defendants Pantranco Bus Company and Alexander Buncan, ordering the
latter to pay as follows:
(1) to pay plaintiff Standard Insurance the amount of P8,000.00 with interest due thereon from November 27, 1984 until fully
paid;
(2) to pay plaintiff Martina Gicale the amount of P13,415.00 with interest due thereon from October 22, 1984 until fully paid;
(3) to pay the sum of P10,000.00 for attorneys fees;
(4) to pay the expenses of litigation and the cost of suit.
SO ORDERED.
On appeal, the Court of Appeals, in a Decision[4] dated July 23, 1999, affirmed the trial courts ruling, holding that:
The appellants argue that appellee Gicales claim of P13,415.00 and appellee insurance companys claim of P8,000.00 individually
fell under the exclusive original jurisdiction of the municipal trial court. This is not correct because under the Totality Rule
provided for under Sec. 19, Batas Pambansa Bilang 129, it is the sum of the two claims that determines the jurisdictional amount.
xxx
In the case at bench, the total of the two claims is definitely more than P20,000.00 which at the time of the incident in question
was the jurisdictional amount of the Regional Trial Court.
Appellants contend that there was a misjoinder of parties. Assuming that there was, under the Rules of Court (Sec. 11, Rule 7) as
well as under the Rules of Civil Procedure (ditto), the same does not affect the jurisdiction of the court nor is it a ground to
dismiss the complaint.
xxx
It does not need perspicacity in logic to see that appellees Gicales and insurance companys individual claims against appellees
(sic) arose from the same vehicular accident on October 28, 1984 involving appellant Pantrancos bus and appellee Gicales
jeepney. That being the case, there was a question of fact common to all the parties: Whose fault or negligence caused the damage
to the jeepney?
Appellants submit that they were denied their day in court because the case was deemed submitted for decision without even
declaring defendants in default or to have waived the presentation of evidence. This is incorrect. Of course, the court did not
declare defendants in default because that is done only when the defendant fails to tender an answer within the reglementary
period. When the lower court ordered that the case is deemed submitted for decision that meant that the defendants were
deemed to have waived their right to present evidence. If they failed to adduce their evidence, they should blame nobody but
themselves. They failed to be present during the scheduled hearing for the reception of their evidence despite notice and without
any motion or explanation. They did not even file any motion for reconsideration of the order considering the case submitted for

20
decision.
Finally, contrary to the assertion of the defendant-appellants, the evidence preponderantly established their liability for quasi-
delict under Article 2176 of the Civil Code.
Petitioners filed a motion for reconsideration but was denied by the Appellate Court in a Resolution dated November 4, 1999.
Hence, this petition for review on certiorari raising the following assignments of error:
I
WHETHER OR NOT THE TRIAL COURT HAS JURISDICTION OVER THE SUBJECT OF THE ACTION CONSIDERING THAT
RESPONDENTS RESPECTIVE CAUSE OF ACTION AGAINST PETITIONERS DID NOT ARISE OUT OF THE SAME TRANSACTION
NOR ARE THERE QUESTIONS OF LAW AND FACTS COMMON TO BOTH PETITIONERS AND RESPONDENTS.
II
WHETHER OR NOT PETITIONERS ARE LIABLE TO RESPONDENTS CONSIDERING THAT BASED ON THE EVIDENCE ADDUCED
AND LAW APPLICABLE IN THE CASE AT BAR, RESPONDENTS HAVE NOT SHOWN ANY RIGHT TO THE RELIEF PRAYED FOR.
III
WHETHER OR NOT PETITIONERS WERE DEPRIVED OF THEIR RIGHT TO DUE PROCESS.
For their part, respondents contend that their individual claims arose out of the same vehicular accident and involve a common
question of fact and law. Hence, the RTC has jurisdiction over the case.
I
Petitioners insist that the trial court has no jurisdiction over the case since the cause of action of each respondent did not arise
from the same transaction and that there are no common questions of law and fact common to both parties. Section 6, Rule 3 of
the Revised Rules of Court,[5] provides:
Sec. 6. Permissive joinder of parties. All persons in whom or against whom any right to relief in respect to or arising out of the
same transaction or series of transactions is alleged to exist, whether jointly, severally, or in the alternative, may, except as
otherwise provided in these Rules, join as plaintiffs or be joined as defendants in one complaint, where any question of law or
fact common to all such plaintiffs or to all such defendants may arise in the action; but the court may make such orders as may
be just to prevent any plaintiff or defendant from being embarrassed or put to expense in connection with any proceedings in
which he may have no interest.
Permissive joinder of parties requires that: (a) the right to relief arises out of the same transaction or series of transactions; (b)
there is a question of law or fact common to all the plaintiffs or defendants; and (c) such joinder is not otherwise proscribed by
the provisions of the Rules on jurisdiction and venue.[6]
In this case, there is a single transaction common to all, that is, Pantrancos bus hitting the rear side of the jeepney. There is also
a common question of fact, that is, whether petitioners are negligent. There being a single transaction common to both
respondents, consequently, they have the same cause of action against petitioners.
To determine identity of cause of action, it must be ascertained whether the same evidence which is necessary to sustain the
second cause of action would have been sufficient to authorize a recovery in the first.[7] Here, had respondents filed separate
suits against petitioners, the same evidence would have been presented to sustain the same cause of action. Thus, the filing by
both respondents of the complaint with the court below is in order. Such joinder of parties avoids multiplicity of suit and ensures
the convenient, speedy and orderly administration of justice.
Corollarily, Section 5(d), Rule 2 of the same Rules provides:
Sec. 5. Joinder of causes of action. A party may in one pleading assert, in the alternative or otherwise, as many causes of action as
he may have against an opposing party, subject to the following conditions:
xxx
(d) Where the claims in all the causes of action are principally for recovery of money the aggregate amount claimed shall be the
test of jurisdiction.
The above provision presupposes that the different causes of action which are joined accrue in favor of the same plaintiff/s and
against the same defendant/s and that no misjoinder of parties is involved.[8] The issue of whether respondents claims shall be
lumped together is determined by paragraph (d) of the above provision. This paragraph embodies the totality rule as exemplified
by Section 33 (1) of B.P. Blg. 129[9] which states, among others, that where there are several claims or causes of action between
the same or different parties, embodied in the same complaint, the amount of the demand shall be the totality of the claims in
all the causes of action, irrespective of whether the causes of action arose out of the same or different transactions.
As previously stated, respondents cause of action against petitioners arose out of the same transaction. Thus, the amount of the
demand shall be the totality of the claims.
Respondent Standards claim is P8,000.00, while that of respondent Martina Gicale is P13,415.00, or a total of P21,415.00. Section
19 of B.P. Blg. 129 provides that the RTC has exclusive original jurisdiction over all other cases, in which the demand, exclusive
of interest and cost or the value of the property in controversy, amounts to more than twenty thousand pesos (P20,000.00).
Clearly, it is the RTC that has jurisdiction over the instant case. It bears emphasis that when the complaint was filed, R.A. 7691
expanding the jurisdiction of the Metropolitan, Municipal and Municipal Circuit Trial Courts had not yet taken effect. It became
effective on April 15, 1994.
II

