RULE 1

G.R. No. L-2352

July 26, 1910

ELADIO ALONSO, plaintiff-appellee,

vs.
TOMAS VILLAMOR, ET AL., defendants-appellants.
Ledesma, Sumulong and Quintos, for appellants.
J. C. Knudson, for appellee.
MORELAND, J.:
DOCTRINE: misjoinder or non-joinder of indispensable parties in a complaint is not a ground for dismissal of
action.

This is an action brought to recover of the defendants the value of certain articles taken from a Roman Catholic Church
located in the municipality of Placer, and the rental value of the church and its appurtenances, including the church
cemetery, from the 11th day of December, 1901, until the month of April, 1904. After hearing the evidence, the court below
gave judgment in favor of the plaintiff for the sum of P1,581, with interest at 6 per cent from the date of the judgment. The
said sum of P1,581 was made up of two items, one of which, P741, was for the value of the articles taken from the
church, and the other, P840, the rental value of the premises during the occupations by defendants. From this judgment
the defendants appealed to this court.
It appears that the defendants were on the 11th day of December, 1901, members of the municipal board of the
municipality of Placer, and that they on that date addressed to the plaintiff in this case, who was the priest in charge of the
church, its appurtenances and contents, the following letter:
PLACER, 11th December, 1901.
R. P. ELADIO ALONSO, Benedicto, Suriago.
ESTEEMED PADRE: After saluting you, we take the liberty of writing you that in the municipality of which we
have charged we have received an order from the provincial fiscal, dated the 5th instant, which says: "The
cemeteries, convents, and the other buildings erected on land belonging to the town at the expense of the town
and preserved by it belong to the town, and for this reason the municipality is under the obligation of
administering them and of collecting the revenues therefrom, and for this reason we notify you that from this
date all of the revenues and products therefrom must be turned into the treasury of the municipality in order that
the people may properly preserve them.
In the same way we notify you that the image of St. Vicente which is now in the church, as it is an image
donated to the people by its owner, by virtue of said order is also the property of said people, and therefore the
alms which are given it by the devotees thereof must be also turned into the municipal treasury for the proper
preservation of the church and for other necessary purposes. We hope that you will view in the proper light and
that you will deliver to the bearer of this letter the key of the alms box of the said image in order that we may
comply with our obligation in conformity with the dispositions of said order.
We beg to remain as always by your spiritual sons. Q. B. S. M.
(Signed) ANDRES OJEDA.
TOMAS VILLAMOR.
ANDRES CALINAUAN.

BERNARDINO TANDOY.
EUSEBIO LIRIO.
ELEUTERIO MONDAYA.
MAXIMO DELOLA.
SEGUNDO BECERRO.
ONOFRE ELIMANCE.
On the 13th of December, 1901, the defendants took possession of the church and its appurtenances, and also of all of
the personal property contained therein. The plaintiff, as priest of the church and the person in charge thereof, protested
against the occupation thereof by the defendants, but his protests received no consideration, and he was summarily
removed from possession of the church, its appurtenances and contents.
The only defense presented by the defendants, except the one that the plaintiff was not the real party in interest, was that
the church and other buildings had been erected by funds voluntarily contributed by the people of that municipality, and
that the articles within the church had been purchased with funds raised in like manner, and that, therefore, the
municipality was the owner thereof.
The question as to the ownership of the church and its appurtenances, including the convent and cemetery, was before
this court on the 23rd day of September, 1908, in an action entitled "The Roman Catholic Apostolic Church against the
municipality of Placer."1 Substantially the same facts were presented on the part of the defendants in that case as are
presented by the defendants in this. The question there litigated was the claim upon the part of the municipality of
ownership of said church and its appurtenances on the ground that according to Spanish law the Roman Catholic
Apostolic Church was not the owner of such property, having only the use thereof for ordinary ecclesiastical and religious
purposes, and that the true owner thereof was the municipality or the State by reason of the contributions by them, or by
the people, of the land and of the funds with which the buildings were constructed or repaired. The court decided in that
case that the claim of the defendants was not well founded and that the property belonged to the Roman Catholic Church.
The same question was discussed and decided in the case of Barlin vs. Ramirez (7 Phil. Rep., 41), and the case of The
Municipality of Ponce vs. Roman Catholic Apostolic Church in Porto Rico (28 Sup. Ct. Rep., 737, 6 Off. Gaz., 1213).
We have made a careful examination of the record and the evidence in this case and we have no doubt that the property
sued for was, at the time it was taken by the defendants, the property of the Roman Catholic Church, and that the seizure
of the same and occupation of the church and its appurtenances by the defendants were wrongful and illegal. We are also
convinced, from such examination, that the conclusions of the court below as to the value of the articles taken by the
defendants and of the rent of the church for the time of its illegal occupation by the defendants were correct and proper.
While some objection was made on appeal by counsel for the defendants that the value of the articles taken and of the
rent of the church and its appurtenances had not been proved by competent evidence, no objection to the introduction of
the evidence of value was made at the trial and we can not consider that question raised for the first time here.
We have carefully examined the assignments of error made by counsel for defendants on this appeal. We find none of
them well founded. The only one which deserves especial attention at our hands is the one wherein the defendants assert
that the court below erred in permitting the action to be brought and continued in the name of the plaintiff instead of in the
name of the bishop of the diocese within which the church was located, or in the name of the Roman Catholic Apostolic
Church, as the real party in interest.
It is undoubted the bishop of the diocese or the Roman Catholic Apostic Church itself is the real party in interest. The
plaintiff personally has no interest in the cause of action. Section 114 of the Code of Civil Procedure requires that every
action must be prosecuted in the name of the real party in interest. The plaintiff is not such party.
Section 110 of the Code of Civil Procedure, however, provides:
SEC. 110. Amendments in general. The court shall, in furtherance of justice, and on such terms, if any, as
may be proper, allow a party to amend any pleading or proceeding and at any stage of the action, in either the
Court of First Instance or the Supreme Court, by adding or striking out the name of any party, either plaintiff or
defendant, or by correcting a mistake in the name of a party, or a mistaken or inadequate allegation or
description in any other respect so that the actual merits of the controversy may speedily be determined,
without regard to technicalities, and in the most expeditious, and inexpensive manner. The court may also, upon
like terms, allow an answer or other pleading to be made after the time limited by the rules of the court for filing

the same. Orders of the court upon the matters provided in this section shall be made upon motion filed in court,
and after notice to the adverse party, and an opportunity to be heard.
Section 503 of the same code provides:
SEC. 503. Judgment not to be reversed on technical grounds. No judgment shall be reversed on formal or
technical grounds, or for such error as has not prejudiced the real rights of the excepting party.
We are confident under these provisions that this court has full power, apart from that power and authority which is
inherent, to amend the process, pleadings, proceedings, and decision in this case by substituting, as party plaintiff, the
real party in interest. Not only are we confident that we may do so, but we are convinced that we should do so. Such an
amendment does not constitute, really a change in the identity of the parties. The plaintiff asserts in his complaint, and
maintains that assertion all through the record, that he is engaged in the prosecution of this case, not for himself, but for
the bishop of the diocesenot by his own right, but by right of another. He seeks merely to do for the bishop what the
bishop might do for himself. His own personality is not involved. His own rights are not presented. He claims no interest
whatever in the litigation. He seeks only the welfare of the great church whose servant he is. Gladly permits his identity to
be wholly swallowed up in that of his superior. The substitution, then, of the name of the bishop of the diocese, or the
Roman Catholic Apostolic Church, for that of Padre Alonso, as party plaintiff, is not in reality the substitution of one identity
for another, of one party for another, but is simply to make the form express the substance. The substance is there. It
appears all through the proceedings. No one is deceived for an instant as to whose interest are at stake. The form of its
expression is alone defective. The substitution, then, is not substantial but formal. Defect in mere form can not possibly so
long as the substantial is clearly evident. Form is a method of speech used to express substance and make it clearly
appear. It is the means by which the substance reveals itself. If the form be faulty and still the substance shows plainly
through no, harm can come by making the form accurately expressive of the substance.
No one has been misled by the error in the name of the party plaintiff. If we should by reason of this error send this back
for amendment and new trial, there would be on the retrial the same complaint, the same answer, the same defense, the
same interests, the same witnesses, and the same evidence. The name of the plaintiff would constitute the only difference
between the old trial and the new. In our judgment there is not enough in a name to justify such action.
There is nothing sacred about processes or pleadings, their forms or contents. Their sole purpose is to facilitate the
application of justice to the rival claims of contending parties. They were created, not to hinder and delay, but to facilitate
and promote, the administration of justice. They do not constitute the thing itself, which courts are always striving to
secure to litigants. They are designed as the means best adapted to obtain that thing. In other words, they are a means to
an end. When they lose the character of the one and become the other, the administration of justice is at fault and courts
are correspondingly remiss in the performance of their obvious duty.
The error in this case is purely technical. To take advantage of it for other purposes than to cure it, does not appeal to a
fair sense of justice. Its presentation as fatal to the plaintiff's case smacks of skill rather than right. A litigation is not a
game of technicalities in which one, more deeply schooled and skilled in the subtle art of movement and position, entraps
and destroys the other. It is, rather, a contest in which each contending party fully and fairly lays before the court the facts
in issue and then, brushing aside as wholly trivial and indecisive all imperfections of form and technicalities of procedure,
asks that justice be done upon the merits. Lawsuits, unlike duels, are not to be won by a rapier's thrust. Technicality, when
it desserts its proper office as an aid to justice and becomes its great hindrance and chief enemy, deserves scant
consideration from courts. There should be no vested rights in technicalities. No litigant should be permitted to challenge a
record of a court of these Islands for defect of form when his substantial rights have not been prejudiced thereby.
In ordering this substitution, we are in accord with the best judicial thought. (McKeighan vs. Hopkins, 19 Neb., 33;
Dixon vs. Dixon, 19 Ia., 512; Hodges vs. Kimball, 49 Ia., 577; Sanger vs. Newton, 134 Mass., 308; George vs. Reed, 101
Mass., 378; Bowden vs. Burnham, 59 Fed. Rep., 752; Phipps and Co. vs. Hurlburt, 70 Fed. Rep., 202; McDonalvs. State,
101 Fed. Rep., 171; Morford vs. Diffenbocker, 20 N. W., 600; Costelo vs. Costelo vs. Crowell, 134 Mass., 280;
Whitaker vs. Pope, 2 Woods, 463, Fed. Cas. no. 17528; Miller vs. Pollock, 99 Pa. St., 202; Wilson vs. Presbyterian
Church, 56 Ga., 554; Wood vs. Circuit Judge, 84 Mich., 521; Insurance Co, vs. Mueller, 77 Ill., 22; Farman vs. Doyle, 128
Mich., 696; Union Bank vs. Mott, 19 How. Pr., 114; R. R. Co. vs. Gibson, 4 Ohio St., 145; Hume vs. Kelly, 28 Oreg., 398.)
It is therefore, ordered and decreed that the process, pleadings, proceedings and decision in this action be, and the same
are hereby, amended by substituting the Roman Catholic Apostolic Church in the place and stead of Eladio Alonso as
party plaintiff, that the complaint be considered as though originally filed by the Catholic Church, the answer thereto made,
the decision rendered and all proceedings in this case had, as if the said institution which Father Eladio Alonso undertook
to represent were the party plaintiff, and that said decision of the court below, so amended, is affirmed, without special
finding as to the costs.
Arellano, C. J., Torres, Johnson and Trent, JJ., concur.

DIGEST
Alonso
(plaintiff),
contained
therein.
church
and
the
the
defendantspurchased
by
funds
a
real
party
in
belonged
to
the
Roman
no
interest
in
Apostolic
Church
in
constitute
identity
of
change
the
parties
in
the
but
just
a purposes.
formal
substitution.
the
Case
date
of
(2)
rental
P840
value
of
the
premises
during
the
occupation
by
defendants.
Statement
of
Facts
municipality
addressed
of
to
the
plaintiff
(Alonso,
priest
in
charge
ofparty
the
church)
a
letter
stating
the
-Placer
We
have
received
an
order
from
the
provincial
fiscal
which
says:
The
cemeteries,
convents,
and you
the will
other
revenues
therefrom,
and
for
this
reason
we
notify
you
that
from
this
date
all
of
revenues
and
products
preserve
them.
people
given
church
and
for
other
necessary
We
hope
that
you
will
view
in
the
proper
light
andfollowing:
that
with
our
obligation
in
conformity
with
the
dispositions
of
said
order.
personal
consideration
recover
of
the
and
its
plaintiff.
the
bishop
of
the
municipality,
and
was
Applicable
the
owner
Laws:
thereof.
Secs.
114,
110
and
503
of
the
Code
of
Civil
Procedure
(used
inthe
this
case)
Issues:
municipality
Placer
(No)
of
2.
3.
WON
the
plaintiff,
Court
can
R.P.
substitute
Alonso,
is
as
the
party
real
plaintiff
party
in
the
interest
real
(No)
in
interest
(Yes)
Rationale
Catholic
Church,
were
defendants
and
proper.
property
to
the
Roman
Catholic
Church.
b.
Barlin
vbelonged
Ramirez,
Municipality
of
Ponce
v
Roman
Catholic
Apostolic
Church
in
Porto
Rico
party
interest.
in
The
plaintiff
personally
has
no
interest
in
the
cause
of
action
Alonso
contained
therein.
church
and
the
the
defendantspurchased
by
funds
a
real
party
in
belonged
to
the
Roman
no
interest
in
the
Apostolic
inin
constitute
identity
ofChurch
change
the
parties
but 26,
just1910|
a formal substitution
Alonso
v(plaintiff),
Villamor,
et.
al.the
July
Ponente: Moreland
Overview: Members of the municipal board of the municipality of Placer (defendants) took from Father Alonso (plaintiff),
priest in charge, possession of the church and its appurtenances, and also all of the personal property contained therein.
Father Alonso then brought an action to recover from the defendants the value of certain articles from the church and the
rental value of the premises during the occupation of the defendants. LC decided in his favor. According to the
defendantsappellants, the church and the articles within it was owned by the municipality as these were built and
purchased by funds voluntarily contributed by the people of the municipality. They also claimed that Father Alonso was not
a real party in interest. SC affirmed the ruling of the LC saying that at the time of taking, the property in question belonged
to the Roman Catholic Church. SC also declared that Father Alonso is not the real party in interest as he personally has
no interest in the cause of action. However, SC ordered that the action be amended by substituting the Roman Catholic
Apostolic Church in the place and stead of Father Alonso as party plaintiff for the reason that the amendment does not
constitute change in the identity of the parties but just a formal substitution.
Statement of the Case The court below gave judgment in favor of the plaintiff for the sum of P1,581, with interest at 6%
from the date of the judgment. Said sum was made up of two items: (1) P741 value of the articles taken from the church;
(2) P840 rental value of the premises during the occupation by defendants.
Statement of Facts December 11, 1901: Defendants (Villamor, et. al) who were members of the municipal board of the
municipality of Placer addressed to the plaintiff (Alonso, priest in charge of the church) a letter stating the following:
We have received an order from the provincial fiscal which says: The cemeteries, convents, and the other
buildings erected on land belonging to the town at the expense of the town and preserved by it belong to the town, and for
this reason the municipality is under the obligation of administering them and of collecting the revenues therefrom, and for
this reason we notify you that from this date all of the revenues and products therefrom must be turned into the treasury of
the municipality in order that the people may properly preserve them.
We notify you that the image of St. Vicente which is now in the church, as it is an image donated to the people
by its owner, by virtue of said order is also the property of said people, and therefore the alms which are given it by the
devotees thereof must be also turned into the municipal treasury for the proper preservation of the church and for other
necessary purposes. We hope that you will view in the proper light and that you will deliver to the bearer of this letter the
key of the alms box of the said image in order that we may comply with our obligation in conformity with the dispositions of
said order. - December 13, 1901: Defendants took possession of the church and its appurtenances, and also all of the
personal property contained therein. The plaintiff protested against the occupation but his protests received no
consideration so he was summarily removed from possession of the same. An action was brought by the plaintiff to
recover of the defendants the (1) value of certain articles taken from the church, and (2) the rental value of the church and
its appurtenances, including the church cemetery from December 11, 1901 April 1904. LC ruled in favor of the plaintiff. Defendants: (1) Plaintiff is not the real party in interest (Action should have been in the name of the bishop of the diocese
within the church was located, or in the name of the Roman Catholic Apostolic Church, as the real party in interest); (2)
The church had been erected by funds voluntarily contributed by the people of the municipality, and that the articles within
the church had been purchased with funds raised in like manner, therefore, the municipality was the owner thereof.
Applicable Laws: Secs. 114, 110 and 503 of the Code of Civil Procedure (used in this case)
Issues: 1. WON the church and its appurtenances, and personal property contained therein belonged to the municipality
of Placer (No)
2. WON the plaintiff, R.P. Alonso, is the real party in interest (No)
3. WON the Court can substitute as party plaintiff the real party in interest (Yes)
Rationale 1. The property sued for was, at the time it was taken by the defendants, the property of the Roman Catholic
Church, and that the seizure of the same and occupation of the church and its appurtenances by the defendants were
wrongful and illegal. The conclusions of the court below as to the value of the articles taken by the defendants and of the
rent of the church for the time of its illegal occupation by the defendants were also correct and proper.
a. The Roman Catholic Church against the municipality of Placer (September 23, 1908): Court ruled that the
property belonged to the Roman Catholic Church.
b. Barlin v Ramirez, Municipality of Ponce v Roman Catholic Apostolic Church in Porto Rico
2. It is undoubted that the bishop of the diocese or the Roman Catholic Apostolic Church itself is the real party in interest.
The plaintiff personally has no interest in the cause of action.
a. Sec. 114 of the Code of Civil Procedure: Every action must be prosecuted in the name of the real party in
interest.
3. This Court has full power, apart from that power and authority which is inherent, to amend the process, pleadings,
proceedings, and decision in this case by substituting, as party plaintiff, the real party in interest. Not only are we confident
that we may do so, but we are convinced that we should do so.

a. Sec. 110 of the Code of Civil Procedure: Amendments in general. The court shall, in furtherance of justice,
and on such terms, if any, as may be proper, allow a party to amend any pleading or proceeding and at any stage of the
action, in either the Court of First Instance or the Supreme Court, by adding or striking out the name of any party, either
plaintiff or defendant, or by correcting a mistake in the name of a party, or a mistaken or inadequate allegation or
description in any other respect so that the actual merits of the controversy may speedily be determined, without regard to
technicalities, and in the most expeditious, and inexpensive manner. The court may also, upon like terms, allow an answer
or other pleading to be made after the time limited by the rules of the court for filing the same. Orders of the court upon
the matters provided in this section shall be made upon motion filed in court, and after notice to the adverse party, and an
opportunity to be heard.
b. Sec. 503: Judgment not to be reversed on technical grounds. No judgment shall be reversed on formal or
technical grounds, or for such error as has not prejudiced the real rights of the excepting party.
c. Such an amendment does not constitute a change in the identity of the parties.
i. The plaintiff asserts in his complaint, and maintains that assertion all through the record, that he is
engaged in the prosecution of this case, not for himself, but for the bishop of the diocesenot by his own right,
but by right of another. He seeks merely to do for the bishop what the bishop might do for himself. His own
personality is not involved. His own rights are not presented. He claims no interest whatever in the litigation. He
seeks only the welfare of the great church whose servant he is. Gladly permits his identity to be wholly
swallowed up in that of his superior.
d. Formal substitution - Substitution so as to make the form express the substance
i. No one is deceived for an instant as to whose interest are at stake. The form of its expression is
alone defective.
ii. Form is a method of speech used to express substance and make it clearly appear. It is the means
by which the substance reveals itself. If the form be faulty and still the substance shows plainly through no,
harm can come by making the form accurately expressive of the substance.
e. No one has been misled by the error in the name of the party plaintiff. If we should by reason of this error
send this back for amendment and new trial, there would be on the retrial the same complaint, the same answer, the
same defense, the same interests, the same witnesses, and the same evidence. The name of the plaintiff would constitute
the only difference between the old trial and the new. In our judgment there is not enough in a name to justify such action.
f. There is nothing sacred about processes or pleadings, their forms or contents. Their sole purpose is to
facilitate the application of justice to the rival claims of contending parties. They were created, not to hinder and delay, but
to facilitate and promote, the administration of justice. The error in this case is purely technical. To take advantage of it for
other purposes than to cure it, does not appeal to a fair sense of justice. Technicality, when it desserts its proper office as
an aid to justice and becomes its great hindrance and chief enemy, deserves scant consideration from courts. There
should be no vested rights in technicalities. No litigant should be permitted to challenge a record of a court of these
Islands for defect of form when his substantial rights have not been prejudiced thereby.
Judgment: Process, pleadings, proceedings and decision in this action is amended by substituting the Roman Catholic
Apostolic Church in the place and stead of Alonso as party plaintiff. Decision of the court below, so amended, is affirmed.

Eladio Alonso
, plaintiff and appellee v.
Tomas Villamor et al
., defendants andappellants.No. 2352July 26, 1910
FACTS:
Defendants were members of the municipal board of the municipality of
Placer. They wrote a letter addressed to the plaintiff who at that time was the priest incharge of the
church. The contents of the letter basically stated that there was
anorder from the provincial fiscal saying that cemeteries, convents, and otherbuildings erected on land
belonging to the town belong to the town. As such, theyare notifying the priest that all revenues and
products of the church must be
turnedover to the treasury of the municipality. All alms given by churchgoers anddevotees to the image of
St. Vicente lodged in the church should also be turned intothe municipal
treasury. Two weeks later, the defendants took possession of the church and all of thepersonal properties
contained therein. The plaintiff, as the priest and as the
personin charge thereof, made protests that went unheeded. Hence, an action wasbrought by him to
recover from the defendants the value of the articles and therental value of the church. The lower court
ruled in favor of the plaintiff. In the defendants appeal, one of thedefenses presented was that the plaintiff
was not the real party in interest. Thedefendants assert that the court erred in permitting the action o be
brought andcontinued in the name of the plaintiff, Tomas Villamor, instead of in the name of thebishop of
the diocese within which the church was located or in the name of theRoman Catholic Apostolic Church.
ISSUE:
Whether or not the formal/technical defect raised by the defendant constitutesenough ground to reverse
the decision of the court
RULING/RATIO:
No, the Court allowed the substitution of the plaintiff as the party in interest. Sec.503 of the Code of Civil
Procedure provides that

No judgment shall be revered onformal or technical grounds, or for such error as has not prejudiced real
rights of theexcepting party.
Sec. 110 of the same code also provides that in furtherance
of justice, the court is empowered to allow a party to amend any pleading orproceeding at any stage of
the action.In this case, it is undoubted that the bishop of the diocese or the Roman CatholicApostolic
Church itself is the real party in interest. The plaintiff asserted the same inthe complaint, and maintained
that assertion all through the record. He claimed nointerest whatsoever in the litigation. The substitution,
then, of the name of thebishop of the diocese as party plaintiff, is in reality not a substation of the identity
of another but is simply to make the form express the substance that is already there. There is nothing
sacred about processes or pleadings, their forms or contents. Theirsole purpose is to facilitate the
application of justice to the rival claims of

RULE2

November5,1928

G.R.No.29155
JOSEFINA RUBIO DE LARENA,plaintiffappellant,
vs.
HERMENEGILDO VILLANUEVA,defendantappellee.

Abad Santos, Camus and Delgado and Jose Montano for appellant.
Del Rosario and Del Rosario for appellee.

OSTRAND, J.:

ThecaseatbarisasequeltocaseG. R. No. 21706,JosefinaRubiodeLarenavs.HermenegildoVillanueva,decidedonMarch26,

1924.[[1]] InthatcaseweaffirmedadecisionoftheCourtofFirstInstanceorderingtherescissionofaleaseoftheTacgajanSugar
Plantationandthepaymentbythedefendantlesseeoftheunpaidbalanceoftherentfortheagriculturalyear19201922inthesumof
P5,949.28withinterestfromAugust26,1922,anforP8,000inrentfortheagriculturalyear19211923.Thedecisionalsoprovided
thatthepossessionoftheleasedlandbedeliveredtotheplaintiff.

