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FIRST DIVISION

[G.R. No. 58986. April 17, 1989.]


DANTE Y. GO, Petitioner, v. HON. FERNANDO CRUZ, Judge, etc., CITY SHERIFF OF CALOOCAN CITY, and
CALIFORNIA MANUFACTURING CO., INC., Respondents.
De Santos, Balgos & Perez for Petitioner.
Francisco N. Carreon, Jr. for Respondents.

SYLLABUS

1. REMEDIAL LAW; DISMISSAL OF ACTIONS; ADDRESSED TO THE SOUND JUDGMENT AND DISCRETION OF THE COURT;
EXCEPTION. The dismissal of civil actions is always addressed to the sound judgment and discretion of the court, whether
dismissal is sought after a trial has been completed or otherwise, or whether it is prayed for by a defending party, or by a
plaintiff or claimant. There is one instance however where the dismissal of an action rests exclusively on the will of a plaintiff
or claimant, to prevent which the defending party and even the court itself is powerless, requiring in fact no action whatever
on the part of the court except the acceptance and recording of the causative document. This is dealt with in Section 1, Rule
17 of the Rules of Court, which reads as follows: "SECTION 1. Dismissal by the plaintiff . An action may be dismissed by
the plaintiff without order of court by filing a notice of dismissal at any time before service of the answer or of a motion for
summary judgment. Unless otherwise stated in the notice, the dismissal is without prejudice, except that a notice operates
as an adjudication upon the merits when filed by a plaintiff who has once dismissed in a competent court an action based on
or including the same claim. A class suit shall not be dismissed or compromised without approval of the court."
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2. ID.; ACTIONS; PLAINTIFFS ABSOLUTE RIGHT TO DISMISS LOST UPON SERVICE OF DEFENDANTS ANSWER OR OF A
MOTION FOR SUMMARY JUDGMENT. What marks the loss by a plaintiff of the right to cause dismissal of the action by mere
notice is not the filing of the defendants answer with the Court (either personally or by mail) but the service on the plaintiff
of said answer or of a motion for summary judgment. This is the plain and explicit message of the Rules. "The filing of
pleadings, appearances, motions, notices, orders and other papers with the court," according to Section 1, Rule 13 of the
Rules of Court, means the delivery thereof to the clerk of the court either personally or by registered mail. Service, on the
other hand, signifies delivery of the pleading or other paper to the parties affected thereby through their counsel of record,
unless delivery to the party himself is ordered by the court, by any of the modes set forth in the Rules, i.e., by personal
service, service by mail, or substituted service.

DECISION

NARVASA, J.:

The dismissal of civil actions is always addressed to the sound judgment and discretion of the court; this, whether the
dismissal is sought after a trial has been completed or otherwise, 1 or whether it is prayed for by a defending party, 2 or by a
plaintiff or claimant. 3 There is one instance however where the dismissal of an action rests exclusively on the will of a
plaintiff or claimant, to prevent which the defending party and even the court itself is powerless, requiring in fact no action
whatever on the part of the court except the acceptance and recording of the causative document. This is dealt with in
Section 1, Rule 17 of the Rules of Court, which reads as follows:
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SECTION 1. Dismissal by the plaintiff. An action may be dismissed by the plaintiff without order of court by filing a notice
of dismissal at any time before service of the answer or of a motion for summary judgment. Unless otherwise stated in the
notice, the dismissal is without prejudice, except that a notice operates as an adjudication upon the merits when filed by a
plaintiff who has once dismissed in a competent court an action based on or including the same claim. A class suit shall not
be dismissed or compromised without approval of the court.
It is this provision with which the proceedings at bar are chiefly concerned.
On October 26, 1981, California Manufacturing Co., Inc. (hereinafter, simply, California) brought an action in the Court of
First Instance of Manila against Dante Go, accusing him of unfair competition. 4 The gravamen of Californias complaint was
that Dante Go, doing business under the name and style of "Sugarland International Products," and engaged like California in
the manufacture of spaghetti, macaroni, and other pasta, was selling his products in the open market under the brand name,
"Great Italian," in packages which were in colorable and deceitful imitation of Californias containers bearing its own brand,
"Royal." Its complaint contained an application for preliminary injunction commanding Dante Go to immediately cease and
desist from the further manufacture, sale and distribution of said products, and to retrieve those already being offered for
sale. 5

About two weeks later, however, or on November 12, 1981, California filed a notice of dismissal with the Court reading as
follows: 6
COMES NOW the plaintiff in the above-entitled case, through undersigned counsel, and unto this Honorable Court most
respectfully gives notice of dismissal without prejudice pursuant to Sec. 1, Rule 17 of the Rules of Court.
WHEREFORE, it is respectfully prayed that the above-entitled case be considered dismissed without prejudice conformably
with Sec. 1, Rule 17 of the Rules of Court.
Four days afterwards, or on November 16, 1981, California received by registered mail a copy of Dante Gos answer with
counterclaim dated November 6, 1981, which had been filed with the Court on November 9, 1981. 7
On November 19, 1981 a fire broke out at the Manila City Hall destroying among others the sala of Judge Tengco and the
records of cases therein kept, including that filed by California against Dante Go. 8
On December 1, 1981, California filed another complaint asserting the same cause of action against Dante Go, this time with
the Court of First Instance at Caloocan City. 9 This second suit was docketed as Civil Case No. C-9702 and was assigned to
the branch presided over by Judge Fernando A. Cruz.
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On December 3, 1981, Judge Cruz issued an ex parte restraining order directing "the defendant . . . to immediately cease
and desist from the further manufacture, sale, promotion and distribution of spaghetti, macaroni and other pasta products
contained in packaging boxes and labels under the name `GREAT ITALIAN, which are similar to or copies of those of the
plaintiff, and . . . recall . . . all his spaghetti, macaroni and other pasta products using the brand, `GREAT ITALIAN." 10
On the day following the rendition of the restraining order, Dante Go filed the present petition forcertiorari, etc. with this
Court praying for its nullification and perpetual inhibition. On December 11, 1981, this Court, in turn, issued a writ of
preliminary injunction restraining California, Judge Cruz and the City Sheriff from enforcing or implementing the restraining
order of December 3, 1981, and from continuing with the hearing on the application for preliminary injunction in said Civil
Case No. C-9702. The scope of the injunction was subsequently enlarged by this Courts Resolution of April 14, 1982 to
include the City Fiscal of Manila, who was thereby restrained from proceeding with the case of unfair competition filed in his
office by California against Dante Go. 11
Dante Gos thesis is that the case filed against him by California in the Manila Court remained pending despite Californias
notice of dismissal. According to him, since he had already filed his answer to the complaint before California sought
dismissal of the action three (3) days afterwards, such dismissal was no longer a matter of right and could no longer be
effected by mere notice in accordance with Section 1, Rule 17 of the Rules of Court, but only on plaintiffs motion, and by
order of the Court; hence, the Caloocan Court acted without jurisdiction over the second action based on the same cause. He
also accused California of forum shopping, of selecting a sympathetic court for a relief which it had failed to obtain from
another. 12
The petitioner is in error. What marks the loss by a plaintiff of the right to cause dismissal of the action by mere notice is not
the filing of the defendants answer with the Court (either personally or by mail) but the service on the plaintiff of said
answer or of a motion for summary judgment. This is the plain and explicit message of the Rules. 13 "The filing of pleadings,
appearances, motions, notices, orders and other papers with the court," according to Section 1, Rule 13 of the Rules of
Court, means the delivery thereof to the clerk of the court either personally or by registered mail. Service, on the other hand,
signifies delivery of the pleading or other paper to the parties affected thereby through their counsel of record, unless
delivery to the party himself is ordered by the court, 14 by any of the modes set forth in the Rules, i.e., by personal service,
15 service by mail, 16 or substituted service. 17
Here, California filed its notice of dismissal of its action in the Manila Court after the filing of Dante Gos answer but before
service thereof. Thus having acted well within the letter and contemplation of the afore-quoted Section 1 of Rule 17 of the
Rules of Court, its notice ipso facto brought about the dismissal of the action then pending in the Manila Court, without need
of any order or other action by the Presiding Judge. The dismissal was effected without regard to whatever reasons or
motives California might have had for bringing it about, and was, as the same Section 1, Rule 17 points out, "without
prejudice," the contrary not being otherwise "stated in the notice" and it being the first time the action was being so
dismissed.
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There was therefore no legal obstacle to the institution of the second action in the Caloocan Court of First Instance based on
the same claim. The filing of the complaint invested it with jurisdiction of the subject matter or nature of the action. In truth,
and contrary to what petitioner Dante Go obviously believes, even if the first action were still pending in the Manila Court,
this circumstance would not affect the jurisdiction of the Caloocan Court over the second suit. The pendency of the first
action would merely give the defendant the right to move to dismiss the second action on the ground of auter action
pendant, or litis pendentia. 18
WHEREFORE, the petition is DISMISSED, with costs against petitioner. The temporary restraining order of December 11,
1981, and the amendatory Resolution of April 14, 1982 are SET ASIDE.
Cruz, Gancayco, Grio-Aquino and Medialdea, JJ., concur.

EN BANC
[G.R. No. L-17828. August 31, 1963.]
LIGAYA MINA, JAIME MINA, SILVINA MINA, FAUSTA MINA, PABLO MINA and MIGUEL MINA, the minors
represented by PILAR LAZO as guardian-ad-litem, Plaintiffs-Appellants, v. ANTONIO PACSON, CRISPINO
MEDINA and CRESENCIA MINA, Defendants-Appellees.
F. A. Pelmoka, for Plaintiffs-Appellants.
Castelo Law Office for Defendants-Appellees.

SYLLABUS

1. DISMISSAL OF ACTIONS; FAILURE TO PROSECUTE; FAILURE TO COMPLY WITH ORDER TO IMPLEAD INDISPENSABLE
PARTY. Appellants contention that the dismissal of the complaint in the previous action was "at the indirect instance of the
plaintiffs through inaction or omission," is not supported by the facts of the case, because the order of the court dismissing
the complaint in the first case contained the warning that should the plaintiffs fail to comply with its order to implead the
surviving widow of the deceased and other necessary parties, the case would be dismissed, and it was because of plaintiffs
refusal to comply with this express mandate that the dismissal was ordered. The dismissal was, therefore, justified under
Rule 30, Section 3 of the Rules of Court. (Garchitorena, Et. Al. v. De los Santos, Et Al., G. R. No. L-17045, June 20, 1962.)
2. ID.; ID.; NEGLIGENCE OF CLIENT AND COUNSEL. The argument of appellants that the dismissal of the previous case
was due to the negligence of plaintiffs lawyer for which the plaintiffs-appellants should not be made to suffer, is not correct;
it was not due to the negligence of their counsel alone but that of themselves also that the required amendment was not
made. Besides, even if the failure was due to the lawyer alone, such failure would not relieve them of the responsibility
resulting from the neglect of their lawyer, for the client is bound by the action of his counsel. (Valerio v. Sec. of Agriculture,
G. R. No. L-18587, April 23, 1963, and other cases cited.)
3. JUDGMENTS; RES JUDICATA; COMPLETE IDENTITY NECESSARY; PARTIES NOT INCLUDED AND MATTERS NOT RAISED IN
PREVIOUS CASE NOT BARRED. The previous order of dismissal bars the present complaint only as to matters already
presented in the previous care, like the action for annulment of the deeds of sale as regards the defendants named therein,
but matters not raised and parties not included in the previous case are not barred, like the action for the recognition of the
filiation of the plaintiffs against the defendant widow of the deceased alleged father.

DECISION

LABRADOR, J.:

This is an appeal from an order of the Court of First Instance of Nueva Ecija, Hon. Felix Makasiar, presiding, in its Civil Case
No. 3296, entitled "Ligaya Mina, Et Al., plaintiffs v. Crispino Medina, Et Al.,Defendants," dismissing the complaint filed in this
case. The appellant also appeals against the order denying the motion for reconsideration of the order of dismissal.
The facts necessary to understand the nature of the issues presented in this appeal, as gleaned from the pleadings, may be
briefly stated as follows: Plaintiffs Ligaya, Jaime, Silvina, Fausta, Pablo and Miguel, all surnamed Mina, are alleged to be the
illegitimate children of the deceased Joaquin Mina with plaintiff Pilar Lazo from 1933-1958, while married to Antonia Pacson.
Joaquin Mina died in August, 1958, leaving no descendants nor ascendants except his widow, the defendant herein Antonia
Pacson. On April 9, 1958, Joaquin Mina, then still living, executed a deed of absolute sale (Annex "B" to Complaint) of three
parcels of land situated in the municipality of Muoz, Nueva Ecija, in favor of the defendants Crispino Medina and Cresencia
Mina for the sum of P12,000. On April 15, 1958 again he executed another deed of sale (Annex "C" to Complaint) of 13
parcels of land covered by 12 transfer certificates of title to the same spouses Crispino Medina and Cresencia Mina. Both
deeds of sale bear the conformity of his wife Antonia Pacson.
In the complaint filed in the Court of First Instance of Nueva Ecija in the case which originated this appeal, it is alleged that
plaintiffs are illegitimate children of the deceased Joaquin Mina begotten by him with Pilar Lazo during the period from 1933
to 1958 while Joaquin Mina was lawfully married to Antonia Pacson; that the plaintiff Pablo Mina is a recognized illegitimate
child of the deceased Joaquin Mina; that Joaquin Mina died intestate leaving no ascendants or descendants, except his widow
Antonio Pacson; that he left various parcels of land enumerated in the complaint but that on April 9, 1950 the defendants
connived and secured from Joaquin Mina, who was ill and did not know what he was doing, the execution of the two deeds of
sale without consideration, fictitiously and fraudulently, transferring his properties to the spouses Crispino Medina and
Cresencia Mina; and that by reason of said acts, defendants have caused moral anguish, anxiety and embarrassment to
plaintiffs, causing them damages amounting to P10,000; that plaintiffs pray that they be declared recognized illegitimate
children of the deceased Joaquin Mina, entitled to share in the properties left by him as such illegitimate children; that the

deeds of sale, Annexes "B" and "C" be declared fictitious, fraudulent and, therefore, null and void; and that defendants be
required to deliver to plaintiffs possession one- fourth of said properties together with P10,000 for moral damages.
Upon the filing of the complaint the defendants presented a motion to dismiss the complaint on the ground of res judicata,
alleging that a similar action had previously been presented as Civil Case No. 3015 in the same court, and by the same
parties against Crispino Medina and Cresencia Mina, in which the same allegations of plaintiffs status and fraudulent
conveyance of the properties to defendants are alleged, together with a prayer for moral damages in the sum of P20,000. It
appears, however, that in the complaint filed in said Civil Case No. 3015, no prayer is made for the declaration of the filiation
of the plaintiffs in relation or with respect to the deceased Joaquin Mina.
The Motion to dismiss also copied an order of the court issued in said Civil Case No. 3015 which reads as follows:

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"Acting on the Motion filed by the defendants on December 22, 1958 for the reconsideration of the order dated December 8,
1958, and considering that the present action is not only for annulment of deeds of sale but also for partition (paragraphs 8
and 11 of the complaint and paragraph 4 of the prayer thereof); that to avoid multiplicity of suits, the complex action to
establish filiation and for partition or for recovery of inheritance may be brought in the same case (Lopez v. Lopez, 68 Phil.
227; Escoval v. Escoval, 48 O.G. 615; Edades v. Edades, L-8964, July 31, 1956); and that Antonia Pacson, the surviving
widow and the other intestate heirs of the deceased Joaquin Mina, or necessary parties are not made a party in this case
(Briz v. Briz, 43 Phil. 763), the plaintiffs are hereby directed to amend their complaint within fifteen (15) days from receipt
hereof by including as party defendant the surviving widow of the deceased Joaquin Mina and other necessary parties.
"Should the plaintiffs fail to comply with this order, this case will be dismissed."