21
The finding of the trial court, affirmed by the Appellate Court, that petitioners are negligent and thus liable to respondents, is a
factual finding which is binding upon us, a rule well-established in our jurisprudence. It has been repeatedly held that the trial
court's factual findings, when affirmed by the Appellate Court, are conclusive and binding upon this Court, if they are not tainted
with arbitrariness or oversight of some fact or circumstance of significance and influence. Petitioners have not presented
sufficient ground to warrant a deviation from this rule.[10]
III
There is no merit in petitioners contention that they were denied due process. Records show that during the hearing, petitioner
Pantrancos counsel filed two motions for resetting of trial which were granted by the trial court. Subsequently, said counsel filed
a notice to withdraw. After respondents had presented their evidence, the trial court, upon petitioners motion, reset the hearing
to another date. On this date, Pantranco failed to appear. Thus, the trial court warned Pantranco that should it fail to appear
during the next hearing, the case will be submitted for resolution on the basis of the evidence presented. Subsequently,
Pantrancos new counsel manifested that his client is willing to settle the case amicably and moved for another postponement.
The trial court granted the motion. On the date of the hearing, the new counsel manifested that Pantrancos employees are on
strike and moved for another postponement. On the next hearing, said counsel still failed to appear. Hence, the trial court
considered the case submitted for decision.
We have consistently held that the essence of due process is simply an opportunity to be heard, or an opportunity to explain
ones side or an opportunity to seek for a reconsideration of the action or ruling complained of.[11]
Petitioner Pantranco filed an answer and participated during the trial and presentation of respondents evidence. It was apprised
of the notices of hearing issued by the trial court. Indeed, it was afforded fair and reasonable opportunity to explain its side of
the controversy. Clearly, it was not denied of its right to due process. What is frowned upon is the absolute lack of notice and
hearing which is not present here.
WHEREFORE, the petition is DENIED. The assailed Decision dated July 23 1999 and Resolution dated November 4, 1999 of the
Court of Appeals in CA-G.R. CV No. 38453 are hereby AFFIRMED. Costs against petitioners.
SO ORDERED.
G.R. No. 186993 August 22, 2012
THEODORE and NANCY ANG, represented by ELDRIGE MARVIN B. ACERON, Petitioners,
vs.
SPOUSES ALAN and EM ANG, Respondents.
VELASCO, JR.,*
LEONARDO-DE CASTRO, **
DECISION
REYES, J.:
Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul and set aside the
Decision1 dated August 28, 2008 and the Resolution2 dated February 20, 2009 rendered by the Court of Appeals (CA) in CA-G.R.
SP No. 101159. The assailed decision annulled and set aside the Orders dated April 12, 20073 and August 27, 20074 issued by
the Regional Trial Court (RTC) of Quezon City, Branch 81 in Civil Case No. Q-06-58834.
The Antecedent Facts
On September 2, 1992, spouses Alan and Em Ang (respondents) obtained a loan in the amount of Three Hundred Thousand U.S.
Dollars (US$300,000.00) from Theodore and Nancy Ang (petitioners). On even date, the respondents executed a promissory
note5 in favor of the petitioners wherein they promised to pay the latter the said amount, with interest at the rate of ten percent
(10%) per annum, upon demand. However, despite repeated demands, the respondents failed to pay the petitioners.
Thus, on August 28, 2006, the petitioners sent the respondents a demand letter asking them to pay their outstanding debt which,
at that time, already amounted to Seven Hundred Nineteen Thousand, Six Hundred Seventy-One U.S. Dollars and Twenty-Three
Cents (US$719,671.23), inclusive of the ten percent (10%) annual interest that had accumulated over the years. Notwithstanding
the receipt of the said demand letter, the respondents still failed to settle their loan obligation.
On August 6, 2006, the petitioners, who were then residing in Los Angeles, California, United States of America (USA), executed
their respective Special Powers of Attorney6 in favor of Attorney Eldrige Marvin B. Aceron (Atty. Aceron) for the purpose of filing
an action in court against the respondents. On September 15, 2006, Atty. Aceron, in behalf of the petitioners, filed a Complaint7
for collection of sum of money with the RTC of Quezon City against the respondents.
On November 21, 2006, the respondents moved for the dismissal of the complaint filed by the petitioners on the grounds of
improper venue and prescription.8 Insisting that the venue of the petitioners’ action was improperly laid, the respondents
asserted that the complaint against them may only be filed in the court of the place where either they or the petitioners reside.
They averred that they reside in Bacolod City while the petitioners reside in Los Angeles, California, USA. Thus, the respondents
maintain, the filing of the complaint against them in the RTC of Quezon City was improper.
The RTC Orders
On April 12, 2007, the RTC of Quezon City issued an Order9 which, inter alia, denied the respondents’ motion to dismiss. In ruling
against the respondents’ claim of improper venue, the court explained that:
Attached to the complaint is the Special Power of Attorney x x x which clearly states that plaintiff Nancy Ang
constituted Atty. Eldrige Marvin Aceron as her duly appointed attorney-in-fact to prosecute her claim against herein
defendants. Considering that the address given by Atty. Aceron is in Quezon City, hence, being the plaintiff, venue