Shortlyaftertherecordwasreturnedtothecourtbelow,awritofexecutionwasissued,butbeforelevywasmadethepartiescameto
anagreement,underwhichthemoneyjudgmentwastobesatisfiedbythepaymentofP10,500incashandthetransfertotheplaintiff
ofadwellinghousesituatedinthemunicipalityofBais.Theagreementwascarriedoutinaccordancewithitsterms,andon
September30,1924,thefollowingdocumentwasexecutedbytheplaintiff:

Habiendollegadoaunconvenioentrelaquesubscribe,ejecutante,enlacausacivilNo.67decididaporlaCorteSuprema,yel
ejecutado,DonHermenegildoVillanueva,porlapresentedeclarohaberrecibidodelSheriffProvincialdeNegrosOriental,ymientera
satisfaccionlasumadediezmilquinientospesos(P10,500),masunacasaresidencialconsusolar,situadaenlaplazadelMunicipio

deBais,ProvinciadeNegrosOriental,cuyasdescripcionesaparecenanunocumentoaparte,porelimportntedelaejecusacion
expididaporelJusgadodeNegrosOrientalal14demayode1924,envituddeunadecisiondelaCorteSuprema.Conestequeda
definitivamentecumplimentadaestaejecucion.

Yparaqueasiconste,firmolapresenteenelMunicipiodeBais,ProvinciadeNegrosOriental,I.F.,anteelSheriffProvincialdeesta
ProvinciadeNegrosOrientalyelNotarioPublicoDonFranciscoRomero,queratificaestecompromiso.

(Fda.)JOSEFINARUBIO,Vda.DELARENA

Firmadoenpresenciade:

(Fdos.)BRAULIORUBIO

FRANCISCOPINERO

(ACKNOWLEDGMENT)

Inthemeantime,thedefendanthadharvestedthesugarcanecropproducedintheagriculturalyear19221924,andafterhaving
satisfiedtheaforesaidmoneyjudgment,healsocontinuedinpossessionoftheplantationlongenoughtoappropriatetohimselfthe
followingratooncanecrop.

ThepresentactionwasbroughtonApril13,1925,butthelastamendedcomplaint,settingforththreecausesofaction,wasnotfiled
untilJune17,1927.Asherfirstcauseofactiontheplaintiff,afterapreliminarystatementoftheoriginofthecontroversy,allegesthat
whilecaseG. R. No. 21706wasonappealtotheSupremeCourt,thedefendantknewpositivelythattheaforesaidleasewas
declaredrescindedbytheCourtofFirstInstanceonSeptember8,1923,andthathe,thedefendant,alsoknewthathethereafterwas
notentitledtothepossessionoftheaforesaidhacienda;thathe,nevertheless,inbadfaithcontinuedinsuchpossessionduringthe
agriculturalyear19221924andappropriatedtohimselfthecaneharvestforthatyear,whichafterdeductingtheshareofthesugar
central,produced1,679.02piculsforhisownbenefit,whichsugarwassoldbyhimforthesumofP13apicul;thattheplaintiffhas
demandedpaymenttoherofthetotalvalueofsaid1,679.02piculs,amountingtoP21,827.26,butthatthedefendantrefusestopay.
Theplaintiff,therefore,asksjudgmentforthesumofP21,827.26uponthefirstcauseofaction.

ForthesecondcauseofactiontheplaintiffallegesthatunderthecontractofleaseoftheTacgajanHacienda,oneoftheobligations
assumedbythedefendantwasthathewouldusethecareofagoodfatherofthefamilyinconservingthetools,agricultural
implements,draftanimals,andothereffectsenumeratedinaninventorymadeatthetimethedefendantenteredinpossessionunder
thelease;thathewasfurtherobligatedtoreturnsaidpropertytotheplaintiff,butthathereturnsaidpropertytotheplaintiff,butthat

hereturnedonlyapartthathereturnedonlyapartthereofandfailedtoreturnedonlyapartthereofandfailedtoreturn4carabaos,4
vacunos,1cornmill,4wagons,106steelrails,14plows,1table,1scale,an1telephone,thetotalvalueofthepropertyenumerated
beingP3,596forwhichamount,plusP500indamages,theplaintiffasksjudgmentunderhersecondcauseofaction.

Asathirdcauseofactiontheplaintiffallegesthattheharvestofsugarcaneillegallymadebythedefendantin1924leftratoonsugar
caneinthefieldsofthehacienda,whichsugarcanwasthepropertyoftheplaintiff,andthatduringtheyear1925,thedefendant
illegallyharvestedsaidratooncanetogetherwithsomerecentlyplantedcane,whichharvestedafterdeductingtheshareofthesugar
central,produced1,613.25piculsofsugar,whichthedefendantsoldforhisownbenefitatthepriceofP13perpicul,thetotalamount
receivedbyhimbeingP20,962.25forwhichtheplaintiffdemandsjudgment.

Inhisanswertothefirstandthirdcausesofaction,thedefendantsallegesthataccordingtothepleadingsincaseG. R. No. 21706,

thetwocausesofactionwereincludedinthatcaseand,therefore,mustbeconsideredres adjudicata.Inregardtothesecondcause
ofactionthedefendantpleadsthegeneralissueandsetsupasaspecialdefensethatassumingthatthepropertyreferredtoinsaid
causeofactionwasmissing,itlosswasduetoitstotalextinctionbyordinaryuse,forwhichthedefendantcouldnotbeheld
responsible.Forallthreecausesofaction,thedefendantsetsupasaspecialdefensethedocumentexecutedbytheplaintiffon
September30,1924,acknowledgingthesatisfactionofthejudgmentincaseG. R. No. 21706.

UpontrialtheCourtofFirstInstancesustainedthedefendant'sspecialdefenseandabsolvedhimfromthecomplaintwiththecost
againsttheplaintiff,whereuponthelatterappealedtothiscourt.

Wedonotthinkthatthecourtbelowerredinabsolvingthedefendantfromliabilityuponthesecondcauseofaction.Itisnotwithout
significancethatinheroriginalcomplainttheplaintiffclaimedonly5plows,6carts,3carabaosan4vacunos,thetotalvalueofwhich
wasallegedtobeP1,360;inthefirstamendedcomplaintfiledovertwoyearslater,thesameclaimwasmade,butinthelastamended
complaintanumberofotherarticleswereincluded,thusincreasingtheclaimtoP3,596.Thecourtbelowfoundthattheweightofthe
evidenceshowedthatthemissingdraftanimalsdiedfromrinderpestandthattheotherpersonalpropertywasturnedovertothe
provincialsherifffordeliverytotheplaintiffbeforethewritofexecutionwasreturnedtothecourt.Ifso,theactionwouldlieagainst
thesheriffratherthanagainstthedefendant.

AstothefirstcauseofactionthedefendantarguesthatitwasincludedintheprayerofanamendedcomplaintfiledincaseG. R. No.
21706andthat,althoughnoexpressdeterminationthereofwasmadeinthedecisionofthecase,itmust,nevertheless,beregarded
asres judicata.Thatsuchisnotthecaseisveryclear.TheCode of Civil Proceduresays:

Thatonlyisdeemedtohavebeensoadjudgedinaformerjudgmentwhichappearsuponitsfacetohavebeensoadjudged,orwhich
wasactuallyandnecessarilyincludedthereinornecessarythereto.(Sec.307,CodeofCivilProc.)

Butthedefendantmaintainsthattheplaintiffhavinghadanopportunitytoventilatethematterintheformercase,shecannotnow
enforcethesamecauseofactioninthepresentcase.Properlyspeaking,thisargumentdoesnotinvolvethedoctrineofres
judicatabutrestsonthewellknownan,inAmericanlaw,firmlyestablishedprinciplethatapartywillnotbepermittedtosplitupa
singlecauseofactionanmakeitthebasisforseveralsuits.Butthatisnotthiscase.Theruleiswellestablishedthatwhenalease
providesforthepaymentoftherentinseparateinstallments,eachinstallmentisanindependentcauseofaction,thoughithasbeen
heldandisgoodlaw,thatinanactionuponsuchaleasefortherecoveryofrent,theinstallmentsdueatthetimetheactionbrought
mustbeincludedinthecomplaintanthatfailuretoosowillconstituteabartoasubsequentactionforthepaymentofthatrent.The
aforesaidaction,G. R. No. 21706,wasbroughtonAugust23,1922,theplaintiffdemandingpaymentofthensuerentinadditionto
therescissionofthelease.OnJuly27,1923,theplaintifffiledamotionforanamendmenttoparagraph6ofthecomplaintaddingto
thatparagraphthefollowingsentence:

Quetambienhavencidoyaelterceranoelarrendamientodelafincaencuestionyquetampocohapagadoeldemandaoelcanon
correspondienteaichoano.

Theplaintiffalsoamendedtheprayerofthecomplaintbyaskingjudgmentforrentforyearssubsequentto1922.Themotionwas
granted,andthecasecameupfortrialonJuly30,1923,andonSeptember8,1923,thetrialcourtrendereditsdecisiongiving
judgmentforrentuptoandincludingtherentfortheagriculturalyearendingin1923.Theleasedidnotprovideforpaymentofrentin
advanceoratanydefinitetime,anitappearsplainlyfromtherecordthattherentforanagriculturalyearwasnotconsidereddueuntil
theendofthecorrespondingyear.Itfollowsthattherentfortheagriculturalyear19221924hanotbecomesuetimeofthetrialofthe
caseandthatconsequentlythetrialcourtcouldnotrenderjudgmenttherefore.Theactionreferredtois,therefore,nobartothefirst
causeofactioninthepresentlitigation.

ThedefendantplacesmuchweighuponthedocumentofSeptember30,1924,hereinbeforequoted.Thedocumentspeaksforitself,
anditwillbereadilyseenthatitismerelyareceiptforthesatisfactionofthemoneyjudgmentinthecaseG.R.No.L21706andhas
nothingtowiththepresentcase.

Theonlyquestioninregardtothefirstcauseofactionrelatestotheamountofthedamages.Theplaintiffcontendsthatthedefendant
wasapossessorinbadfaith,andtherefore,mustpaythevalueofthefruitsofthelandinaccordancewitharticle455oftheCivil
Code.Underthecircumstancesofthecase,wecannotsohold.Thedefendantheldpossessionunderthecontractofleaseuntilsaid
contractwasrescinded.Thecontractcontainednospecialprovisionfortheprocedureineffectingtherescission,anditfollowsthatit
couldonlybeaccompaniedbyafinaljudgmentofthecourt.ThejudgmentincaseG.R.No.L210706didnotbecomefinaluntil
March27,192,whenourdecisiononappealwasrendered.Asthatmusthavebeenclosetotheendoftheharvestandmillingofthe
sugarcropfortheperiodtowhichthefirstcauseofactionrefers,wedonotthinkthatthedefendantshouldberequiredtopaymore

thantheamountofthestipulatedrentfortheperiod,i.e.,thesumofP8,000withinterestrentforthatperiod,i.e.,thesumofP8,000
withinterest.(Lermavs.DelaCruz,7 Phil., 581.)

Theactionforterminatingtheleasewasbroughtunderarticle1124oftheCivilCode,anitmay,perhaps,hesaidthatproperly
speaking,thesubjectmatteroftheactionwasaresolutionofthecontractannotarescission.Thatmaybetrue,butitisadistinction
withoutadifference;intheircaseajudicialdeclarationwouldbenecessaryforthecancellationofthecontractintheabsenceofa
specialagreement.

Verylittleneedbesaidinregardtothethirdcauseofaction.Itrelatestoaperiodsubsequenttothecompleteterminationofthelease
byfinaljudicialorder.Thedefendanthadthennorightwhatevertothepossessionofthelandortothefruitsthereof,andinremoving
thefruits,heactedinbadfaith.Thisbeingthecase,hemustpayforthefruitsreceivedbyhim,lessthenecessaryexpensesof
production.(Arts.455and453oftheCivilCode.)Ashisbadfaithcommencelongbeforethefruitsinquestionwereproduced,heis
notentitledtoanypartofthenetproceedsofthecrop.Theevidenceshowsthatthenetratooncropoftheyear19241925was
1,613.25piculsofsugar,andaccordingtothedefendant'sownstatement,themarketvalueofthesugarwasintheneighborhoodof
P11perpiculanthecostsofproductionaboutP4.50.Thenetresultisthatunderthethirdcauseofaction,thedefendantmustpayto
theplaintiffthesumofP10,486.13withinterest.

Forthereasonstated,thejudgmentofthecourtbelowisaffirmedinregardtothesecondcauseofaction.Itisreversedastothefirst
andthirdcausesofaction,anditisherebyorderedthattheplaintiffhaveandrecoverfromthedefendantthesumofP18,486.13with
interestattherateof6percentperannumfromApril13,1925,thedateofthefilingofthecomplaint.Nocostswillbeallowed.So
ordered.

Avancea, C. J., Johnson Street, Malcolm, Villamor, Romualdez, an Villa-Real, JJ., concur.

ORDER AMENDING DECISION

December 10, 1928

OSTRAND, J.:

InthemotionfiledbythedefendantonNovember14,1928ourattentioniscalledtoamathematicalerrorinthatwe,indiscussingthe
plaintiff'sthirdcauseofaction,failedtotakeintoconsiderationthefactthatonehalfofthegrossratooncropproducedonthelandin
questionintheagriculturalyear19241925wascededtothesugarcentralascompensationforthemillingofthecaneandthatthe
defendantpaidtheexpensesoftheproductionofthetotalorgrosscrop.Page8oftheaforesaiddecisionisthereforeamendedsoasto
readasfollows:

Verylittleneedbesaidinregardtothethirdcauseofaction.Itrelatestoaperiodsubsequenttocompleteterminationoftheleaseby
finaljudicialorder.Thedefendanthadthennorightwhatevertothepossessionofthelandortothefruitsthereof,andinremovingthe
fruits,heactedinbadfaith.Thisbeingthecase,hemustpayforthefruitsreceivedbyhim,lessthenecessaryexpensesofproduction
(Arts.455and453oftheCivilCode.)Ashisbadfaithcommencedlongbeforethefruitsinquestionwereproduced,heisnotentitled
toanypartofthenetproceedsofthecrop.Theevidenceshowsthatthegrossratooncropfortheyear19241925was3,226.50piculs
ofsugar,andaccordingtothedefendant'sownstatement,themarketvalueofthesugarwasintheneighborhoodofP11perpiculand
thecostofproductionaboutP4.50.Thedefendantreceivedonlyonehalfofthegrosscrop,theotherhalfgoingtothesugarcentralas
compensationforthemillingofthecane,butthedefendantpaidthecostofproductionbothofhisshareofthesugarandthatofthe
sugarcentral.Thenetresultisthatunderthethirdcauseofaction,thedefendantmustpaytotheplaintiffthesumofP3,226.50with
interest.

"Forthereasonsstated,thejudgmentofthecourtbelowisaffirmedinregardtothesecondcauseofaction.Itisreversedastothefirst
anthirdcausesofaction,anitisherebyorderedthattheplaintiffhaveandrecoverfromthedefendantthesumofP11,226.50with
interestattherateof6percentperannumfromApril13,1925,thedateofthefilingofthecomplaint.Nocostswillbeallowed."So
ordered.

.R. No. L-29155

November 5, 1928
JOSEFINA RUBIO DE LARENA,vs. HERMENEGILDO VILLANUEVA, OSTRAND,J.:
In G. R. No. 21706, the Court of First Instance ordered the rescission of a lease of the Tacgajan
Sugar Pleantation and the payment by Villanueva of the unpaid balance of the rent with interest.
The decision also provided that the possession of the leased land be delivered to Larena.
before levy was made the parties came to an agreement, under which the money judgment was
to be satisfied by the payment of P10,500 in cash and the transfer to Larena of a dwelling
house. The agreement was carried out in accordance with its terms.
In the meantime, Villanueva had harvested the sugarcane crop produced, and after
having satisfied the aforesaid money judgment, he also continued in possession of the
plantation long enough to appropriate to himself the following ratoon cane crop.
De Larena filed an action wherein she alleged that while first case was on appeal to theSupreme Court,
Villanueva knew positively that the aforesaid lease was declared rescinded bythe Court of First Instance and that
Villanueva, also knew that he thereafter was not entitled tothe possession of the aforesaid hacienda; that he,
nevertheless, in bad faith continued in suchpossession during the agricultural year 1922-1924 and appropriated to himself
the cane harvestfor that year.
In his answer Villanueva alleges that according to the pleadings in case G. R. No. 21706,
the two causes of action were included in that case and, therefore, must be consideredre s
judicata.
ISSUE: WON this case involved the doctrine of res judicata?
HELD: No.
Properly speaking, this argument does not involve the doctrine of res judicata but rests on
the well-known and firmly established principle that a party will not be permitted to split up a

single cause of action and make it the basis for several suits. But that is not this case. The rule
is well established that when a lease provides for the payment of the rent in separate
installments, each installment is an independent cause of action, though it has been held and is
good law, that in an action upon such a lease for the recovery of rent, the installments due at
the time the action brought must be included in the complaint and that failure to do so will
constitute a bar to a subsequent action for the payment of that rent. The aforesaid action, G. R.
No. 21706, was brought on August 23, 1922, Larena demanding payment of then sue rent in
addition to the rescission of the lease. In 1923, Larena amended the prayer of the complaint by
asking judgment for rent for years subsequent to 1922. The lease did not provide for payment of
rent in advance or at any definite time, and it appears that the rent for an agricultural year was
not considered due until the end of the corresponding year. It follows that the rent for the
agricultural year 1922-1924 has not become due at the time of the trial of the case and that
consequently the trial court could not render judgment therefore. The action referred to is,
therefore, no bar to the first cause of action in the present litigation.

G.R. No. L-32958

November 8, 1930

BLOSSOM AND COMPANY, INC., plaintiff-appellant,

vs.
MANILA GAS CORPORATION, defendant-appellee.
Harvey and O'Brien for appellant.
Ross, Lawrence and Selph and John B. Miller for appellee.
STATEMENT
In its complaint filed March 3, 1927, the plaintiff alleges that on September 10, 1918, it
entered into a contract with the defendant in which the plaintiff promised and undertook to
purchase and receive from the defendant and the defendant agreed to sell and deliver to the
plaintiff, for a period of four years, three tons of water gas tar per month from September to
January 1, 1919 and twenty tons per month after January 1, 1919, for the remaining period
of the contract; one-half ton of coal gas tar a month from September to January 1, 1919, and
six tons per month after January 1, 1919, for the remainder of the contract, delivery to be
made at the plant of the defendant in the City of Manila, without containers and at the price
of P65 per ton for each kind of gas tar, it being agreed that this price should prevail only so
long as the raw materials coal and crude oil used by the defendant in the manufacture
of gas should cost the defendant the same price as that prevailing at the time of the contract,
and that in the event of an increase or decrease in the cost of raw material there would be a
corresponding increase or decrease in the price of the tar. That on January 31, 1919, this
contract was amended so that it should continue to remain in force for a period of ten years
from January 1, 1919, and it was agreed that the plaintiff should not be obliged to take the
qualities of the tars required during the year 1919, but that it might purchase tars in such
quantities as it could use to advantage at the stipulated price. That after the year 1919 the
plaintiff would take at least the quantities specified in the contract of September 10, 1918, to
be taken from and after January 1, 1919, and that at its option it would have the right to take
any quantity of water gas tar in excess of the minimum quantity specified in that contract and
up to the total amount of output of that tar of defendant's plant and also to take any quantity
of coal gas tar in excess of the minimum quantity specified in that contract and up to 50 per

cent of defendant's entire output of coal gas tar, and that by giving the defendant ninety days'
notice, it would have the right at its option to take the entire output of defendant's coal gas
tar, except such as it might need for its own use in and about its plant. That in consideration
of this modification of the contract of September 10, 1918, plaintiff agreed to purchase from
the defendant of certain piece of land lying adjacent to its plant at the price of P5 per square
meter, the proof of which is evidenced by Exhibit C. That pursuant to Exhibit C, defendant
sold and conveyed the land to the plaintiff which in turn executed a mortgage thereon to the
defendant for P17,140.20, to secure the payment of the balance of the purchase price.
It is then alleged:
VIII. That about the last part of July, 1920 the defendant herein, the Manila Gas
Corporation willfully, and deliberately breached its said contract, Exhibit C, with the
plaintiff by ceasing to deliver any coal and water gas tar to it thereunder solely
because of the increased price of its tar products and its desire to secure better
prices therefor than plaintiff was obliged to pay to it, notwithstanding the frequent and
urgent demands made by the plaintiff upon it to comply with its aforesaid contract by
continuing to deliver the coal and water gas tar to the plaintiff thereunder, but the said
defendant flatly refused to make any deliveries under said contract, and finally on
November 23, 1923, the plaintiff was forced to commence action against the
defendant herein in the Court of First Instance of Manila, being case No. 25352, of
that court entitled 'Blossom & Co., plaintiff,vs. Manila Gas Corporation, defendant,' to
recover the damages which it had up to that time suffered by reason of such flagrant
violation of said contract on the part of the defendant herein, and to obtain the
specific performance of the said contract and after due trial of that action, judgment
was entered therein in favor of the plaintiff herein and against the said defendant, the
Manila Gas Corporation, for the sum of P26,119.08, as the damages suffered by this
plaintiff by the defendant's breach of said contract from July, 1920, up to and
including September, 1923, with legal interest thereon from November 23, 1923, and
for the costs but the court refused to order the said defendant to resume the delivery
of the coal and water gas tar to the plaintiff under said contract, but left the plaintiff
with its remedy for damages against said defendant for the subsequent breaches of
said contract, which said decision, as shown by the copy attached hereto as Exhibit
G, and made a part hereof, was affirmed by our Supreme Court on March 3, 1926;
IX. That after the defendant had willfully and deliberately violated its said contract as
herein-before alleged, and the plaintiff suffered great damage by reason thereof, the
plaintiff claimed the right to off- set its damages against the balance due from it to
said defendant on account of the purchase of said land from the defendant, and
immediately thereupon and notwithstanding said defendant was justly indebted to the
plaintiff at that time as shown by the judgment of the Court Exhibit G, in more that
four times the amount due to it from the plaintiff, the said defendant caused to be
presented against the plaintiff a foreclosure action, known as the Manila Gas
Corporation versus Blossom & Company, No. 24267, of the Court of First Instance of
Manila, and obtained judgment therein ordering that Blossom & Company pay the
last installment and interest due on said land or else the land and improvements
placed thereon by the plaintiff would be sold as provided by law in such cases to
satisfy the same, and the said defendant proceeded with the sale of said property
under said judgment and did everything in its power to sell the same for the sole
purpose of crushing and destroying the plaintiff's business and thus rendering it
impossible for the plaintiff herein to continue with its said contract in the event that
said defendant might in the future consider it more profitable to resume performance
of the same, but fortunately the plaintiff was able to redeem its property as well as to