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Lastly, another order of the same court dated February 9, 1959 was quoted, the dispositive part of which reads:

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"The fifteen-day period granted to the plaintiffs having elapsed without said order having been complied with, the Court
hereby dismisses this case, without pronouncement as to costs."
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Opposition to the motion to dismiss was presented on behalf of the plaintiffs by their attorney to which a reply was filed on
behalf of the defendants. A rejoinder was also filed after which Judge Genaro Tan Torres, then presiding over the court,
sustained the motion to dismiss in an order which reads as follows:
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"After a careful consideration of the joint motion to dismiss of defendants Antonia Pacson and the spouses Crispino Medina
and Cresencia Mina, dated November 11, 1959, the opposition thereto dated November 24, 1959, and the reply of the
defendants to the opposition, dated December 7, 1959, the Court is of the opinion that said motion to dismiss is well taken;
hence this case is hereby dismissed without costs.
"Plaintiffs motion for time to submit rejoinder, dated December 10, 1959, is hereby denied because it will only unnecessarily
delay the termination of this case.
"So ordered.
"Cabanatuan City, December 18, 1959."

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A motion for the reconsideration of the order of the court dismissing the action having been denied, the plaintiffs in the
present case prosecuted this appeal directly to this Court.
As shown above the question to be resolved is whether or not the order dismissing the previous Civil Case No. 3015 bars the
present civil action No. 3296 of the Court of First Instance of Nueva Ecija.
In the first error assigned by the appellants in their brief it is argued that the dismissal of the complaint in the previous
action was in fact "at the indirect instance of the plaintiffs through inaction or omission." We do not find this claim justified by
the facts of the case. The order of the court dismissing the complaint in the first case contains the following warning: "Should
the plaintiffs fail to comply with this order, this case will be dismissed." In the face of this express warning given in the
courts order the dismissal can not be said to have been "at the indirect instance of the plaintiffs;" it was in fact caused by
plaintiffs refusal to comply with the express mandate contained in the order of dismissal. The dismissal, therefore, was
justified under Rule 30, Section 3 of the Rules of Court, which reads:
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"SEC. 3. Failure to prosecute. When plaintiff fails to appear at the time of the trial, or to prosecute his action for an
unreasonable length of time, or to comply with these rules or any order of the court, the action may be dismissed upon
motion of the defendant or upon the courts own motion. This dismissal shall have the effect of an adjudication upon the
merits, unless otherwise provided by court."
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The above provision of the Rules was invoked in the case of Garchitorena, Et. Al. v. De los Santos, Et Al., G.R. No. L-17045,
June 30, 1962, wherein this Court held:
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"To order an amendment to a complaint within a certain period in order to implead as party plaintiff or defendant one who is
not a party to the case lies within the discretion of the Court. And where it appears that the person to be impleaded is an
indispensable party, the party to whom such order is directed has no other choice but to comply with it. His refusal or failure

to comply with the order is a ground for the dismissal of his complaint pursuant to Section 3, Rule 30, of the Rules of
Court . . ."
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Under the second assignment of error it is argued that the dismissal of the previous case was brought about by the
negligence, gross or criminal, of plaintiffs lawyer for which the plaintiffs- appellants should not be made to suffer. The
argument is not true to fact. The failure to amend was a result not of the neglect of the lawyer alone but also of the
plaintiffs-appellants themselves. Had the plaintiffs taken even an ordinary interest in the result of the action that they had
filed, they would have been able to secure information from their lawyer that the case had been dismissed for failure to
amend. Upon receipt of such information, plaintiffs could have applied to the court for relief under Rule 38 of the Rules of
Court and could have had the complaint amended as directed in the order of dismissal. It is not alone negligence of their
counsel, therefore, but of themselves also that the required amendment was not made. But assuming for the sake of
argument that the failure was due to the lawyer alone, such failure would not relieve them of the responsibility resulting from
the neglect of their lawyer, for the client is bound by the action of his counsel. (Isaac v. Mendoza, G.R. No. L-2830, June 21,
1951; Vivero v. Santos, Et Al., G.R. No. L-8105, Feb. 28, 1956; Fernandez v. Tan Tiong Tick, G.R. No. L-15877, April 28,
1961; Gordulan v. Gordulan, G.R. No. L-17722, Oct. 9, 1962; Valerio v. Sec. of Agriculture, G.R. No. L-18587, April 23,
1963.)
In the third assignment of error it is claimed that there is no complete identity between the parties in the first case and those
in the case at bar. The statement is true because in the previous case Antonia Pacson was not included as party-defendant.
As a matter of fact the order decided that Pacson was to be included as party- defendant. As the latter, therefore, the
previous order of dismissal does not bar the present complaint, not only because she was not made a party but also because
the issue of filiation of the parties- plaintiffs was not raised in the previous case, although such issue was necessary for the
plaintiffs to be able to maintain their right of action. In view of this fact the present action should be considered barred in
respect to the action for the annulment of the deeds of sale and as regards the defendants spouses Crispino Medina and
Cresencia Mina; but as to the case for the declaration of the plaintiffs as illegitimate children and heirs of the deceased
Joaquin Mina this latter case is not barred by the previous action as above explained and may still be prosecuted.
WHEREFORE, the order of dismissal is hereby modified in the sense that the action for the recognition of the filiation of the
plaintiffs should be allowed to continue against the defendant Antonia Pacson; but the dismissal of the action for the
annulment of the deeds of sale in affirmed. Without costs.
Bengzon, C.J., Padilla, Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala and Makalintal, JJ.,
concur.

EN BANC
[G.R. No. L-18707. February 28, 1967.]
AGUSTIN O. CASEAS, Plaintiff-Appellant, v. CONCEPCION SANCHEZ VDA. DE ROSALES (substituted by her
heirs), ROMEO S. ROSALES, ET AL., Defendants-Appellees.
Juan L. Pastrana, for Plaintiff-Appellant.
Francisco Ro. Cupin and Wenceslao B. Rosales for Defendants-Appellees.

SYLLABUS

1. CIVIL ACTIONS; DEATH OF A PARTY; EFFECT OF ORDER TO AMEND PRIOR TO SUBSTITUTION OF PARTIES. Instead of
ordering the substitution of the deceaseds legal representatives in accordance with Rule 3, Section 37, of the Rules of Court,
the trial court directed the surviving plaintiff to amend the complaint and when the latter failed to comply therewith, the said
court dismissed the complaint for such non- compliance. HELD: Inasmuch as there was no obligation on the part of the
plaintiff-appellant herein to amend his complaint in Civil Case No. 261, any such imposition being void, his failure to comply
with such an order did not justify the dismissal of his complaint. Grounded as it was upon a void order, the dismissal was
itself void.
2. ID.; CAUSE OF ACTION DEFINED. A cause of action is an act or omission of one party in violation of the legal right or
rights of the other (Ma-ao Sugar Central v. Barrios, 79, Phil., 666).
3. PRESCRIPTION; TRUST RELATIONSHIP A PROPER DEFENSE. Insofar as the issue of prescription is concerned, this Court
is of the view that it should defer resolution on it until after Civil Case No. 780 shall have been tried on the merits,
considering that one of the defenses set up by the appellant against the said issue is the existence of a trust relationship over
the property in dispute.

DECISION

REGALA, J.:

This is an appeal from the order of dismissal entered by the Court of First Instance of Agusan in Civil Case No. 780, entitled
Agustin Caseas v. Concepcion Sanchez Vda. de Rosales, Et. Al.
On August 21, 1952, Rodolfo Araas and Agustin O. Caseas filed with the Court of First Instance of Agusan, under Civil Case
No. 261, a complaint for specific performance and enforcement of their alleged right under a certain deed of sale, and
damages against the spouses Jose A. Rosales and Concepcion Sanchez. They alleged that sometime in 1939, Agustin O.
Caseas acquired from Rodolfo Araas, under a deed of assignment, the latters rights and interest over a parcel of land
covering an area of more or less than 2,273 square meters and designated as Lot No. 445-A of the Butuan Cadastre No. 84
(Psd 4943); that Rodolfo Araas, in turn, acquired the said property from the spouses Jose A. Rosales and Concepcion
Sanchez under a deed of sale executed on March 18, 1939 under the terms of which, however, the actual transfer of the
aforesaid land unto the vendee would be made only on or before February 18, 1941; and that despite the above documented
transactions, and despite the arrival of the stipulated period for the execution of the final deed of transfer, the vendors
spouses refused to fulfill their obligation to effect such transfer of the said lot to the vendee Rodolfo Araas, or his assignee,
the herein appellant, Agustin O. Caseas. Thus, the principal relief prayed for in the above complaint was for an order
directing the defendants- spouses to "execute a deed of absolute sale of the property described in the complaint in favor of
the assignee, plaintiff Agustin O. Caseas."
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After the defendants spouses had filed their answer to the above complaint, but before trial, the counsel for the plaintiffs
gave notice to the trial court that plaintiff Rodolfo Araas and defendant Jose A. Rosales had both died. In view of the said
manifestation, the lower court, in an order dated April 27, 1956, directed the surviving plaintiff, Agustin O. Caseas, to
amend the complaint to effect the necessary substitution of parties thereon. The said surviving plaintiff, however, failed
altogether to comply with the aforementioned order of April 27, 1956 to the end that on July 18, 1957, the lower court
issued the following order:
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"Until this date no amended complaint was filed by the attorney for the plaintiffs. This shows abandonment and lack of
interest on the part of the plaintiffs. This being an old case, for failure on the part of the counsel for the plaintiffs to comply
with the order of this Court the same is hereby dismissed without pronouncement as to costs."
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As no appeal was taken from the above order of dismissal, the same, in due time, became final.

On April 18, 1960, Agustin O. Caseas, the same plaintiff Caseas in Civil Case No. 261, filed with the same Court of First
Instance of Agusan, under Civil Case No. 780, another complaint against the widow and heirs of the late Jose A. Rosales "to
quiet, and for reconveyance of, title to real property, with damages." This suit referred itself to the very same property
litigated under Civil Case No. 261 and asserted exactly the same allegations as those made in the former complaint, to wit:
"that the plaintiff (Agustin O. Caseas) has acquired the above-described property by purchase from its previous owner,
Rodolfo Araas, now deceased, . . .; and said Rodolfo Araas had in turn acquired the same property by virtue of another
deed of sale executed by Jose A. Rosales, now also deceased," (Par. 3, Complaint) "that under the terms and stipulations of
paragraph 2 of the deed of sale (between Rosales and Araas), . . . Jose A. Rosales was to hold title to the land in question in
favor of Rodolfo Araas or the latters assigns and successors in interest for a period of five (5) years from February 19,
1936, at the expiration of which said Jose A. Rosales was to execute a document conveying absolutely the title to the land in
question in favor of the aforementioned Rodolfo Araas or his assigns and successors in interest" (Par. 9, Complaint);
"despite which obligation the defendants refused, even after the expiration of the stipulated period to "convey title to the
land in question and to execute the corresponding document covering the same." (Par. 12, Complaint) In the premises, the
plaintiff prayed for judgment "quieting the title of the plaintiff to the land in question and ordering the defendants to execute
a deed of conveyance of the same in favor of the said plaintiff" plus costs and damages.
To the above complaint, the defendants filed a motion to dismiss on several grounds, namely; res judicata, prescription, lack
of cause of action, failure to include indispensable parties, and that the contract subject of the complaint was void ab initio.
After the plaintiff had filed his opposition to the above motion, the lower court issued the order under appeal dismissing the
complaint. Of the above grounds, though, the lower court relied alone on the defendants plea of res judicata, lack of cause
of action and prescription. The material portion of this order of dismissal reads:
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"The Court, however, believes that this action is barred by prior judgment. The order of dismissal in Civil Case No. 261 was
already final and has the effect of an adjudication upon the merits. The parties in Civil Case No. 261 and in this case are
substantially the same; the subject matter is the same and there is identity of cause of action. All the elements of res
judicata are therefore present.
"Moreover, the complaint states no cause of action if its purpose is to quiet title, because the plaintiff has as yet no title to
the land in question. Precisely, this action is brought in order to acquire or secure title by compelling the defendants to
execute a deed of sale in favor of the plaintiff. However, this action for specific performance cannot also prosper because
being based upon an agreement in writing it is already barred by prescription as the period of ten years has long expired
when the present complaint was filed."
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The appeal at bar assails the above determination that Civil Case No. 780 is barred by a prior judgment and by prescription
and that the same states no cause of action. It is on these issues, therefore, that this Court shall dispose of this appeal.
We find for the Appellant.
When certain of the parties to Civil Case No. 261 died and due notice thereof was given to the trial court, it devolved on the
said court to order, not the amendment of the complaint, but the appearance of the legal representatives of the deceased in
accordance with the procedure and manner outlined in Rule 3, Section 17 of the Rules of Court, which provides:
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"Sec. 17. Death of party. After a party dies and the claim is not thereby extinguished, the court shall order, upon proper
notice, the legal representative of the deceased to appear and to be substituted for the deceased, within a period of thirty
(30) days, or within such time as may be granted. If the legal representative fails to appear within said time, the court may
order the opposing party to procure the appointment of a legal representative of the deceased within a time to be specified
by the court, and the representative shall immediately appear for and on behalf of the interest of the deceased. The court
charges involved in procuring such appointment, if defrayed by the opposing party, may be recovered as costs. The heirs of
the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or
administrator and the court may appoint guardian ad litem for the minor heirs."
cralaw virtua1aw library

In the case of Barrameda v. Barbara, 90 Phil, 718, this court held that an order to amend the complaint, before the proper
substitution of parties as directed by the aforequoted rule has been effected, is void and imposes upon the plaintiff no duty to
comply therewith to the end that an order dismissing the said complaint, for such non-compliance, would similarly be void. In
a subsequent case, Ferreira et al v. Gonzalez, Et Al., G.R. No. L-11567, July 17, 1958, this court affirmed a similar conclusion
on the determination that the continuance of a proceedings during the pendency of which a party thereto dies, without such
party having been validly substituted in accordance with the rules, amounts to a "lack of jurisdiction."
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The facts of this case fit four square into the Barrameda case abovecited, save for the minor variance that in the former two
of the litigants died while only one predeceased the case in Barrameda. Here, as in Barrameda, during the pendency of civil
case, notice was given to the trial court of the deaths of one of the plaintiffs and one of the defendants in it. Instead of
ordering the substitution of the deceaseds legal representatives in accordance with Rule 3 section 17, of the Rules of Court,
the trial Court directed the surviving plaintiff to amend the complaint and when the latter failed to comply therewith, the said
court dismissed the complaint for such non- compliance. We must hold, therefore, as We did in Barrameda that inasmuch as
there was no obligation on the part of the plaintiff- appellant herein to amend his complaint in Civil Case No. 261, any such
imposition being void, his failure to comply with such an order did not justify the dismissal of his complaint. Grounded as it
was upon a void order, the dismissal was itself void.
Consequently, as the dismissal of Civil Case No. 261 was void, it clearly may not be asserted to bar the subsequent

prosecution of the same or identical claim.


Finally, We find ourselves unable to share the appellees view that the appellants complaint under Civil Case No. 780 failed to
state a sufficient cause of action. A cause of action is an act or omission of one party in violation of the legal right or rights of
the other (Ma-ao Sugar Central v. Barrios, 79 Phil. 666) and both these elements were clearly alleged in the aforesaid
complaint.
Insofar as the issue of prescription is concerned, this Court is of the view that it should defer resolution on it until after Civil
Case No. 780 shall have been tried on the merits, considering that one of the defenses set up by the appellant against the
said issue is the existence of a trust relationship over the property in dispute.
In view of all the foregoing, the order dated January 20, 1961 dismissing Civil Case No. 780 is hereby set aside and the said
case is ordered remanded to the court of origin for trial on the merits. Costs against the appellees.
Concepcion, C.J., Reyes, J. B. L., Dizon, Makalintal, Bengzon, J. P., Zaldivar, Sanchez, and Ruiz Castro, JJ., concur.