22
of the action may lie where he resides as provided in Section 2, Rule 4 of the 1997 Rules of Civil Procedure.10

The respondents sought reconsideration of the RTC Order dated April 12, 2007, asserting that there is no law which allows the
filing of a complaint in the court of the place where the representative, who was appointed as such by the plaintiffs through a
Special Power of Attorney, resides.11
The respondents’ motion for reconsideration was denied by the RTC of Quezon City in its Order12 dated August 27, 2007.
The respondents then filed with the CA a petition for certiorari13 alleging in the main that, pursuant to Section 2, Rule 4 of the
Rules of Court, the petitioners’ complaint may only be filed in the court of the place where they or the petitioners reside.
Considering that the petitioners reside in Los Angeles, California, USA, the respondents assert that the complaint below may only
be filed in the RTC of Bacolod City, the court of the place where they reside in the Philippines.
The respondents further claimed that, the petitioners’ grant of Special Power of Attorney in favor of Atty. Aceron
notwithstanding, the said complaint may not be filed in the court of the place where Atty. Aceron resides, i.e., RTC of Quezon City.
They explained that Atty. Aceron, being merely a representative of the petitioners, is not the real party in interest in the case
below; accordingly, his residence should not be considered in determining the proper venue of the said complaint.
The CA Decision
On August 28, 2008, the CA rendered the herein Decision,14 which annulled and set aside the Orders dated April 12, 2007 and
August 27, 2007 of the RTC of Quezon City and, accordingly, directed the dismissal of the complaint filed by the petitioners. The
CA held that the complaint below should have been filed in Bacolod City and not in Quezon City. Thus:
As maybe clearly gleaned from the foregoing, the place of residence of the plaintiff’s attorney-in-fact is of no
moment when it comes to ascertaining the venue of cases filed in behalf of the principal since what should be
considered is the residence of the real parties in interest, i.e., the plaintiff or the defendant, as the case may be.
Residence is the permanent home – the place to which, whenever absent for business or pleasure, one intends to
return. Residence is vital when dealing with venue. Plaintiffs, herein private respondents, being residents of Los
Angeles, California, U.S.A., which is beyond the territorial jurisdiction of Philippine courts, the case should have
been filed in Bacolod City where the defendants, herein petitioners, reside. Since the case was filed in Quezon City,
where the representative of the plaintiffs resides, contrary to Sec. 2 of Rule 4 of the 1997 Rules of Court, the trial
court should have dismissed the case for improper venue.15

The petitioners sought a reconsideration of the Decision dated August 28, 2008, but it was denied by the CA in its Resolution
dated February 20, 2009.16
Hence, the instant petition.
Issue
In the instant petition, the petitioners submit this lone issue for this Court’s resolution:
WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR OF LAW WHEN IT RULED THAT
THE COMPLAINT MUST BE DISMISSED ON THE GROUND THAT VENUE WAS NOT PROPERLY LAID.17

The Court’s Ruling

The petition is denied.

Contrary to the CA’s disposition, the petitioners maintain that their complaint for collection of sum of money against the
respondents may be filed in the RTC of Quezon City. Invoking Section 3, Rule 3 of the Rules of Court, they insist that Atty. Aceron,
being their attorney-in-fact, is deemed a real party in interest in the case below and can prosecute the same before the RTC. Such
being the case, the petitioners assert, the said complaint for collection of sum of money may be filed in the court of the place
where Atty. Aceron resides, which is the RTC of Quezon City.
On the other hand, the respondents in their Comment18 assert that the petitioners are proscribed from filing their complaint in
the RTC of Quezon City. They assert that the residence of Atty. Aceron, being merely a representative, is immaterial to the
determination of the venue of the petitioners’ complaint.
The petitioners’ complaint should
have been filed in the RTC of
Bacolod City, the court of the place
where the respondents reside, and
not in RTC of Quezon City.
It is a legal truism that the rules on the venue of personal actions are fixed for the convenience of the plaintiffs and their
witnesses. Equally settled, however, is the principle that choosing the venue of an action is not left to a plaintiff’s caprice; the
matter is regulated by the Rules of Court.19
The petitioners’ complaint for collection of sum of money against the respondents is a personal action as it primarily seeks the
enforcement of a contract. The Rules give the plaintiff the option of choosing where to file his complaint. He can file it in the place
(1) where he himself or any of them resides, or (2) where the defendant or any of the defendants resides or may be found. The
plaintiff or the defendant must be residents of the place where the action has been instituted at the time the action is
commenced.20
However, if the plaintiff does not reside in the Philippines, the complaint in such case may only be filed in the court of the place