comply with its contract and continued demanding that the defendant performed its
said contract and deliver to it the coal and water gas tar required thereby.
That the defendant made no deliveries under its contract, Exhibit C, from July, 1920 to March
26, 1926, or until after the Supreme Court affirmed the judgment of the lower court for
damages in the sum of P26, 119.08. 1
It is then alleged that:
. . . On March 26, 1926 the said defendant offered to resume delivery to the plaintiff
from that date of the minimum monthly quantities of tars stated in its contract ,and
the plaintiff believing that the said defendant was at least going to try to act in good
faith in the further performance of its said contract, commenced to accept deliveries
of said tars from it, and at once ascertained that the said defendant was deliberately
charging it prices much higher than the contract price, and while the plaintiff
accepted deliveries of the minimum quantities of tars stated in said contract up to
and including January, 1927, (although it had demanded deliveries of larger
quantities thereunder, as hereinafter alleged) and paid the increased prices
demanded by the defendant, in the belief that it was its duty to minimize the
damages as much as possible which the defendant would be required to pay to it by
reason of its violation of said contract, it has in all cases done so under protest and
with the express reservation of the right to demand from the said defendant an
adjustment of the prices charged in violation of its contract, and the right to the
payment of the losses which it had and would suffer by reason of its refusal to make
additional deliveries under said contract, and it also has continuously demanded that
the said defendant furnish to it statements supported by its invoices showing the cost
prices if its raw materials coal and crude oil upon which the contract price of the
tars in question is fixed, which is the only way the plaintiff has to calculate the true
price of said tars, but said defendant has and still refuses to furnish such information,
and will continue to refuse to do so, unless ordered to furnish such information to the
plaintiff by the court, and the plaintiff believes from the information which it now has
and so alleges that the said defendant has overcharged it on the deliveries of said
tars mentioned in the sum of at least P10,000, all in violation of the rights of the
plaintiff under its said contract with the defendant.
That on January 31, 1926 and pursuant to Exhibit C. plaintiff notified the defendant in writing
that commencing with the month of August, 1926 it desired to take delivery of 50 per cent of
defendant's coal tar production for that month and that on November 1, 1926, it desired to
take the entire output of defendant's coal gas tar, but that the defendant refused and still
refuses to make such deliveries unless plaintiff would take all of its water gas tar production
with the desired quantity of coal gas tar which refusal was a plain violation of the contract.
That on January 29, 1927, and in accord with Exhibit C, plaintiff notified the defendant in
writing that within ninety days after the initial delivery to it of its total coal gas tar production
or in February, 1927, it would require 50 per cent of its total water gas tar production and that
in April 1927, it would require the total output of the defendant of both coal and water gas
tars, and that it refused to make either of such deliveries.
It is then alleged:
XIV. That as shown by the foregoing allegations of this complaint, it is apparent that
notwithstanding the plaintiff in this case has at all times faithfully performed all the
terms and conditions of said contract, Exhibit C, on its part of be performed, and has

at all times and is now ready, able and willing to accept and pay for the deliveries of
said coal and water gas tars required by said contract and the notices given pursuant
thereto, the said defendant, the Manila Gas Corporation, does not intend to comply
with its said contract, Exhibit C, and deliver to the plaintiff at the times and under the
terms and conditions stated therein the quantities of coal and water gas tars required
by said contract, and the several notices given pursuant thereto, and that it is useless
for the plaintiff to insist further upon its performance of the said contract, and for that
reason he only feasible course for the plaintiff to pursue is to ask the court for the
rescission of said contract and for the full damages which the plaintiff has suffered
from September, 1923, and will suffer for the remainder of said contract by reason of
the defendant's failure and refusal to perform the same, and the plaintiff has so
notified the said defendant.
That since September, 1923, by reason of the bad faith of the defendant, the plaintiff has
been damaged in the sum of P300,000, for which it prays a corresponding judgment, and
that the contract, Exhibit C, be rescinded and declared void and without force and effect.
After the filing and overruling of its demurrer, the defendant filed an answer in the nature of a
general and specific denial and on April 10, 1928, and upon stipulation of the parties, the
court appointed W. W. Larkin referee, "to take the evidence and, upon completion of the trial,
to report his findings of law and fact to the court."
July 18, 1928, the defendant filed an amended answer in which it alleged as an affirmative
defense, first, that the complaint does not state facts sufficient to constitute cause of action
the reason that a prior adjudication has been had of all the issues involved in this action,
and, second, "that on or about the 16th day of June, 1925, in an action brought in the Court
of First Instance of the City on Manila, Philippine Islands, before the Honorable Geo. R.
Harvey, Judge, by Blossom & Company, plaintiff, vs. Manila Gas Corporation, defendant,
being civil case No. 25353, of said court, for the same cause of action as that set fourth in
the complaint herein, said plaintiff recovered judgment upon the merits thereof, against said
defendant decreeing a breach of the contract sued upon herein, and awarding damages
therefor in the sum of P26,119.08 with legal interest from November 23, 1923, and costs of
suit, which judgment was upon appeal affirmed by the Supreme Court of the Philippine
Islands, in case G. R. No. 24777 of said court, on the 3d day of March, 1926 and reported in
volume 48 Philippines Reports at page 848," and it prays that plaintiff's complaint be
dismissed with costs.
After the evidence was taken the referee made an exhaustive report of sixty-pages in which
he found that the plaintiff was entitled to P56,901.53 damages, with legal interest from the
date of the filing on the complaint, to which both parties filed numerous exceptions
In its decision the court says:
Incidental references have been made to the referee's report. It was admirably
prepared. Leaving aside the question of damages and the facts upon which the
referee assessed them, the facts are not in dispute at least not in serious dispute.
They appear in the documentary evidence and this decision is based upon
documents introduced into evidence by plaintiff. If I could have agreed with the
referee in respect to the question of law, I should have approved his report in toto. If
defendant is liable for the damages accruing from November 23, 1923, the date the
first complaint was filed, to April 1st, 1926, the date of resumption of relations; and if
defendant, after such resumption of relations, again violated the contract, the

damages assessed by the referee, are, to my way of thinking, as fair as could be

estimated. He went to tremendous pains in figuring out the details upon which he
based his decision. Unfortunately, I cannot agree with his legal conclusions and the
report is set aside except wherein specifically approved.
It is unnecessary to resolve specifically the many exceptions made by both partied to
the referee's report. It would take much time to do so. Much time has already been
spent in preparing this decision. Since both parties have informed me that in case of
adverse judgment ,and appeal would be taken, I desire to conclude the case so that
delay will be avoided.
Let judgment be entered awarding damages to plaintiff in the sum of P2,219.60, with
costs.
From which plaintiff only appealed and assigns twenty-four different errors, of which the
following are material to this opinion:
I. The trial court erred in holding that this suit in so far as the damages from
November, 1923, to March 31, 1926, are concerned , is res adjudicata.
II. The trial court erred in holding that the defendant repudiated the contract in
question as a whole, and that the plaintiff when it brought its first suit to collect
damages had already elected and consented to the dissolution of the contract, and
its choice once made, being final, it was estopped to claim that the contract was alive
when that suit was brought.
xxx

xxx

xxx

VII. The trial court erred in refusing to sustain plaintiff's third exception to the legal
interpretation placed on the contract in this case by the referee with reference to
quantity of tars and his conclusion with respect to the terms thereof that:
"1. Plaintiff must take and defendant must deliver either the minimum or maximum
quantity of water gas tar and not any quantity from the minimum to the
maximum and/or
"2. Plaintiff must take either the minimum and any quantity up to fifty per cent of
entire output of coal gas tar.
"3. With ninety days' notice by plaintiff to defendant the former must take and the
latter must deliver total output of both tars, except such as might be needed by
defendant for use in and about its plants and not any quantity from the minimum up
to total output of both tars." (See page 47, Referee's report.)
And in holding that the option contained in said contract, taking into consideration the
purposes of both parties in entering into the contract, was a claimed by defendant: all
the water gas tar and 50 per cent of the coal gas tar upon immediate notice and all
tars upon ninety day's notice.
VIII. The trial court erred in refusing to sustain plaintiff's fourth exception to the
finding and conclusion of the referee that from the correspondence between the

parties it was apparent that plaintiff did not make a right use of its option, and that the
letter of June 25, 1926, and the subsequent demands, with exception of the letter of
July 31, 1926, were not made in pursuance to the terms of the contract, and that
defendant had no liability in refusing to comply therewith, and in allowing plaintiff
damages only for the failure of the defendant to deliver quantities shown in Exhibits
Ref. 21 and 22. (See pages 51, 52, Referee's report.)
IX. The trial court erred in finding and holding that the demands of plaintiff for
additional tars under its contract with the defendant were extravagant and not made
in good faith, and that when it wrote to defendant that it desired maximum quantities
of coal gas tars and only minimum of water gas tars, but with the reservation of going
back to minimum quantities of both at any time it chose, it announced its intention f
breaching the contract, and defendant was under no obligation to deliver maximum
quantities of either tars, and since this was the efficient cause of the failure of
defendant to deliver or plaintiff to accept tars, the blame is attribute to plaintiff, and it
cannot recover for a rescission.
xxx

xxx

xxx

XXIII. The trial court erred in refusing to sustain plaintiff's seventeenth exception to
the finding and conclusion of the referee that the plaintiff is entitled to recover from
the defendant only the following sums:
Water gas tar (Exhibit Ref. 21)

P38,134.60

Coal gas tar (Exhibit Ref. 22)

16,547.33

Overcharges on deliveries (Exhibit Ref. 23)

2,219.60
or a total of

56,901.53

with interest, and in not awarding to the plaintiff as damages in this case the sum of
P319,253.40, with legal interest thereon from the date of filing the complaint in this
case, in the manner and form computed but it, and in awarding damages to the
plaintiff for the sum of only P2,219.60. with costs.
xxx

xxx

xxx

JOHNS, J.:
In this action plaintiff seeks to recover damages from the defendant which it claims to have
sustained after September, 1923, arising from, and growing out of, its original contract of
September 10, 1918, as modified on January 1, 1919, to continue for a period of ten years
from that date.
In paragraph VIII of its complaint, plaintiff alleges that about the last part of July, 1920, the
defendant "willfully and deliberately breached its said contract," and that it "flatly refused to
make any deliveries under said contract, and finally on November 23, 1923," it was forced to

commence action in the Court of First Instance against the defendant known as case No.
25352, to recover the damages which it had then sustained by reason of such flagrant
violation of said contract on the part of the defendant, in which judgment was rendered in
favor of the plaintiff and against the defendant for P26,1119.08, as damages suffered by this
plaintiff by the defendant's breach of said contract from July 1920, up to and including
September, 1923, with legal interest thereon from November 23, 1923, and for the costs," in
which the court refused to order the defendant to resume the delivery of the coal and water
gas tar to the plaintiff, in accord with said contract, but left it with its remedy for damages
against the defendant for any subsequent breaches of the contract. A copy of that judgment,
which was later affirmed by this court, is attached to, marked Exhibit G, and made a part of,
the complaint in this action.
In their respective briefs, opposing counsel have much to say about the purpose and intent
of the judgment, and it is vigorously asserted that it was never intended that it should be or
become a bar to another action by the plaintiff to recover any damages it may have
sustained after September, 1923, during the remainder of the ten-year period of that
contract. Be that as it may, it must be conceded that the question as to what would be the
legal force and effect of that judgment in that case was never presented to, or decided by,
the lower court or this court. In the very nature of things, neither court in that case would
have the power to pass upon or decided the legal force and effect of its own judgment, for
the simple reason that it would be premature and outside of the issues of any pleading, and
could not be raised or presented until after the judgment became final and then only by an
appropriate plea, as in this case.
Plaintiff specifically alleges that the defendant willfully and deliverately breached the contract
and "flatly refused to make any deliveries under said contract," by reason of. which it was
forced to and commenced its former action in which it was awarded P26,119.08 damages
against the defendant by reason of its breach of the contract from July, 1920, to September,
1923.
In the final analysis, plaintiff in this action seeks to recover damages growing out of, and
arising from, other and different breaches of that same contract after November, 1923, for
the remainder of the ten-year period, and the question is thus squarely presented as to
whether the rendition of the former judgment is a bar to the right of the plaintiff to recover
damages from and after September, 1923, arising from, and growing out of, breaches of the
original contract of September 10, 1918, as modified on January 1, 1919. That is to say,
whether the plaintiff, in a former action, having recovered judgment for the damages which it
sustained by reason of a breach of its contract by the defendant up to September, 1923, can
now in this action recover damages it may have sustained after September, 1923, arising
from, and growing out of, a breach of the same contract, upon and for which it recovered its
judgment in the former action.
In the former action in which the judgment was rendered, it is alleged in the compliant:
"7. That about the last part of July or the first part of August, 1920, the Manila Gas
Corporation, the defendant herein, without any cause ceased delivering coal and
water gas tar to the plaintiff herein; and that from that time up to the present date, the
plaintiff corporation, Blossom & Company, has frequently and urgently demanded of
the defendant, the Manila Gas Corporation, that it comply with its aforesaid contract
Exhibit A by continuing to deliver coal and water gas tar to this plaintiff but that the
said defendant has refused and still refuses, to deliver to the plaintiff any coal and

water gas tar whatsoever under the said contract Exhibit A, since the said month of
July 1920.
"9. That owing to the bad faith of the said Manila Gas Corporation, defendant herein,
in not living up to its said contract Exhibit A, made with this plaintiff, and refusing now
to carry out the terms of the same, be delivering to this plaintiff the coal and water
gas tar mentioned in the said Exhibit A, has caused to this plaintiff great and
irreparable damages amounting to the sum total of one hundred twenty- four
thousand eight hundred forty eight pesos and seventy centavos (P124,848,70);and
that the said defendant corporation has refused, and still refuses, to pay to this
plaintiff the whole or any part of the aforesaid sum.
"10. That the said contract Exhibit A, was to be in force until January 1, 1929, that is
to say ten (10) years counted from January 1, 1929; and that unless the defendant
again commence to furnish and supply this plaintiff with coal and water gas tar, as
provided for in the said contract Exhibit A, the damages already suffered by this
plaintiff will continually increase and become larger and larger in the course of years
preceding the termination of the said contract on January 1, 1929."
In that action plaintiff prays for judgment against the defendant:
"(a) That upon trial of this this cause judgment be rendered in favor of the plaintiff
and against the defendant for the sum of P124,8484.70), with legal interest thereon
from November 23, 1923;
"(b) That the court specifically order the defendant to resume the delivery of the coal
and water gas tar to the plaintiff under the terms of the said contract Exhibit A of this
complaint."
In the final analysis, plaintiff must stand or fall on its own pleadings, and tested by that rule it
must be admitted that the plaintiff's original cause of action, in which it recovered judgment
for damages, was founded on the ten-year contract, and that the damages which it then
recovered were recovered for a breach of that contract.
Both actions are founded on one and the same contract. By the terms of the original contract
of September 10, 1018, the defendant was to sell and the plaintiff was to purchase three tons
of water gas tar per month form September to January 1, 1919, and twenty tons of water gas
tar per month after January 1, 1919, one-half ton of coal gas tar per month from September
to January 1, 1919, and six tons of coal gas tar per month after January 1, 1919. That from
and after January 1, 1919, plaintiff would take at least the quantities specified in the contract
of September 10, 1918, and that at its option, it would have the right to take the total output
of water gas tar of defendant's plant and 50 per cent of the gross output of its coal gas tar,
and upon giving ninety days' notice, it would have the right to the entire output of coal gas
tar, except such as the defendant might need for its own use. That is to say, the contract
provided for the delivery to the plaintiff from month to month of the specified amounts of the
different tars as ordered and requested by the plaintiff. In other words, under plaintiff's own
theory, the defendant was to make deliveries from month to month of the tars during the
period of ten years, and it is alleged in both complaints that the defendant broke its contract,
and in bad faith refused to make any more deliveries.
In 34 Corpus Juris, p. 839, it is said:

As a general rule a contract to do several things at several times in its nature, so as

to authorize successive actions; and a judgment recovered for a single breach of a
continuing contract or covenant is no bar to a suit for a subsequent breach thereof.
But where the covenant or contract is entire, and the breach total, there can be only
one action, and plaintiff must therein recover all his damages.
In the case of Rhoelm vs, Horst, 178 U. U., 1; 44 Law. ed., 953, that court said:
An unqualified and positive refusal to perform a contract, though the performance
thereof is not yet due, may, if the renunciation goes to the whole contract, be treated
as a complete breach which will entitle the injured party to bring his action at once.
15 Ruling Case Law, 966, 967, sec. 441 says:
Similarly if there is a breach by the vendor of a contract for the sale of goods to be
delivered and paid for in installments, and the vendee maintains an action therefor
and recovers damages, he cannot maintain a subsequent action to recover for the
failure to deliver later installments.
In Pakas vs. Hollingshead, 184 N. Y., 211; 77 N. E., 40; 3 L. R. A. (N. S.), 1024, the syllabus
says:
Upon refusal, by the seller, after partial performance, longer to comply with his
contract to sell and deliver a quantity of articles in installments the buyer cannot keep
the contract in force and maintain actions for breaches as they occur but must
recover all his damages in one suit.
And on page 1044 of its opinion, the court say:
The learned counsel for the plaintiff contends that the former judgment did not
constitute a bar to the present action but that the plaintiff had the right to elect to
waive or disregard the breach, keep the contract in force, and maintain successive
actions for time to time as the installments of goods were to be delivered, however
numerous these actions might be. It is said that this contention is supported in
reason and justice, and has the sanction of authority at least in other jurisdictions.
We do not think that the contention can be maintained. There is not as it seems to us
any judicial authority in this state that gives it any substantial support. On the
contrary, we think that the cases, so far as we have been able to examine them, are
all the other way, and are to the effect that, inasmuch as there was a total breach of
the contract by the defendant's refusal to deliver, the plaintiff cannot split up his
demand and maintain successive actions, but must either recover all his damages in
the first suit or wait until the contract matured or the time for the delivery of all the
goods had arrived. In other words, there can be but one action for damages for a
total breach of an entire contract to deliver goods, and the fact that they were to be
delivered in installment from time to time does not change the general rule.
The case of L. Bucki & Son Lumber Co. vs. Atlantic Lumber Co. (109 Federal, 411), of the
United States Circuit Court of Appeals for the Fifth Circuit, is very similar.
The syllabus says:

1. CONTRACTS CONSTRUCTION ENTIRE CONTRACT. A contract was

made for the sale of a large quantity of logs to be delivered in monthly installments
during a period of eight years, payments to be made also in installments at times
having relation tot he deliveries. It contained stipulations as to such payments, and
guaranties as to the average size of the logs to be delivered in each
installment. Held, that it was an entire contract, and not a number of separate and
independent agreements for the sale of the quantity to be delivered and paid for each
month, although there might be breaches of the minor stipulations and warranties
with reference thereto which would warrant suits without a termination of the
contract.
2. JUDGMENTS MATTERS CONCLUDED ACTION FOR BREACH OF
INDIVISIBLE CONTRACT. The seller declared the contract terminated for alleged
breaches by the purchaser, and brought suit for general and special damages the
latter covering payments due for installments of logs delivered. By way of set-off and
recoupment against this demand, the purchaser pleaded breaches of the warranty as
to the size of the logs delivered during the months for which payment had not been
made. Held, that the judgment in such action was conclusive as to all claims or
demands or either party against the other growing out of the entire contract, and was
a bar to a subsequent suit brought by the purchaser to recover for other breaches of
the same warranty in relation to deliveries made in previous months.
On page 415 of the opinion, the court says:
When the contract was ended, the claims of each party for alleged breaches and
damages therefor constituted an indivisible demand; and when the same, or any part
of the same, was pleaded, litigation had, and final judgment rendered, such suit and
judgment constitute a bar to subsequent demands which were or might have been
litigated (Baird vs. U. S., 96 U. S., 430; 24 L. ed., 703.)
In Watts vs. Weston (238 Federal, 149), Circuit Court of Appeals, Second Circuit, the
syllabus says:
1. JUDGMENTS 593 JUDGMENT AS BAR MATTERS CONCLUDED.
Where a continuing contract was terminated by the absolute refusal of the party
whose action was necessary to further perform, a claim for damages on account of
the breach constituted as indivisible demand, and when the same or any part of the
same was pleaded, litigated, and final judgment rendered, such suit and judgment
constitute a bar to subsequent demands which were or might have been litigated
therein.
And on page 150 of the opinion, the court says:
It is enough to show the lack of merit in the present contention to point out as an
inexorable rule of law that, when Kneval's contract was discharged by his total
repudiation thereof, Watt's claims for breaches and damages therefor constituted an
indivisible demand, and when the same, or any part of the same, was pleaded,
litigation had and final judgment rendered, such suit and judgment constitute a bar to
subsequent demands which were or might have been litigated." (Bucki, etc., Co. vs.
Atlantic, etc., Co., 109 Fed. at page 415; 48 C. C. A., 459; Cf. Landon vs. Bulkley, 95
Fed., 344; 337 C. C. A., 96.)

The rule is usually applied in cases of alleged or supposed successive breaches, and
consequently severable demands for damages; but if the contract has been
discharged by breach, if suit for damages is all that is left, the rule is applicable, and
every demand arising form that contract and possessed by any given plaintiff must
be presented (at least as against any given defendant) in one action; what the
plaintiff does not advance he foregoes by conclusive presumption.
Inn Abbott vs. 76 Land and Water Co. (118 Pac., 425; 161 Cal., 42), at page 428, the court
said:
In Fish vs. Folley, 6 Hill (N. Y.), 54, it was held, in accord with the rule we have
discussed, that, where the defendant had covenanted that plaintiff should have a
continual supply of water for his mill from a dam, and subsequently totally failed to
perform for nine years, and plaintiff brought an action for the breach and recovered
damages sustained by him to that time, the judgment was a bar to a second action
arising from subsequent failure to perform, on the theory that, although he covenant
was a continuing one in one sense, it was an entire contract, and a total breach put
an end to it, and gave plaintiff the right to sue for an equivalent in damages.
In such a case it is no warrant for a second action that the party may not be able to
actually prove in the first action all the items of the demand, or that all the damage
may not then have been actually suffered. He is bound to prove in the first action not
only such damages as has been actually suffered, but also such prospective damage
by reason of the breach as he may be legally entitled to, for the judgment he
recovers in such action will be a conclusive adjudication as to the total damage on
account of the breach.
It will thus be seen that, where there is a complete and total breach of a continuous contract
for a term of years, the recovery of a judgment for damages by reason of the breach is a bar
to another action on the same contract for and on account of the continuous breach.
In the final analysis is, there is no real dispute about any material fact, and the important and
decisive question is the legal construction of the pleadings in the former case and in this
case, and of the contract between the plaintiff and the defendant of January 1, 1920.
The complaint on the former case specifically alleges that the defendant "has refused and
still refuses, to deliver to the plaintiff any coal and water gas tar whatsoever under the said
contract Exhibit A, since the said month of July, 1920." " That owing to the bad faith of the
said Manila Gas Corporation, defendant herein, in not living up to its said contract Exhibit A,
made with this plaintiff, and refusing now to carry out the terms of the same." That is a
specific allegation not only a breach of the contract since the month of July, 1920, but of the
faith of the defendant in its continuous refusal to make deliveries of any coal and water gas
tar. That amended complaint was filed on July 11, 1924, or four years after the alleged bad
faith in breaking the contract.
Having recovered damages against it, covering a period of four years, upon the theory that
the defendant broke the contract, and in bad faith refused to make deliveries of either of the
tars, how can the plaintiff now claim and assert that the contract is still in fierce and effect? In
the instant case the plaintiff alleges and relies upon the ten year contract on January 11,
1920, which in bad faith was broken by the defendant. If the contract was then broken, how
can it be enforced in this action?