FIRST DIVISION

[G.R. No. L-54287. September 2, 1988.]


REPUBLIC PLANTERS BANK, Petitioner, v. HON. CONRADO M. MOLINA, as Presiding Judge, Court of First
Instance of Manila, Branch XX, SARMIENTO EXPORT CORPORATION, SARMIENTO SECURITIES CORPORATION
and FELICIANO SARMIENTO, JR., Respondents.
Paco, Gutierrez, Dorado, Asia & Associates for Petitioner.
Benjamin M. Reyes for Respondents.

SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; ACTION; DISMISSAL DESPITE LACK OF JURISDICTION OVER THE PERSON OF THE
DEFENDANTS NOT AN ADJUDICATION ON THE MERITS. A judgment, to be considered res judicata, must be binding, and
must be rendered by a court of competent jurisdiction. Otherwise, the judgment is a nullity. The order of dismissal in Civil
Case No. 116820 does not have the effect of an adjudication on the merits of the case because the court that rendered the
same did not have the requisite jurisdiction over the persons of the defendants therein. This being so, it cannot be the basis
of res judicata and it cannot be a bar to a lawful claim. If at all, such a dismissal may be considered as one without prejudice.
2. ID.; ID.; ID.; ID.; ORDER OF DISMISSAL AND DENIAL OF MOTION FOR RECONSIDERATION, ISSUED WITH GRAVE ABUSE
OF DISCRETION. Trial courts have the duty to dispose of controversies after trial on the merits whenever possible. In this
case, there are no indications that petitioner intentionally failed to prosecute the case. The delay could not be attributed to
its fault. Petitioner pursued the case with diligence but jurisdiction could not be acquired over defendants-private
respondents. The sheriff had not yet submitted his return of the alias summons when the action was precipitately dismissed
by the trial court. These are proven circumstances that negate the action of respondent judge that the dismissal of Civil Case
No. 116028 has the effect of an adjudication upon the merits and constitutes a bar to the prosecution of Civil Case No.
129829. The court finds that the two questioned orders of the trial court are irregular, improper, and were issued with grave
abuse of discretion amounting to excess of jurisdiction.
3. ID.; CERTIORARI; ADEQUATE REMEDY WHERE ISSUE INVOLVED ONE OF JURISDICTION. petitioner correctly states that
its appeal to the Court of Appeals in CA-G.R. No. 67288 pertaining to the questioned orders of the trial court is not an
adequate remedy, because petitioner was not able to present evidence in the trial court. The sole issue involved in this case
is one of jurisdiction, which is appropriate for resolution by the instant petition.

DECISION

GANCAYCO, J.:

The principal issue raised in this case is whether the trial court committed a grave abuse of discretion when it ordered Civil
Case No. 129829 dismissed on the ground of res judicata it appearing that Civil Case No. 116028 was dismissed on May 21,
1979, for failure of petitioner to prosecute within a reasonable length of time, although in the said case, the trial court never
acquired jurisdiction over the persons of private respondents.
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It is not disputed that both complaints in Civil Case No. 116028 (Branch XXXVI, Manila, Judge Alfredo C. Florendo) and in
Civil Case No. 129829 (Branch XX, Manila, Judge Conrado M. Molina) were filed by petitioner Republic Planters Bank against
private respondent, for the collection of a sum of money based on a promissory note dated January 26, 1970, in the amount
of P100,000.00.
On May 21, 1979, Judge Alfredo C. Florendo dismissed Civil Case No. 116028 for failure of the petitioner "to prosecute its
case within a reasonable length of time." 1 A motion for reconsideration of that order was denied on January 15, 1979. 2
When Civil Case No. 129829 was filed by petitioner, a motion to dismiss was submitted by private respondents on the ground
that the cause of action is barred by a prior judgment (res judicata) in Civil Case No. 116028. Private respondents opined
that said order was an adjudication upon the merits. Petitioner opposed the motion to dismiss, claiming that res judicata
does not apply because the summons and complaint in Civil Case No. 116028 were never served upon private respondents
and, as such, the trial court never acquired jurisdiction over private respondents and, consequently, over the case. Petitioner
maintains that the order of dismissal in Civil Case No. 116028 never became final as against private respondents.
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The trial court (Branch XX), in its order dated May 8, 1980, dismissed the complaint in Civil Case No. 129829 on the ground
that the orders dated May 21, 1979 and June 15, 1979 issued by Judge Alfredo C. Florendo, dismissing Civil Case No.
116028, had become final. The trial court ruled that the dismissal of Civil Case No. 116028 had the effect of an adjudication
upon the merits, that the dismissal was with prejudice since the order was unconditional, and that the lack of jurisdiction

over defendants (private respondents) in Civil Case No. 116028 was of no moment. 3
In a motion for reconsideration of the order of May 8, 1980, petitioner reiterated its allegation that in Civil Case No. 116028,
the court did not acquire jurisdiction over private respondents and that at the time the court ordered its dismissal, a motion
for an alias writ of summons was pending resolution inasmuch as the sheriff had not acted on the same. 4 The motion for
reconsideration was denied by the trial court on June 26, 1980 in Civil Case No. 129829. 5
Petitioner appealed to the Court of Appeals both questioned orders of respondent court in Civil Case No. 129829. 6 But then,
petitioner sought a more speedy remedy in questioning said orders by filing this petition for certiorari before this Court.
Under the foregoing undisputed facts, the Court finds this petition to be impressed with merit.
The questioned orders of the trial court in Civil Case No. 129829 supporting private respondents motion to dismiss on the
ground of res judicata are without cogent basis. We sustain petitioners claim that respondent trial judge acted without or in
excess of jurisdiction when he issued said orders because he thereby traversed the constitutional precept that "no person
shall be deprived of property without due process of law" and that jurisdiction is vitally essential for any order or adjudication
to be binding. Justice cannot be sacrificed for technicality. Originally, the action for collection of the loan, evidenced by a
promissory note, was only for P100,000.00 but petitioner claims that as of March 5, 1981, the obligation was already
P429,219.74. It is a cardinal rule that no one must be allowed to enrich himself at the expense of another without just
cause.
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In the very order of dismissal of Civil Case No. 116028, the trial court admitted that it did not acquire jurisdiction over the
persons of private respondents and yet, it held that it was of no moment as to the dismissal of the case. We disagree. For the
court to have authority to dispose of the case on the merits, it must acquire jurisdiction over the subject matter and the
parties. If it did not acquire jurisdiction over the private respondents as parties to Civil Case No. 116028, it cannot render
any binding decision, favorable or adverse to them, or dismiss the case with prejudice which, in effect, is an adjudication on
the merits. 7 The controverted orders in Civil Case No. 116028 disregarded the fundamental principles of remedial law and
the meaning and the effect of jurisdiction. A judgment, to be considered res judicata, must be binding, and must be rendered
by a court of competent jurisdiction. Otherwise, the judgment is a nullity.
The order of dismissal in Civil Case No. 116028 does not have the effect of an adjudication on the merits of the case because
the court that rendered the same did not have the requisite jurisdiction over the persons of the defendants therein. This
being so, it cannot be the basis of res judicata and it cannot be a bar to a lawful claim. If at all, such a dismissal may be
considered as one without prejudice. 8
Trial courts have the duty to dispose of controversies after trial on the merits whenever possible. In this case, there are no
indications that petitioner intentionally failed to prosecute the case. The delay could not be attributed to its fault. Petitioner
pursued the case with diligence, but jurisdiction could not be acquired over defendants-private respondents. The sheriff had
not yet submitted his return of the alias summons when the action was precipitately dismissed by the trial court. These are
proven circumstances that negate the action of respondent judge that the dismissal of Civil Case No. 116028 has the effect
of an adjudication upon the merits and constitutes a bar to the prosecution of Civil Case No. 129829. The court finds that the
two questioned orders of the trial court are irregular, improper, and, were issued with grave abuse of discretion amounting to
excess of jurisdiction.
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Petitioner correctly states that its appeal to the Court of Appeals in CA-G.R. No. 67288 pertaining to the questioned orders of
the trial court is not an adequate remedy, because petitioner was not able to present evidence in the trial court. The sole
issue involved in this case is one of jurisdiction, which is appropriate for resolution by the instant petition.
WHEREFORE, and by reason of the foregoing, the questioned orders dated May 8, 1980 and June 26, 1980 issued in Civil
Case No. 129829 are hereby REVERSED and SET ASIDE. The records of the case are ordered returned to the trial court for
trial and disposition on the merits. No costs.
This decision is immediately executory.
SO ORDERED.

EN BANC

[G.R. No. L-15814. February 28, 1962.]


IN THE MATTER OF THE ESTATE CANDELARIA BENGUAN, deceased. SUSANA ABAY DE ARROYO, PetitionerAppellant, v. FRANCISCO ABAY, ET AL., opponents-appellees.

SYLLABUS

1. DISMISSAL OF PETITION FOR PROBATE OF WILL FOR FAILURE TO APPEAR; NOT ADJUDICATION ON MERITS. The
dismissal of a petition for probate of a will and last testament in a previous special proceedings due to the failure of the then
petitioner and his counsel to appear on the date and time set for the hearing thereof is not an adjudication on the merits.
2. ID.; ID.; ID.; PROVISIONS OF RULES ON DISMISSAL NOT APPLICABLE; REASONS. The provisions of Sections 3 and 4,
Rule 30, to Section 2, Rule 73 of the Rules of Court cannot be made to apply to proceedings for the probate of wills, because
parties interested in the probate of a will for transmission of property rights to them should not be prejudiced by the act or
fault of another and because it is the policy of the State to have such last wills and testaments submitted to Court for their
probate or legalization as shown or indicated by or in the punishment provided for persons who are in possession of the last
wills and testaments of deceased persons and fail or neglect to deliver or present them to Court for probate or to deliver
them to the executor named in the will within twenty days after they know of the death of the testators or within the same
period of time after they know that they were named executors of the will (Sections 2 to 5, Rule 76).

DECISION

PADILLA, J.:

On 5 January 1956 Susana Abay de Arroyo filed in the Court of First Instance of Negros Occidental a petition for the probate
of the will of her deceased first-degree cousin Candelaria Benguan (special proceedings No. 3883). On 28 May, the Court
ordered that the petition be published once a week for three consecutive weeks in Civismo, a newspaper of general
circulation in Negros Occidental, setting the date of hearing thereof for the 23rd day of June 1956. On the date and time set
for the hearing of the petition attorney Rolando Medalla, representing some of the heirs hereinafter referred to as opponents,
moved for the postponement of the hearing to give him time and opportunity to file a written objection to the petition.
Whereupon, the hearing was postponed to 30 June 1956. On 28 June, the opponents filed a motion to dismiss, on the ground
that a petition for the probate of the same last will and testament had been dismissed by the same Court in a previous
special proceedings No. 3628 and constitutes a bar to the present proceedings (No. 3883). On 7 July, the petitioner answered
the motion to dismiss. By an order entered on 14 July, the Court dismissed the petition. After considering the motion for
reconsideration filed by the petitioner on 31 July 1956 and the answer thereto filed by the opponents on 3 August 1956, the
Court denied the motion for reconsideration. The petitioner appealed to the Court of Appeals which certified the appeal to this
Court, for only questions of law are raised.
The previous proceedings invoked by the opponents to bar the present is special proceedings No. 3628 filed in the Court of
First Instance of Negros Occidental on 27 September 1955 by one Felix Abay, a brother of Susana Abay de Arroyo, the herein
petitioner and appellant. The last will and testament involved therein is the same invoked herein. However, upon failure of
Felix Abay and his counsel Pio B. Japitana to appear at the hearing on 5 November 1955, despite due notice, the Court there
dismissed the petition, without stating that it was a dismissal with prejudice. Two motions for reconsideration were filed, the
first on 15 November 1955 and the second on 28 November 1955, but both were denied, the last for lack of merit.
The issue now hinges on whether or not the petition for the probate of a will filed in this special proceedings is barred by a
previous special proceedings No. 3628, the petition of which was dismissed for failure of the petitioner and his counsel to
appear on the date set for the hearing thereof.
The appellant contends that the dismissal of the petition in the previous case (spec. proc. No. 3628) does not bar the present
(spec. proc. No. 3883), both for the probate of the same last will and testament of the late Candelaria Benguan, because the
dismissal for failure of the petitioner and his counsel to appear at the hearing set by the Court was not an adjudication on the
merits of the case and is not res judicata, because the parties in the previous and present proceedings are not the same.
The appellants contention that the dismissal of the petition for probate in the previous special proceedings due to failure of
the then petitioner and his counsel to appear on the date and time set for the hearing thereof is not an adjudication on the
merits must be upheld. In arriving at this conclusion the Court has not overlooked the provisions of sections 3 and 4, Rule
30, and section 2, Rule 73, of the Rules of Court. The probate of a will may be the concern of one person or several persons
as usually is the case. The fault of one such person may be imputed to him alone who must suffer the consequences of his
act. Such fault cannot be imputed to other persons. Hence the failure of Felix Abay and his counsel to appear on the date and
time set for the hearing of the petition for the probate of a will claimed to have been executed by the late Candelaria
Benguan during her lifetime which brought about the dismissal of the petition filed in that special proceedings (No. 3628)

cannot prejudice the right of Susana Abay de Arroyo, the petitioner in a subsequent petition filed for the probate of the same
will and last testament. So the provisions of the Rules cited and invoked by the opponents-appellees cannot be made to
apply to proceedings for the probate of wills, because as already stated other parties interested in the probate of a will for
transmission of property rights to them should not be prejudiced by the act or fault of another and because it is the policy of
the State to have such last wills and testaments submitted to Court for their probate or legalization, as shown or indicated or
evidenced by or in the punishment provided for persons who are in possession of last wills and testaments of deceased
persons and fail or neglect to deliver or present them to Court for probate or to deliver them to the executor named in the
will within twenty days after they know of the death of the testators or within the same period of time after they know that
they were named executors of the will (sections 2 to 5, Rule 76). The underlying reason for the rule that a dismissal of an
action or complaint in a civil case may be a bar to a subsequent action unless the dismissal is without prejudice is lack of
interest or inaction of the one who brought the action in court by his complaint and for such lack of interest or inaction he
should be made to suffer.
The order of dismissal appealed from is set aside and the petition for probate of a will filed in special proceedings No. 3883
remanded to the Court of First Instance of Negros Occidental for further proceedings as provided for in the Rules of Court,
without special pronouncement as to costs.
Bengzon, C.J., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon and De Leon, JJ., concur.

THIRD DIVISION

[G.R. No. L-40307. April 15, 1988.]


FILOIL MARKETING CORPORATION (now Petrophil Corporation), Plaintiff-Appellee, v. DY PAC & CO.,
INC., Defendant-Appellant.
Meneses, Magno, Leynes, Gamboa & Cabusora Law Offices for Plaintiff-Appellee.
Semaco P. Sacmar, for Defendant-Appellant.

SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; PRE-TRIAL; LITIGANTS MAY NOT BE COMPELLED TO STIPULATE FACTS. There is no
law which compulsorily requires litigants to stipulate at pre-trial on the facts and issues that may possibly crop up in a
particular case, upon pain of dismissal of such case. The process of securing admissions whether of facts or evidence is
essentially voluntary, since stipulations of facts, like contracts, bind the parties thereto who are not allowed to controvert
statements made therein.
2. ID.; ID.; DISMISSAL OF APPEAL FOR FAILURE TO SUBMIT A STIPULATION OF FACT, REVERSIBLE ERROR. The court a
quo committed serious or reversible error in dismissing appellants appeal from the then City Court of Manila solely upon the
ground that the parties had failed to comply with the courts Order to submit a stipulation of facts. The trial courts desire
speedily to dispose of the case which had been pending for almost four (4) years in that sala is understandable and
praiseworthy; but it cannot justify the Order of dismissal. Defendants appeal from the decision of the City Court of Manila
was entitled to a regular trial; under Section 45 of Republic Act No. 296 (the Judiciary Act of 1948) as amended by Republic
Act No. 6031, the defendant-appellant was entitled to have its affirmative defenses and counterclaim passed upon by the
Court of First Instance in a trial de novo. It is perhaps noteworthy that defendant-appellant had never been afforded the
benefit of a trial, even by the City Court which had rendered its judgment on the evidence of the plaintiff submitted ex parte.
We hold that the trial courts Order of 24 May 1973 in effect deried defendant-appellant its right to due process and must
hence be set aside.
3. ID.; B.P. 129; ALL PENDING CASES INVOLVING A CLAIM NOT EXCEEDING P20,000.00 REMAIN WITH THE COURT OF
FIRST INSTANCE. Under Section 33 (1) of B.P. Blg. 129, a suit for the collection of a sum of money not exceeding
P20,000.00 would fall within the exclusive original jurisdiction of the Metropolitan Trial Courts, Municipal Trial Courts and the
Municipal Circuit Trial Courts. This case, however. was pending before the Court of First Instance of Manila on 14 February
1983, while this appeal remained before this Court where it has been since 17 March 1975. Applying the Resolution of this
Court en banc dated 14 February 1983 this case should remain with and be remanded to the Court of First Instance of
Manila.

DECISION

FELICIANO, J.:

This case was certified to us by the Court of Appeals in its Resolution dated 20 February 1975, as one raising only questions
of law.
On 19 March 1969, an action for collection of a sum of money with interest was commenced by plaintiff Filoil Marketing
Corporation (now Petrophil Corporation) in the City Court of Manila against defendant Dy Pac & Co., Inc., alleging that from
1961 to 1965, plaintiff had sold and delivered on credit petroleum products to defendant, who became indebted to it in the
total amount of P2,123.69; that notwithstanding repeated demands, defendant refused to pay.
In its Answer with Counterclaim, defendant Dy Pac & Co., Inc., admitted the credit transactions alleged by plaintiff but denied
indebtedness, alleging lack of cause of action, payment and prescription.
At the hearing set on 17 June 1969, neither defendant nor his counsel appeared; plaintiff was allowed to present its evidence
ex parte, and accordingly, the City Court of Manila, Branch 3, rendered a decision on the same date ordering defendant to
pay plaintiff the sum of P2,123.69 plus 6% interest thereon, attorneys fees and costs.
Upon denial of its motion for reconsideration, defendant appealed to the Court of First Instance of Manila, which appeal was
subsequently assigned to Branch 19 thereof.
By 30 January 1973, the lower court, in accordance with Republic Act No. 6031, 1 immediately set the case for pre-trial, with
a warning that no further postponements would be granted.
On 23 March 1973, the lower court issued a pre-trial order, the full text of which follows:

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"When this case was called for pre-trial, the parties were duly represented by their respective counsel. Filoil Marketing was
represented also by Mr. Rodolfo Bondoc, Accountant. Counsel for defendant manifested that he is duly authorized to enter
into this pre-trial and promises to submit said authority within three (3) days from today, as required by the Rules,
otherwise, the Court will not recognize his authority for pre-trial. The plaintiff duly adopted his exhibits already marked in the
lower court and also adopted the markings in said court. In addition, he asked that the decision in the City Court, found on
page 17 of the records, be marked as Exhibits F and that the letter addressed to the defendant dated February 7, 1968 be
marked as Exhibit G to G-7. These were all admitted by the defendant.
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"Defendant presented as its exhibits, Exhibit 1, a cash voucher dated February 16, 1965, which was admitted by the
plaintiff; Exhibits 2 and 3 letters of defendant Filoil Marketing Corporation, both of which were also admitted by the plaintiff
.
"The Court finds that this is just a matter of adjustment of accounts by the plaintiff and the defendant, who are hereby
ordered to prepare a stipulation of facts based on their exhibits already marked and submit the same to the Court within
thirty (30) days from today. It is also ordered that in the stipulation of facts, the parties define the issues to be resolved by
the Court and if they are submitting the case for decision on the basis of their exhibits. The parties are warned that if they
cannot submit the stipulation of facts, the Court will dismiss the appeal, the case having been filed on August 14, 1969 and
up to the present no trial has been conducted." 2 (Italics supplied)
In a subsequent Order dated 24 May 1973, the trial court dismissed defendants appeal for failure of the parties to submit
the required stipulation of facts and ordered the immediate return of the records to the City Court for execution.
A subsequent motion to reconsider the order of dismissal having been denied, Defendant-Appellanttook this appeal to the
Court of Appeals, which, as already noted, certified the case to us as involving only questions of law. This case, without an
appellees brief, was submitted for decision on 17 March 1975.
Appellant claimed, in its brief, that it was deprived of its day in court and urged that the trial court erred (a) in dismissing its
appeal on the ground that the parties failed to submit a stipulation of facts and (b) in finding that defendants counsel had
not filed his authority to appear during pre-trial. 3
We find merit in this appeal.
There is no law which compulsorily requires litigants to stipulate at pre-trial on the facts and issues that may possibly crop up
in a particular case, upon pain of dismissal of such case. The process of securing admissions whether of facts or evidence is
essentially voluntary, since stipulations of facts, like contracts, bind the parties thereto who are not allowed to controvert
statements made therein. The trial court may, of course, advise and indeed urge the parties during the pre-trial conference
to try to arrive at a stipulation of facts principally for their own convenience and to simplify subsequent proceedings by
identifying those facts which are not really controverted and do not need to be proved. Courts, however, cannot compel the
parties to enter into an agreement upon the facts. Where the parties are unable to arrive at a stipulation of agreed facts and
do not reach an amicable settlement of their controversy, the court must close the pre-trial proceedings and go forward with
the trial of the case. The court a quo, therefore, committed serious or reversible error in dismissing appellants appeal from
the then City Court of Manila solely upon the ground that the parties had failed to comply with the courts Order to submit a
stipulation of facts. The trial courts desire speedily to dispose of the case which had been pending for almost four (4) years
in that sala is understandable and praiseworthy; but it cannot justify the Order of dismissal. Defendants appeal from the
decision of the City Court of Manila was entitled to a regular trial; under Section 45 of Republic Act No. 296 (the Judiciary Act
of 1948) as amended by Republic Act No. 6031, the defendant-appellant was entitled to have its affirmative defenses and
counterclaim passed upon by the Court of First Instance in a trial de novo. It is perhaps noteworthy that defendant-appellant
had never been afforded the benefit of a trial, even by the City Court which had rendered its judgment on the evidence of the
plaintiff submitted ex parte. We hold that the trial courts Order of 24 May 1973 in effect denied defendant-appellant its right
to due process and must hence be set aside.
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Under Section 33 (1) of B.P. Blg. 129, a suit for the collection of a sum of money not exceeding P20,000.00 would fall within
the exclusive original jurisdiction of the Metropolitan Trial Courts, Municipal Trial Courts and the Municipal Circuit Trial Courts.
This case, however. was pending before the Court of First Instance of Manila on 14 February 1983, while this appeal
remained before this Court where it has been since 17 Mercy 1975.
Applying the Resolution of this Court en banc dated 14 February 1983, which established guidelines for the distribution of
cases pending upon implementation of B.P. Blg. 129 and which provided in pertinent part as follows:
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"I. PENDING CASES AS OF FEBRUARY 14, 1983:

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General Rule. All pending cases as of February 14, 1983 shall be distributed, by raffle, among all branches in a multiple
sala seat with incumbent judges except as herein provided:
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3. All pending cases in the Regional Trial Courts (under the former Judiciary Act, the Courts of First Instance, Circuit Criminal

Courts, Juvenile and Domestic Relations Court and Court of Agrarian Relations) hall remain with the Regional Trial Courts
even though there may have been a change of jurisdiction provided in Batas Pambansa Blg. 129.
By way of example:

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a. Cases in the Regional Trial Courts where the amount involved is above P10,000.00 up to P20,000.00 exclusive of interest
and costs shall remain therein even though the jurisdiction of the Metropolitan Trial Courts, the Municipal Trial Courts, and
Municipal Circuit Trial Court has been increased to P20,000.00;
. . ." (Italics supplied)
this case should remain with and be remanded to the Court of First Instance of Manila.
ACCORDINGLY, the Order dated 24 May 1973 of the Court of First Instance of Manila, dismissing the appeal of defendantappellant, is hereby SET ASIDE. This case is REMANDED to the Regional Trial Court of Manila for trial on the merits. No
pronouncement as to costs.
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SO ORDERED.

THIRD DIVISION
[G.R. NO. 164375 : October 12, 2006]

RODOLFO PAREDES, TITO ALAGO AND AGRIPINO BAYBAY, SR., Petitioners, v. ERNESTO VERANO and COSME
HINUNANGAN, Respondent.
DECISION
TINGA, J.:
The central issue in this case is whether the absence of the counsel for defendants at the pre-trial, with all defendants
themselves present, is a ground to declare defendants in default and to authorize plaintiffs to present evidence ex parte.
The relevant facts are uncomplicated.
The protracted legal battle between the parties began with a complaint for the establishment of a right of way filed by
petitioners herein as plaintiffs against respondents as defendants. 1 The complaint, docketed as Civil Case No. 2767 of the
Regional Trial Court (RTC) of Maasin City, Southern Leyte, Branch 24, culminated in a judgment by compromise dated 26
April 1994.2 In the Compromise Agreement, respondent Cosme Hinunangan granted a two (2) meter-wide right of way in
favor of petitioners in consideration of the amount of P6,000.00 which petitioners agreed to pay.3
Alleging that petitioners had blocked the passage way in violation of the Compromise Agreement, on 28 September 1999,
respondents filed a complaint for specific performance with damages against petitioners. It was docketed as Civil Case No. R3111 also of the RTC of Maasin City, Southern Leyte, Branch 24. 4
In their answer, petitioners denied having violated the Compromise Agreement. They alleged that like them, respondents
were not actual residents of Barangay Tagnipa where the "road right of way" was established and that respondent Cosme
Hinunangan had already sold his only remaining lot in the vicinity to petitioner Rodolfo Paderes. 5
Subsequent to the answer, petitioners filed a motion to dismiss on the ground of lack of cause of action. 6 The trial court,
presided by Judge Bethany G. Kapili, denied the motion to dismiss. 7Petitioners elevated the order of denial to the Court of
Appeals and thereafter to this Court, both to no avail. 8
Petitioners asked Judge Kapili to inhibit himself from the case. The judge denied the motion. 9
Pre-trial was initially set for 24 April 2003, but this was reset to 3 June 2003 on motion of respondents' counsel. But the pretrial set on 3 June 2003 did not push through either because none of the parties appeared.
So, pre-trial was reset to 11 November 2003. Petitioner Baybay's counsel moved to reset it to another date on account of a
conflicting hearing. However, petitioner Baybay, who is the father of the counsel for petitioners, was present in court along
with the other defendants, when the case was called on 11 November 2003. The RTC was informed then of a proposed
settlement between the parties, although respondent Baybay qualified his reaction by telling the court
that he would first have to inform his lawyer and the co-defendants of the said proposal. The RTC then commented
unfavorably on the absence of petitioners' counsel, expressing disappointment towards his attitude, even making note of the
fact that not once had the counsel appeared before the RTC, even though the case had already reached the Supreme Court
over the denial of the motion to dismiss.10 At the same time, the RTC acceded and reset the pre-trial for 23 January 2004. 11
Shortly before the new pre-trial date, counsel for petitioners filed a Manifestation of Willingness to Settle With Request for
Cancellation dated 5 January 2004.12 Apart from manifesting his willingness to settle the complaint, petitioners' counsel
through the Manifestation suggested to the opposing counsel that he be informed of the terms of the proposed settlement.
Correspondingly, petitioners' counsel requested the cancellation of the 23 January 2004 hearing.
However, the hearing did push through on 23 January 2004. The private respondents and their counsel were present. So
were petitioners Baybay and Paderes, and co-defendant Alago, but not their counsel.
An order of even date formalized what had transpired during the hearing. The RTC allowed respondents to present their
evidence ex parte, "for failure of the defendants['] counsel to appear before [the RTC]". 13 Petitioners filed a motion for
reconsideration, but this was denied by the RTC.14

Thus, petitioners filed a petition for certiorari with the Court of Appeals, assailing the orders of the RTC. However, on 28 April
2004, the Court of Appeals dismissed the petition outright, 15 for failure to attach duplicate original copies of the annexes to
the petition other than the RTC Orders dated 23 January 2004 and 17 February 2004 (attaching photocopies instead), as well
as for failure to submit such other pleadings relevant and pertinent to the petition. Petitioners filed a Motion for
Reconsideration with Motion to Admit Additional Exhibits, adverting to the documents previously missing from the petition
but attached to the motion.
On 13 July 2004, the Court of Appeals issued a Resolution denying the motion for reconsideration. In doing so, the Court of
Appeals resolved the petition on its merits, as it ruled that "even with the submission by petitioners of the required pleadings
and documents, the instant petition must nevertheless fail." 16 The appellate court quoted extensively from the transcripts of
the hearings of 11 November 2003 and 23 January 2004. It conceded that under Section 5, Rule 18 of the 1997 Rules of Civil
Procedure, it is the failure of the defendant, and not defendant's counsel, to appear at the pre-trial that would serve cause to
allow plaintiff to present evidence ex parte. Nevertheless, the Court of Appeals noted that petitioner Baybay had made it
clear that he would never enter into any amicable settlement without the advice of his counsel. Thus, the Court of Appeals
concluded that Judge Kapili's "hands were tied," explaining, thus: "He was held hostage by the blatant display of arrogance
exhibited by petitioner's counsel in assiduously failing to appear before the trial court. Were he to close his eyes to the
reprehensible scheme of Atty. Baybay in delaying the disposition of the main case, the resulting impass would only strain
further the meager resources of the court and prejudice the rights of private respondents." 17
The Court of Appeals then cited Sps. Ampeloquio, Sr. v. Court of Appeals,18 wherein the Court held that if every error
committed by the trial court were to be a proper object of review by certiorari, then trial would never come to an end and the
appellate court dockets would be clogged with petitions challenging every interlocutory order of the trial court. It concluded
that the acts of Judge Kapili did not constitute grave abuse of discretion equivalent to lack of jurisdiction.
Finally, the trial court admonished petitioners' counsel to "bear in mind that as an officer of the court, he is tasked to observe
the rules of procedure, not to unduly delay a case and defeat the ends of justice but to promote respect for the law and legal
processes."19
We reverse the trial court and the Court of Appeals.
A preliminary observation. The Court of Appeals had initially dismissed the petition lodged by petitioners on account of their
failure to attach several relevant pleadings, citing Section 3, Rule 46 of the 1997 Rules of Civil Procedure. Before this Court,
petitioners devote some effort in arguing that the Court of Appeals erred in dismissing the petition on that procedural
ground, while respondents in their comment similarly undertook to defend the appellate court's action on that point. We do
not doubt that under Section 3, Rule 46 of the 1997 Rules of Civil Procedure, the Court of Appeals has sufficient discretion to
dismiss the petition for failure of petitioner to comply with the requirements enumerated in the section, including "such
material portions of the record as are referred to [in the petition], and other documents relevant or pertinent thereto." 20 At
the same time, "[d]ismissal of appeals purely on technical grounds is frowned upon and the rules of procedure ought not to
be applied in a very rigid, technical sense, for they are adopted to help secure, not override, substantial justice, and thereby
defeat their very aims."21 Thus, the Court has not hesitated to view Section 3 of Rule 46 with a liberal outlook, ruling for
example that it was not necessary to attach certified true copies of such material portions of the record as referred to
therein.22
The situation in this case bears similarity to that which transpired in Cortez-Estrada v. Heirs of Samut.23 Therein, the
petitioner had failed to attach material documents to her petition before the Court of Appeals. The Court of Appeals held the
petition was dismissible for such procedural infirmities, yet it nonetheless proceeded to rule against the petitioner on the
merits. The Supreme Court agreed with the appellate court that the petition was procedurally infirm, yet found partial merit
in its arguments and consequently granted partial relief in favor of the petitioner. In this case, the Court of Appeals, in
resolving the motion for reconsideration, proceeded to make a judgment on the merits. Similarly, this Court finds ample basis
to review the decision of the trial court as affirmed by the appellate court, notwithstanding the procedural flaw that originally
accompanied the petition a flaw which petitioners did seek to remedy when they belatedly attached the relevant documents
to their motion for reconsideration.
Ultimately, there are important reasons to consider the case on the merits. This case affords the Court the opportunity to
clarify the authority granted to a trial judge in relation to pre-trial proceedings.
The order of the RTC allowing respondents to present evidence ex parte was undoubtedly to the detriment of petitioners.
Since the RTC would only consider the evidence presented by respondents, and not that of petitioners, the order strikes at
the heart of the case, disallowing as it does any meaningful defense petitioners could have posed. A judgment of default