23
where the defendant resides. In Cohen and Cohen v. Benguet Commercial Co., Ltd.,21 this Court held that there can be no election
as to the venue of the filing of a complaint when the plaintiff has no residence in the Philippines. In such case, the complaint may
only be filed in the court of the place where the defendant resides. Thus:
Section 377 provides that actions of this character "may be brought in any province where the defendant or any
necessary party defendant may reside or be found, or in any province where the plaintiff or one of the plaintiffs
resides, at the election of the plaintiff." The plaintiff in this action has no residence in the Philippine Islands. Only
one of the parties to the action resides here. There can be, therefore, no election by plaintiff as to the place of trial.
It must be in the province where the defendant resides. x x x.22 (Emphasis ours)

Here, the petitioners are residents of Los Angeles, California, USA while the respondents reside in Bacolod City. Applying the
foregoing principles, the petitioners’ complaint against the respondents may only be filed in the RTC of Bacolod City – the court
of the place where the respondents reside. The petitioners, being residents of Los Angeles, California, USA, are not given the
choice as to the venue of the filing of their complaint.
Thus, the CA did not commit any reversible error when it annulled and set aside the orders of the RTC of Quezon City and
consequently dismissed the petitioners’ complaint against the respondents on the ground of improper venue.
In this regard, it bears stressing that the situs for bringing real and personal civil actions is fixed by the Rules of Court to attain
the greatest convenience possible to the litigants and their witnesses by affording them maximum accessibility to the courts.23
And even as the regulation of venue is primarily for the convenience of the plaintiff, as attested by the fact that the choice of
venue is given to him, it should not be construed to unduly deprive a resident defendant of the rights conferred upon him by the
Rules of Court.24
Atty. Aceron is not a real party in
interest in the case below; thus, his
residence is immaterial to the venue
of the filing of the complaint.
Contrary to the petitioners’ claim, Atty. Aceron, despite being the attorney-in-fact of the petitioners, is not a real party in interest
in the case below. Section 2, Rule 3 of the Rules of Court reads:
Sec. 2. Parties in interest. – A real party in interest is the party who stands to be benefited or injured by the judgment
in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these Rules, every
action must be prosecuted or defended in the name of the real party in interest. (Emphasis ours)

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

Nowhere in the rule cited above is it stated or, at the very least implied, that the representative is likewise deemed as the real
party in interest. The said rule simply states that, in actions which are allowed to be prosecuted or defended by a representative,
the beneficiary shall be deemed the real party in interest and, hence, should be included in the title of the case.
Indeed, to construe the express requirement of residence under the rules on venue as applicable to the attorney-in-fact of the
plaintiff would abrogate the meaning of a "real party in interest", as defined in Section 2 of Rule 3 of the 1997 Rules of Court vis-
à-vis Section 3 of the same Rule.28
On this score, the CA aptly observed that:

As may be unerringly gleaned from the foregoing provisions, there is nothing therein that expressly allows, much
less implies that an action may be filed in the city or municipality where either a representative or an attorney-in-
fact of a real party in interest resides. Sec. 3 of Rule 3 merely provides that the name or names of the person or
persons being represented must be included in the title of the case and such person or persons shall be considered
the real party in interest. In other words, the principal remains the true party to the case and not the representative.
Under the plain meaning rule, or verba legis, if a statute is clear, plain and free from ambiguity, it must be given its
24
literal meaning and applied without interpretation. xxx29 (Citation omitted)

At this juncture, it bears stressing that the rules on venue, like the other procedural rules, are designed to insure a just and
orderly administration of justice or the impartial and even-handed determination of every action and proceeding. Obviously, this
objective will not be attained if the plaintiff is given unrestricted freedom to choose the court where he may file his complaint or
petition. The choice of venue should not be left to the plaintiff's whim or caprice. He may be impelled by some ulterior motivation
in choosing to file a case in a particular court even if not allowed by the rules on venue.30
WHEREFORE, in consideration of the foregoing disquisitions, the petition is DENIED. The Decision dated August 28, 2008 and
Resolution dated February 20, 2009 rendered by the Court of Appeals in CA-G.R. SP No. 101159 are AFFIRMED.
SO ORDERED.
G.R. No. 153788 November 27, 2009
ROGER V. NAVARRO, Petitioner,
vs.
HON. JOSE L. ESCOBIDO, Presiding Judge, RTC Branch 37, Cagayan de Oro City, and KAREN T. GO, doing business under
the name KARGO ENTERPRISES, Respondents.
DECISION
BRION, J.:

This is a petition for review on certiorari1 that seeks to set aside the Court of Appeals (CA) Decision 2 dated October 16, 2001
and Resolution3 dated May 29, 2002 in CA-G.R. SP. No. 64701. These CA rulings affirmed the July 26, 20004 and March 7, 20015
orders of the Regional Trial Court (RTC), Misamis Oriental, Cagayan de Oro City, denying petitioner Roger V. Navarro’s (Navarro)
motion to dismiss.
BACKGROUND FACTS