It is admitted that the defendant never made any deliveries of any tar from July, 1920, to
April, 1936. Also that it made nine deliveries to plaintiff of the minimum quantities of coal and
water gas tar from April 7, 1926, to January 5, 1927.
Plaintiff contends that such deliveries were made under and in continuation of the old
contract.
March 26, 1926, after the decision of this court affirming the judgment in the original action,
plaintiff wrote the defendant:
. . . It is our desire to take deliveries of at least the minimum quantities set forth
therein and shall appreciate to have you advise us how soon you will be in a position
to make deliveries; . . .
. . . In view of the fact that you have only effected settlement up to November 23,
1923, please inform us what adjustment you are willing to make for the period of time
that has since elapsed without your complying with the contract.
In response to which on March 31, 1926, the defendant wrote this letter to the plaintiff:
In reply to your letter of March 26th, 1926, in regard to tar, we beg to advise you that
we are prepared to furnish the minimum quantities of coal and water gas tars as per
your letter, viz: twenty tons of water gas tar and six tons of coal gas tar. The price
figured on present costs of raw materials is P39.01 ) Thirty-nine and 01/100 Pesos)
per ton of water gas and P33.59 (Thirty-three and 59/100 Pesos) per ton of coal tar.
We shall expect you to take delivery and pay for the above amount of tars at our
factory on or before April 7th prox.
Thereafter we shall be ready to furnish equal amounts on the first of each month.
Kindly make your arrangements accordingly.
On January 29, 1927, the plaintiff wrote the defendant that:
On July 31st last, we made demand upon you, under the terms of our tar contract for
50 per cent of your total coal tar production for that month and also served notice on
you that beginning 90 days from August 1st we would require you total output of coal
tar monthly; this in addition to the 20 tons of water gas tar provided for in the contract
to be taken monthly.
xxx

xxx

xxx

We are here again on your for your total output of coal tar immediately and the
regular minimum monthly quantity of water gas tar. In this connection we desire to
advise you that within 90 days of your initial delivery to us of your total coal tar output
we will require 50 per cent of your total water gas tar output, and, further, that two
months thereafter we will require your total output of both tars.
February 2, 1927, the defendant wrote the plaintiff:

Replying to your letter of Jan. 29, we would sat that we have already returned to you
the check enclosed there with. As we have repeatedly informed you we disagree with
you as to the construction of your contract and insist that you take the whole output
of both tars if you wish to secure the whole of the coal tar.
With regard to your threat of further suits we presume that you will act as advised. If
you make it necessary we shall do the same.
lawphil.net

From an analysis of these letters it clearly appears that the plaintiff then sought to reply upon
and enforce the contract of January 1, 1920, and that defendant denied plaintiff's
construction of the contract, and insisted "that you take the whole output of both tars if you
wish to secure the whole of the coal tar."
February 28, 1927, the plaintiff wrote the defendant:
In view of your numerous violations of and repeated refusal and failure to comply
with the terms and provisions of our contract dated January 30-31, 1919, for the
delivery to us of water and coal gas tars, etc., we will commence action," which it did.
The record tends to show that tars which the defendant delivered after April 7, 1926, were
not delivered under the old contract of January 1, 1920, and that at all times since July 1920,
the defendant has consistently refused to make any deliveries of any tars under that
contract.
The referee found as a fact that plaintiff was entitled to P2,219.60 for and on account of
overcharges which the defendant made for the deliveries of fifty-four tons of coal gas tar, and
one hundred eighty tons of water gas tar after April, 1926, and upon that point the lower
says:
The fourth charge that plaintiff makes is meritorious. The price was to be fixed on the
basis of raw materials. The charge for deliveries during 1926 were too high. In this I
agree with entirely with the referee and adopt his findings of fact and calculations.
(See Referee's report, p. 83) The referee awarded for overcharge during the period
aforesaid, the sum of P2,219.60. The defendant was trying to discharge plaintiff from
buying tars and made the price of raw material appear as high as possible.
That finding is sustained upon the theory that the defendant broke its contract which it made
with the plaintiff for the sale and delivery of the tars on and after April, 1926.
After careful study of the many important questions presented on this appeal in the
exhaustive brief of the appellant, we are clearly of the opinion that, as found by the lower
court, the plea of res judicata must be sustained. The judgment of the lower court is affirmed.
It is so ordered, with costs against the appellant.

[G.R. No. 161135. April 8, 2005]

SWAGMAN HOTELS AND TRAVEL, INC., petitioner, vs. HON.

COURT
OF
APPEALS,
and
NEAL
B.
CHRISTIAN, respondents.
DECISION
DAVIDE, JR., C.J.:

May a complaint that lacks a cause of action at the time it was filed
be cured by the accrual of a cause of action during the pendency of the
case? This is the basic issue raised in this petition for the Courts
consideration.
Sometime in 1996 and 1997, petitioner Swagman Hotels and Travel,
Inc., through Atty. Leonor L. Infante and Rodney David Hegerty, its
president and vice-president, respectively, obtained from private
respondent Neal B. Christian loans evidenced by three promissory
notes dated 7 August 1996, 14 March 1997, and 14 July 1997. Each of
the promissory notes is in the amount of US$50,000 payable after three
years from its date with an interest of 15% per annum payable every
three months. In a letter dated 16 December 1998, Christian informed
the petitioner corporation that he was terminating the loans and
demanded from the latter payment in the total amount of US$150,000
plus unpaid interests in the total amount of US$13,500.
[1]

[2]

On 2 February 1999, private respondent Christian filed with the

Regional Trial Court of Baguio City, Branch 59, a complaint for a sum of
money and damages against the petitioner corporation, Hegerty, and
Atty. Infante. The complaint alleged as follows: On 7 August 1996, 14
March 1997, and 14 July 1997, the petitioner, as well as its president
and vice-president obtained loans from him in the total amount of
US$150,000 payable after three years, with an interest of 15% per
annum payable quarterly or every three months. For a while, they paid
an interest of 15% per annum every three months in accordance with
the three promissory notes. However, starting January 1998 until
December 1998, they paid him only an interest of 6% per annum,
instead of 15% per annum, in violation of the terms of the three
promissory notes. Thus, Christian prayed that the trial court order them
to pay him jointly and solidarily the amount of US$150,000 representing
the total amount of the loans; US$13,500 representing unpaid interests
from January 1998 until December 1998; P100,000 for moral
damages; P50,000 for attorneys fees; and the cost of the suit.
[3]

The petitioner corporation, together with its president and vicepresident, filed an Answer raising as defenses lack of cause of action
and novation of the principal obligations. According to them, Christian
had no cause of action because the three promissory notes were not yet
due and demandable. In December 1997, since the petitioner
corporation was experiencing huge losses due to the Asian financial
crisis, Christian agreed (a) to waive the interest of 15% per annum, and
(b) accept payments of the principal loans in installment basis, the
amount and period of which would depend on the state of business of
the petitioner corporation. Thus, the petitioner paid Christian capital
repayment in the amount of US$750 per month from January 1998 until
the time the complaint was filed in February 1999. The petitioner and its
co-defendants then prayed that the complaint be dismissed and that
Christian be ordered to pay P1 million as moral damages; P500,000 as
exemplary damages; and P100,000 as attorneys fees.
[4]

In due course and after hearing, the trial court rendered a

decision on 5 May 2000 declaring the first two promissory notes dated
7 August 1996 and 14 March 1997 as already due and demandable and
that the interest on the loans had been reduced by the parties from 15%
to 6% per annum. It then ordered the petitioner corporation to pay
Christian the amount of $100,000 representing the principal obligation
covered by the promissory notes dated 7 August 1996 and 14 March
1997, plus interest of 6% per month thereon until fully paid, with all
interest payments already paid by the defendant to the plaintiff to be
deducted therefrom.
[5]

The trial court ratiocinated in this wise:

(1)Therewasnonovationofdefendantsobligationtotheplaintiff.Under
Article1292oftheCivilCode,thereisanimpliednovationonlyiftheoldand
thenewobligationbeoneverypointincompatiblewithoneanother.
Thetestofincompatibilitybetweenthetwoobligationsorcontracts,according
toanimminentauthor,iswhethertheycanstandtogether,eachonehavingan
independentexistence.Iftheycannot,theyareincompatible,andthe
subsequentobligationnovatesthefirst(Tolentino,CivilCodeofthe
Philippines,Vol.IV,1991ed.,p.384).Otherwise,theoldobligationwill
continuetosubsistsubjecttothemodificationsagreeduponbytheparties.
Thus,ithasbeenwrittenthataccidentalmodificationsinanexistingobligation
donotextinguishitbynovation.Meremodificationsofthedebtagreedupon

betweenthepartiesdonotconstitutenovation.Whenthechangesreferto
secondaryagreementandnottotheobjectorprincipalconditionsofthe
contract,thereisnonovation;suchchangeswillproducemodificationsof
incidentalfacts,butwillnotextinguishtheoriginalobligation.Thus,the
acceptanceofpartialpaymentsorapartialremissiondoesnotinvolvenovation
(id.,p.387).Neitherdoesthereductionoftheamountofanobligationamount
toanovationbecauseitonlymeansapartialremissionorcondonationofthe
samedebt.
Intheinstantcase,theCourtisoftheviewthatthepartiesmerelyintendedto
changetherateofinterestfrom15%perannumto6%perannumwhenthe
defendantstartedpaying$750permonthwhichpaymentswereallacceptedby
theplaintifffromJanuary1998onward.Thepaymentoftheprincipal
obligation,however,remainsunaffectedwhichmeansthatthedefendantshould
stillpaytheplaintiff$50,000onAugust9,1999,March14,2000andJuly14,
2000.
(2)WhentheinstantcasewasfiledonFebruary2,1999,noneofthe
promissorynoteswasdueanddemandable.Asofthisdatehowever,thefirst
andthesecondpromissorynoteshavealreadymatured.Hence,paymentis
alreadydue.
UnderSection5ofRule10ofthe1997RulesofCivilProcedure,acomplaint
whichstatesnocauseofactionmaybecuredbyevidencepresentedwithout
objection.Thus,eveniftheplaintiffhadnocauseofactionatthetimehefiled
theinstantcomplaint,asdefendantsobligationarenotyetdueanddemandable
then,hemayneverthelessrecoveronthefirsttwopromissorynotesinviewof
theintroductionofevidenceshowingthattheobligationscoveredbythetwo
promissorynotesarenowdueanddemandable.
(3)IndividualdefendantsRodneyHegertyandAtty.LeonorL.Infantecannot
beheldpersonallyliablefortheobligationscontractedbythedefendant
corporationitbeingclearthattheymerelyactedinrepresentationofthe
defendantcorporationintheircapacityasGeneralManagerandPresident,
respectively,whentheysignedthepromissorynotesasevidencedbyBoard
ResolutionNo.1(94)passedbytheBoardofDirectorsofthedefendant
corporation(Exhibit4).
[6]

In its decision of 5 September 2003, the Court of Appeals denied

petitioners appeal and affirmed in toto the decision of the trial court,
holding as follows:
[7]

Inthecaseatbench,thereisnoincompatibilitybecausethechangesreferredto
byappellantSwagmanconsistonlyinthemannerofpayment....
AppellantSwagmansinterpretationthatthethree(3)promissorynoteshave
beennovatedbyreasonofappelleeChristiansacceptanceofthemonthly
paymentsofUS$750.00ascapitalrepaymentscontinuouslyevenafterthe
filingoftheinstantcaseisalittlebitstrainedconsideringthestiffrequirements
ofthelawonnovationthattheintentiontonovatemustappearbyexpress
agreementoftheparties,orbytheiractsthataretooclearandunequivocalto
bemistaken.Underthecircumstances,themorereasonableinterpretationofthe
actoftheappelleeChristianinreceivingthemonthlypaymentsofUS$750.00
isthatappelleeChristianmerelyallowedappellantSwagmantopaywhatever
amountthelatteriscapableof.Thisinterpretationissupportedbytheletterof
demanddatedDecember16,1998whereinappelleeChristiandemandedfrom
appellantSwagmantoreturntheprincipalloanintheamountofUS$150,000
plusunpaidinterestintheamountofUS$13,500.00
...
AppellantSwagman,likewise,contendsthat,atthetimeofthefilingofthe
complaint,appelleeChristianha[d]nocauseofactionbecausenoneofthe
promissorynoteswasdueanddemandable.
Again,Wearenotpersuaded.
...
Inthecaseatbench,whileitistruethatappellantSwagmanraisedinits
Answertheissueofprematurityinthefilingofthecomplaint,appellant
SwagmannonethelessfailedtoobjecttoappelleeChristianspresentationof
evidencetotheeffectthatthepromissorynoteshavebecomedueand
demandable.
Theaforequotedruleallowsacomplaintwhichstatesnocauseofactiontobe
curedeitherbyevidencepresentedwithoutobjectionor,intheeventofan
objectionsustainedbythecourt,byanamendmentofthecomplaintwithleave
ofcourt(Herrera,RemedialLaw,Vol.VII,1997ed.,p.108).
[8]

Its motion for reconsideration having been denied by the Court of

Appeals in its Resolution of 4 December 2003, the petitioner came to
this Court raising the following issues:
[9]

I.WHERETHEDECISIONOFTHETRIALCOURTDROPPINGTWO
DEFENDANTSHASBECOMEFINALANDEXECUTORY,MAYTHE
RESPONDENTCOURTOFAPPEALSSTILLSTUBBORNLYCONSIDER
THEMASAPPELLANTSWHENTHEYDIDNOTAPPEAL?
II.WHERETHEREISNOCAUSEOFACTION,ISTHEDECISIONOF
THELOWERCOURTVALID?
III.MAYTHERESPONDENTCOURTOFAPPEALSVALIDLYAFFIRM
ADECISIONOFTHELOWERCOURTWHICHISINVALIDDUETO
LACKOFCAUSEOFACTION?
IV.WHERETHEREISAVALIDNOVATION,MAYTHEORIGINAL
TERMSOFCONTRACTWHICHHASBEENNOVATEDSTILL
PREVAIL?
[10]

The petitioner harps on the absence of a cause of action at the time

the private respondents complaint was filed with the trial court. In
connection with this, the petitioner raises the issue of novation by
arguing that its obligations under the three promissory notes were
novated by the renegotiation that happened in December 1997 wherein
the private respondent agreed to waive the interest in each of the three
promissory notes and to accept US$750 per month as installment
payment for the principal loans in the total amount of US$150,000.
Lastly, the petitioner questions the act of the Court of Appeals in
considering Hegerty and Infante as appellants when they no longer
appealed because the trial court had already absolved them of the
liability of the petitioner corporation.
On the other hand, the private respondent asserts that this petition is
a mere ploy to continue delaying the payment of a just obligation. Anent
the fact that Hegerty and Atty. Infante were considered by the Court of
Appeals as appellants, the private respondent finds it immaterial
because they are not affected by the assailed decision anyway.

Cause of action, as defined in Section 2, Rule 2 of the 1997 Rules of

Civil Procedure, is 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.[11]

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.
It is undisputed that the three promissory notes were for the amount
of P50,000 each and uniformly provided for (1) a term of three years; (2)
an interest of 15 % per annum, payable quarterly; and (3) the
repayment of the principal loans after three years from their respective
dates. However, both the Court of Appeals and the trial court found that
a renegotiation of the three promissory notes indeed happened in
December 1997 between the private respondent and the petitioner
resulting in the reduction not waiver of the interest from 15% to 6% per
annum, which from then on was payable monthly, instead of quarterly.
The term of the principal loans remained unchanged in that they were
still due three years from the respective dates of the promissory notes.
Thus, at the time the complaint was filed with the trial court on 2
February 1999, none of the three promissory notes was due yet;
although, two of the promissory notes with the due dates of 7 August
1999 and 14 March 2000 matured during the pendency of the case with
the trial court. Both courts also found that the petitioner had been
religiously paying the private respondent US$750 per month from
January 1998 and even during the pendency of the case before the trial
court and that the private respondent had accepted all these monthly
payments.
With these findings of facts, it has become glaringly obvious that
when the complaint for a sum of money and damages was filed with the
trial court on 2 February 1999, no cause of action has as yet existed

because the petitioner had not committed any act in violation of the
terms of the three promissory notes as modified by the renegotiation in
December 1997. Without a cause of action, the private respondent had
no right to maintain an action in court, and the trial court should have
therefore dismissed his complaint.
Despite its finding that the petitioner corporation did not violate the
modified terms of the three promissory notes and that the payment of
the principal loans were not yet due when the complaint was filed, the
trial court did not dismiss the complaint, citing Section 5, Rule 10 of the
1997 Rules of Civil Procedure, which reads:
Section5.Amendmenttoconformtoorauthorizepresentationofevidence.
Whenissuesnotraisedbythepleadingsaretriedwiththeexpressorimplied
consentoftheparties,theyshallbetreatedinallrespectsasiftheyhadbeen
raisedinthepleadings.Suchamendmentofthepleadingsasmaybenecessary
tocausethemtoconformtotheevidenceandtoraisetheseissuesmaybemade
uponmotionofanypartyatanytime,evenafterjudgment;butfailuretoamend
doesnotaffecttheresultofthetrialoftheseissues.Ifevidenceisobjectedtoat
thetrialonthegroundthatitisnotwithintheissuesmadebythepleadings,the
courtmayallowthepleadingstobeamendedandshalldosowithliberalityif
thepresentationofthemeritsoftheactionandtheendsofsubstantialjustice
willbesubservedthereby.Thecourtmaygrantacontinuancetoenablethe
amendmenttobemade.
According to the trial court, and sustained by the Court of Appeals,
this Section allows a complaint that does not state a cause of action to
be cured by evidence presented without objection during the trial. Thus,
it ruled that even if the private respondent had no cause of action when
he filed the complaint for a sum of money and damages because none
of the three promissory notes was due yet, he could nevertheless
recover on the first two promissory notes dated 7 August 1996 and 14
March 1997, which became due during the pendency of the case in
view of the introduction of evidence of their maturity during the trial.
Such interpretation of Section 5, Rule 10 of the 1997 Rules of Civil
Procedure is erroneous.
Amendments of pleadings are allowed under Rule 10 of the 1997
Rules of Civil Procedure in order that the actual merits of a case may be
determined in the most expeditious and inexpensive manner without

regard to technicalities, and that all other matters included in the case
may be determined in a single proceeding, thereby avoiding multiplicity
of suits. Section 5 thereof applies to situations wherein evidence not
within the issues raised in the pleadings is presented by the parties
during the trial, and to conform to such evidence the pleadings are
subsequently amended on motion of a party. Thus, a complaint which
fails to state a cause of action may be cured by evidence presented
during the trial.
[12]

However, the curing effect under Section 5 is applicable only if a

cause of action in fact exists at the time the complaint is filed, but the
complaint is defective for failure to allege the essential facts. For
example, if a complaint failed to allege the fulfillment of a condition
precedent upon which the cause of action depends, evidence showing
that such condition had already been fulfilled when the complaint was
filed may be presented during the trial, and the complaint may
accordingly be amended thereafter. Thus, inRoces v. Jalandoni, this
Court upheld the trial court in taking cognizance of an otherwise
defective complaint which was later cured by the testimony of the
plaintiff during the trial. In that case, there was in fact a cause of action
and the only problem was the insufficiency of the allegations in the
complaint. This ruling was reiterated in Pascua v. Court of Appeals.
[13]

[14]

[15]

It thus follows that a complaint whose cause of action has not yet
accrued cannot be cured or remedied by an amended or supplemental
pleading alleging the existence or accrual of a cause of action while the
case is pending. Such an action is prematurely brought and is,
therefore, a groundless suit, which should be dismissed by the court
upon proper motion seasonably filed by the defendant. The underlying
reason for this rule is that a person should not be summoned before the
public tribunals to answer for complaints which are immature. As this
Court eloquently said in Surigao Mine Exploration Co., Inc. v. Harris:
[16]

[17]

Itisaruleoflawtowhichthereis,perhaps,noexception,eitheratlaworin
equity,thattorecoveratalltheremustbesomecauseofactionatthe
commencementofthesuit.Asobservedbycounselforappellees,thereare
reasonsofpublicpolicywhythereshouldbenoneedlesshasteinbringingup
litigation,andwhypeoplewhoareinnodefaultandagainstwhomthereisyet
nocauseofactionshouldnotbesummonedbeforethepublictribunalsto
answercomplaintswhicharegroundless.Wesaygroundlessbecauseifthe

actionisimmature,itshouldnotbeentertained,andanactionprematurely
broughtisagroundlesssuit.
Itistruethatanamendedcomplaintandtheanswertheretotaketheplaceofthe
originalswhicharetherebyregardedasabandoned(Reynesvs.Compaa
GeneraldeTabacos[1912],21Phil.416;RuymanandFarrisvs.Directorof
Lands[1916],34Phil.,428)andthatthecomplaintandanswerhavingbeen
supersededbytheamendedcomplaintandanswerthereto,andtheanswerto
theoriginalcomplaintnothavingbeenpresentedinevidenceasanexhibit,the
trialcourtwasnotauthorizedtotakeitintoaccount.(Bastidavs.Menzi&Co.
[1933],58Phil.,188.)Butinnoneofthesecasesorinanyothercasehavewe
heldthatifarightofactiondidnotexistwhentheoriginalcomplaintwasfiled,
onecouldbecreatedbyfilinganamendedcomplaint.Insomejurisdictionsin
theUnitedStateswhatwastermedanimperfectcauseofactioncouldbe
perfectedbysuitableamendment(Brownvs.GalenaMining&SmeltingCo.,
32Kan.,528;Hoopervs.CityofAtlanta,26Ga.App.,221)andthisisvirtually
permittedinBanzonandRosaurovs.Sellner([1933],58Phil.,453);Asiatic
Potroleum[sic]Co.vs.Veloso([1935],62Phil.,683);andrecentlyinRamos
vs.Gibbon(38Off.Gaz.,241).That,however,whichisnocauseofaction
whatsoevercannotbyamendmentorsupplementalpleadingbeconverted
intoacauseofaction:Nihildereaccresciteiquinihilinrequandojus
accrescerethabet.
Wearethereforeoftheopinion,andsohold,thatunlesstheplaintiffhasa
validandsubsistingcauseofactionatthetimehisactioniscommenced,
thedefectcannotbecuredorremediedbytheacquisitionoraccrualofone
whiletheactionispending,andasupplementalcomplaintoran
amendmentsettingupsuchafteraccruedcauseofactionisnot
permissible.(Emphasisours).
Hence, contrary to the holding of the trial court and the Court of
Appeals, the defect of lack of cause of action at the commencement of
this suit cannot be cured by the accrual of a cause of action during the
pendency of this case arising from the alleged maturity of two of the
promissory notes on 7 August 1999 and 14 March 2000.
Anent the issue of novation, this Court observes that the petitioner
corporation argues the existence of novation based on its own version
of what transpired during the renegotiation of the three promissory notes
in December 1997. By using its own version of facts, the petitioner is, in

a way, questioning the findings of facts of the trial court and the Court of
Appeals.
As a rule, the findings of fact of the trial court and the Court of
Appeals are final and conclusive and cannot be reviewed on appeal to
the Supreme Court as long as they are borne out by the record or are
based on substantial evidence. The Supreme Court is not a trier of
facts, its jurisdiction being limited to reviewing only errors of law that
may have been committed by the lower courts. Among the exceptions is
when the finding of fact of the trial court or the Court of Appeals is not
supported by the evidence on record or is based on a misapprehension
of facts. Such exception obtains in the present case.
[18]

[19]

[20]

This Court finds to be contrary to the evidence on record the finding

of both the trial court and the Court of Appeals that the renegotiation in
December 1997 resulted in the reduction of the interest from 15% to 6%
per annum and that the monthly payments of US$750 made by the
petitioner were for the reduced interests.
It is worthy to note that the cash voucher dated January
1998 states that the payment of US$750 represents INVESTMENT
PAYMENT. All the succeeding cash vouchers describe the payments
from February 1998 to September 1999 as CAPITAL REPAYMENT. All
these cash vouchers served as receipts evidencing private respondents
acknowledgment of the payments made by the petitioner: two of which
were signed by the private respondent himself and all the others were
signed by his representatives. The private respondent even identified
and confirmed the existence of these receipts during the
hearing. Significantly, cognizant of these receipts, the private
respondent applied these payments to the three consolidated principal
loans in the summary of payments he submitted to the court.
[21]

[22]

[23]

[24]

Under Article 1253 of the Civil Code, if the debt produces interest,
payment of the principal shall not be deemed to have been made until
the interest has been covered. In this case, the private respondent
would not have signed the receipts describing the payments made by
the petitioner as capital repayment if the obligation to pay the interest
was still subsisting. The receipts, as well as private respondents
summary of payments, lend credence to petitioners claim that the
payments were for the principal loans and that the interests on the three
consolidated loans were waived by the private respondent during the

undisputed renegotiation of the loans on account of the business

reverses suffered by the petitioner at the time.
There was therefore a novation of the terms of the three promissory
notes in that the interest was waived and the principal was payable in
monthly installments of US$750. Alterations of the terms and conditions
of the obligation would generally result only in modificatory novation
unless such terms and conditions are considered to be the essence of
the obligation itself. The resulting novation in this case was, therefore,
of the modificatory type, not the extinctive type, since the obligation to
pay a sum of money remains in force.
[25]