against a defendant who failed to attend pre-trial, or even any defendant who failed to file an answer, implies a waiver only
of their right to be heard and to present evidence to support their allegations but not all their other rights. 24
The Constitution guarantees that no person shall be deprived of property without due process of law. One manner by which
due process is assured is through the faithful adherence to the procedural rules that govern the behavior of the partylitigants. The Rules of Court do sanction, on several instances, penalties for violation of the Rules that causes the termination
of an action without a ruling on the merits, or bars one party from litigating the same while permitting the other to do so. We
noted earlier that Section 3, Rule 46 authorizes the dismissal of an original petition before the Court of Appeals for failure to
append material portions of the record. Pursuant to Section 5, Rule 17, the failure of the plaintiff to appear on the date of the
presentation of his/her evidence in chief on the complaint is ground for the court to dismiss the complaint, without prejudice
to the right of the defendant to prosecute the counterclaim in the same or in a separate action. And under Section 5, Rule
18, the failure of the plaintiff or defendant to appear during pre-trial authorizes the court to either dismiss the complaint, if
the plaintiff were absent; or to allow the plaintiff to present evidenceex parte, if the defendant were absent.
The operation of the above-cited provisions may defeat the cause of action or the defense of the party who violated the
procedural rule. Yet it could not be said that any resultant adverse judgment would contravene the due process clause, as the
parties are presumed to have known the governing rules and the consequences for the violation of such rules. In contrast,
the same presumption could not attach if a party were condemned to the same outcome even if the party did not violate a
prescribed rule of procedure. Any ruling that disposes of an action or precludes a party from presenting evidence in support
or against thereof must have basis in law,25 and any ruling so intentioned without legal basis is deemed as issued with grave
abuse of discretion.26 In the end, a person who is condemned to suffer loss of property without justifying legal basis is denied
due process of law.
Simply put, nothing in the Rules of Court authorizes a trial judge to allow the plaintiff to present evidence ex parte on
account of the absence during pre-trial of the counsel for defendant.
Sections 4 and 5 of Rule 18 warrant examination:
SEC. 4. Appearance of Parties. - It shall be the duty of the parties and their counsel to appear at the pre-trial. The nonappearance of a party may be excused only if a valid cause is shown therefor or if a representative shall appear in his behalf
fully authorized in writing to enter into an amicable settlement, to submit to alternative modes of dispute resolution, and to
enter into stipulations or admissions of facts and of documents.
SEC. 5. Effect of failure to appear. - The failure of the plaintiff to appear when so required pursuant to the next preceding
section shall be cause for dismissal of the action. The dismissal shall be with prejudice, unless otherwise ordered by the
court. A similar failure on the part of the defendant shall be cause to allow the plaintiff to present his evidence ex parte and
the court to render judgment on the basis thereof.
Section 4 imposes the duty on litigating parties and their respective counsel during pre-trial. The provision also provides for
the instances where the non-appearance of a party may be excused. Nothing, however, in Section 4 provides for a sanction
should the parties or their respective counsel be absent during pre-trial. Instead, the penalty is provided for in Section 5.
Notably, what Section 5 penalizes is the failure to appear of either the plaintiff or the defendant, and not their respective
counsel.
Indeed, the Court has not hesitated to affirm the dismissals of complaints or the allowance of plaintiffs to present
evidence ex parte on account of the absence of a party during pre-trial. In United Coconut Planters Bank v. Magpayo,27 the
complaint was dismissed because although the counsel for complainant was present during the pre-trial hearing, the Court
affirmed such dismissal on account of said counsel's failure to present any special power of attorney authorizing him to
represent the complainant during pre-trial.28 In Jonathan Landoil International Co. v. Mangudadatu,29 the defendant and its
counsel failed to appear during pre-trial, and the complainants were allowed to present evidence ex parte. After an adverse
decision was rendered against the defendant, it filed a motion for new trial in which it cited the illness of defendant's counsel
as the reason for his non-appearance during pre-trial. While the Court acknowledged that such argument was not a proper
ground for a motion for new trial, it also noted that the appearance of the defendant during pre-trial was also mandatory,
and that the defendant failed to justify its own absence during pre-trial. 30
There are two cases which, at first blush, may seem to affirm the action of the RTC. In the disbarment case of Miwa v.
Medina,31 a lawyer was suspended from the practice for one (1) month for, among others, failing to appear during pre-trial,
thus leading to the declaration of his client, the defendant, in default. At the same time, the Court in Miwa did take the

defendant herself to task for also failing to appear during pre-trial, observing that "the failure of a party to appear at pretrial, given its mandatory character, may cause her to be non-suited or considered as in default." 32
In Social Security System v. Chaves,33 the Social Security System (SSS) itself was named as the defendant in a complaint
filed with the RTC of Cagayan de Oro City. The pre-trial brief was filed by the acting assistant branch manager of the SSS in
Cagayan de Oro City, who happened to be a lawyer and who also entered his appearance as counsel for the SSS. However,
said lawyer was not present during pre-trial, and the SSS was declared in default and the complainants allowed to present
their evidence ex parte. The Court affirmed such order of default, noting other procedural violations on the part of SSS, such
as the fact that the motion for reconsideration to lift the order of default lacked verification, notice of hearing and affidavit of
merit.
Notwithstanding, the Court is not convinced that SSS is ample precedent to affirm an order of default where even though the
defendant was present during pre-trial, defendant's counsel failed to appear for the same hearing. The Court in SSS did not
make any categorical declaration to this effect. Moreover, it can be observed that in SSS, the counsel himself, the acting
assistant branch manager of the SSS, would have been in addition, the representative of the SSS itself, a juridical person
which can only make an appearance during pre-trial through a natural person as its duly authorized representative. The
Court of Appeals decision upheld in SSS, cited extensively in our decision therein, expressly affirmed the order of default on
the ground that "it is the discretion of the trial judge to declare a party-defendant as in default for failure to appear at a pretrial conference." However, in SSS, neither the Court of Appeals nor this Court expressly laid relevance to the fact that the
counsel himself, as opposed to the defendant, had not attended the pre-trial.
Upon the other hand, Africa v. Intermediate Appellate Court34 illuminates the proper standard within which to view the
instant petition. It appeared therein that on the day of the pre-trial, counsel for the defendant (therein petitioner) had
arrived ten minutes after the case was called. Within that ten-minute span, the trial court had issued an order in open court
declaring the defendant in default and authorizing the plaintiff to present its evidence ex parte. A mere two days later, the
trial court rendered judgment in favor of plaintiff. The Court reversed the trial court, holding that the order of default was
issued with grave abuse of discretion. The reasoning of the Court was grounded primarily on the doctrinal rule that frowned
against "the injudicious and often impetuous issuance of default orders," 35 which led in that case to "a deni[al of the
defendant's] basic right to be heard, even after his counsel had promptly explained the reason for his tardiness at the pretrial."36
Still, it would not be proper to consider Africa as the governing precedent herein, influential as it may be to our disposition. It
was not clear from the narration in Africa whether the defendant himself was absent during the pre-trial, a circumstance
which is determinative to this petition. Moreover, the Court's tone in Africa indicated that it was animated by a liberal
philosophy towards the procedural rule, implying that the trial court's reversed action was nonetheless adherent to the strict
letter of the rule. Whether or not the trial court in Africa acted conformably with the rules depends upon the presence or
absence of the defendant therein during pre-trial. It can no longer be discerned whether the Court so ruled
in Africa notwithstanding the presence or absence of the defendant therein. It would be disingenuous though to assume, as a
means of applying that case as precedent herein, that the defendant was actually present during the pre-trial in Africa.
Hence, we pronounce that the absence of counsel for defendants at pre-trial does not ipso factoauthorize the judge to
declare the defendant as in default and order the presentation of evidence ex parte. It bears stressing that nothing in the
Rules of Court sanctions the presentation of evidence ex parte upon instances when counsel for defendant is absent during
pre-trial. The Rules do not countenance stringent construction at the expense of justice and equity.37 As the Court has
previously enunciated:
We cannot look with favor on a course of action which would place the administration of justice in a straightjacket for then
the result would be a poor kind of justice if there would be justice at all. Verily, judicial orders, such as the one subject of this
petition, are issued to be obeyed, nonetheless a non-compliance is to be dealt with as the circumstances attending the case
may warrant. What should guide judicial action is the principle that a party-litigant is to be given the fullest
opportunity to establish the merits of his complaint or defense rather than for him to lose life, liberty or
properties on technicalities.38
Due process dictates that petitioners be deprived of their right to be heard and to present evidence to support their
allegations if, and only if, there exists sufficient basis in fact and in law to do so. 39There being a manifest lack of such basis in
this case, petitioners would be unjustly denied of the opportunity to fully defend themselves should the Court affirm the
questioned orders which were evidently issued by the RTC with grave abuse of discretion. The better and certainly more
prudent course of action in every judicial proceeding is to hear both sides and decide on the merits rather than dispose of a
case on technicalities.40

While counsel is somewhat to blame for his non-attendance at pre-trial, incidentally the operative act which gave birth to the
controversy at bar, it would be most unfair to penalize petitioners for what may be the deficiency of their lawyer when the
consequent penalty has no basis in law. Particularly mitigating in the instant case is the fact that the counsel for private
respondents intimated, at an earlier hearing, a possibility of an amicable settlement to the case. Then, counsel for petitioners
submitted a manifestation41 requesting therein that the parties be given ample time to respectively discuss their proposals
and counter-proposals and that the hearing for 23 January 2004 be moved to a later date as may be agreed upon by the
parties for submission of their possible compromise agreement. It may well have been that counsel for petitioners labored
under the false understanding that a compromise agreement was an imminent possibility. The Court nonetheless notes that
counsel was remiss in assuming that his motion to reset the scheduled hearing would necessarily be granted by the court a
quo.
Be that as it may, there is no clear demonstration that the acts of the counsel of petitioners were intended to perpetuate
delay in the litigation of the case. Assuming arguendo that the trial court correctly construed the actions of the counsel of
petitioners to be dilatory, it cannot be said that the court was powerless and virtually without recourse but to order the ex
parte presentation of evidence by therein plaintiffs. We are in some sympathy with the judge who was obviously aggrieved
that the case was dragging on for an undue length of time. But even so, there were other remedies available to the court.
Among the inherent powers of the courts expressly recognized by the Rules include the authority to enforce order in
proceedings before it,42 to compel obedience to its judgments, orders and processes,43 and to amend and control its process
and orders so as to make them conformable to law and justice. 44 Moreover, the Code of Judicial Conduct empowers the courts
to judiciously take or initiate disciplinary measures against lawyers for unprofessional conduct. 45 A show cause order to
counsel would have been the more cautious and reasonable course of action to take under the circumstances then prevailing.
In failing to do so, the trial court impetuously deprived petitioners of the opportunity to meaningfully present an effective
defense and to adequately adduce evidence in support of their contentions.
WHEREFORE, the instant petition is hereby GRANTED and the resolutions of the Court of Appeals affirming the Orders of the
Regional Trial Court in Civil Case No. R-3111 dated 23 January 2004 and 17 February 2004 are REVERSED. No costs.
SO ORDERED.

SECOND DIVISION
[G.R. No. 94005. April 6, 1993.]
LUISA LYON NUAL, herein represented by ALBERT NUAL, and ANITA NUAL HORMIGOS,Petitioners, v. THE
COURT OF APPEALS and EMMA LYON DE LEON in her behalf and as guardian ad litem of the minors HELEN
SABARRE and KENNY SABARRE, EDUARDO GUZMAN, MERCEDEZ LYON TAUPAN, WILFREDO GUZMAN, MALLY
LYON ENCARNACION and DORA LYON DELAS PEAS, Respondents.

SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; JUDGMENT; ONCE IT BECOMES FINAL, MAY NO LONGER BE MODIFIED IN ANY
RESPECT; EXCEPTIONS. In the case of Manning International Corporation v. NLRC, (195 SCRA 155, 161 [1991]) We held
that." . ., nothing is more settled in the law than that when a final judgment becomes executory, it thereby becomes
immutable and unalterable. The judgment may no longer be modified in any respect, even if the modification is meant to
correct what is perceived to be an erroneous conclusion of fact or law, and regardless of whether the modification is
attempted to be made by the Court rendering it or by the highest Court of land. The only recognized exceptions are the
correction of clerical errors or the making of so-called nunc pro tunc entries which cause no prejudice to any party, and, of
course, where the judgment is void." Furthermore," (a)ny amendment or alteration which substantially affects a final and
executory judgment is null and void for lack of jurisdiction, including the entire proceedings held for that purpose."
cralaw virtua1aw library

2. ID.; ID.; ID.; ID.; REMEDY OF AGGRIEVED PARTY. In the case at bar, the decision of the trial court in Civil Case No. 872
has become final and executory. Thus, upon its finality, the trial judge lost his jurisdiction over the case. Consequently, any
modification that he would make, as in this case, the inclusion of Mary Lyon Martin would be in excess of his authority. The
remedy of Mary Lyon Martin is to file an independent suit against the parties in Civil Case No. 872 and all other heirs for her
share in the subject property, in order that all the parties in interest can prove their respective claims.

DECISION

CAMPOS, JR., J.:

This is a petition for review on certiorari of the decision ** dated February 22, 1990 of the Court of Appeals in CA-G.R. CV
No. 14889 entitled "Emma Lyon de Leon, Et Al., plaintiffs-appellees versus Luisa Lyon Nual, now deceased herein
represented by Albert Nual, Et Al., defendants appellants," dismissing petitioners appeal and affirming the trial courts order
*** dated January 9, 1987 for the inclusion of Mary Lyon Martin as one of the heirs who shall benefit from the partition.