On September 12, 1998, respondent Karen T. Go filed two complaints, docketed as Civil Case Nos. 98-599 (first complaint)6 and
98-598 (second complaint),7 before the RTC for replevin and/or sum of money with damages against Navarro. In these
complaints, Karen Go prayed that the RTC issue writs of replevin for the seizure of two (2) motor vehicles in Navarro’s possession.
The first complaint stated:
1. That plaintiff KAREN T. GO is a Filipino, of legal age, married to GLENN O. GO, a resident of Cagayan de Oro City and doing
business under the trade name KARGO ENTERPRISES, an entity duly registered and existing under and by virtue of the laws of
the Republic of the Philippines, which has its business address at Bulua, Cagayan de Oro City; that defendant ROGER NAVARRO
is a Filipino, of legal age, a resident of 62 Dolores Street, Nazareth, Cagayan de Oro City, where he may be served with summons
and other processes of the Honorable Court; that defendant "JOHN DOE" whose real name and address are at present unknown
to plaintiff is hereby joined as party defendant as he may be the person in whose possession and custody the personal property
subject matter of this suit may be found if the same is not in the possession of defendant ROGER NAVARRO;
2. That KARGO ENTERPRISES is in the business of, among others, buying and selling motor vehicles, including hauling trucks
and other heavy equipment;
3. That for the cause of action against defendant ROGER NAVARRO, it is hereby stated that on August 8, 1997, the said defendant
leased [from] plaintiff a certain motor vehicle which is more particularly described as follows –
Make/Type FUSO WITH MOUNTED CRANE
Serial No. FK416K-51680
Motor No. 6D15-338735
Plate No. GHK-378
as evidenced by a LEASE AGREEMENT WITH OPTION TO PURCHASE entered into by and between KARGO ENTERPRISES, then
represented by its Manager, the aforementioned GLENN O. GO, and defendant ROGER NAVARRO xxx; that in accordance with the
provisions of the above LEASE AGREEMENT WITH OPTION TO PURCHASE, defendant ROGER NAVARRO delivered unto plaintiff
six (6) post-dated checks each in the amount of SIXTY-SIX THOUSAND THREE HUNDRED THIRTY-THREE & 33/100 PESOS
(₱66,333.33) which were supposedly in payment of the agreed rentals; that when the fifth and sixth checks, i.e. PHILIPPINE
BANK OF COMMUNICATIONS – CAGAYAN DE ORO BRANCH CHECKS NOS. 017112 and 017113, respectively dated January 8,
1998 and February 8, 1998, were presented for payment and/or credit, the same were dishonored and/or returned by the
drawee bank for the common reason that the current deposit account against which the said checks were issued did not have
sufficient funds to cover the amounts thereof; that the total amount of the two (2) checks, i.e. the sum of ONE HUNDRED THIRTY-
TWO THOUSAND SIX HUNDRED SIXTY-SIX & 66/100 PESOS (₱132,666.66) therefore represents the principal liability of
defendant ROGER NAVARRO unto plaintiff on the basis of the provisions of the above LEASE AGREEMENT WITH RIGHT TO
PURCHASE; that demands, written and oral, were made of defendant ROGER NAVARRO to pay the amount of ONE HUNDRED
THIRTY-TWO THOUSAND SIX HUNDRED SIXTY-SIX & 66/100 PESOS (₱132,666.66), or to return the subject motor vehicle as
also provided for in the LEASE AGREEMENT WITH RIGHT TO PURCHASE, but said demands were, and still are, in vain to the
great damage and injury of herein plaintiff; xxx
4. That the aforedescribed motor vehicle has not been the subject of any tax assessment and/or fine pursuant to law, or seized
under an execution or an attachment as against herein plaintiff;
xxx
8. That plaintiff hereby respectfully applies for an order of the Honorable Court for the immediate delivery of the above-described
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motor vehicle from defendants unto plaintiff pending the final determination of this case on the merits and, for that purpose,
there is attached hereto an affidavit duly executed and bond double the value of the personal property subject matter hereof to
answer for damages and costs which defendants may suffer in the event that the order for replevin prayed for may be found out
to having not been properly issued.
The second complaint contained essentially the same allegations as the first complaint, except that the Lease Agreement with
Option to Purchase involved is dated October 1, 1997 and the motor vehicle leased is described as follows:
Make/Type FUSO WITH MOUNTED CRANE
Serial No. FK416K-510528
Motor No. 6D14-423403
The second complaint also alleged that Navarro delivered three post-dated checks, each for the amount of ₱100,000.00, to Karen
Go in payment of the agreed rentals; however, the third check was dishonored when presented for payment. 8

On October 12, 19989 and October 14, 1998,10 the RTC issued writs of replevin for both cases; as a result, the Sheriff seized the
two vehicles and delivered them to the possession of Karen Go.
In his Answers, Navarro alleged as a special affirmative defense that the two complaints stated no cause of action, since Karen
Go was not a party to the Lease Agreements with Option to Purchase (collectively, the lease agreements) – the actionable
documents on which the complaints were based.
On Navarro’s motion, both cases were duly consolidated on December 13, 1999.
In its May 8, 2000 order, the RTC dismissed the case on the ground that the complaints did not state a cause of action.

In response to the motion for reconsideration Karen Go filed dated May 26, 2000,11 the RTC issued another order dated July 26,
2000 setting aside the order of dismissal. Acting on the presumption that Glenn Go’s leasing business is a conjugal property, the
RTC held that Karen Go had sufficient interest in his leasing business to file the action against Navarro. However, the RTC held
that Karen Go should have included her husband, Glenn Go, in the complaint based on Section 4, Rule 3 of the Rules of Court
(Rules).12 Thus, the lower court ordered Karen Go to file a motion for the inclusion of Glenn Go as co-plaintiff.1avvphi1
When the RTC denied Navarro’s motion for reconsideration on March 7, 2001, Navarro filed a petition for certiorari with the CA,
essentially contending that the RTC committed grave abuse of discretion when it reconsidered the dismissal of the case and
directed Karen Go to amend her complaints by including her husband Glenn Go as co-plaintiff. According to Navarro, a complaint
which failed to state a cause of action could not be converted into one with a cause of action by mere amendment or supplemental
pleading.