Thus, since the petitioner did not renege on its obligation to pay the
monthly installments conformably with their new agreement and even
continued paying during the pendency of the case, the private
respondent had no cause of action to file the complaint. It is only upon
petitioners default in the payment of the monthly amortizations that a
cause of action would arise and give the private respondent a right to
maintain an action against the petitioner.
Lastly, the petitioner contends that the Court of Appeals obstinately
included its President Infante and Vice-President Hegerty as appellants
even if they did not appeal the trial courts decision since they were
found to be not personally liable for the obligation of the petitioner.
Indeed, the Court of Appeals erred in referring to them as defendantsappellants; nevertheless, that error is no cause for alarm because its
ruling was clear that the petitioner corporation was the one solely liable
for its obligation. In fact, the Court of Appeals affirmed in toto the
decision of the trial court, which means that it also upheld the latters
ruling that Hegerty and Infante were not personally liable for the
pecuniary obligations of the petitioner to the private respondent.
In sum, based on our disquisition on the lack of cause of action
when the complaint for sum of money and damages was filed by the
private respondent, the petition in the case at bar is impressed with
merit.
WHEREFORE, the petition is hereby GRANTED. The Decision of 5
September 2003 of the Court of Appeals in CA-G.R. CV No. 68109,
which affirmed the Decision of 5 May 2000 of the Regional Trial Court of
Baguio, Branch 59, granting in part private respondents complaint for
sum of money and damages, and its Resolution of 4 December 2003,

which denied petitioners motion for reconsideration are hereby

REVERSED and SET ASIDE. The complaint docketed as Civil Case No.
4282-R is hereby DISMISSED for lack of cause of action.
DIGEST

Facts: Sometime in 1996 and 1997, Swagman

through Atty. Infante and Hegerty, its president and
vice-president, respectively, obtained from Christian
loans evidenced by three promissory notes dated 7
August 1996, 14 March 1997, and 14 July 1997. Each
of thepromissory notes is in the amount of US$50,000
payable after three years from its date with an interest
of 15% per annum payable every three months. In a
letter dated 16 December 1998, Christian informed
the petitioner corporation that he was terminating the
loansand demanded from the latter payment of said
loans.
On 2 February 1999, Christian filed with the RTC a
complaint for a sum of money and damages against
the petitioner corporation, Hegerty, and Atty. Infante.
The petitioner corporation, together with its president
and vice-president, filed an Answer raising as
defenses lack of cause of action. According to them,
Christian had no cause of action because the
three promissory notes were not yet due and
demandable.
The trial court ruled that under Section 5 of Rule 10 of
the 1997 Rules of Civil Procedure, a complaint which
states no cause of action may be cured

by evidence presented without objection. Thus, even

if the plaintiff had no cause of action at the time he
filed the instant complaint, as defendants obligation
are not yet due and demandable then, he may
nevertheless recover on the first twopromissory
notes in view of the introduction of evidence showing
that the obligations covered by the two promissory
notes are now due and demandable. When the
instant case was filed on February 2, 1999, none of
the promissory notes was due and demandable, but ,
the first and the second promissory notes have
already matured during the course of the proceeding.
Hence,
payment
is
already
due.
This finding was affirmed in toto by the CA.
Issue: Whether or not a complaint that lacks a cause
of action at the time it was filed be cured by the
accrual of a cause of action during the pendency of
the case.
Held: No. Cause of action, as defined in Section 2,
Rule 2 of the 1997 Rules of Civil Procedure, is 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.
Such interpretation by the trial court and CA of
Section 5, Rule 10 of the 1997 Rules of Civil
Procedure is erroneous. The curing effect under
Section 5 is applicable only if a cause of action in fact
exists at the time the complaint is filed, but the
complaint is defective for failure to allege the essential
facts.Amendments of pleadings are allowed under
Rule 10 of the 1997 Rules of Civil Procedure in order
that the actual merits of a case may be determined in
the most expeditious and inexpensive manner without
regard to technicalities, and that all other matters
included in the case may be determined in a single
proceeding, thereby avoiding multiplicity of suits.
[G.R. No. 182435. August 13, 2012.]
LILIA B. ADA, et al., vs. FLORANTE BAYLON
FACTS:

This case involves the estate of spouses Florentino Baylon and Maximina Elnas Baylon
(Spouses Baylon) who died on November 7, 1961 and May 5, 1974, respectively. 3 At
the time of their death, Spouses Baylon were survived by their legitimate children,
namely, Rita Baylon (Rita), Victoria Baylon (Victoria), Dolores Baylon (Dolores), Panfila
Gomez (Panfila), Ramon Baylon (Ramon) and herein petitioner Lilia B. Ada (Lilia).
Dolores died intestate and without issue on August 4, 1976. Victoria died on November
11, 1981 and was survived by her daughter, herein petitioner Luz B. Adanza. Ramon died
intestate on July 8, 1989 and was survived by herein respondent Florante Baylon
(Florante), his child from his first marriage, as well as by petitioner Flora Baylon, his
second wife, and their legitimate children, namely, Ramon, Jr. and herein petitioners
Remo, Jose, Eric, Florentino and Ma. Ruby, all surnamed Baylon.

Florentino +
Maxima

Rita

Victoria

Luz

Dolores

Lilia

Ramon

Panfila

Florante
+ Flora

Ramon Jr
Remo, Jose,
Eric,
Florentino,
Ma. Ruby

Petitioners filed with the RTC complaint for partition, accounting, and damages
against respondent Florante, Rita, and Panfila. They alleged that Spouses Baylon
owned 43 parcels of land. They claimed that Rita took possession of the land and
appropriated the income derived therefrom. Florante, Rita and Panfila asserted, in
their answer, that the co-owned the properties in question. On July 1997, Rita
donated a parcel of land to Florante. In July 2000, Rita died. Petitioners learned of
the donation made by Rita in favor of Florante. They filed for a Supplemental
Pleading, asking the court to rescind the Deed of Donation.
The RTC rendered a decision, finding the existence of co-ownership but ordered the
partition of the estate of the Spouses Baylon. RTC also rescinded the donation made.
The case was appealed to the CA. The appellate court set aside the decision and
remanded the case to determine ownership of Lot Nos. 4706 and 4709.

The complaint filed by the petitioners with the RTC involves two separate, distinct
and independent actions partition and rescission. First, the petitioners raised the
refusal of their co-heirs, Florante, Rita and Panfila, to partition the properties which
they inherited from Spouses Baylon. Second, in their supplemental pleading, the
petitioners assailed the donation inter vivos of Lot No. 4709 and half of Lot No. 4706
made by Rita in favor of Florante pendente lite.
ISSUE/S: W/N
RULING:
By a joinder of actions, or more properly, a joinder of causes of action is meant the
uniting of two or more demands or rights of action in one action, the statement of more
than one cause of action in a declaration. It is the union of two or more civil causes of
action, each of which could be made the basis of a separate suit, in the same complaint,
declaration or petition. A plaintiff may under certain circumstances join several distinct
demands, controversies or rights of action in one declaration, complaint or petition. 29
While parties to an action may assert in one pleading, in the alternative or otherwise, as
many causes of action as they may have against an opposing party, such joinder of causes
of action is subject to the condition, inter alia, that the joinder shall not include special
civil actions governed by special rules. 31
Here, there was a misjoinder of causes of action. The action for partition filed by the
petitioners could not be joined with the action for the rescission of the said donation inter
vivos in favor of Florante. Lest it be overlooked, an action for partition is a special civil
action governed by Rule 69 of the Rules of Court while an action for rescission is an
ordinary civil action governed by the ordinary rules of civil procedure. The variance in
the procedure in the special civil action of partition and in the ordinary civil action of
rescission precludes their joinder in one complaint or their being tried in a single
proceeding to avoid confusion in determining what rules shall govern the conduct of the
proceedings as well as in the determination of the presence of requisite elements of each
particular cause of action. 32
Nevertheless, misjoinder of causes of action is not a ground for dismissal. Indeed, the
courts have the power, acting upon the motion of a party to the case or sua sponte, to
order the severance of the misjoined cause of action to be proceeded with
separately. 33 However, if there is no objection to the improper joinder or the court did
not motu proprio direct a severance, then there exists no bar in the simultaneous
adjudication of all the erroneously joined causes of action.
It should be emphasized that the foregoing rule only applies if the court trying the case
has jurisdiction over all of the causes of action therein notwithstanding the misjoinder of
the same. If the court trying the case has no jurisdiction over a misjoined cause of action,
then such misjoined cause of action has to be severed from the other causes of action, and

if not so severed, any adjudication rendered by the court with respect to the same would
be a nullity.
Here, Florante posed no objection, and neither did the RTC direct the severance of the
petitioners' action for rescission from their action for partition. While this may be a patent
omission on the part of the RTC, this does not constitute a ground to assail the validity
and correctness of its decision. The RTC validly adjudicated the issues raised in the
actions for partition and rescission filed by the petitioners.
Asserting a New Cause of Action in a Supplemental Pleading
Section 6, Rule 10 of the Rules of Court reads:
Sec. 6.Supplemental Pleadings. Upon motion of a party the court
may, upon reasonable notice and upon such terms as are just, permit him
to serve a supplemental pleading setting forth transactions, occurrences
or events which have happened since the date of the pleading sought to
be supplemented. The adverse party may plead thereto within ten (10)
days from notice of the order admitting the supplemental pleading.
In Young v. Spouses Sy, 36 this Court had the opportunity to elucidate on the purpose of a
supplemental pleading. Thus:
As its very name denotes, a supplemental pleading only serves to bolster
or add something to the primary pleading. A supplement exists side by
side with the original. It does not replace that which it supplements.
Moreover, a supplemental pleading assumes that the original pleading is
to stand and that the issues joined with the original pleading remained an
issue to be tried in the action. It is but a continuation of the
complaint. Its usual office is to set up new facts which justify, enlarge
or change the kind of relief with respect to the same subject matter
as the controversy referred to in the original complaint.
The purpose of the supplemental pleading is to bring into the
records new facts which will enlarge or change the kind of relief to
which the plaintiff is entitled; hence, any supplemental facts which
further develop the original right of action, or extend to vary the
relief, are available by way of supplemental complaint even though
they themselves constitute a right of action. 37 (Citations omitted and
emphasis ours)
Thus, a supplemental pleading may properly allege transactions, occurrences or events
which had transpired after the filing of the pleading sought to be supplemented, even if
the said supplemental facts constitute another cause of action.
Here, the issue as to the validity of the donation inter vivos of Lot No. 4709 and half of
Lot No. 4706 made by Rita in favor of Florante is a new cause of action that occurred
after the filing of the original complaint. However, the petitioners' prayer for the
rescission of the said donation inter vivos in their supplemental pleading is germane to,
and is in fact, intertwined with the cause of action in the partition case. Lot No. 4709 and

half of Lot No. 4706 are included among the properties that were sought to be
partitioned.
The petitioners' supplemental pleading merely amplified the original cause of action, on
account of the gratuitous conveyance of Lot No. 4709 and half of Lot No. 4706 after the
filing of the original complaint and prayed for additional reliefs, i.e., rescission. Indeed,
the petitioners claim that the said lots form part of the estate of Spouses Baylon, but
cannot be partitioned unless the gratuitous conveyance of the same is rescinded. Thus, the
principal issue raised by the petitioners in their original complaint remained the same.
Petition is partly granted. The case is remanded to the RTC.
RULE 3

G.R. No. 166620

April 20, 2010

ATTY. SYLVIA BANDA, CONSORICIA O. PENSON, RADITO V. PADRIGANO, JEAN R. DE

MESA, LEAH P. DELA CRUZ, ANDY V. MACASAQUIT, SENEN B. CORDOBA, ALBERT
BRILLANTES, GLORIA BISDA, JOVITA V. CONCEPCION, TERESITA G. CARVAJAL,
ROSANNA T. MALIWANAG, RICHARD ODERON, CECILIA ESTERNON, BENEDICTO
CABRAL, MA. VICTORIA E. LAROCO, CESAR ANDRA, FELICISIMO GALACIO, ELSA R.
CALMA, FILOMENA A. GALANG, JEAN PAUL MELEGRITO, CLARO G. SANTIAGO, JR.,
EDUARDO FRIAS, REYNALDO O. ANDAL, NEPHTALIE IMPERIO, RUEL BALAGTAS,
VICTOR R. ORTIZ, FRANCISCO P. REYES, JR., ELISEO M. BALAGOT, JR., JOSE C.
MONSALVE, JR., ARTURO ADSUARA, F.C. LADRERO, JR., NELSON PADUA,
MARCELA C. SAYAO, ANGELITO MALAKAS, GLORIA RAMENTO, JULIANA SUPLEO,
MANUEL MENDRIQUE, E. TAYLAN, CARMELA BOBIS, DANILO VARGAS, ROY-LEO C.
PABLO, ALLAN VILLANUEVA, VICENTE R. VELASCO, JR., IMELDA ERENO, FLORIZA
M. CATIIS, RANIEL R. BASCO, E. JALIJALI, MARIO C. CARAAN, DOLORES M. AVIADO,
MICHAEL P. LAPLANA, GUILLERMO G. SORIANO, ALICE E. SOJO, ARTHUR G.
NARNE, LETICIA SORIANO, FEDERICO RAMOS, JR., PETERSON CAAMPUED,
RODELIO L. GOMEZ, ANTONIO D. GARCIA, JR., ANTONIO GALO, A. SANCHEZ, SOL E.
TAMAYO, JOSEPHINE A.M. COCJIN, DAMIAN QUINTO, JR., EDLYN MARIANO, M.A.
MALANUM, ALFREDO S. ESTRELLA, and JESUS MEL SAYO, Petitioners,
vs.
EDUARDO R. ERMITA, in his capacity as Executive Secretary, The Director General of
the Philippine Information Agency and The National Treasurer, Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
The present controversy arose from a Petition for Certiorari and prohibition challenging the
constitutionality of Executive Order No. 378 dated October 25, 2004, issued by President
Gloria Macapagal Arroyo (President Arroyo). Petitioners characterize their action as a class
suit filed on their own behalf and on behalf of all their co-employees at the National Printing
Office (NPO).
The NPO was formed on July 25, 1987, during the term of former President Corazon C.
Aquino (President Aquino), by virtue of Executive Order No. 285 1 which provided, among

others, the creation of the NPO from the merger of the Government Printing Office and the
relevant printing units of the Philippine Information Agency (PIA). Section 6 of Executive
Order No. 285 reads:
SECTION 6. Creation of the National Printing Office. There is hereby created a National
Printing Office out of the merger of the Government Printing Office and the relevant printing
units of the Philippine Information Agency. The Office shall have exclusive printing jurisdiction
over the following:
a. Printing, binding and distribution of all standard and accountable forms of national,
provincial, city and municipal governments, including government corporations;
b. Printing of officials ballots;
c. Printing of public documents such as the Official Gazette, General Appropriations
Act, Philippine Reports, and development information materials of the Philippine
Information Agency.
The Office may also accept other government printing jobs, including government
publications, aside from those enumerated above, but not in an exclusive basis.
The details of the organization, powers, functions, authorities, and related management
aspects of the Office shall be provided in the implementing details which shall be prepared
and promulgated in accordance with Section II of this Executive Order.
The Office shall be attached to the Philippine Information Agency.
On October 25, 2004, President Arroyo issued the herein assailed Executive Order No. 378,
amending Section 6 of Executive Order No. 285 by, inter alia, removing the exclusive
jurisdiction of the NPO over the printing services requirements of government agencies and
instrumentalities. The pertinent portions of Executive Order No. 378, in turn, provide:
SECTION 1. The NPO shall continue to provide printing services to government agencies
and instrumentalities as mandated by law. However, it shall no longer enjoy exclusive
jurisdiction over the printing services requirements of the government over standard and
accountable forms. It shall have to compete with the private sector, except in the printing of
election paraphernalia which could be shared with the Bangko Sentral ng Pilipinas, upon the
discretion of the Commission on Elections consistent with the provisions of the Election Code
of 1987.
SECTION 2. Government agencies/instrumentalities may source printing services outside
NPO provided that:
2.1 The printing services to be provided by the private sector is superior in quality
and at a lower cost than what is offered by the NPO; and
2.2 The private printing provider is flexible in terms of meeting the target completion
time of the government agency.
SECTION 3. In the exercise of its functions, the amount to be appropriated for the programs,
projects and activities of the NPO in the General Appropriations Act (GAA) shall be limited to

its income without additional financial support from the government. (Emphases and
underscoring supplied.)
Pursuant to Executive Order No. 378, government agencies and instrumentalities are
allowed to source their printing services from the private sector through competitive bidding,
subject to the condition that the services offered by the private supplier be of superior quality
and lower in cost compared to what was offered by the NPO. Executive Order No. 378 also
limited NPOs appropriation in the General Appropriations Act to its income.
Perceiving Executive Order No. 378 as a threat to their security of tenure as employees of
the NPO, petitioners now challenge its constitutionality, contending that: (1) it is beyond the
executive powers of President Arroyo to amend or repeal Executive Order No. 285 issued by
former President Aquino when the latter still exercised legislative powers; and (2) Executive
Order No. 378 violates petitioners security of tenure, because it paves the way for the
gradual abolition of the NPO.
We dismiss the petition.
Before proceeding to resolve the substantive issues, the Court must first delve into a
procedural matter. Since petitioners instituted this case as a class suit, the Court, thus, must
first determine if the petition indeed qualifies as one. In Board of Optometry v. Colet, 2 we held
that "[c]ourts must exercise utmost caution before allowing a class suit, which is the
exception to the requirement of joinder of all indispensable parties. For while no difficulty
may arise if the decision secured is favorable to the plaintiffs, a quandary would result if the
decision were otherwise as those who were deemed impleaded by their self-appointed
representatives would certainly claim denial of due process."
Section 12, Rule 3 of the Rules of Court defines a class suit, as follows:
Sec. 12. Class suit. When the subject matter of the controversy is one of common or
general interest to many persons so numerous that it is impracticable to join all as parties, a
number of them which the court finds to be sufficiently numerous and representative as to
fully protect the interests of all concerned may sue or defend for the benefit of all. Any party
in interest shall have the right to intervene to protect his individual interest.
From the foregoing definition, the requisites of a class suit are: 1) the subject matter of
controversy is one of common or general interest to many persons; 2) the parties affected
are so numerous that it is impracticable to bring them all to court; and 3) the parties bringing
the class suit are sufficiently numerous or representative of the class and can fully protect
the interests of all concerned.
In Mathay v. The Consolidated Bank and Trust Company,3 the Court held that:
An action does not become a class suit merely because it is designated as such in the
pleadings. Whether the suit is or is not a class suit depends upon the attending facts, and
the complaint, or other pleading initiating the class action should allege the existence of the
necessary facts, to wit, the existence of a subject matter of common interest, and the
existence of a class and the number of persons in the alleged class, in order that the court
might be enabled to determine whether the members of the class are so numerous as to
make it impracticable to bring them all before the court, to contrast the number appearing on
the record with the number in the class and to determine whether claimants on record

adequately represent the class and the subject matter of general or common interest.
(Emphases ours.)
Here, the petition failed to state the number of NPO employees who would be affected by the
assailed Executive Order and who were allegedly represented by petitioners. It was the
Solicitor General, as counsel for respondents, who pointed out that there were about 549
employees in the NPO.4 The 67 petitioners undeniably comprised a small fraction of the NPO
employees whom they claimed to represent. Subsequently, 32 of the original petitioners
executed an Affidavit of Desistance, while one signed a letter denying ever signing the
petition,5 ostensibly reducing the number of petitioners to 34. We note that counsel for the
petitioners challenged the validity of the desistance or withdrawal of some of the petitioners
and insinuated that such desistance was due to pressure from people "close to the seat of
power."6 Still, even if we were to disregard the affidavit of desistance filed by some of the
petitioners, it is highly doubtful that a sufficient, representative number of NPO employees
have instituted this purported class suit. A perusal of the petition itself would show that of the
67 petitioners who signed the Verification/Certification of Non-Forum Shopping, only 20
petitioners were in fact mentioned in the jurat as having duly subscribed the petition before
the notary public. In other words, only 20 petitioners effectively instituted the present case.
Indeed, in MVRS Publications, Inc. v. Islamic Dawah Council of the Philippines, Inc., 7 we
observed that an element of a class suit or representative suit is the adequacy of
representation. In determining the question of fair and adequate representation of members
of a class, the court must consider (a) whether the interest of the named party is coextensive
with the interest of the other members of the class; (b) the proportion of those made a party,
as it so bears, to the total membership of the class; and (c) any other factor bearing on the
ability of the named party to speak for the rest of the class.
Previously, we held in Ibaes v. Roman Catholic Church8 that where the interests of the
plaintiffs and the other members of the class they seek to represent are diametrically
opposed, the class suit will not prosper.
It is worth mentioning that a Manifestation of Desistance, 9 to which the previously mentioned
Affidavit of Desistance10 was attached, was filed by the President of the National Printing
Office Workers Association (NAPOWA). The said manifestation expressed NAPOWAs
opposition to the filing of the instant petition in any court. Even if we take into account the
contention of petitioners counsel that the NAPOWA President had no legal standing to file
such manifestation, the said pleading is a clear indication that there is a divergence of
opinions and views among the members of the class sought to be represented, and not all
are in favor of filing the present suit. There is here an apparent conflict between petitioners
interests and those of the persons whom they claim to represent. Since it cannot be said that
petitioners sufficiently represent the interests of the entire class, the instant case cannot be
properly treated as a class suit.
As to the merits of the case, the petition raises two main grounds to assail the
constitutionality of Executive Order No. 378:
First, it is contended that President Arroyo cannot amend or repeal Executive Order No. 285
by the mere issuance of another executive order (Executive Order No. 378). Petitioners
maintain that former President Aquinos Executive Order No. 285 is a legislative enactment,
as the same was issued while President Aquino still had legislative powers under the
Freedom Constitution;11 thus, only Congress through legislation can validly amend Executive
Order No. 285.

Second, petitioners maintain that the issuance of Executive Order No. 378 would lead to the
eventual abolition of the NPO and would violate the security of tenure of NPO employees.
Anent the first ground raised in the petition, we find the same patently without merit.
It is a well-settled principle in jurisprudence that the President has the power to reorganize
the offices and agencies in the executive department in line with the Presidents
constitutionally granted power of control over executive offices and by virtue of previous
delegation of the legislative power to reorganize executive offices under existing statutes.
In Buklod ng Kawaning EIIB v. Zamora,12 the Court pointed out that Executive Order No. 292
or the Administrative Code of 1987 gives the President continuing authority to reorganize
and redefine the functions of the Office of the President. Section 31, Chapter 10, Title III,
Book III of the said Code, is explicit:
Sec. 31. Continuing Authority of the President to Reorganize his Office. The President,
subject to the policy in the Executive Office and in order to achieve simplicity, economy and
efficiency, shall have continuing authority to reorganize the administrative structure of the
Office of the President. For this purpose, he may take any of the following actions:
(1) Restructure the internal organization of the Office of the President Proper,
including the immediate Offices, the President Special Assistants/Advisers System
and the Common Staff Support System, by abolishing, consolidating or merging units
thereof or transferring functions from one unit to another;
(2) Transfer any function under the Office of the President to any other Department
or Agency as well as transfer functions to the Office of the President from other
Departments and Agencies; and
(3) Transfer any agency under the Office of the President to any other department or
agency as well as transfer agencies to the Office of the President from other
Departments or agencies. (Emphases ours.)
Interpreting the foregoing provision, we held in Buklod ng Kawaning EIIB, thus:
But of course, the list of legal basis authorizing the President to reorganize any department
or agency in the executive branch does not have to end here. We must not lose sight of the
very source of the power that which constitutes an express grant of power. Under Section
31, Book III of Executive Order No. 292 (otherwise known as the Administrative Code of
1987), "the President, subject to the policy in the Executive Office and in order to achieve
simplicity, economy and efficiency, shall have the continuing authority to reorganize the
administrative structure of the Office of the President." For this purpose, he may transfer the
functions of other Departments or Agencies to the Office of the President. In Canonizado v.
Aguirre [323 SCRA 312 (2000)], we ruled that reorganization "involves the reduction of
personnel, consolidation of offices, or abolition thereof by reason of economy or redundancy
of functions." It takes place when there is an alteration of the existing structure of
government offices or units therein, including the lines of control, authority and responsibility
between them. The EIIB is a bureau attached to the Department of Finance. It falls under the
Office of the President. Hence, it is subject to the Presidents continuing authority to
reorganize.13 (Emphasis ours.)