The facts as culled from the records of the case are as follows.
This case originated from a suit docketed as Civil Case No. 872 filed by Emma Lyon de Leon in her behalf and as guardian ad
litem of the minors Helen Sabarre and Kenny Sabarre, Eduardo Guzman, Mercedes Lyon Taupan, Wilfredo Guzman, Mally
Lyon Encarnacion and Dona Lyon de las Peas, (herein private respondents) against Luisa Lyon Nual, now deceased and
herein represented by her heirs, Albert Nual and Anita Nual Hormigos (herein petitioners), for partition and accounting of a
parcel of land located in Isabela, Basilan City. Subject parcel of land was formerly owned by Frank C. Lyon and May Ekstrom
Lyon, deceased parents of Helen, Dona, Luisa, Mary, Frank and William James. Private respondents claimed that said parcel
of land, formerly covered by Transfer Certificate of Title No. 3141 in the name of Frank C. Lyon, has been in possession of
petitioner Luisa Lyon Nual since 1946 and that she made no accounting of the income derived therefrom, despite demands
made by private respondents for the partition and delivery of their shares.
On December 17, 1974, after trial and hearing, the then Court of First Instance (now Regional Trial court) rendered its
judgment in favor of private respondents and ordered the partition of the property but dismissing private respondents
complaint for accounting. The dispositive portion of the judgment reads as follows:
chanroble s.com : virtual law library

"WHEREFORE, judgment is hereby rendered ordering the partition of the land covered by Transfer Certificate of Title No.
3141 among the plaintiffs and defendant. The parties shall make partition among themselves by proper instruments of
conveyance, subject to the Courts confirmation, should the parties be unable to agree on the partition, the court shall
appoint commissioners to make the partition, commanding them to set off to such party in interest such part and proportion
of the property as the Court shall direct. Defendant is further ordered to pay plaintiffs attorneys fees in the sum of
P2,000.00." 1
On July 30, 1982, the order of partition was affirmed in toto by the Court of Appeals in CA-G.R. No. 57265-R. The case was
remanded to the court of origin for the ordered partition. 2
On May 17, 1984, an order for the issuance of the writ of execution was issued by the court a quo. 3
On July 17, 1984, Mary Lyon Martin, daughter of the late Frank C. Lyon and Mary Ekstrom Lyon, assisted by her counsel filed
a motion to quash the order of execution with preliminary injunction. In her motion, she contends that not being a party to
the above-entitled case her rights, interests, ownership and participation over the land should not be affected by a judgment
in the said case; that the order of execution is unenforceable insofar as her share, right, ownership and participation is
concerned, said share not having been brought within the Jurisdiction of the court a quo. She further invokes Section 12,
Rule 69 of the Rules of Court. 4
On June 26, 1985, the trial court issued an order revoking the appointment of the three commissioners and in lieu thereof,
ordered the issuance of a writ of execution. 5
On February 4, 1986, the said court issued an order appointing a Board of Commissioners to effect the partition of the
contested property. 6
On May 28, 1986, the trial court dismissed the motion to quash order of execution with preliminary injunction filed by Mary
Lyon Martin and directed the partition of the property among the original party plaintiffs and defendants. 7
On September 24, 1986, the Commissioners manifested to the trial court that in view of the fact that the name of Mary Lyon
Martin also appears in the Transfer Certificate of Title, she could therefore be construed as one of the heirs. A ruling from the
trial court was then sought. 8
On September 29, 1986, the lower court issued an order directing the counsel of Emma Lyon de Leon to furnish the court
within five days from receipt thereof all the names the of heirs entitled to share in the partition of the subject property. 9
On October 1, 1986, the petitioners filed a manifestation praying that the court issue an order directing the partition of the
property in consonance the decision dated December 17, 1974 of the trial court the order of said court dated May 28, 1986.
10
Without ruling on the manifestation, the lower court issued an order directing the Board of Commissioners to immediately
partition the said property. 11
On January 3, 1987, the private respondents filed motion for clarification as to whether the partition of property is to be
confined merely among the party plaintiffs and defendants, to the exclusion of Mary Lyon Martin. 12
On January 9, 1987, the lower court issued the assailed order directing the inclusion of Mary Lyon Martin as co-owner with a
share in the partition of the property, to wit:
jgc:chanrobles.com .ph

"After a perusal of the decision of the Court of Appeals CA-G.R. No. 57265-R, where this case was appealed by the
unsatisfied parties, there is a finding that Mary now Mary Lyon Martin is one of the legitimate children of Frank C. Lyon and
Mary Ekstrom. (Page 3 of the decision).
In view of this finding, it would be unfair and unjust if she would be left out in the partition of this property now undertaking

(sic) by the said court appointed commissioners.


WHEREFORE, premises considered, the court appointed commissioners is hereby directed to include Mary Lyon Martin as coowner in the said property subject of partition with the corresponding shares adjudicated to her.
chanroble s virtualawlibrary chanrobles.com:chanrobles.com.ph

SO ORDERED." 13
Petitioners motion for reconsideration 14 of the aforesaid order was denied by the trial court. 15
On February 22, 1990 the Court of Appeals rendered its decision dismissing petitioners appeal, the dispositive portion of
which reads as follows:
jgc:chanrobles.com .ph

"WHEREFORE, premises considered, there being no legal impediment to the inclusion of Mary Lyon Martin by the courtappointed Board of Commissioners as one of the heirs who shall benefit from the partition, the instant appeal is DISMISSED
for lack of merit.
NO COSTS.
SO ORDERED." 16
Petitioners motion for reconsideration was denied on June 6, 1990. 17
Petitioners filed this petition for review alleging that the Court of Appeals has decided questions of substance contrary to law
and the applicable decisions of this Court, for the following reasons:
jgc:chanroble s.com.ph

"1.) BY SUSTAINING THE ORDER OF THE REGIONAL TRIAL COURT DIRECTING THE COURT APPOINTED BOARD OF
COMMISSIONERS TO INCLUDE MARY L. MARTIN TO SHARE IN THE PARTITION OF THE PROPERTY IN LITIGATION DESPITE
THE FACT, OVER WHICH THERE IS NO DISPUTE, THAT SHE HAS NOT LITIGATED EITHER AS A PARTY PLAINTIFF OR
DEFENDANT IN CIVIL CASE NO. 872, IT HAS REFUSED TO RECOGNIZE THAT THE REGIONAL TRIAL COURT HAS NO
JURISDICTION TO AMEND OR MODIFY THE JUDGMENT IN CIVIL CASE NO. 872 AND THE REGIONAL TRIAL COURTS ORDER
DATED 28 MAY 1986 WHICH HAS BECOME FINAL AND EXECUTORY.
2.) WHEN THE COURT OF APPEALS HAS CATEGORICALLY STATED THAT MARY L. MARTIN "NEVER LITIGATED AS ONE OF THE
PLAINTIFFS IN SAID CASE," AND HER ONLY PARTICIPATION THEREIN WAS SIMPLY CONFINED "AS A WITNESS FOR
DEFENDANT-SISTER LUISA LY ON NUAL," AND TO ALLOW HER TO SHARE IN THE PARTITION THIS LATE WITHOUT
REQUIRING A PROCEEDING WHERE THE PARTIES COULD PROVE THEIR RESPECTIVE CLAIMS, IS TANTAMOUNT TO DENYING
THE NUALS OF THEIR RIGHT TO DUE PROCESS. 18
The crux of this case is whether of not the trial court may order the inclusion of Mary L. Martin as co-heir entitled to
participate in the partition of the property considering that she was neither a party plaintiff nor a party defendant in Civil
Case No. 872 for partition and accounting of the aforesaid property and that the decision rendered in said case has long
become final and executory.
Petitioners contend that the trial courts decision dated December 14, 1974 in Civil Case No. 872 ordering the partition of the
parcel of land covered by Transfer Certificate of Title No. 3141 among plaintiffs and defendants has long become final and
executory. Hence the trial court has no jurisdiction to issue the questioned Order dated January 9, 1987 ordering the Board
of Commissioners to include Mary Lyon Martin to share in the partition of said property despite the fact that she was not a
party to the said case. Said Order, therefore, resulted in an amendment or modification of its decision rendered in Civil Case
No. 872.
We find merit in the instant petition.
In the ease of Manning International Corporation v. NLRC, 19 We held that." . ., nothing is more settled in the law than that
when a final judgment becomes executory, it thereby becomes immutable and unalterable. The judgment may no longer be
modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous conclusion of fact
or law, and regardless of whether the modification is attempted to be made by the Court rendering it or by the highest Court
of land. The only recognized exceptions are the correction of clerical errors or the making of so-called nunc pro tunc entries
which cause no prejudice to any party, and, of course, where the judgment is void."
cralaw virtua1aw library

Furthermore," (a)ny amendment. or alteration which substantially affects a final and executory judgment is null and void for
lack of jurisdiction, including the entire proceedings held for that purpose." 20
In the case at bar, the decision of the trial court in Civil Case No. 872 has become final and executory. Thus, upon its finality,
the trial judge lost his jurisdiction over the case. Consequently, any modification that he would make, as in this case, the
inclusion of Mary Lyon Martin would be in excess of his authority.
chanrobles law library : red

The remedy of Mary Lyon Martin is to file an independent suit against the parties in Civil Case No. 872 and all other heirs for
her share in the subject property, in order that all the parties in interest can prove their respective claims.

WHEREFORE, the petition is GRANTED. The Order dated January 9, 1987 of the trial Court as affirmed by the Court of
Appeals is hereby REVERSED and SET ASIDE. The decision of the trial court dated December 17, 1974 in Civil Case No. 872
is hereby REINSTATED.
SO ORDERED.

FIRST DIVISION
[G.R. NO. 160727

: June 26, 2007]

UNION BANK OF THE PHILIPPINES, Petitioner, v. DANILO L. CONCEPCION, Respondent.


DECISION
GARCIA, J.:
In this Petition for Review under Rule 45 of the Rules of Court, petitioner Union Bank of the Philippines (Union Bank) assails
and seeks the setting aside of the Decision1 dated July 22, 2003 of the Court of Appeals (CA) in CA-G.R. SP No. 75355, as
effectively reiterated in its Resolution2 of November 7, 2003 denying the petitioner's motion for reconsideration.
The records, which include a copy of this Court's Decision dated May 19, 1998 in G.R. No. 131729 entitled "Union Bank of the
Philippines v. Court of Appeals et al., respondents,"3 yield the following material facts:
On September 16, 1997, the EYCO Group of Companies4 (EYCO or EYCO Group) filed with the Securities and Exchange
Commission (SEC) a PETITION5 for the declaration of suspension of payment, appointment of a rehabilitation
receiver/committee and approval of rehabilitation plan with an alternative prayer for liquidation and dissolution of
corporations (Petition for Suspension of Payment, hereinafter). In it, EYCO depicted the Group's composite corporations as
having a combined assets that are more than enough to pay off all their debts, but nonetheless unable to pay them as they
fall due. Joining EYCO as co-petitioners were Eulogio Yutingco and two other individuals holding controlling interests in the
composite corporations (collectively, the Yutingcos).
Finding the petition, docketed as SEC Case No. 09-97-5764, to be sufficient in form and substance, the SEC Hearing Panel,
by an order of September 19, 1997, directed the suspension of all actions, claims and proceedings against EYCO, et al.
pending before any court, tribunal, board or office 6 (the Suspension Order). At the same time, the Panel set the petition for
hearing.
Meanwhile, a consortium of private banks which had granted credit facilities to EYCO, among them, Union Bank, convened to
map out their collective collection options. The formation of a management committee (ManCom) to represent the creditor
banks was agreed upon in that meeting.
Subsequently, Union Bank decided to break away from the consortium and, without notifying its members, filed a slew of civil
cases against EYCO, et al. Of relevance is the first, a complaint for a sum of money instituted on September 23, 1997 before
the Regional Trial Court (RTC) of Makati City, against four (4) members of the EYCO Group and spouses Eulogio and Bee

Kuan Yutingco, as sureties of the corporate obligations, with application for preliminary attachment. This complaint, 7docketed
as Civil Case No. 97-2184, eventually ended up in Branch 148 of the court. The next day, the Makati RTC issued the desired
writ of preliminary attachment,8 pursuant to which levy on attachment was annotated on the titles, i.e., TCT Nos. V481929 and V-4819310 of the Registry of Deeds of Valenzuela City, of two parcels of land under the name of Nikon Plaza, Inc.
and EYCO Properties, Inc., respectively. Also attached, per herein respondent Danilo L. Concepcion (Concepcion, for brevity),
without denial from the petitioner, is a parcel of land covered by TCT No. V-49678 of the same registry allegedly held by the
Yutingcos in trust for Nikon Industrial Corporation. 11
On October 22, 1997, Union Bank moved, on jurisdictional ground, for the dismissal of SEC Case No. 09-97-5764. On the
same date, EYCO submitted its rehabilitation plan.
In January 1998, the SEC Hearing Panel appointed the regular members of the newly created ManCom for EYCO.
Meanwhile, Union Bank, without awaiting for the SEC's ruling on its motion to dismiss SEC Case No. 09-97-5764, filed with
the CA a petition for certiorari to nullify what it tagged as the precipitate September 19, 1997 SEC suspension order 12 and its
creation of the ManCom. In the same petition, docketed as CA-G.R. SP No. 45774, Union Bank alleged that the jurisdiction
over the basic petition for declaration of suspension of payment pertains to the RTC under Act No. 1956, as amended, or the
Insolvency Law.
On December 22, 1997, in CA-G.R. SP No. 45774, the CA rendered judgment declaring Union Bank guilty of forum shopping
and accordingly dismissed its petition for certiorari . This Court, in its Decision13 dated May 19, 1998 in G.R. No. 131729, in
turn affirmed that of the CA, but proceeded further to declare the SEC as possessed of jurisdiction over EYCO's petition for
suspension of payments filed pursuant to Section 5(d) of Presidential Decree (P.D.) No. 902-A, but not insofar as the
Yutingcos' petition was concerned. With respect to the Yutingcos, the Court held that the SEC's jurisdiction on matters of
suspension of payments is confined only to those initiated by corporate entities, as the aforecited section does not allow an
individual to file, or join in, the corresponding petition. In line with the rule on misjoinder of parties, the Court directed the
SEC to drop the individual petitioners from the petition for suspension of payment.
Conformably with this Court's Decision aforementioned, the Makati RTC issued, in Civil Case No. 97-2184, an Order 14 dated
August 17, 1998 thereunder indefinitely suspending the proceedings in that collection suit until further orders. The fallo of
the RTC's order reads:
WHEREFORE, - the complaint filed by the plaintiff [Union Bank] against defendant-corporation [EYCO 4] - is hereby
INDEFINITELY SUSPENDED until further Orders from this Court in view of the existing petition for Suspension of Payment
before the [SEC]. On the other hand, the defendant's motion to dismiss complaint against the individual-defendants, namely:
Spouses Eulogio and Bee Kuan Yutingco, is hereby DENIED for lack of merit.
Consequently, in order to give defendant-Spouses [Yutingcos] ample time to prepare for whatever defense they may raise,
they are hereby given a new fifteen (15) days period from receipt of this Order within which to file their answer to the
complaint against them.
SO ORDERED. (Words in brackets and emphasis supplied.)
In a related development, the SEC Hearing Panel, over the objection of the consortium of EYCO's creditor banks, approved,
on December 18, 1998, the rehabilitation plan prepared by the Strategies and Alliance Corporation for EYCO. The consortium
lost no time in appealing to the SEC en banc the Hearing Panel's approval order and prayed for the liquidation and dissolution
of EYCO, the appellate recourse docketed as SEC AC No. 649.
On September 14, 1999, the SEC en banc issued in SEC AC No. 649 an order finding for the consortium, disposing as
follows:
WHEREFORE, - the appeal is, as it is hereby granted and the Order dated 18 December 1998 is set aside. The Petition to be
Declared in State of Suspension of Payment is hereby disapproved and the SAC Plan terminated. Consequently, all
committees, conservator/receivers created pursuant to said Order are dissolved. xxx
The Commission, likewise, orders the liquidation and dissolution of the [EYCO Group]. The case is hereby remanded to the
hearing panel below for that purpose. xxx (Words in brackets and emphasis supplied.)