On October 16, 2001, the CA denied Navarro’s petition and affirmed the RTC’s order. 13 The CA also denied Navarro’s motion for
reconsideration in its resolution of May 29, 2002,14 leading to the filing of the present petition.
THE PETITION
Navarro alleges that even if the lease agreements were in the name of Kargo Enterprises, since it did not have the requisite
juridical personality to sue, the actual parties to the agreement are himself and Glenn Go. Since it was Karen Go who filed the
complaints and not Glenn Go, she was not a real party-in-interest and the complaints failed to state a cause of action.
Navarro posits that the RTC erred when it ordered the amendment of the complaint to include Glenn Go as a co-plaintiff, instead
of dismissing the complaint outright because a complaint which does not state a cause of action cannot be converted into one
with a cause of action by a mere amendment or a supplemental pleading. In effect, the lower court created a cause of action for
Karen Go when there was none at the time she filed the complaints.
Even worse, according to Navarro, the inclusion of Glenn Go as co-plaintiff drastically changed the theory of the complaints, to
his great prejudice. Navarro claims that the lower court gravely abused its discretion when it assumed that the leased vehicles
are part of the conjugal property of Glenn and Karen Go. Since Karen Go is the registered owner of Kargo Enterprises, the vehicles
subject of the complaint are her paraphernal properties and the RTC gravely erred when it ordered the inclusion of Glenn Go as
a co-plaintiff.
Navarro likewise faults the lower court for setting the trial of the case in the same order that required Karen Go to amend her
complaints, claiming that by issuing this order, the trial court violated Rule 10 of the Rules.
Even assuming the complaints stated a cause of action against him, Navarro maintains that the complaints were premature
because no prior demand was made on him to comply with the provisions of the lease agreements before the complaints for
replevin were filed.
Lastly, Navarro posits that since the two writs of replevin were issued based on flawed complaints, the vehicles were illegally
seized from his possession and should be returned to him immediately.
Karen Go, on the other hand, claims that it is misleading for Navarro to state that she has no real interest in the subject of the
complaint, even if the lease agreements were signed only by her husband, Glenn Go; she is the owner of Kargo Enterprises and
Glenn Go signed the lease agreements merely as the manager of Kargo Enterprises. Moreover, Karen Go maintains that Navarro’s
insistence that Kargo Enterprises is Karen Go’s paraphernal property is without basis. Based on the law and jurisprudence on
the matter, all property acquired during the marriage is presumed to be conjugal property. Finally, Karen Go insists that her
complaints sufficiently established a cause of action against Navarro. Thus, when the RTC ordered her to include her husband as
co-plaintiff, this was merely to comply with the rule that spouses should sue jointly, and was not meant to cure the complaints’
lack of cause of action.
THE COURT’S RULING

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We find the petition devoid of merit.
Karen Go is the real party-in-interest
The 1997 Rules of Civil Procedure requires that every action must be prosecuted or defended in the name of the real party-in-
interest, i.e., 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.15
Interestingly, although Navarro admits that Karen Go is the registered owner of the business name Kargo Enterprises, he still
insists that Karen Go is not a real party-in-interest in the case. According to Navarro, while the lease contracts were in Kargo
Enterprises’ name, this was merely a trade name without a juridical personality, so the actual parties to the lease agreements
were Navarro and Glenn Go, to the exclusion of Karen Go.
As a corollary, Navarro contends that the RTC acted with grave abuse of discretion when it ordered the inclusion of Glenn Go as
co-plaintiff, since this in effect created a cause of action for the complaints when in truth, there was none.
We do not find Navarro’s arguments persuasive.
The central factor in appreciating the issues presented in this case is the business name Kargo Enterprises. The name appears
in the title of the Complaint where the plaintiff was identified as "KAREN T. GO doing business under the name KARGO
ENTERPRISES," and this identification was repeated in the first paragraph of the Complaint. Paragraph 2 defined the business
KARGO ENTERPRISES undertakes. Paragraph 3 continued with the allegation that the defendant "leased from plaintiff a certain
motor vehicle" that was thereafter described. Significantly, the Complaint specifies and attaches as its integral part the Lease
Agreement that underlies the transaction between the plaintiff and the defendant. Again, the name KARGO ENTERPRISES
entered the picture as this Lease Agreement provides:
This agreement, made and entered into by and between:
GLENN O. GO, of legal age, married, with post office address at xxx, herein referred to as the LESSOR-SELLER; representing
KARGO ENTERPRISES as its Manager,
xxx
thus, expressly pointing to KARGO ENTERPRISES as the principal that Glenn O. Go represented. In other words, by the express
terms of this Lease Agreement, Glenn Go did sign the agreement only as the manager of Kargo Enterprises and the latter is clearly
the real party to the lease agreements.
As Navarro correctly points out, Kargo Enterprises is a sole proprietorship, which is neither a natural person, nor a juridical
person, as defined by Article 44 of the Civil Code:
Art. 44. The following are juridical persons:
(1) The State and its political subdivisions;
(2) Other corporations, institutions and entities for public interest or purpose, created by law; their personality begins as soon
as they have been constituted according to law;
(3) Corporations, partnerships and associations for private interest or purpose to which the law grants a juridical personality,
separate and distinct from that of each shareholder, partner or member.

Thus, pursuant to Section 1, Rule 3 of the Rules,16 Kargo Enterprises cannot be a party to a civil action. This legal reality leads
to the question: who then is the proper party to file an action based on a contract in the name of Kargo Enterprises?