It is undisputed that the NPO, as an agency that is part of the Office of the Press Secretary
(which in various times has been an agency directly attached to the Office of the Press
Secretary or as an agency under the Philippine Information Agency), is part of the Office of
the President.14
Pertinent to the case at bar, Section 31 of the Administrative Code of 1987 quoted above
authorizes the President (a) to restructure the internal organization of the Office of the
President Proper, including the immediate Offices, the President Special Assistants/Advisers
System and the Common Staff Support System, by abolishing, consolidating or merging
units thereof or transferring functions from one unit to another, and (b) to transfer functions or
offices from the Office of the President to any other Department or Agency in the Executive
Branch, and vice versa.
Concomitant to such power to abolish, merge or consolidate offices in the Office of the
President Proper and to transfer functions/offices not only among the offices in the Office of
President Proper but also the rest of the Office of the President and the Executive Branch,
the President implicitly has the power to effect less radical or less substantive changes to the
functional and internal structure of the Office of the President, including the modification of
functions of such executive agencies as the exigencies of the service may require.
In the case at bar, there was neither an abolition of the NPO nor a removal of any of its
functions to be transferred to another agency. Under the assailed Executive Order No. 378,
the NPO remains the main printing arm of the government for all kinds of government forms
and publications but in the interest of greater economy and encouraging efficiency and
profitability, it must now compete with the private sector for certain government printing jobs,
with the exception of election paraphernalia which remains the exclusive responsibility of the
NPO, together with the Bangko Sentral ng Pilipinas, as the Commission on Elections may
determine. At most, there was a mere alteration of the main function of the NPO by limiting
the exclusivity of its printing responsibility to election forms.15
There is a view that the reorganization actions that the President may take with respect to
agencies in the Office of the President are strictly limited to transfer of functions and offices
as seemingly provided in Section 31 of the Administrative Code of 1987.
However, Section 20, Chapter 7, Title I, Book III of the same Code significantly provides:
Sec. 20. Residual Powers. Unless Congress provides otherwise, the President shall
exercise such other powers and functions vested in the President which are provided for
under the laws and which are not specifically enumerated above, or which are not delegated
by the President in accordance with law. (Emphasis ours.)
Pursuant to Section 20, the power of the President to reorganize the Executive Branch under
Section 31 includes such powers and functions that may be provided for under other laws. To
be sure, an inclusive and broad interpretation of the Presidents power to reorganize
executive offices has been consistently supported by specific provisions in general
appropriations laws.
In the oft-cited Larin v. Executive Secretary,16 the Court likewise adverted to certain
provisions of Republic Act No. 7645, the general appropriations law for 1993, as among the
statutory bases for the Presidents power to reorganize executive agencies, to wit:
Section 48 of R.A. 7645 provides that:

"Sec. 48. Scaling Down and Phase Out of Activities of Agencies Within the Executive
Branch. The heads of departments, bureaus and offices and agencies are hereby directed
to identify their respective activities which are no longer essential in the delivery of public
services and which may be scaled down, phased out or abolished, subject to civil [service]
rules and regulations. x x x. Actual scaling down, phasing out or abolition of the activities
shall be effected pursuant to Circulars or Orders issued for the purpose by the Office of the
President."
Said provision clearly mentions the acts of "scaling down, phasing out and abolition" of
offices only and does not cover the creation of offices or transfer of functions. Nevertheless,
the act of creating and decentralizing is included in the subsequent provision of Section 62,
which provides that:
"Sec. 62. Unauthorized organizational changes. Unless otherwise created by law or
directed by the President of the Philippines, no organizational unit or changes in key
positions in any department or agency shall be authorized in their respective organization
structures and be funded from appropriations by this Act."
The foregoing provision evidently shows that the President is authorized to effect
organizational changes including the creation of offices in the department or agency
concerned.
The contention of petitioner that the two provisions are riders deserves scant consideration.
Well settled is the rule that every law has in its favor the presumption of constitutionality.
Unless and until a specific provision of the law is declared invalid and unconstitutional, the
same is valid and binding for all intents and purposes.17 (Emphases ours)
Buklod ng Kawaning EIIB v. Zamora,18 where the Court upheld as valid then President
Joseph Estradas Executive Order No. 191 "deactivating" the Economic Intelligence and
Investigation Bureau (EIIB) of the Department of Finance, hewed closely to the reasoning in
Larin. The Court, among others, also traced from the General Appropriations Act 19 the
Presidents authority to effect organizational changes in the department or agency under the
executive structure, thus:
We adhere to the precedent or ruling in Larin that this provision recognizes the authority of
the President to effect organizational changes in the department or agency under the
executive structure. Such a ruling further finds support in Section 78 of Republic Act No.
8760. Under this law, the heads of departments, bureaus, offices and agencies and other
entities in the Executive Branch are directed (a) to conduct a comprehensive review of their
respective mandates, missions, objectives, functions, programs, projects, activities and
systems and procedures; (b) identify activities which are no longer essential in the delivery of
public services and which may be scaled down, phased-out or abolished; and (c) adopt
measures that will result in the streamlined organization and improved overall performance
of their respective agencies. Section 78 ends up with the mandate that the actual
streamlining and productivity improvement in agency organization and operation shall be
effected pursuant to Circulars or Orders issued for the purpose by the Office of the
President. x x x.20 (Emphasis ours)
Notably, in the present case, the 2003 General Appropriations Act, which was reenacted in
2004 (the year of the issuance of Executive Order No. 378), likewise gave the President the
authority to effect a wide variety of organizational changes in any department or agency in
the Executive Branch. Sections 77 and 78 of said Act provides:

Section 77. Organized Changes. Unless otherwise provided by law or directed by the
President of the Philippines, no changes in key positions or organizational units in any
department or agency shall be authorized in their respective organizational structures and
funded from appropriations provided by this Act.
Section 78. Institutional Strengthening and Productivity Improvement in Agency Organization
and Operations and Implementation of Organization/Reorganization Mandated by Law. The
Government shall adopt institutional strengthening and productivity improvement measures
to improve service delivery and enhance productivity in the government, as directed by the
President of the Philippines. The heads of departments, bureaus, offices, agencies, and
other entities of the Executive Branch shall accordingly conduct a comprehensive review of
their respective mandates, missions, objectives, functions, programs, projects, activities and
systems and procedures; identify areas where improvements are necessary; and implement
corresponding structural, functional and operational adjustments that will result in
streamlined organization and operations and improved performance and productivity:
PROVIDED, That actual streamlining and productivity improvements in agency organization
and operations, as authorized by the President of the Philippines for the purpose, including
the utilization of savings generated from such activities, shall be in accordance with the rules
and regulations to be issued by the DBM, upon consultation with the Presidential Committee
on Effective Governance: PROVIDED, FURTHER, That in the implementation of
organizations/reorganizations, or specific changes in agency structure, functions and
operations as a result of institutional strengthening or as mandated by law, the appropriation,
including the functions, projects, purposes and activities of agencies concerned may be
realigned as may be necessary: PROVIDED, FINALLY, That any unexpended balances or
savings in appropriations may be made available for payment of retirement gratuities and
separation benefits to affected personnel, as authorized under existing laws. (Emphases and
underscoring ours.)
Implicitly, the aforequoted provisions in the appropriations law recognize the power of the
President to reorganize even executive offices already funded by the said appropriations act,
including the power to implement structural, functional, and operational adjustments in the
executive bureaucracy and, in so doing, modify or realign appropriations of funds as may be
necessary under such reorganization. Thus, insofar as petitioners protest the limitation of the
NPOs appropriations to its own income under Executive Order No. 378, the same is
statutorily authorized by the above provisions.
In the 2003 case of Bagaoisan v. National Tobacco Administration,21 we upheld the
"streamlining" of the National Tobacco Administration through a reduction of its personnel
and deemed the same as included in the power of the President to reorganize executive
offices granted under the laws, notwithstanding that such streamlining neither involved an
abolition nor a transfer of functions of an office. To quote the relevant portion of that decision:
In the recent case of Rosa Ligaya C. Domingo, et al. vs. Hon. Ronaldo D. Zamora, in his
capacity as the Executive Secretary, et al., this Court has had occasion to also delve on the
Presidents power to reorganize the Office of the President under Section 31(2) and (3) of
Executive Order No. 292 and the power to reorganize the Office of the President Proper. x x
x
xxxx
The first sentence of the law is an express grant to the President of a continuing authority to
reorganize the administrative structure of the Office of the President. The succeeding

numbered paragraphs are not in the nature ofprovisos that unduly limit the aim and scope of
the grant to the President of the power to reorganize but are to be viewed in consonance
therewith. Section 31(1) of Executive Order No. 292 specifically refers to the Presidents
power to restructure the internal organization of the Office of the President Proper, by
abolishing, consolidating or merging units hereof or transferring functions from one unit to
another, while Section 31(2) and (3) concern executive offices outside the Office of the
President Proper allowing the President to transfer any function under the Office of the
President to any other Department or Agency and vice-versa, and the transfer of any agency
under the Office of the President to any other department or agency and vice-versa.
In the present instance, involving neither an abolition nor transfer of offices, the assailed
action is a mere reorganization under the general provisions of the law consisting mainly of
streamlining the NTA in the interest of simplicity, economy and efficiency. It is an act well
within the authority of the President motivated and carried out, according to the findings of
the appellate court, in good faith, a factual assessment that this Court could only but
accept.22 (Emphases and underscoring supplied.)
In the more recent case of Tondo Medical Center Employees Association v. Court of
Appeals,23 which involved a structural and functional reorganization of the Department of
Health under an executive order, we reiterated the principle that the power of the President
to reorganize agencies under the executive department by executive or administrative order
is constitutionally and statutorily recognized. We held in that case:
This Court has already ruled in a number of cases that the President may, by executive or
administrative order, direct the reorganization of government entities under the Executive
Department. This is also sanctioned under the Constitution, as well as other statutes.
Section 17, Article VII of the 1987 Constitution, clearly states: "[T]he president shall have
control of all executive departments, bureaus and offices." Section 31, Book III, Chapter 10
of Executive Order No. 292, also known as the Administrative Code of 1987 reads:
SEC. 31. Continuing Authority of the President to Reorganize his Office - The President,
subject to the policy in the Executive Office and in order to achieve simplicity, economy and
efficiency, shall have continuing authority to reorganize the administrative structure of the
Office of the President. For this purpose, he may take any of the following actions:
xxxx
In Domingo v. Zamora [445 Phil. 7 (2003)], this Court explained the rationale behind the
Presidents continuing authority under the Administrative Code to reorganize the
administrative structure of the Office of the President. The law grants the President the
power to reorganize the Office of the President in recognition of the recurring need of every
President to reorganize his or her office "to achieve simplicity, economy and efficiency." To
remain effective and efficient, it must be capable of being shaped and reshaped by the
President in the manner the Chief Executive deems fit to carry out presidential directives and
policies.
The Administrative Code provides that the Office of the President consists of the Office of the
President Proper and the agencies under it. The agencies under the Office of the President
are identified in Section 23, Chapter 8, Title II of the Administrative Code:

Sec. 23. The Agencies under the Office of the President.The agencies under the Office of
the President refer to those offices placed under the chairmanship of the President, those
under the supervision and control of the President, those under the administrative
supervision of the Office of the President, those attached to it for policy and program
coordination, and those that are not placed by law or order creating them under any specific
department.
xxxx
The power of the President to reorganize the executive department is likewise recognized in
general appropriations laws. x x x.
xxxx
Clearly, Executive Order No. 102 is well within the constitutional power of the President to
issue. The President did not usurp any legislative prerogative in issuing Executive Order No.
102. It is an exercise of the Presidents constitutional power of control over the executive
department, supported by the provisions of the Administrative Code, recognized by other
statutes, and consistently affirmed by this Court.24 (Emphases supplied.)
Subsequently, we ruled in Anak Mindanao Party-List Group v. Executive Secretary25 that:
The Constitutions express grant of the power of control in the President justifies an
executive action to carry out reorganization measures under a broad authority of law.
In enacting a statute, the legislature is presumed to have deliberated with full knowledge of
all existing laws and jurisprudence on the subject. It is thus reasonable to conclude that in
passing a statute which places an agency under the Office of the President, it was in
accordance with existing laws and jurisprudence on the Presidents power to reorganize.
In establishing an executive department, bureau or office, the legislature necessarily ordains
an executive agencys position in the scheme of administrative structure. Such determination
is primary, but subject to the Presidents continuing authority to reorganize the administrative
structure. As far as bureaus, agencies or offices in the executive department are concerned,
the power of control may justify the President to deactivate the functions of a particular office.
Or a law may expressly grant the President the broad authority to carry out reorganization
measures. The Administrative Code of 1987 is one such law.26
The issuance of Executive Order No. 378 by President Arroyo is an exercise of a delegated
legislative power granted by the aforementioned Section 31, Chapter 10, Title III, Book III of
the Administrative Code of 1987, which provides for the continuing authority of the President
to reorganize the Office of the President, "in order to achieve simplicity, economy and
efficiency." This is a matter already well-entrenched in jurisprudence. The reorganization of
such an office through executive or administrative order is also recognized in the
Administrative Code of 1987. Sections 2 and 3, Chapter 2, Title I, Book III of the said Code
provide:
Sec. 2. Executive Orders. - Acts of the President providing for rules of a general or
permanent character in implementation or execution of constitutional or statutory powers
shall be promulgated in executive orders.

Sec. 3. Administrative Orders. - Acts of the President which relate to particular aspects of
governmental operations in pursuance of his duties as administrative head shall be
promulgated in administrative orders. (Emphases supplied.)
To reiterate, we find nothing objectionable in the provision in Executive Order No. 378
limiting the appropriation of the NPO to its own income. Beginning with Larin and in
subsequent cases, the Court has noted certain provisions in the general appropriations
laws as likewise reflecting the power of the President to reorganize executive offices or
agencies even to the extent of modifying and realigning appropriations for that purpose.
Petitioners contention that the issuance of Executive Order No. 378 is an invalid exercise of
legislative power on the part of the President has no legal leg to stand on.
In all, Executive Order No. 378, which purports to institute necessary reforms in government
in order to improve and upgrade efficiency in the delivery of public services by redefining the
functions of the NPO and limiting its funding to its own income and to transform it into a selfreliant agency able to compete with the private sector, is well within the prerogative of
President Arroyo under her continuing delegated legislative power to reorganize her own
office. As pointed out in the separate concurring opinion of our learned colleague, Associate
Justice Antonio T. Carpio, the objective behind Executive Order No. 378 is wholly consistent
with the state policy contained in Republic Act No. 9184 or the Government Procurement
Reform Act to encourage competitiveness by extending equal opportunity to private
contracting parties who are eligible and qualified.27
1avvphi1

To be very clear, this delegated legislative power to reorganize pertains only to the Office of
the President and the departments, offices and agencies of the executive branch and does
not include the Judiciary, the Legislature or the constitutionally-created or mandated bodies.
Moreover, it must be stressed that the exercise by the President of the power to reorganize
the executive department must be in accordance with the Constitution, relevant laws and
prevailing jurisprudence.
In this regard, we are mindful of the previous pronouncement of this Court in Dario v.
Mison28 that:
Reorganizations in this jurisdiction have been regarded as valid provided they are pursued in
good faith. As a general rule, a reorganization is carried out in "good faith" if it is for the
purpose of economy or to make bureaucracy more efficient. In that event, no dismissal (in
case of a dismissal) or separation actually occurs because the position itself ceases to exist.
And in that case, security of tenure would not be a Chinese wall. Be that as it may, if the
"abolition," which is nothing else but a separation or removal, is done for political reasons or
purposely to defeat security of tenure, or otherwise not in good faith, no valid "abolition"
takes place and whatever "abolition" is done, is void ab initio. There is an invalid "abolition"
as where there is merely a change of nomenclature of positions, or where claims of economy
are belied by the existence of ample funds. (Emphasis ours.)
Stated alternatively, the presidential power to reorganize agencies and offices in the
executive branch of government is subject to the condition that such reorganization is carried
out in good faith.
If the reorganization is done in good faith, the abolition of positions, which results in loss of
security of tenure of affected government employees, would be valid. In Buklod ng Kawaning
EIIB v. Zamora,29 we even observed that there was no such thing as an absolute right to hold

office. Except those who hold constitutional offices, which provide for special immunity as
regards salary and tenure, no one can be said to have any vested right to an office or
salary.30
This brings us to the second ground raised in the petition that Executive Order No. 378, in
allowing government agencies to secure their printing requirements from the private sector
and in limiting the budget of the NPO to its income, will purportedly lead to the gradual
abolition of the NPO and the loss of security of tenure of its present employees. In other
words, petitioners avow that the reorganization of the NPO under Executive Order No. 378 is
tainted with bad faith. The basic evidentiary rule is that he who asserts a fact or the
affirmative of an issue has the burden of proving it.31
A careful review of the records will show that petitioners utterly failed to substantiate their
claim. They failed to allege, much less prove, sufficient facts to show that the limitation of the
NPOs budget to its own income would indeed lead to the abolition of the position, or removal
from office, of any employee. Neither did petitioners present any shred of proof of their
assertion that the changes in the functions of the NPO were for political considerations that
had nothing to do with improving the efficiency of, or encouraging operational economy in,
the said agency.
In sum, the Court finds that the petition failed to show any constitutional infirmity or grave
abuse of discretion amounting to lack or excess of jurisdiction in President Arroyos issuance
of Executive Order No. 378.
WHEREFORE, the petition is hereby DISMISSED and the prayer for a Temporary
Restraining Order and/or a Writ of Preliminary Injunction is hereby DENIED. No costs.
SO ORDERED.
G.R. No. 153788

November 27, 2009

ROGER V. NAVARRO, Petitioner,

vs.
HON. JOSE L. ESCOBIDO, Presiding Judge, RTC Branch 37, Cagayan de Oro City, and
KAREN T. GO, doing business under the name KARGO ENTERPRISES, Respondents.
DOCTRINE: Thus, the complaint in the court below should have been

filed in the name of the owner of Juasing Hardware. The allegation in

the body of the complaint would show that the suit is brought by such
person as proprietor or owner of the business conducted under the
name and style Juasing Hardware. The descriptive words doing
business as Juasing Hardware may be added to the title of the case,
as is customarily done. [
DECISION
BRION, J.:

This is a petition for review on certiorari1 that seeks to set aside the Court of Appeals (CA)
Decision2 dated October 16, 2001 and Resolution3 dated May 29, 2002 in CA-G.R. SP. No.
64701. These CA rulings affirmed the July 26, 20004 and March 7, 20015 orders of the
Regional Trial Court (RTC), Misamis Oriental, Cagayan de Oro City, denying petitioner Roger
V. Navarros (Navarro) motion to dismiss.
BACKGROUND FACTS
On September 12, 1998, respondent Karen T. Go filed two complaints, docketed as Civil
Case Nos. 98-599 (first complaint)6 and 98-598 (second complaint),7 before the RTC for
replevin and/or sum of money with damages against Navarro. In these complaints, Karen Go
prayed that the RTC issue writs of replevin for the seizure of two (2) motor vehicles in
Navarros possession.
The first complaint stated:
1. That plaintiff KAREN T. GO is a Filipino, of legal age, married to GLENN O. GO, a
resident of Cagayan de Oro City and doing business under the trade name KARGO
ENTERPRISES, an entity duly registered and existing under and by virtue of the
laws of the Republic of the Philippines, which has its business address at Bulua,
Cagayan de Oro City; that defendant ROGER NAVARRO is a Filipino, of legal age, a
resident of 62 Dolores Street, Nazareth, Cagayan de Oro City, where he may be
served with summons and other processes of the Honorable Court; that defendant
"JOHN DOE" whose real name and address are at present unknown to plaintiff is
hereby joined as party defendant as he may be the person in whose possession and
custody the personal property subject matter of this suit may be found if the same is
not in the possession of defendant ROGER NAVARRO;
2. That KARGO ENTERPRISES is in the business of, among others, buying and
selling motor vehicles, including hauling trucks and other heavy equipment;
3. That for the cause of action against defendant ROGER NAVARRO, it is hereby
stated that on August 8, 1997, the said defendant leased [from] plaintiff a certain
motor vehicle which is more particularly described as follows
Make/Type FUSO WITH MOUNTED CRANE
Serial No. FK416K-51680
Motor No. 6D15-338735
Plate No. GHK-378
as evidenced by a LEASE AGREEMENT WITH OPTION TO PURCHASE entered into by
and between KARGO ENTERPRISES, then represented by its Manager, the aforementioned
GLENN O. GO, and defendant ROGER NAVARRO xxx; that in accordance with the
provisions of the above LEASE AGREEMENT WITH OPTION TO PURCHASE, defendant
ROGER NAVARRO delivered unto plaintiff six (6) post-dated checks each in the amount of
SIXTY-SIX THOUSAND THREE HUNDRED THIRTY-THREE & 33/100 PESOS (P66,333.33)
which were supposedly in payment of the agreed rentals; that when the fifth and sixth
checks, i.e. PHILIPPINE BANK OF COMMUNICATIONS CAGAYAN DE ORO BRANCH
CHECKS NOS. 017112 and 017113, respectively dated January 8, 1998 and February 8,
1998, were presented for payment and/or credit, the same were dishonored and/or returned
by the drawee bank for the common reason that the current deposit account against which

the said checks were issued did not have sufficient funds to cover the amounts thereof; that
the total amount of the two (2) checks, i.e. the sum of ONE HUNDRED THIRTY-TWO
THOUSAND SIX HUNDRED SIXTY-SIX & 66/100 PESOS (P132,666.66) therefore
represents the principal liability of defendant ROGER NAVARRO unto plaintiff on the basis of
the provisions of the above LEASE AGREEMENT WITH RIGHT TO PURCHASE; that
demands, written and oral, were made of defendant ROGER NAVARRO to pay the amount
of ONE HUNDRED THIRTY-TWO THOUSAND SIX HUNDRED SIXTY-SIX & 66/100 PESOS
(P132,666.66), or to return the subject motor vehicle as also provided for in the LEASE
AGREEMENT WITH RIGHT TO PURCHASE, but said demands were, and still are, in vain to
the great damage and injury of herein plaintiff; xxx
4. That the aforedescribed motor vehicle has not been the subject of any tax assessment
and/or fine pursuant to law, or seized under an execution or an attachment as against herein
plaintiff;
xxx
8. That plaintiff hereby respectfully applies for an order of the Honorable Court for the
immediate delivery of the above-described motor vehicle from defendants unto plaintiff
pending the final determination of this case on the merits and, for that purpose, there is
attached hereto an affidavit duly executed and bond double the value of the personal
property subject matter hereof to answer for damages and costs which defendants may
suffer in the event that the order for replevin prayed for may be found out to having not been
properly issued.
The second complaint contained essentially the same allegations as the first complaint,
except that the Lease Agreement with Option to Purchase involved is dated October 1, 1997
and the motor vehicle leased is described as follows:
Make/Type FUSO WITH MOUNTED CRANE
Serial No. FK416K-510528
Motor No. 6D14-423403
The second complaint also alleged that Navarro delivered three post-dated checks, each for
the amount ofP100,000.00, to Karen Go in payment of the agreed rentals; however, the third
check was dishonored when presented for payment.8
On October 12, 19989 and October 14, 1998,10 the RTC issued writs of replevin for both
cases; as a result, the Sheriff seized the two vehicles and delivered them to the possession
of Karen Go.
In his Answers, Navarro alleged as a special affirmative defense that the two complaints
stated no cause of action, since Karen Go was not a party to the Lease Agreements with
Option to Purchase (collectively, the lease agreements) the actionable documents on
which the complaints were based.
On Navarros motion, both cases were duly consolidated on December 13, 1999.
In its May 8, 2000 order, the RTC dismissed the case on the ground that the complaints did
not state a cause of action.