Another en banc order15 of March 31, 2001 followed, with the SEC this time appointing respondent Concepcion to act, vice
the dissolved Liquidation Committee, as EYCO Liquidator. Among Concepcion's first act as such liquidator was to file, on
March 8, 2002, in Civil Case No. 97-2184, a Motion to Intervene and To Admit Motion to Set Aside Order of
Attachment16 (Motion to Intervene, for brevity). Three days later, Concepcion submitted before the SEC a Liquidation
Plan17 for the EYCO Group.
After due proceedings, the SEC approved, on April 11, 2002, the Concepcion-submitted Liquidation Plan. 18 Concepcion's
motion to intervene, however, met a different fate. For, by Order 19 of August 8, 2002, the Makati RTC denied Concepcion's
motion to intervene in Civil Case No. 97-2184 on the ground of lack of standing to intervene, his appointment as Liquidator
being, according to the court, of doubtful validity. The order, in addition, granted Union Bank's earlier motion to declare EYCO
in default, and set a date for the ex-parte reception of Union Bank's evidence.
Concepcion then moved for reconsideration questioning the basis of the denial of his motion to intervene. Questioned, too,
was the default aspect of the order, Concepcion arguing in this regard that the collection proceedings were suspended "until
further Orders from this Court" 20 and the RTC of Makati has yet to issue the suspension-lifting order. The Makati RTC denied
the motion on December 16, 2002.
Earlier, however, Union Bank presented evidence ex parte, on the basis of which the Makati RTC rendered, on December 27,
2002, partial judgment21 ordering EYCO to pay the bank P400 million plus interests and attorney's fees.
Via a petition for certiorari and prohibition before the CA, Concepcion challenged the RTC's partial judgment aforementioned
and its earlier order denying the motion to intervene. His recourse was docketed as CA-G.R. SP No. 75355.
The appellate court eventually issued the herein assailed Decision 22 reversing the Makati RTC's impugned issuances and
allowing Concepcion to intervene, thus:
WHEREFORE, foregoing premises considered, the petition is GRANTED. The assailed orders and partial judgment are hereby
ANNULLED and SET ASIDE. Public respondent [RTC Judge Oscar Pimentel, Branch 148, Makati City] is ordered to allow
petitioner [Concepcion] to intervene in Civil Case No. 97-2184.
SO ORDERED.
Following the denial of its motion for reconsideration,23 Union Bank has interposed this petition ascribing to the CA the
following errors:
1. In ruling in favor of respondent Concepcion's right to intervene in Civil Case No. 97-2184 pending in the lower court
despite his lack of legal interest in the matter in litigation.
2. In ruling in favor of respondent Concepcion's right to intervene in said Civil Case No. 97-2184 despite his lack of legal
personality, his appointment by the SEC as liquidator of EYCO being null and void for lack of jurisdiction; and
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3. In giving due course to respondent Concepcion's petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure
despite its being the improper remedy.
We DENY.
As the Court distinctly notes, the petitioner does not assail the CA's judgment insofar as it nullified the RTC's partial
judgment or its default order. As thus couched, the petition particularly sets its sight on that part of the appellate court's
ruling allowing respondent Concepcion to intervene in Civil Case No. 97-2184. Of the three errors assigned, the more critical
relates to the challenged validity of the respondent's appointment by the SEC as liquidator of the EYCO Group, his right to
intervene predicated as it is on his being such liquidator.
It is the petitioner's posture, following the Makati RTC's line, that the respondent's appointment as liquidator of EYCO was
invalid for lack of jurisdiction on the part of SEC to preside, in first place, over EYCO's liquidation and dissolution. Pressing
on, the petitioner states that EYCO is already insolvent and insolvency proceedings fall under the jurisdiction of regular courts
under the Insolvency Law (Act No. 1956, as amended) in relation to the pertinent provision of R.A. No. 8799, otherwise
known as the Securities Regulation Code.

We are not persuaded.


As it were, the underlying petition24 EYCO filed with and over which the SEC assumed jurisdiction was one for declaration of
suspension of payment, appointment of a rehabilitation receiver/committee, approval of rehabilitation plan with alternative
prayer for liquidation and dissolution. That the SEC, along the way, ordained EYCO's liquidation and dissolution did not,
without more, strip the SEC of jurisdiction over the liquidation process. Albeit jurisdiction over a petition to declare a
corporation in a state of insolvency strictly lies with regular courts, the SEC possessed, during the period material, ample
power under P.D. No. 902-A,25 as amended, to declare a corporation insolvent as an incident of and in continuation of its
already acquired jurisdiction over the petition to be declared in the state of suspension of payments in the two instances
provided in Section 5(d) thereof.26 Said Section 5(d)27 vests the SEC with exclusive and original jurisdiction over petitions for
suspension of payments which may either be: (a) a simple petition for suspension of payments based on the provisions of
the Insolvency Law, i.e., the petitioning corporation has sufficient assets to cover all its debts, but foresees the impossibility
of meeting the obligations as they fall due, or (b) a similar petition filed by an insolvent corporation accompanied by a prayer
for the creation of a management committee and/or rehabilitation receiver based on the provisions of P.D. No. 902-A, as
amended by P.D. No. 1758.28
In the case at bench, EYCO's petition for suspension of payment was, at bottom, a mix of both situations adverted to above.
For, while EYCO, in the said petition, alleged being solvent but illiquid, it nonetheless pleaded for the constitution of a
rehabilitation receiver/committee, with an alternative prayer for liquidation, if warranted. Clearly then, the SEC has, from the
start, jurisdiction over EYCO's petition for suspension of payment, such jurisdiction, following Ching, 29 continuing for purposes
of liquidation after it (SEC) declared EYCO insolvent. The SEC appeared to be aware of the continuity angle as it even ordered
the remand to the SEC Hearing Panel of SEC Case No. 09-97-5764 for purposes of liquidating and dissolving the EYCO Group.
If the SEC contextually retained jurisdiction over the liquidation of EYCO, is it not but logical then that it has competence to
appoint the respondent - or any qualified individual for that matter - as liquidator?
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And lest it be overlooked, the Court had, in G.R. No. 131729, already rejected the petitioner's thesis about the SEC's
purported lack of jurisdiction over EYCO's suspension of payment case owing to its supervening insolvency. Therein, the
Court stated:
We are of course aware of the argument [of] - petitioner [Union Bank] that the petition of [EYCO] should be entirely
dismissed and taken out of the SEC's jurisdiction on account of the alleged insolvency of [the latter]. In this regard,
petitioner theorizes that [EYCO has] already become insolvent when [the composite corporations] allegedly disposed of a
substantial portion of their properties - hence suspension of payments with the SEC is not the proper remedy.
Such argument does not persuade us. Petitioner's allegations of - [EYCO's] - supposed insolvency - are hardly of any
consequence to the assumption of jurisdiction by the SEC over the nature or subject matter of the petition for suspension of
payments. Aside from the fact that these allegations are evidentiary in nature ', we have likewise consistently ruled that what
determines the nature of an action, as well as which court or body has jurisdiction over it, are the allegations of the
complaint, or a petition as in this case, and the character of the relief sought. That the merits of the case after due
proceedings are later found to veer away from the claims asserted by EYCO in its petition, as when it is shown later that it is
actually insolvent and may not be entitled to suspension of payments, does not divest the SEC at all of its jurisdiction already
acquired as its inception '. (Words in brackets and emphasis added.)
The Court is certainly aware of the transfer, effected by R.A. No. 8799, to the RTC of the SEC's jurisdiction defined under
Section 5(d) of P.D. No. 902-A.30 Such transfer, however, did not, as the petitioner and the RTC posit, divest the SEC of its
jurisdiction over SEC Case No. 09-97-5764, given that it had already issued, as early as September 19, 1998, the suspension
order after it found the petition for suspension filed on September 16, 1998 to be sufficient in form and substance.
Subsection 5.2 of R.A. No. 8799 prescribing the jurisdiction transfer and the rules on transition provides as follows:
5.2. The [Securities and Exchange] Commission's jurisdiction over all cases enumerated under Section 5 of [P.D.] No. 902-A
is hereby transferred to the appropriate [RTC]: Provided that the Supreme Court - may designate the [RTC] branches that
shall exercise jurisdiction over these cases. xxx The Commission shall retain jurisdiction over pending suspension of
payments/rehabilitation cases filed as of 30 June 2000 until finally disposed. (Words in bracket and emphasis added.)
EYCO's petition for suspension for payment was, for all intents and purposes, still pending with the SEC as of June 30, 2000.
Accordingly, the SEC's jurisdiction thereon, by the express terms of R.A. No. 8999, still subsists "until [the suspension of
payment case and its incidents are] finally disposed." In the words of the CA:

As held by this Court - Section 5.2 of RA 8799 specifically provided that the SEC shall retain jurisdiction over pending
suspension of payments/rehabilitation cases filed as of June 30, 2000 until finally disposed. The records are clear that the
suspension of payment was filed on September 7, 1998. As such, the petition is still pending with the SEC as of the cut-off
date set in the rules. xxx31
When the law speaks of "until finally disposed," the reference should include the final disposition of the liquidation and
dissolution processes since it is within the power of the SEC by law,32 or as incident of or in continuation of its already
acquired jurisdiction over the petition for suspension of payment, 33 to order the dissolution/liquidation of a corporation and
accordingly appoint a liquidator. In fine, the continuing exercise of jurisdiction by the SEC over the liquidation and dissolution
of the EYCO Group is warranted. Once jurisdiction attaches, the court cannot be ousted from the case by any subsequent
events, such as a new legislation placing such proceedings under the jurisdiction of another body. The only recognized
exceptions to the rule, which find no sway in the present case, arise when the statute expressly so provides or when the
statute is clearly intended to apply to actions pending before its enactment. 34
Given the above perspective, the Court is at a loss to understand petitioner's challenge against the right of the respondent to
intervene in Civil Case No. 97-2184, on the postulate that the latter lacks legal interest in the matter in litigation.
Intervention is a procedure by which a third person, not originally party to the suit, but claiming an interest in the subject
matter, comes into the case, in order to protect his right or interpose his claim. 35 Its main purpose is to settle in one action
and by a single judgment all conflicting claims of or the whole controversy among the persons involved. 36 To warrant
intervention under Rule 19, Section 1 of the Rules of Court, 37 two requisites must concur: (a) the movant has a legal interest
in the matter in litigation, and (b) intervention must not unduly delay or prejudice the adjudication of the rights of the
parties, nor should the claim of the intervenor be capable of being properly decided in a separate proceeding. The interest,
which entitles one to intervene, must involve the matter in litigation and of such direct and immediate character 38 that the
intervenor will either gain or lose by the direct legal operation and effect of the judgment. 39
Just like the CA, the Court has no doubt about the respondent, as the duly-appointed liquidator of EYCO's remaining assets,
having a legal interest in the matter litigated in Civil Case No. 97-2184. This is particularly true with respect to the parcels of
land covered by the writ of attachment which, in the implementation of the SEC-approved Liquidation Plan for EYCO, had
been conveyed to the respondent40 in trust for the benefit of creditors, EYCO's stockholders and other persons in interest. At
the very least, the respondent, as liquidator-trustee, is so situated as to be affected by the distribution or disposition of the
attached properties which were under threat of being levied on execution and sold at public auction. Respondent would be
unfaithful to his trust if he does take a bona fide effort to intervene in Civil Case No. 97-2184 to thwart the attempt of the
petitioner to collect unpaid loans ahead of other legitimate creditors similarly situated. Under the SEC Rules of Procedure on
Corporate Recovery pursuant to which the SEC appointed the respondent to liquidate the remaining assets of EYCO, the
liquidator is empowered and duty bound to "[R]epresent the debtor - in any case filed by or against the debtor in any
tribunal" and "[B]ring any action on behalf of the debtor to collect, recover or preserve any of its assets, or to resist or
defend against any claim."41
Any suggestion that allowing intervention would unduly delay the final closure of the collection case cannot be accepted. Far
from unnecessarily prolonging or complicating the case, the desired intervention, if allowed, would possibly enable the court
in one single action and judgment to protect the collective interests of the creditors of the EYCO Group that are seriously
threatened by the imminent exclusion of certain properties from the pool of assets that should legally, if not ideally, be
equitably distributed among them. Disallowing intervention would pave the way for the petitioner to seize the proceedings
before the Makati RTC to work entirely in its favor. Such course of action trifles with the entire liquidation process. And any
decision rendered therein would unlikely be left undisturbed by other legitimate but unpaid creditors whose interest in the
attached properties can hardly be disputed.
Moreover, the claim of the respondent over the attached properties could not possibly be better threshed out in a separate
but subsequent proceedings given that he had already secured titles over them.
The third and last issue turns on the propriety of certiorari as a recourse to the denial of a motion for intervention. The
correct remedy, according to the petitioner, is an appeal under Rule 45 of the Rules of Court, an order denying intervention
being final in character, not merely interlocutory. Petitioner thus faults the CA for allowing respondent Concepcion's petition
for certiorari under Rule 65 of the Rules as a vehicle to impugn the denial of his motion for intervention. It stresses that the
availability of appeal proscribes recourse to the special civil action of certiorari .
We are not convinced.

Petitioner's statement of the rule on the availability of the extraordinary writ of certiorari under the premises is impeccable.
So too is its citation of supporting jurisprudence. Petitioner conveniently forgot, however, to include in its formulation settled
exceptions to and qualifications of the rule, even as it glossed over another holding that intervention is merely accessory to
the principal action and, as such, is an interlocutory proceeding dependent on the case between the original parties. 42
It is true that certiorari may not be resorted to when appeal is available as a remedy. However, it is also true that the Court
has allowed the issuance of a writ of certiorari when appeal does not afford a speedy and adequate remedy in the ordinary
course of law. As in the past, the Court has ruled that the availability of an appeal does not foreclose recourse to the ordinary
remedies or certiorari or prohibition where appeal is not adequate, equally beneficial, expeditious and sufficient. 43 Stated a bit
differently, certiorari may be availed of where an appeal would be slow, inadequate and insufficient. The determination as to
what exactly constitutes plain, speedy and adequate remedy rests on judicial discretion and depends on the particular
circumstances of each case.
In the case at bar, the CA did not commit any reversible error in allowing the petition for certiorarifiled by the respondent. As
it were, the respondent was able to convince the CA of the urgency of his cause and that an appeal from the denial of the
motion for intervention would not constitute speedy and adequate remedy, thus necessitating the resort to the extraordinary
remedy of certiorari . And in an instance justifying the invocation of the remedy of certiorari, it would appear too that the CA
found the RTC to have exercised its judicial authority in an oppressive manner,44 so much so that the CA stated the apt
observation that: "In the first place, it [RTC] should not have taken cognizance of the case when it was notified of the
pending petition [for suspension of payments] before the SEC at the time the complaint was filed." 45
Certainly not lost on the Court is an obvious reality: the Makati RTC virtually interfered with and invalidated the appointment
made by the SEC when it has no jurisdiction over the latter.
WHEREFORE, the instant petition is DENIED and the impugned Decision and Resolution of the Court of Appeals dated July 22,
2003 and November 7, 2003, respectively, are AFFIRMED.
Costs against the petitioner.
SO ORDERED.

SECOND DIVISION
[G.R. No. 182902 : October 05, 2011]
VIRRA MALL TENANTS ASSOCIATION, INC., PETITIONER, VS. VIRRA MALL GREENHILLS ASSOCIATION, INC.,
LOLITA C. REGALADO, ANNIE L. TRIAS, WILSON GO, PABLO OCHOA, JR., BILL OBAG AND GEORGE V.
WINTERNITZ, RESPONDENTS.