We faced a similar question in Juasing Hardware v. Mendoza,17 where we said:


Finally, there is no law authorizing sole proprietorships like petitioner to bring suit in court. The law merely recognizes the
existence of a sole proprietorship as a form of business organization conducted for profit by a single individual, and requires the
proprietor or owner thereof to secure licenses and permits, register the business name, and pay taxes to the national
government. It does not vest juridical or legal personality upon the sole proprietorship nor empower it to file or defend an action
in court.
Thus, the complaint in the court below should have been filed in the name of the owner of Juasing Hardware. The allegation in
the body of the complaint would show that the suit is brought by such person as proprietor or owner of the business conducted
under the name and style Juasing Hardware. The descriptive words "doing business as Juasing Hardware" may be added to the
title of the case, as is customarily done.18 [Emphasis supplied.]
This conclusion should be read in relation with Section 2, Rule 3 of the Rules, which states:
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.
As the registered owner of Kargo Enterprises, Karen Go is the party who will directly benefit from or be injured by a judgment
in this case. Thus, contrary to Navarro’s contention, Karen Go is the real party-in-interest, and it is legally incorrect to say that
her Complaint does not state a cause of action because her name did not appear in the Lease Agreement that her husband signed
in behalf of Kargo Enterprises. Whether Glenn Go can legally sign the Lease Agreement in his capacity as a manager of Kargo
Enterprises, a sole proprietorship, is a question we do not decide, as this is a matter for the trial court to consider in a trial on
the merits.
Glenn Go’s Role in the Case

27
We find it significant that the business name Kargo Enterprises is in the name of Karen T. Go, 19 who described herself in the
Complaints to be "a Filipino, of legal age, married to GLENN O. GO, a resident of Cagayan de Oro City, and doing business under
the trade name KARGO ENTERPRISES."20 That Glenn Go and Karen Go are married to each other is a fact never brought in issue
in the case. Thus, the business name KARGO ENTERPRISES is registered in the name of a married woman, a fact material to the
side issue of whether Kargo Enterprises and its properties are paraphernal or conjugal properties. To restate the parties’
positions, Navarro alleges that Kargo Enterprises is Karen Go’s paraphernal property, emphasizing the fact that the business is
registered solely in Karen Go’s name. On the other hand, Karen Go contends that while the business is registered in her name, it
is in fact part of their conjugal property.
The registration of the trade name in the name of one person – a woman – does not necessarily lead to the conclusion that the
trade name as a property is hers alone, particularly when the woman is married. By law, all property acquired during the
marriage, whether the acquisition appears to have been made, contracted or registered in the name of one or both spouses, is
presumed to be conjugal unless the contrary is proved.21 Our examination of the records of the case does not show any proof
that Kargo Enterprises and the properties or contracts in its name are conjugal. If at all, only the bare allegation of Navarro to
this effect exists in the records of the case. As we emphasized in Castro v. Miat:22
Petitioners also overlook Article 160 of the New Civil Code. It provides that "all property of the marriage is presumed to be
conjugal partnership, unless it be prove[n] that it pertains exclusively to the husband or to the wife." This article does not
require proof that the property was acquired with funds of the partnership. The presumption applies even when the
manner in which the property was acquired does not appear.23 [Emphasis supplied.]
Thus, for purposes solely of this case and of resolving the issue of whether Kargo Enterprises as a sole proprietorship is conjugal
or paraphernal property, we hold that it is conjugal property.
Article 124 of the Family Code, on the administration of the conjugal property, provides:
Art. 124. The administration and enjoyment of the conjugal partnership property shall belong to both spouses jointly.
In case of disagreement, the husband’s decision shall prevail, subject to recourse to the court by the wife for proper remedy,
which must be availed of within five years from the date of the contract implementing such decision.
xxx
This provision, by its terms, allows either Karen or Glenn Go to speak and act with authority in managing their conjugal property,
i.e., Kargo Enterprises. No need exists, therefore, for one to obtain the consent of the other before performing an act of
administration or any act that does not dispose of or encumber their conjugal property.
Under Article 108 of the Family Code, the conjugal partnership is governed by the rules on the contract of partnership in all that
is not in conflict with what is expressly determined in this Chapter or by the spouses in their marriage settlements. In other
words, the property relations of the husband and wife shall be governed primarily by Chapter 4 on Conjugal Partnership of Gains
of the Family Code and, suppletorily, by the spouses’ marriage settlement and by the rules on partnership under the Civil Code.
In the absence of any evidence of a marriage settlement between the spouses Go, we look at the Civil Code provision on
partnership for guidance.
A rule on partnership applicable to the spouses’ circumstances is Article 1811 of the Civil Code, which states:
Art. 1811. A partner is a co-owner with the other partners of specific partnership property.
The incidents of this co-ownership are such that:
(1) A partner, subject to the provisions of this Title and to any agreement between the partners, has an equal right with his
partners to possess specific partnership property for partnership purposes; xxx
Under this provision, Glenn and Karen Go are effectively co-owners of Kargo Enterprises and the properties registered under
this name; hence, both have an equal right to seek possession of these properties. Applying Article 484 of the Civil Code, which
states that "in default of contracts, or special provisions, co-ownership shall be governed by the provisions of this Title," we find
further support in Article 487 of the Civil Code that allows any of the co-owners to bring an action in ejectment with respect to
the co-owned property.
While ejectment is normally associated with actions involving real property, we find that this rule can be applied to the
circumstances of the present case, following our ruling in Carandang v. Heirs of De Guzman. 24 In this case, one spouse filed an
action for the recovery of credit, a personal property considered conjugal property, without including the other spouse in the
action. In resolving the issue of whether the other spouse was required to be included as a co-plaintiff in the action for the
recovery of the credit, we said:
Milagros de Guzman, being presumed to be a co-owner of the credits allegedly extended to the spouses Carandang, seems to be
either an indispensable or a necessary party. If she is an indispensable party, dismissal would be proper. If she is merely a
necessary party, dismissal is not warranted, whether or not there was an order for her inclusion in the complaint pursuant to
Section 9, Rule 3.
Article 108 of the Family Code provides:
Art. 108. The conjugal partnership shall be governed by the rules on the contract of partnership in all that is not in conflict with
what is expressly determined in this Chapter or by the spouses in their marriage settlements.
This provision is practically the same as the Civil Code provision it superseded:
Art. 147. The conjugal partnership shall be governed by the rules on the contract of partnership in all that is not in conflict with
what is expressly determined in this Chapter.