In response to the motion for reconsideration Karen Go filed dated May 26, 2000, 11 the RTC
issued another order dated July 26, 2000 setting aside the order of dismissal. Acting on the
presumption that Glenn Gos leasing business is a conjugal property, the RTC held that
Karen Go had sufficient interest in his leasing business to file the action against Navarro.
However, the RTC held that Karen Go should have included her husband, Glenn Go, in the
complaint based on Section 4, Rule 3 of the Rules of Court (Rules).12 Thus, the lower court
ordered Karen Go to file a motion for the inclusion of Glenn Go as co-plaintiff.
1avvphi1

When the RTC denied Navarros motion for reconsideration on March 7, 2001, Navarro filed
a petition for certiorari with the CA, essentially contending that the RTC committed grave
abuse of discretion when it reconsidered the dismissal of the case and directed Karen Go to
amend her complaints by including her husband Glenn Go as co-plaintiff. According to
Navarro, a complaint which failed to state a cause of action could not be converted into one
with a cause of action by mere amendment or supplemental pleading.
On October 16, 2001, the CA denied Navarros petition and affirmed the RTCs order.13 The
CA also denied Navarros motion for reconsideration in its resolution of May 29,
2002,14 leading to the filing of the present petition.
THE PETITION
Navarro alleges that even if the lease agreements were in the name of Kargo Enterprises,
since it did not have the requisite juridical personality to sue, the actual parties to the
agreement are himself and Glenn Go. Since it was Karen Go who filed the complaints and
not Glenn Go, she was not a real party-in-interest and the complaints failed to state a cause
of action.
Navarro posits that the RTC erred when it ordered the amendment of the complaint to
include Glenn Go as a co-plaintiff, instead of dismissing the complaint outright because a
complaint which does not state a cause of action cannot be converted into one with a cause
of action by a mere amendment or a supplemental pleading. In effect, the lower court
created a cause of action for Karen Go when there was none at the time she filed the
complaints.
Even worse, according to Navarro, the inclusion of Glenn Go as co-plaintiff drastically
changed the theory of the complaints, to his great prejudice. Navarro claims that the lower
court gravely abused its discretion when it assumed that the leased vehicles are part of the
conjugal property of Glenn and Karen Go. Since Karen Go is the registered owner of Kargo
Enterprises, the vehicles subject of the complaint are her paraphernal properties and the
RTC gravely erred when it ordered the inclusion of Glenn Go as a co-plaintiff.
Navarro likewise faults the lower court for setting the trial of the case in the same order that
required Karen Go to amend her complaints, claiming that by issuing this order, the trial court
violated Rule 10 of the Rules.
Even assuming the complaints stated a cause of action against him, Navarro maintains that
the complaints were premature because no prior demand was made on him to comply with
the provisions of the lease agreements before the complaints for replevin were filed.
Lastly, Navarro posits that since the two writs of replevin were issued based on flawed
complaints, the vehicles were illegally seized from his possession and should be returned to
him immediately.

Karen Go, on the other hand, claims that it is misleading for Navarro to state that she has no
real interest in the subject of the complaint, even if the lease agreements were signed only
by her husband, Glenn Go; she is the owner of Kargo Enterprises and Glenn Go signed the
lease agreements merely as the manager of Kargo Enterprises. Moreover, Karen Go
maintains that Navarros insistence that Kargo Enterprises is Karen Gos paraphernal
property is without basis. Based on the law and jurisprudence on the matter, all property
acquired during the marriage is presumed to be conjugal property. Finally, Karen Go insists
that her complaints sufficiently established a cause of action against Navarro. Thus, when
the RTC ordered her to include her husband as co-plaintiff, this was merely to comply with
the rule that spouses should sue jointly, and was not meant to cure the complaints lack of
cause of action.
THE COURTS RULING
We find the petition devoid of merit.
Karen Go is the real party-in-interest
The 1997 Rules of Civil Procedure requires that every action must be prosecuted or
defended in the name of the real party-in-interest, i.e., the party who stands to be benefited
or injured by the judgment in the suit, or the party entitled to the avails of the suit. 15
Interestingly, although Navarro admits that Karen Go is the registered owner of the business
name Kargo Enterprises, he still insists that Karen Go is not a real party-in-interest in the
case. According to Navarro, while the lease contracts were in Kargo Enterprises name, this
was merely a trade name without a juridical personality, so the actual parties to the lease
agreements were Navarro and Glenn Go, to the exclusion of Karen Go.
As a corollary, Navarro contends that the RTC acted with grave abuse of discretion when it
ordered the inclusion of Glenn Go as co-plaintiff, since this in effect created a cause of action
for the complaints when in truth, there was none.
We do not find Navarros arguments persuasive.
The central factor in appreciating the issues presented in this case is the business name
Kargo Enterprises. The name appears in the title of the Complaint where the plaintiff was
identified as "KAREN T. GO doing business under the name KARGO ENTERPRISES," and
this identification was repeated in the first paragraph of the Complaint. Paragraph 2 defined
the business KARGO ENTERPRISES undertakes. Paragraph 3 continued with the allegation
that the defendant "leased from plaintiff a certain motor vehicle" that was thereafter
described. Significantly, the Complaint specifies and attaches as its integral part the Lease
Agreement that underlies the transaction between the plaintiff and the defendant. Again, the
name KARGO ENTERPRISES entered the picture as this Lease Agreement provides:
This agreement, made and entered into by and between:
GLENN O. GO, of legal age, married, with post office address at xxx, herein referred to as
the LESSOR-SELLER; representing KARGO ENTERPRISES as its Manager,
xxx

thus, expressly pointing to KARGO ENTERPRISES as the principal that Glenn O. Go

represented. In other words, by the express terms of this Lease Agreement, Glenn Go did
sign the agreement only as the manager of Kargo Enterprises and the latter is clearly the
real party to the lease agreements.
As Navarro correctly points out, Kargo Enterprises is a sole proprietorship, which is neither a
natural person, nor a juridical person, as defined by Article 44 of the Civil Code:
Art. 44. The following are juridical persons:
(1) The State and its political subdivisions;
(2) Other corporations, institutions and entities for public interest or purpose, created
by law; their personality begins as soon as they have been constituted according to
law;
(3) Corporations, partnerships and associations for private interest or purpose to
which the law grants a juridical personality, separate and distinct from that of each
shareholder, partner or member.
Thus, pursuant to Section 1, Rule 3 of the Rules,16 Kargo Enterprises cannot be a party to a
civil action. This legal reality leads to the question: who then is the proper party to file an
action based on a contract in the name of Kargo Enterprises?
We faced a similar question in Juasing Hardware v. Mendoza,17 where we said:
Finally, there is no law authorizing sole proprietorships like petitioner to bring suit in court.
The law merely recognizes the existence of a sole proprietorship as a form of business
organization conducted for profit by a single individual, and requires the proprietor or owner
thereof to secure licenses and permits, register the business name, and pay taxes to the
national government. It does not vest juridical or legal personality upon the sole
proprietorship nor empower it to file or defend an action in court.
Thus, the complaint in the court below should have been filed in the name of the owner of
Juasing Hardware. The allegation in the body of the complaint would show that the suit is
brought by such person as proprietor or owner of the business conducted under the name
and style Juasing Hardware. The descriptive words "doing business as Juasing Hardware"
may be added to the title of the case, as is customarily done.18 [Emphasis supplied.]
This conclusion should be read in relation with Section 2, Rule 3 of the Rules, which states:
SEC. 2. Parties in interest. A real party in interest is the party who stands to be benefited or
injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless
otherwise authorized by law or these Rules, every action must be prosecuted or defended in
the name of the real party in interest.
As the registered owner of Kargo Enterprises, Karen Go is the party who will directly benefit
from or be injured by a judgment in this case. Thus, contrary to Navarros contention, Karen
Go is the real party-in-interest, and it is legally incorrect to say that her Complaint does not
state a cause of action because her name did not appear in the Lease Agreement that her
husband signed in behalf of Kargo Enterprises. Whether Glenn Go can legally sign the

Lease Agreement in his capacity as a manager of Kargo Enterprises, a sole proprietorship, is

a question we do not decide, as this is a matter for the trial court to consider in a trial on the
merits.
Glenn Gos Role in the Case
We find it significant that the business name Kargo Enterprises is in the name of Karen T.
Go,19 who described herself in the Complaints to be "a Filipino, of legal age, married to
GLENN O. GO, a resident of Cagayan de Oro City, and doing business under the trade
name KARGO ENTERPRISES."20 That Glenn Go and Karen Go are married to each other is
a fact never brought in issue in the case. Thus, the business name KARGO ENTERPRISES
is registered in the name of a married woman, a fact material to the side issue of whether
Kargo Enterprises and its properties are paraphernal or conjugal properties. To restate the
parties positions, Navarro alleges that Kargo Enterprises is Karen Gos paraphernal
property, emphasizing the fact that the business is registered solely in Karen Gos name. On
the other hand, Karen Go contends that while the business is registered in her name, it is in
fact part of their conjugal property.
The registration of the trade name in the name of one person a woman does not
necessarily lead to the conclusion that the trade name as a property is hers alone,
particularly when the woman is married. By law, all property acquired during the marriage,
whether the acquisition appears to have been made, contracted or registered in the name of
one or both spouses, is presumed to be conjugal unless the contrary is proved. 21 Our
examination of the records of the case does not show any proof that Kargo Enterprises and
the properties or contracts in its name are conjugal. If at all, only the bare allegation of
Navarro to this effect exists in the records of the case. As we emphasized in Castro v. Miat:22
Petitioners also overlook Article 160 of the New Civil Code. It provides that "all property of
the marriage is presumed to be conjugal partnership, unless it be prove[n] that it pertains
exclusively to the husband or to the wife." This articledoes not require proof that the
property was acquired with funds of the partnership. The presumption applies even
when the manner in which the property was acquired does not appear.23 [Emphasis
supplied.]
Thus, for purposes solely of this case and of resolving the issue of whether Kargo
Enterprises as a sole proprietorship is conjugal or paraphernal property, we hold that it is
conjugal property.
Article 124 of the Family Code, on the administration of the conjugal property, provides:
Art. 124. The administration and enjoyment of the conjugal partnership property shall
belong to both spouses jointly. In case of disagreement, the husbands decision shall
prevail, subject to recourse to the court by the wife for proper remedy, which must be availed
of within five years from the date of the contract implementing such decision.
xxx
This provision, by its terms, allows either Karen or Glenn Go to speak and act with authority
in managing their conjugal property, i.e., Kargo Enterprises. No need exists, therefore, for
one to obtain the consent of the other before performing an act of administration or any act
that does not dispose of or encumber their conjugal property.

Under Article 108 of the Family Code, the conjugal partnership is governed by the rules on
the contract of partnership in all that is not in conflict with what is expressly determined in this
Chapter or by the spouses in their marriage settlements. In other words, the property
relations of the husband and wife shall be governed primarily by Chapter 4 on Conjugal
Partnership of Gains of the Family Code and, suppletorily, by the spouses marriage
settlement and by the rules on partnership under the Civil Code. In the absence of any
evidence of a marriage settlement between the spouses Go, we look at the Civil Code
provision on partnership for guidance.
A rule on partnership applicable to the spouses circumstances is Article 1811 of the Civil
Code, which states:
Art. 1811. A partner is a co-owner with the other partners of specific partnership property.
The incidents of this co-ownership are such that:
(1) A partner, subject to the provisions of this Title and to any agreement between the
partners, has an equal right with his partners to possess specific partnership
property for partnership purposes; xxx
Under this provision, Glenn and Karen Go are effectively co-owners of Kargo Enterprises
and the properties registered under this name; hence, both have an equal right to seek
possession of these properties. Applying Article 484 of the Civil Code, which states that "in
default of contracts, or special provisions, co-ownership shall be governed by the provisions
of this Title," we find further support in Article 487 of the Civil Code that allows any of the coowners to bring an action in ejectment with respect to the co-owned property.
While ejectment is normally associated with actions involving real property, we find that this
rule can be applied to the circumstances of the present case, following our ruling in
Carandang v. Heirs of De Guzman.24 In this case, one spouse filed an action for the recovery
of credit, a personal property considered conjugal property, without including the other
spouse in the action. In resolving the issue of whether the other spouse was required to be
included as a co-plaintiff in the action for the recovery of the credit, we said:
Milagros de Guzman, being presumed to be a co-owner of the credits allegedly extended to
the spouses Carandang, seems to be either an indispensable or a necessary party. If she is
an indispensable party, dismissal would be proper. If she is merely a necessary party,
dismissal is not warranted, whether or not there was an order for her inclusion in the
complaint pursuant to Section 9, Rule 3.
Article 108 of the Family Code provides:
Art. 108. The conjugal partnership shall be governed by the rules on the contract of
partnership in all that is not in conflict with what is expressly determined in this Chapter or by
the spouses in their marriage settlements.
This provision is practically the same as the Civil Code provision it superseded:
Art. 147. The conjugal partnership shall be governed by the rules on the contract of
partnership in all that is not in conflict with what is expressly determined in this Chapter.

In this connection, Article 1811 of the Civil Code provides that "[a] partner is a co-owner with
the other partners of specific partnership property." Taken with the presumption of the
conjugal nature of the funds used to finance the four checks used to pay for petitioners stock
subscriptions, and with the presumption that the credits themselves are part of conjugal
funds, Article 1811 makes Quirino and Milagros de Guzman co-owners of the alleged credit.
Being co-owners of the alleged credit, Quirino and Milagros de Guzman may separately
bring an action for the recovery thereof. In the fairly recent cases of Baloloy v.
Hular and Adlawan v. Adlawan, we held that, in a co-ownership, co-owners may bring actions
for the recovery of co-owned property without the necessity of joining all the other co-owners
as co-plaintiffs because the suit is presumed to have been filed for the benefit of his coowners. In the latter case and in that of De Guia v. Court of Appeals, we also held that Article
487 of the Civil Code, which provides that any of the co-owners may bring an action for
ejectment, covers all kinds of action for the recovery of possession.
In sum, in suits to recover properties, all co-owners are real parties in interest. However,
pursuant to Article 487 of the Civil Code and relevant jurisprudence, any one of them may
bring an action, any kind of action, for the recovery of co-owned properties. Therefore, only
one of the co-owners, namely the co-owner who filed the suit for the recovery of the coowned property, is an indispensable party thereto. The other co-owners are not
indispensable parties. They are not even necessary parties, for a complete relief can be
accorded in the suit even without their participation, since the suit is presumed to have been
filed for the benefit of all co-owners.25 [Emphasis supplied.]
Under this ruling, either of the spouses Go may bring an action against Navarro to recover
possession of the Kargo Enterprises-leased vehicles which they co-own. This conclusion is
consistent with Article 124 of the Family Code, supporting as it does the position that either
spouse may act on behalf of the conjugal partnership, so long as they do not dispose of or
encumber the property in question without the other spouses consent.
On this basis, we hold that since Glenn Go is not strictly an indispensable party in the action
to recover possession of the leased vehicles, he only needs to be impleaded as a pro-forma
party to the suit, based on Section 4, Rule 4 of the Rules, which states:
Section 4. Spouses as parties. Husband and wife shall sue or be sued jointly, except as
provided by law.
Non-joinder of indispensable parties not ground to dismiss action
Even assuming that Glenn Go is an indispensable party to the action, we have held in a
number of cases26 that the misjoinder or non-joinder of indispensable parties in a complaint is
not a ground for dismissal of action. As we stated in Macababbad v. Masirag: 27
Rule 3, Section 11 of the Rules of Court provides that neither misjoinder nor nonjoinder of
parties is a ground for the dismissal of an action, thus:
Sec. 11. Misjoinder and non-joinder of parties. Neither misjoinder nor non-joinder of parties is
ground for dismissal of an action. Parties may be dropped or added by order of the court on
motion of any party or on its own initiative at any stage of the action and on such terms as
are just. Any claim against a misjoined party may be severed and proceeded with separately.

In Domingo v. Scheer, this Court held that the proper remedy when a party is left out is to
implead the indispensable party at any stage of the action. The court, either motu proprio or
upon the motion of a party, may order the inclusion of the indispensable party or give the
plaintiff opportunity to amend his complaint in order to include indispensable parties. If the
plaintiff to whom the order to include the indispensable party is directed refuses to comply
with the order of the court, the complaint may be dismissed upon motion of the defendant or
upon the court's own motion. Only upon unjustified failure or refusal to obey the order to
include or to amend is the action dismissed.
In these lights, the RTC Order of July 26, 2000 requiring plaintiff Karen Go to join her
husband as a party plaintiff is fully in order.
Demand not required prior
to filing of replevin action
In arguing that prior demand is required before an action for a writ of replevin is filed,
Navarro apparently likens a replevin action to an unlawful detainer.
For a writ of replevin to issue, all that the applicant must do is to file an affidavit and bond,
pursuant to Section 2, Rule 60 of the Rules, which states:
Sec. 2. Affidavit and bond.
The applicant must show by his own affidavit or that of some other person who personally
knows the facts:
(a) That the applicant is the owner of the property claimed, particularly describing
it, or is entitled to the possession thereof;
(b) That the property is wrongfully detained by the adverse party, alleging the
cause of detention thereof according to the best of his knowledge, information, and
belief;
(c) That the property has not been distrained or taken for a tax assessment or a fine
pursuant to law, or seized under a writ of execution or preliminary attachment, or
otherwise placed under custodia legis, or if so seized, that it is exempt from such
seizure or custody; and
(d) The actual market value of the property.
The applicant must also give a bond, executed to the adverse party in double the value of
the property as stated in the affidavit aforementioned, for the return of the property to the
adverse party if such return be adjudged, and for the payment to the adverse party of such
sum as he may recover from the applicant in the action.
We see nothing in these provisions which requires the applicant to make a prior demand on
the possessor of the property before he can file an action for a writ of replevin. Thus, prior
demand is not a condition precedent to an action for a writ of replevin.
More importantly, Navarro is no longer in the position to claim that a prior demand is
necessary, as he has already admitted in his Answers that he had received the letters that

Karen Go sent him, demanding that he either pay his unpaid obligations or return the leased
motor vehicles. Navarros position that a demand is necessary and has not been made is
therefore totally unmeritorious.
WHEREFORE, premises considered, we DENY the petition for review for lack of merit.
Costs against petitioner Roger V. Navarro.

ROSENDO BACALSO, RODRIGO

BACALSO,
MARCILIANA
B.
DOBLAS, TEROLIO BACALSO,
ALIPIO BACALSO, JR., MARIO
BACALSO,
WILLIAM
BACALSO,ALIPIO BACALSO
III and CRISTITA B. BAES,
Petitioners,

G.R. No. 173192

Present:
QUISUMBING, J., Chairperson,
CARPIO MORALES,
TINGA,
VELASCO, JR., and
BRION, JJ.

- versus MAXIMO PADIGOS, FLAVIANO

MABUYO, GAUDENCIO PADIGOS,
DOMINGO PADIGOS, VICTORIA P.
Promulgated:
ABARQUEZ, LILIA P. GABISON,
April 14, 2008
TIMOTEO PADIGOS, PERFECTO
PADIGOS,
PRISCA SALARDA,
FLORA
GUINTO,
BENITA
TEMPLA,
SOTERO
PADIGOS,
ANDRES
PADIGOS,
EMILIO
PADIGOS, DEMETRIO PADIGOS,
JR.,
WENCESLAO
PADIGOS,
NELLY
PADIGOS,
EXPEDITO
PADIGOS, HENRY PADIGOS and
ENRIQUE P. MALAZARTE,
Respondents.
x--------------------------------------------------X
DECISION
CARPIO MORALES, J.:

The case at bar involves a parcel of land identified as Lot No. 3781
(the lot) located in Inayawan, Cebu, covered by Original Certificate of Title
No. RO-2649 (0-9092)[1] in the name of the following 13 co-owners, their
respective shares of which are indicated opposite their names:

Fortunata Padigos (Fortunata)

Felix Padigos (Felix)
Wenceslao Padigos (Wenceslao)
Maximiano Padigos (Maximiano)
Geronimo Padigos (Geronimo)
Macaria Padigos
Simplicio Padigos (Simplicio)
Ignacio Padigos (Ignacio)
Matilde Padigos
Marcelo Padigos
Rustica Padigos
Raymunda Padigos
Antonino Padigos

1/8
1/8
1/8
1/8
1/8
1/8
1/8
1/48
1/48
1/48
1/48
1/48
1/48

Maximo Padigos (Maximo), Flaviano Mabuyo (Flaviano), Gaudencio

Padigos (Gaudencio), Domingo Padigos (Domingo), and Victoria P.
Abarquez (Victoria), who are among the herein respondents, filed on April
17, 1995, before the Regional Trial Court (RTC) of Cebu City, a Complaint,
[2]
docketed as Civil Case No. CEB-17326, against Rosendo Bacalso
(Rosendo) and Rodrigo Bacalso (Rodrigo) who are among the herein
petitioners, for quieting of title, declaration of nullity of documents,
recovery of possession, and damages.
The therein plaintiffs-herein respondents Maximo and Flaviano
claimed that they are children of the deceased co-owner Simplicio; that
respondents Gaudencio and Domingo are children of the deceased co-owner
Ignacio; and that respondent Victoria and respondent Lilia P. Gabison (Lilia)
are grandchildren of the late co-owner Fortunata.[3]
Respondents also alleged that the therein defendants-petitioners
Rosendo and Rodrigo are heirs of Alipio Bacalso, Sr. (Alipio, Sr.) who,

during his lifetime, secured Tax Declaration Nos. L-078-02223 and L-07802224 covering the lot without any legal basis; that Rosendo and Rodrigo
have been leasing portions of the lot to persons who built houses thereon,
and Rosendo has been living in a house built on a portion of the lot; [4] and
that demands to vacate and efforts at conciliation proved futile, [5] prompting
them to file the complaint at the RTC.
In their Answer[6] to the complaint, petitioners Rosendo and Rodrigo
claimed that their father Alipio, Sr. purchased via deeds of sale the shares in
the lot of Fortunata, Simplicio, Wenceslao, Geronimo, and Felix from their
respective heirs, and that Alipio, Sr. acquired the shares of the other coowners of the lot by extraordinary acquisitive prescription through
continuous, open, peaceful, and adverse possession thereof in the concept of
an owner since 1949.[7]
By way of Reply and Answer to the Defendants Counterclaim,
herein respondents Gaudencio, Maximo, Flaviano, Domingo, and Victoria
alleged that the deeds of sale on which Rosendo and Rodrigo base their
claim of ownership of portions of the lot are spurious, but assuming that they
are not, laches had set in againstAlipio, Sr.; and that the shares of the other
co-owners of the lot cannot be acquired through laches or prescription.
[8]

Gaudencio, Maximo, Flaviano, Domingo, and Victoria, with leave of

court, filed an Amended Complaint[10] impleading as additional defendants
Alipio, Sr.s other heirs, namely, petitioners Marceliana [11] Doblas, Terolio
Bacalso, Alipio Bacalso, Jr., Mario Bacalso, William Bacalso, Alipio
Bacalso III, and Christine B. Baes.[12] Still later, Gaudencio et al. filed a
Second Amended Complaint[13] with leave of court,[14] impleading as
additional plaintiffs the other heirs of registered co-owner Maximiano,
namely, herein respondents Timoteo Padigos, Perfecto Padigos,
Frisca[15] Salarda, Flora Quinto (sometimes rendered as Guinto), Benita
Templa, Sotero Padigos, Andres Padigos, and Emilio Padigos.[16]
[9]

In their Answer to the Second Amended Complaint,[17] petitioners

contended that the Second Amended Complaint should be dismissed in view

of the failure to implead other heirs of the other registered owners of the lot
who are indispensable parties.[18]
A Third Amended Complaint[19] was thereafter filed with leave of
court[20] impleading as additional plaintiffs the heirs of Wenceslao, namely,
herein respondents Demetrio Padigos, Jr., Wenceslao Padigos, and Nelly
Padigos, and the heirs of Felix, namely, herein respondents Expedito Padigos
(Expedito), Henry Padigos, and Enrique P. Malazarte.[21]
After trial, Branch 16 of the Cebu City RTC decided [22] in favor in the
therein plaintiffs-herein respondents, disposing as follows:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of the plaintiffs and against the defendants.
1.