DECISION
SERENO, J.:
Before us is a Petition for Review of the 21 May 2007 Decision [1] and 14 May 2008 Resolution[2] of the Court of Appeals (CA)
dismissing the Complaint-in-Intervention and denying the Motion for Reconsideration both filed by petitioner.
Ortigas & Company, Limited Partnership (Ortigas) is the owner of the Greenhills Shopping Center (GSC). On 5 November
1975, Ortigas and Virra Realty Development Corporation (Virra Realty) entered into a Contract of Lease (First Contract of
Lease) over a portion of the GSC. The 25-year lease was to expire on 15 November 2000. Pursuant thereto, Virra Realty
constructed a commercial building, the Virra Mall Shopping Center (Virra Mall), which was divided into either units for lease
or units whose leasehold rights were sold.[3]
Thereafter, Virra Realty organized respondent Virra Mall Greenhills Association (VMGA), an association of all the tenants and
leasehold right holders, who managed and operated Virra Mall. In the First Contract of Lease, VMGA assumed and was
subrogated to all the rights, obligations and liabilities of Virra Realty.[4]
On 22 November 2000, VMGA, through its president, William Uy (Uy), requested from Ortigas the renewal of the First
Contract of Lease.[5]
VGMA secured two insurance policies to protect Virra Mall against damage by fire and other causes. However, these insurance
coverages expired simultaneously with the First Contract of Lease on 15 November 2000. [6] Subsequently, on 13 March 2001,
VGMA acquired new sets of insurance policies effective 10 January 2001 to 31 December 2001. [7]
On 5 May 2001, Virra Mall was gutted by fire, requiring substantial repair and restoration. VMGA thus filed an insurance claim
through the insurance broker, respondent Winternitz Associates Insurance Company, Inc. (Winternitz). Thereafter, the
proceeds of the insurance were released to VMGA.[8]
On 3 September 2001, Ortigas entered into a Contract of Lease (Second Contract of Lease) with Uy effective 2 November
2001 to 31 December 2004. On 11 September 2001, the latter assigned and transferred to petitioner Virra Mall Tenants
Association (VMTA) all his rights and interests over the property.[9]
On 7 February 2003, Ortigas filed a Complaint for Specific Performance with Damages and Prayer for Issuance of a Writ of
Preliminary Attachment against several defendants, including herein respondents. It accused them of fraud, misappropriation
and conversion of substantial portions of the insurance proceeds for their own personal use unrelated to the repair and
restoration of Virra Mall. To secure the subject insurance proceeds, Ortigas also sought the issuance of a writ of preliminary
attachment against herein respondents. The case was docketed as Civil Case No. 69312, and raffled to the Regional Trial
Court, National Capital Judicial Region, Pasig City, Branch 67 (RTC Br. 67), which issued a Writ of Preliminary Attachment on
12 February 2003.[10]
On 17 February 2003, VMTA filed a Complaint-in-Intervention. [11] It claimed that as the assignee or transferee of the rights
and obligations of Uy in the Second Contract of Lease, and upon the order of Ortigas, it had engaged the services of various
contractors. These contractors undertook the restoration of the damaged area of Virra Mall amounting to P18,902,497.75.
Thus, VMTA sought the reimbursement of the expenses it had incurred in relation thereto. [12] RTC Br. 67 admitted the
Complaint-in-Intervention in its Order dated 8 January 2004. [13]
On 5 March 2004, herein respondents moved for the dismissal of the Complaint-in-Intervention on the ground that it stated
no cause of action.[14] In its Omnibus Order dated 2 August 2005, RTC Br. 67 denied this Motion to Dismiss. [15] The trial court
based its Decision on the grounds that (a) by filing the said motion, herein respondents hypothetically admitted the truth of
the facts alleged in the Complaint-in-Intervention, and (b) the test of sufficiency of the facts alleged was whether or not the
court could render a valid judgment as prayed for, accepting as true the exclusive facts set forth in the Complaint. [16] Thus,
RTC Br. 67 held that if there are doubts as to the truth of the facts averred, then the court must not dismiss the Complaint,
but instead require an answer and proceed to trial on the merits. [17]
On a Rule 65 Petition for Certiorari alleging grave abuse of discretion, the CA reversed the ruling of RTC Br. 67 and dismissed
the Complaint-in-Intervention on the following grounds: (a) VMTA failed to state a cause of action; (b) VMTA has no legal
interest in the matter in litigation; and (c) the Complaint-in-Intervention would cause a delay in the trial of the action, make
the issues more complicated, prejudice the adjudication of the rights of the parties, stretch the issues, and increase the
breadth of the remedies and relief.[18] The relevant portions of the Decision read:
Section 2, Rule 2 of the Rules of Court defines a cause of action as the act or omission by which a party violates the right of
another. Its essential elements are as follows:
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. Act or 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.
It is, thus, only upon the occurrence of the last element that a cause of action arises, giving the plaintiff the right to maintain
an action in court for recovery of damages or other appropriate relief. (Swagman Hotels and Travel, Inc. v. Court of Appeals,
G.R. No. 161135, April 8, 2005, 455 SCRA 175, 183). If these elements are absent, the complaint is dismissible on the
ground of failure to state a cause of action.
What VMTA actually seeks in filing a complaint-in-intervention is the reimbursement of the cost of the restoration and
rehabilitation of the burned area of the Virra Mall building. And VMTA believes that such reimbursement must be made from
the fire insurance proceeds released to VMGA. Such position cannot be sustained.
...

...

...

Firstly, We find that the complaint-in-intervention fails to state a cause of action against the petitioners. The material
averments of the complaint-in-intervention belie any correlative obligation on the part of herein petitioners vis- -vis the
legal right of VMTA for reimbursement. The petitioners are not the proper parties against whom the subject action for
reimbursement must be directed to. On the contrary, since "x x x plaintiff Ortigas, as owner of the building, has ordered
intervenor VMTA to undertake with dispatch the restoration and rehabilitation of the burned area or section of the Virra Mall
buiding x x x" (par. 7 of Complaint-in-Intervention), VMTA's recourse would be to file and direct its claim against ORTIGAS
who has the obligation to pay for the same. The complaint-in-intervention is not the proper action for VMTA to enforce its
right of reimbursement. At any rate, VMTA's rights, if any, can be ventilated and protected in a separate action. The
complaint-in-intervention is therefore dismissible for failure to state a cause of action against the petitioners.
Secondly, VMTA has no legal interest in the matter in litigation. It is not privy to the Contract of Lease between ORTIGAS and
VMGA. It came into the picture only after the expiration of the said contract.
Finally, Section 1, Rule 19 of the 1997 Rules of Civil Procedure provides:
Section 1. Who may intervene. A person who has a legal interest in the matter in litigation, or in the success of either of the
parties, or an interest against both, or is so situated as to be adversely affected by a distribution or other disposition of the
property in the custody of the court or of an offices thereof may, with leave of court, be allowed to intervene in the action.
The court shall consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the
original parties, and whether or not the intervenor's rights may be fully protected in a separate proceeding.
As a general guide in determining whether a party may intervene, the court shall consider whether or not the intervention
will unduly delay or prejudice the adjudication of the rights of the original parties, and whether or not the intervenor's rights
may be fully protected in a separate proceeding (Sec. 2(b), Rule 12; Balane, et al. vs. De Guzman, et al., 20 SCRA 177
[1967]).
The complaint below is primarily on the issue of specific performance. The relief being sought by the VMTA in its complaintin-intervention is the reimbursement of expenses incurred by it for the repair/restoration of the Virra Mall Building. VMTA's
cause of action has a standpoint which is unique to itself. New, unrelated, and conflicting issues would be raised which do not
concern the petitioners herein, or VMTA as intervenor. Inevitably, the allowance of the intervention will not only cause delay
in the trial of the action, make the issues even more complicated, and stretch the issues in the action as well as amplify the
breadth of the remedies and relief.
Thereafter, VMTA filed a Motion for Reconsideration, which the CA denied in the assailed Resolution dated 14 May 2008.
[19]
Hence, the instant Petition raising the following issues:
I.
With due respect, the Honorable Court of Appeals committed grave error in declaring that the complaint in intervention failed
to state a cause of action against private respondents when it declared that the complaint in intervention belies any
correlative obligation on the part of private respondents vis- -vis the legal right of petitioner for reimbursement.
II.
With due respect, the Honorable Court of Appeals committed grave error in holding that private respondents are not the
proper parties against whom the subject action for reimbursement must be directed to but recourse would be for petitioner
VMTA to file and direct its claim against OCLP who has the obligation to pay petitioner VMTA since it was OCLP who has (sic)
ordered to undertake the restoration and rehabilitation of the burned area or section of the Virra Mall Building.
III.
With due respect, the Honorable Court of Appeals similarly committed grave error when it ruled that the complaint-in-

intervention is not the proper action to enforce its right in the controversy between OCLP and private respondents since the
proper remedy is for petitioner VMTA to ventilate and protect its right in a separate action. [20]
The determination of whether the CA committed reversible error in dismissing the Complaint-in-Intervention filed by VMTA
boils down to the sole issue of the propriety of this remedy in enforcing the latter's rights.
According to VMTA, it has a legal interest in Civil Case No. 69312, which is rooted in the alleged failure of VMGA to turn over
the insurance proceeds for the restoration and rehabilitation of Virra Mall, in breach of the latter's contractual obligation to
Ortigas. However, the CA ruled against this position taken by VMTA not only because, in the CA's view, VMTA's Complaint-inIntervention failed to state a cause of action, but also because it has no legal interest in the matter in litigation. We rule in
favor of VMTA.
Section 1, Rule 19 of the Rules of Court provides:
Who may intervene. - A person who has a legal interest in the matter in litigation, or in the success of either of the parties,
or an interest against both, or is so situated as to be adversely affected by a distribution or other disposition of property in
the custody of the court or of an officer thereof may, with leave of court, be allowed to intervene in the action. The court
shall consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original
parties, and whether or not the intervenor's rights may be fully protected in a separate proceeding.
In Executive Secretary v. Northeast Freight,[21] this Court explained intervention in this wise:
Intervention is not a matter of absolute right but may be permitted by the court when the applicant shows facts which satisfy
the requirements of the statute authorizing intervention. Under our Rules of Court, what qualifies a person to intervene
is his possession of a legal interest in the matter in litigation or in the success of either of the parties, or an
interest against both; or when he is so situated as to be adversely affected by a distribution or other disposition
of property in the custody of the court or an officer thereof. As regards the legal interest as qualifying factor, this
Court has ruled that such interest must be of a direct and immediate character so that the intervenor will either gain or
lose by the direct legal operation of the judgment. The interest must be actual and material, a concern which is more
than mere curiosity, or academic or sentimental desire; it must not be indirect and contingent, indirect and remote,
conjectural, consequential or collateral. However, notwithstanding the presence of a legal interest, permission to intervene is
subject to the sound discretion of the court, the exercise of which is limited by considering "whether or not the intervention
will unduly delay or prejudice the adjudication of the rights of the original parties and whether or not the intervenor's rights
may be fully protected in a separate proceeding."[22] (Emphasis supplied.)
Applying the foregoing points to the case at bar, VMTA may be allowed to intervene, and the ruling of RTC Br. 67 allowing
intervention was wrongly reversed by the CA because such a ruling does not constitute grave abuse of discretion.
VMTA has a cause of action
A cause of action is defined as "the act or omission by which a party violates a right of another." [23]In Shell Philippines v.
Jalos,[24] this Court expounded on what constitutes a cause of action, to wit:
A cause of action is the wrongful act or omission committed by the defendant in violation of the primary rights of the
plaintiff.Its elements consist of: (1) a right existing in favor of the plaintiff, (2) a duty on the part of the defendant to respect
the plaintiff's right, and (3) an act or omission of the defendant in violation of such right.To sustain a motion to dismiss for
lack of cause of action, however, the complaint must show that the claim for relief does not exist and not only that the claim
was defectively stated or is ambiguous, indefinite or uncertain. [25]
In the case at bar, VMTA, in its Complaint-in-Intervention, explicitly laid down its cause of action as follows: [26]
Pursuant to and by virtue of such claim, defendant VMGA and defendant VMGA Board Members, impleaded as party
defendants herein, received, at various times, from their insurance broker, and it is in their custody, the insurance proceeds
arising out of such claim which, as of January 8, 2003, aggregated P48.6-Million. Having failed to deliver the said
proceeds to the real beneficiary inspite of due notice and demand, plaintiff Ortigas herein instituted the present
action against all the defendants to compel delivery of the said insurance proceeds which are being unlawfully
and illegally withheld by all the defendant VMGA and defendant VMGA Board Members inspite of written
demands made therefor. Worse, a portion of said insurance proceeds, aggregating P8.6-Million had already been disbursed
and misappropriated in breach of trust and fiduciary duty. (Emphasis supplied.)
It is clear from the foregoing allegations that VMTA's purported right is rooted in its claim that it is the real beneficiary of the
insurance proceeds, on the grounds that it had (a) facilitated the repair and restoration of the insured infrastructure upon the
orders of Ortigas, and (b) advanced the costs thereof. Corollarily, respondents have a duty to reimburse it for its expenses
since the insurance proceeds had already been issued in favor of respondent VMGA, even if the latter was not rightfully
entitled thereto. Finally, the imputed act or omission on the part of respondents that supposedly violated the right of VMTA
was respondent VMGA's refusal, despite demand, to release the insurance proceeds it received to reimburse the former for
the expenses it had incurred in relation to the restoration and repair of Virra Mall. Clearly, then, VMTA was able to establish
its cause of action.

VMTA has a legal interest in the matter in litigation


VMTA was also able to show its legal interest in the matter in litigation -- VMGA's insurance proceeds -- considering that it
had already advanced the substantial amount of P18,902,497.75 for the repair and restoration of Virra Mall. That VMTA seeks
reimbursement from Ortigas is precisely the reason why intervention is proper. The main issue in Civil Case No. 69312 is
whether Ortigas has a contractual right to the insurance proceeds received by VMGA. Thus, the recoupment by VMTA of the
expenses it incurred in the repair of Virra Mall depends on the success of either party in the main case. VMTA therefore has
an undeniable stake in Civil Case No. 69312 that would warrant its intervention therein.
Further, the issuance to Ortigas of a Writ of Preliminary Attachment against VMGA puts VMTA in a situation in which it will be
adversely affected by a distribution or other disposition of the property in the custody of the court, pursuant to the said writ.
The prospect of any distribution or disposition of the attached property will likewise affect VMTA's claim for reimbursement.
VMTA's intervention in Civil Case No. 69312 will avoid a multiplicity of suits
Lastly, allowing VMTA to intervene in Civil Case No. 69312 finds support in Heirs of Medrano v. De Vera,[27] to wit:
The purpose of intervention is to enable a stranger to an action to become a party in order for him to protect his interest and
for the court to settle all conflicting claims. Intervention is allowed to avoid multiplicity of suits more than on due process
considerations.[28]
Thus, although the CA was correct in stating that VMTA could always file a separate case against Ortigas, allowing VMTA to
intervene will facilitate the orderly administration of justice and avoid a multiplicity of suits. We do not see how delay will be
inordinately occasioned by the intervention of VMTA, contrary to the fear of the CA.
WHEREFORE, the instant petition is GRANTED. The Decision dated 21 May 2007 and Resolution dated 14 May 2008 of the
CA are hereby REVERSED and SET ASIDE insofar as the dismissal of the Complaint-in-Intervention filed by VMTA is
concerned. The Complaint-in-Intervention of VMTA in Civil Case No. 69312 is allowed to proceed before RTC Br. 67.
SO ORDERED.