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In this connection, Article 1811 of the Civil Code provides that "[a] partner is a co-owner with the other partners of specific
partnership property." Taken with the presumption of the conjugal nature of the funds used to finance the four checks used to
pay for petitioners’ stock subscriptions, and with the presumption that the credits themselves are part of conjugal funds, Article
1811 makes Quirino and Milagros de Guzman co-owners of the alleged credit.
Being co-owners of the alleged credit, Quirino and Milagros de Guzman may separately bring an action for the recovery thereof.
In the fairly recent cases of Baloloy v. Hular and Adlawan v. Adlawan, we held that, in a co-ownership, co-owners may bring
actions for the recovery of co-owned property without the necessity of joining all the other co-owners as co-plaintiffs because
the suit is presumed to have been filed for the benefit of his co-owners. In the latter case and in that of De Guia v. Court of Appeals,
we also held that Article 487 of the Civil Code, which provides that any of the co-owners may bring an action for ejectment,
covers all kinds of action for the recovery of possession.
In sum, in suits to recover properties, all co-owners are real parties in interest. However, pursuant to Article 487 of the Civil Code
and relevant jurisprudence, any one of them may bring an action, any kind of action, for the recovery of co-owned properties.
Therefore, only one of the co-owners, namely the co-owner who filed the suit for the recovery of the co-owned property, is an
indispensable party thereto. The other co-owners are not indispensable parties. They are not even necessary parties, for a
complete relief can be accorded in the suit even without their participation, since the suit is presumed to have been filed for the
benefit of all co-owners.25 [Emphasis supplied.]
Under this ruling, either of the spouses Go may bring an action against Navarro to recover possession of the Kargo Enterprises-
leased vehicles which they co-own. This conclusion is consistent with Article 124 of the Family Code, supporting as it does the
position that either spouse may act on behalf of the conjugal partnership, so long as they do not dispose of or encumber the
property in question without the other spouse’s consent.
On this basis, we hold that since Glenn Go is not strictly an indispensable party in the action to recover possession of the leased
vehicles, he only needs to be impleaded as a pro-forma party to the suit, based on Section 4, Rule 4 of the Rules, which states:
Section 4. Spouses as parties. – Husband and wife shall sue or be sued jointly, except as provided by law.
Non-joinder of indispensable parties not ground to dismiss action

Even assuming that Glenn Go is an indispensable party to the action, we have held in a number of cases 26 that the misjoinder or
non-joinder of indispensable parties in a complaint is not a ground for dismissal of action. As we stated in Macababbad v.
Masirag:27
Rule 3, Section 11 of the Rules of Court provides that neither misjoinder nor nonjoinder of parties is a ground for the dismissal
of an action, thus:
Sec. 11. Misjoinder and non-joinder of parties. Neither misjoinder nor non-joinder of parties is ground for dismissal of an action.
Parties may be 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.
In Domingo v. Scheer, this Court held that the proper remedy when a party is left out is to implead the indispensable party at any
stage of the action. The court, either motu proprio or upon the motion of a party, may order the inclusion of the indispensable
party or give the plaintiff opportunity to amend his complaint in order to include indispensable parties. If the plaintiff to whom
the order to include the indispensable party is directed refuses to comply with the order of the court, the complaint may be
dismissed upon motion of the defendant or upon the court's own motion. Only upon unjustified failure or refusal to obey the
order to include or to amend is the action dismissed.
In these lights, the RTC Order of July 26, 2000 requiring plaintiff Karen Go to join her husband as a party plaintiff is fully in order.
Demand not required prior
to filing of replevin action
In arguing that prior demand is required before an action for a writ of replevin is filed, Navarro apparently likens a replevin
action to an unlawful detainer.
For a writ of replevin to issue, all that the applicant must do is to file an affidavit and bond, pursuant to Section 2, Rule 60 of the
Rules, which states:
Sec. 2. Affidavit and bond.
The applicant must show by his own affidavit or that of some other person who personally knows the facts:
(a) That the applicant is the owner of the property claimed, particularly describing it, or is entitled to the possession
thereof;
(b) That the property is wrongfully detained by the adverse party, alleging the cause of detention thereof according to the
best of his knowledge, information, and belief;
(c) That the property has not been distrained or taken for a tax assessment or a fine pursuant to law, or seized under a writ of
execution or preliminary attachment, or otherwise placed under custodia legis, or if so seized, that it is exempt from such seizure
or custody; and
(d) The actual market value of the property.
The applicant must also give a bond, executed to the adverse party in double the value of the property as stated in the affidavit
aforementioned, for the return of the property to the adverse party if such return be adjudged, and for the payment to the adverse
party of such sum as he may recover from the applicant in the action.
We see nothing in these provisions which requires the applicant to make a prior demand on the possessor of the property before
29
he can file an action for a writ of replevin. Thus, prior demand is not a condition precedent to an action for a writ of replevin.
More importantly, Navarro is no longer in the position to claim that a prior demand is necessary, as he has already admitted in
his Answers that he had received the letters that Karen Go sent him, demanding that he either pay his unpaid obligations or
return the leased motor vehicles. Navarro’s position that a demand is necessary and has not been made is therefore totally
unmeritorious.
WHEREFORE, premises considered, we DENY the petition for review for lack of merit. Costs against petitioner Roger V. Navarro.
SO ORDERED.

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