Declaring the plaintiffs to be entitled to the ownership

and possession of the lot in litigation;

2.

Declaring as null and

Absolute Sale in question;

3.

Ordering the defendants to pay plaintiffs the sum of

P50,000.00 as actual and compensatory damages[,] the
sum of P20,000.00 as attorneys fees, and P10,000.00
as litigation expenses.

4.

void

the

Deeds

of

Ordering the defendants to pay the costs of suit.

SO
ORDERED.[23] (Emphasis
original; underscoring supplied)

in

the

The defendants-herein petitioners Bacalsos appealed.[24] Meanwhile,

the trial court, on respondents Motion for Execution Pending Appeal,
[25]
issued a writ of execution which was implemented by, among other
things, demolishing the houses constructed on the lot.[26]

By
Decision[27] of September
6,
2005,
the
Court
of
Appeals affirmed the
trial
courts
decision. Their
Motion
for
[28]
[29]
Reconsideration having been denied, petitioners filed the present
Petition for Review on Certiorari,[30] faulting the Court of Appeals:
. . . when it ruled that the Second Amended Complaint is
valid and legal, even if not all indispensable parties are impleaded
or joined . . .
. . . when [it] wittingly overlooked the most potent,
unescapable and indubitable fact or circumstance which proved
the continuous possession of Lot No. 3781 by the defendants and
their predecessors in interest, Alipio Bacalso [Sr.] and/or when it
sanctioned impliedly the glaring arbitrary RTC order of
the demolition of the over 40 years old houses, situated on Lot
No. 3781 Cebu Cad., belonging to the old lessees, long allowed to
lease or stay thereat for many years, by Alipio Bacalso [Sr.],
father and [predecessor] in interest of the defendants, now the
herein Petitioners. The said lessees were not even joined as parties
in this case, much less were they given a chance to air their side
before their houses were demolished, in gross violation of the due
process clause provided for in Sec. 1[,] Art. III of the
Constitution . . .
. . . in upholding as gospel truth the report and conclusion
of Nimrod Vao, the supposed handwriting expert[,] that signatures
and thumb marks appearing on all documents of sale presented by
the defendants are forgeries, and not mindful that Nimrod Vao was
not cross-examined thoroughly by the defense counsel as he was
prevented from doing so by the trial judge, in violation of the law
more particularly Sec. 6, Rule 132, Rules of Court and/or the
accepted and usual course of judicial proceedings and is therefore
not admissible in evidence.
. . . [when it] . . . wittingly or unwittingly,
again overlooked the vital facts, the circumstances, the laws and
rulings of the Supreme Court, which are of much weight,
substance and influence which, if considered carefully,
undoubtedly uphold that the defendants and their predecessors in
interests, have long been in continuous, open, peaceful and
adverse, and notorious possession against the whole world of Lot
No. 3781, Cebu Cad., in concept of absolute owners for 46 years,

a period more than sufficient to sustain or uphold the defense of

prescription, provided for in Art. 1137 of the Civil Code even
without good faith.[31] (Emphasis and underscoring in the
original; italics supplied)

Respondents admit that Teodulfo Padigos (Teodulfo), an heir of

Simplicio, was not impleaded.[32] They contend, however, that the omission
did not deprive the trial court of jurisdiction because Article 487 of the Civil
Code states that [a]ny of the co-owners may bring an action in ejectment.[33]
Respondents contention does not lie. The action is for quieting of title,
declaration of nullity of documents, recovery of possession and ownership,
and damages.Arcelona v. Court of Appeals[34] defines indispensable parties
under Section 7 of Rule 3, Rules of Court as follows:
[P]arties-in-interest without whom there can be no final
determination of an action. As such, they must be joined either as
plaintiffs or as defendants. The general rule with reference to the
making of parties in a civil action requires, of course, the joinder
of all necessary parties where possible, and the joinder of all
indispensable parties under any and all conditions, their presence
being a sine qua non for the exercise of judicial power. It is
precisely when an indispensable party is not before the court (that)
the action should be dismissed. The absence of an indispensable
party renders all subsequent actions of the court null and void for
want of authority to act, not only as to the absent parties but even
as to those present.
Petitioners are co-owners of a fishpond . . . The fishpond is
undivided; it is impossible to pinpoint which specific portion of
the property is owned by Olanday, et. al. and which portion
belongs to petitioners. x x x Indeed, petitioners should have been
properly impleaded as indispensable parties. x x x
x x x x[35] (Underscoring supplied)

The absence then of an indispensable party renders all subsequent

actions of a court null and void for want of authority to act, not only as to the
absent party but even as to those present.[36]
Failure to implead indispensable parties aside, the resolution of the
case hinges on a determination of the authenticity of the documents on
which petitioners in part anchor their claim to ownership of the lot. The
questioned documents are:
1. Exhibit 3 a notarized Deed of Sale executed by Gaudencio, Domingo,
a certain Hermenegilda Padigos, and the heirs of Fortunata, in favor of
Alipio, Sr. on June 8, 1959;
2. Exhibit 4 a notarized Deed of Sale executed on September 9, 1957 by
Gavino Padigos (Gavino), alleged son of Felix, in favor of Alipio
Gadiano;
3. Exhibit 5 a private deed of sale executed in June 1957 by Macaria
Bongalan, Marciano Padigos, and Dominga Padigos, supposed heirs
of Wenceslao, in favor of Alipio, Sr.;
4. Exhibit 6 a notarized deed of sale executed on September 9, 1957 by
Gavino and Rodulfo Padigos, heirs of Geronimo, in favor of Alipio
Gadiano;
5. Exhibit 7 a notarized deed of sale executed on March 19, 1949 by
Irenea Mabuyo, Teodulfo and Maximo, heirs of Simplicio;
6. Exhibit 8 a private deed of sale executed on May 3, 1950 by
Candido Padigos, one of Simplicios children, in favor of Alipio, Sr.;
and
7. Exhibit 9 a notarized deed of sale executed on May 17, 1957 by
Alipio Gadiano in favor of Alipio, Sr.

Exhibits 3, 4, 6, 7, and 8, which are notarized documents, have in their

favor the presumption of regularity.[37]
Forgery, as any other mechanism of fraud, must be proved clearly and
convincingly, and the burden of proof lies on the party alleging forgery.[38]
The trial court and the Court of Appeals relied on the findings of
Nimrod Bernabe Vao (Vao), expert witness for respondents, that Gaudencios
signature on Exhibit 3 (Deed of Absolute Sale covering Fortunatas share in
the lot) and Maximos thumbprint on Exhibit 7 (Deed of Sale covering
Simplicios share in the lot) are spurious. [39] Vaos findings were presented by
respondents to rebut those of Wilfredo Espina (Espina), expert witness for
petitioners, that Gaudencios signature and Maximos thumbprint are genuine.
[40]

Expert opinions are not ordinarily conclusive. They are generally

regarded as purely advisory in character.[41] The courts may place whatever
weight they choose upon and may reject them, if they find them inconsistent
with the facts in the case or otherwise unreasonable. [42] When faced with
conflicting expert opinions, courts give more weight and credence to that
which is more complete, thorough, and scientific.[43]
The Court observes that in examining the questioned signatures of
respondent Gaudencio, petitioners expert witness Espina used as standards
15 specimen signatures which have been established to be Gaudencios,
[44]
and that after identifying similarities between the questioned signatures
and the standard signatures, he concluded that the questioned signatures are
genuine. On the other hand, respondents expert witness Vao used, as
standards, the questioned signatures themselves.[45]He identified
characteristics of the signatures indicating that they may have been
forged. Vaos statement of the purpose of the examination is revealing:
x x x [t]o x x x discover, classify and determine the authenticity of
every document that for any reason requires examination be [sic]
scrutinized in every particular that may possibly throw any light
upon its origin, its age or upon quality element or condition

that may have a bearing upons [sic] its genuineness or

spuriousness.[46] (Emphasis supplied)

The Court also notes that Vao also analyzed the signatures of the
witnesses to the questioned documents, the absence of standard specimens
with which those signatures could be compared notwithstanding. [47] On the
other hand, Espina refrained from making conclusions on signatures which
could not be compared with established genuine specimens.[48]
Specifically with respect to Vaos finding that Maximos thumbprint on
Exhibit 7 is spurious, the Court is not persuaded, no comparison having been
made of such thumbprint with a genuine thumbprint established to be
Maximos.[49]
Vaos testimony should be received with caution, the trial court having
abruptly cut short his cross-examination conducted by petitioners counsel,
[50]
thus:
COURT:
You are just delaying the proceedings in this case if you are
going to ask him about the documents one by one. Just
leave it to the Court to determine whether or not he is a
qualified expert witness. The Court will just go over the
Report of the witness. You do not have to ask the witness
one by one on the document,[51]

thereby depriving this Court of the opportunity to determine his

credibility. Espina, on the other hand, withstood thorough crossexamination, re-direct and re-cross examination.[52]
The value of the opinion of a handwriting expert depends not upon his
mere statements of whether a writing is genuine or false, but upon the
assistance he may afford in pointing out distinguishing marks, characteristics
and discrepancies in and between genuine and false specimens of writing
which would ordinarily escape notice or detection from an unpracticed

observer.[53] While differences exist between Gaudencios signatures

appearing on Exhibits 3-3-D and his signatures appearing on the affidavits
accompanying the pleadings in this case,[54] the gap of more than 30 years
from the time he affixed his signatures on the questioned document to the
time he affixed his signatures on the pleadings in the case could explain the
difference. Thus Espina observed:
xxxx
4. Both questioned and standard signatures exhibited the same
style and form of the movement impulses in its execution;
5. Personal habits of the writer were established in both
questioned and standard signatures such as misalignment of the
whole structure of the signature, heavy penpressure [sic] of
strokes from initial to the terminal, formation of the loops and
ovals, poor line quality and spacing between letters are all
repeated;
6. Both questioned and standard signatures [show] no radical
change in the strokes and letter formation in spite o[f] their wide
difference in dates of execution considering the early writing
maturity of the writer;
7. Variations in both writings questioned and standards were
considered and properly evaluated.
xxxx
Fundamental similarities
characteristics to wit:

are

observed

in

the

following

xxxx
SIGNATURES
1. Ovals of a either rounded or angular at the base;
2. Ovals of d either narrow, rounded, or angular at the base;

3. Loop stems of d consistently tall and retraced in both

specimens questioned and standards;
4. Base alignment of e and i are repeated with sameness;
5. Top of c either with a retrace, angular formation or an eyelet;
6. Terminal ending of o heavy with a short tapering formation;
7. Loop stem of P with wide space and angular;
8. Oval of P either rounded or multi-angular;
9. Base loop of g consistently short either a retrace, a blind loop
or narrow space disproportionate to the top oval;
10. Angular top of s are repeated with sameness;
11. Terminal ending of s short and heavy with blind loop or
retrace at the base. [55]

And Espina concluded

xxxx
[t]hat the four (4) questioned signatures over and above the
typewritten name and word GAUDENCIO PADIGOS Vendor on
four copies of a DEED OF ABSOLUTE SALE (original and
carbon) dated June 8, 1959 were written, signed, and prepared by
the hand who wrote the standard specimens Exh. G and other
specimen materials collected from the records of this case that
were submitted or comparison; a product of one Mind and
Brain hence GENUINE and AUTHENTIC.[56] (Emphasis in the
original; underscoring supplied)

Respondents brand Maximos thumbmark on Exhibit 7 as spurious

because, so they claim, Maximo did not affix his signature thru a thumbmark,
he knowing how to write.[57] Such conclusion is a non sequitur, however, for a

person who knows how to write is not precluded from signing by

thumbmark.
In affirming the nullification by the trial court of Exhibits 3, 4, 5, 6, 7,
and 8, the Court of Appeals held:
xxxx
First of all, facts about pedigree of the registered owners
and their lawful heirs were convincingly testified to by plaintiffappellant Gaudencio Padigos and his testimony remained
uncontroverted.
xxxx
Giving due weight to his testimony, we find that x x x
the vendors in the aforesaid Deeds of Sale x x x were not the legal
heirs of the registered owners of the disputed land.x x x
xxxx
As for Exhibit 4, the vendor Gavino Padigos is not a legal
heir of the registered owner Felix Padigos. The latters heirs are
plaintiff-appellants Expedito Padigos, Henry Padigos and Enrique
P. Malazarte. Accordingly, Exhibit 4 is a patent nullity and did not
vest title of Felix Padigos share of Lot 3781 to Alipio [Gadiano].
As for Exhibit 6, the vendors Gavino and Rodulfo Padigos
are not the legal heirs of the registered owner Geronimo
Padigos. Therefore, these fictitious heirs could not validly convey
ownership in favor of Alipio [Gadiano].
xxxx
As for Exhibit 8, the vendor Candido Padigos is not a legal
heir of Simplicio Padigos. Therefore, the former could not vest
title of the land to Alipio Bacalso.
As for Exhibit 3, the vendors Gaudencio Padigos,
Hermenegilda Padigos and Domingo Padigos are not the legal

heirs of registered owner Fortunata Padigos. Hermenegilda

Padigos is not a known heir of any of the other registered owners
of the property.
On the other hand, plaintiffs-appellants Gaudencio and
Domingo Padigos are only some of the collateral grandchildren of
Fortunata Padigos. They could not by themselves dispose of the
share of Fortunata Padigos.
xxxx
As for Exhibit 5, the vendors in Exhibit 5 are not the legal
heirs of Wenceslao Padigos. The children of registered owner
Wenceslao Padigos are: Wenceslao Padigos, Demetrio Padigos
and Nelly Padigos. Therefore, Exhibit 5 is null and void and could
not convey the shares of the registered owner Wenceslao Padigos
in favor of Alipio Bacalso.
As for Exhibit 9, the Deed of Sale executed by Alipio
[Gadiano] in favor of Alipio Bacalso is also void because the
shares of the registered owners Felix and Geronimo Padigos were
not validly conveyed to Alipio [Gadiano] because Exhibit 4 and
6 were void contracts. Thus, Exhibit 9 is also null and void.
[58]
(Italics in the original; underscoring supplied)

The evidence regarding the facts of pedigree of the registered owners

and their heirs does not, however, satisfy this Court. Not only is Gaudencios
self-serving testimony uncorroborated; it contradicts itself on material
points. For instance, on direct examination, he testified that Ignacio is his
father and Fortunata is his grandmother.[59] On cross-examination, however,
he declared that his father Ignacio is the brother of Fortunata. [60] On direct
examination, he testified that his co-plaintiffs Victoria and Lilia are already
dead.[61] On cross-examination, however, he denied knowledge whether the
two are already dead.[62] Also on direct examination, he identified Expedito,
Henry, and Enrique as the children of Felix.[63] Expedito himself testified,
however, that he is the son of a certain Mamerto Padigos, the son of a certain
Apolonio Padigos who is in turn the son of Felix.[64]

AT ALL EVENTS, respondents are guilty of laches the negligence or

omission to assert a right within a reasonable time, warranting a presumption
that the party entitled to assert it has either abandoned it or declined to assert
it.[65] While, by express provision of law, no title to registered land in
derogation of that of the registered owner shall be acquired by prescription or
adverse possession, it is an enshrined rule that even a registered owner may
be barred from recovering possession of property by virtue of laches.[66]
Respondents insist, however, that they only learned of the deeds of sale
in 1994, the year that Alipio, Sr. allegedly commenced possession of the
property.[67]The record shows, however, that although petitioners started
renting out the land in 1994, they have been tilling it since the 1950s, [68] and
Rosendos house was constructed in about 1985.[69] These acts of possession
could not have escaped respondents notice given the following unassailed
considerations, inter alia: Gaudencio testified that he lived on the lot from
childhood until 1985, after which he moved to a place three kilometers away,
and after he moved, a certain Vicente Debelos lived on the lot with his
permission.[70] Petitioners witness Marina Alcoseba, their employee,
[71]
testified that Gaudencio and Domingo used to cut kumpay planted by
petitioners tenant on the lot.[72] The tax declarations in Alipio, Sr.s name for
the years 1967-1980 covering a portion of the lot indicate Fortunatas share to
be the north and east boundaries of Alipio, Sr.s;[73] hence, respondents could
not have been unaware of the acts of possession that petitioners exercised
over the lot.
Upon the other hand, petitioners have been vigilant in protecting their
rights over the lot, which their predecessor-in-interest Alipio, Sr. had declared
in his name for tax purposes as early as 1960, and for which he had been
paying taxes until his death in 1994, by continuing to pay the taxes thereon.
[74]

Respondents having failed to establish their claim by preponderance of

evidence, their action for quieting of title, declaration of nullity of
documents, recovery of possession, and damages must fail.

A final word. While petitioners attribution of error to the appellate

courts implied sanction of the trial courts order for the demolition pending
appeal of the houses of their lessees is well taken, the Court may not consider
any grant of relief to them, they not being parties to the case.
WHEREFORE, the petition is GRANTED. The September 6,
2005 decision of the Court of Appeals is REVERSED and SET
ASIDE. Civil
Case
No.
CEB-17326
of
Branch
16
of
the Regional Trial Court of Cebu City is DISMISSED.
G.R. No. 177429

November 24, 2009

ANICIA VALDEZ-TALLORIN, Petitioner,

vs.
HEIRS OF JUANITO TARONA, Represented by CARLOS TARONA, ROGELIO TARONA
and LOURDES TARONA, Respondents.
DECISION
ABAD, J.:
This case is about a courts annulment of a tax declaration in the names of three persons,
two of whom had not been impleaded in the case, for the reason that the document was
illegally issued to them.
The Facts and the Case
On February 9, 1998 respondents Carlos, Rogelio, and Lourdes Tarona (the Taronas) filed
an action before the Regional Trial Court (RTC) of Balanga, Bataan, 1 against petitioner Anicia
Valdez-Tallorin (Tallorin) for the cancellation of her and two other womens tax declaration
over a parcel of land.
The Taronas alleged in their complaint that, unknown to them, in 1981, the Assessors Office
of Morong in Bataan cancelled Tax Declaration 463 in the name of their father, Juanito
Tarona (Juanito), covering 6,186 square meters of land in Morong, Bataan. The cancellation
was said to be based on an unsigned though notarized affidavit that Juanito allegedly
executed in favor of petitioner Tallorin and two others, namely, Margarita Pastelero Vda. de
Valdez and Dolores Valdez, who were not impleaded in the action. In place of the cancelled
one, the Assessors Office issued Tax Declaration 6164 in the names of the latter three
persons. The old man Taronas affidavit had been missing and no copy could be found
among the records of the Assessors Office.2
The Taronas further alleged that, without their fathers affidavit on file, it followed that his tax
declaration had been illegally cancelled and a new one illegally issued in favor of Tallorin and
the others with her. The unexplained disappearance of the affidavit from official files, the
Taronas concluded, covered-up the falsification or forgery that caused the substitution. 3 The

Taronas asked the RTC to annul Tax Declaration 6164, reinstate Tax Declaration 463, and
issue a new one in the name of Juanitos heirs.
On March 6, 1998 the Taronas filed a motion to declare petitioner Tallorin in default for failing
to answer their complaint within the allowed time.4 But, before the RTC could act on the
motion, Tallorin filed a belated answer, alleging among others that she held a copy of the
supposedly missing affidavit of Juanito who was merely an agricultural tenant of the land
covered by Tax Declaration 463. He surrendered and waived in that affidavit his occupation
and tenancy rights to Tallorin and the others in consideration of P29,240.00. Tallorin also put
up the affirmative defenses of non-compliance with the requirement of conciliation
proceedings and prescription.
On March 12, 1998 the RTC set Tallorins affirmative defenses for hearing 5 but the Taronas
sought reconsideration, pointing out that the trial court should have instead declared Tallorin
in default based on their earlier motion.6 On June 2, 1998 the RTC denied the Taronas
motion for reconsideration7 for the reasons that it received Tallorins answer before it could
issue a default order and that the Taronas failed to show proof that Tallorin was notified of the
motion three days before the scheduled hearing. Although the presiding judge inhibited
himself from the case on motion of the Taronas, the new judge to whom the case was reraffled stood by his predecessors previous orders.
By a special civil action for certiorari before the Court of Appeals (CA), 8 however, the Taronas
succeeded in getting the latter court to annul the RTCs March 12 and June 2, 1998
orders.9 The CA ruled that the RTC gravely abused its discretion in admitting Tallorins late
answer in the absence of a motion to admit it. Even if petitioner Tallorin had already filed her
late answer, said the CA, the RTC should have heard the Taronas motion to declare Tallorin
in default.
Upon remand of the case, the RTC heard the Taronas motion to declare Tallorin in
default,10 granted the same, and directed the Taronas to present evidence ex parte. 11
On January 30, 2002 the RTC rendered judgment, a) annulling the tax declaration in the
names of Tallorin, Margarita Pastelero Vda. de Valdez, and Dolores Valdez; b) reinstating the
tax declaration in the name of Juanito; and c) ordering the issuance in its place of a new tax
declaration in the names of Juanitos heirs. The trial court also ruled that Juanitos affidavit
authorizing the transfer of the tax declaration had no binding force since he did not sign it.
1avvphi1

Tallorin appealed the above decision to the CA,12 pointing out 1) that the land covered by the
tax declaration in question was titled in her name and in those of her two co-owners; 2) that
Juanitos affidavit only dealt with the surrender of his tenancy rights and did not serve as
basis for canceling Tax Declaration 463 in his name; 3) that, although Juanito did not sign the
affidavit, he thumbmarked and acknowledged the same before a notary public; and 4) that
the trial court erred in not dismissing the complaint for failure to implead Margarita Pastelero
Vda. de Valdez and Dolores Valdez who were indispensable parties in the action to annul
Juanitos affidavit and the tax declaration in their favor.13
On May 22, 2006 the CA rendered judgment, affirming the trial courts decision.14 The CA
rejected all of Tallorins arguments. Since she did not assign as error the order declaring her
in default and since she took no part at the trial, the CA pointed out that her claims were in
effect mere conjectures, not based on evidence of record.15 Notably, the CA did not address
the issue Tallorin raised regarding the Taronas failure to implead Margarita Pastelero Vda.

de Valdez and Dolores Valdez as indispensable party-defendants, their interest in the

cancelled tax declarations having been affected by the RTC judgment.
Questions Presented
The petition presents the following questions for resolution by this Court:
1. Whether or not the CA erred in failing to dismiss the Taronas complaint for not
impleading Margarita Pastelero Vda. de Valdez and Dolores Valdez in whose names,
like their co-owner Tallorin, the annulled tax declaration had been issued;
2. Whether or not the CA erred in not ruling that the Taronas complaint was barred
by prescription; and
3. Whether or not the CA erred in affirming the RTCs finding that Juanitos affidavit
had no legal effect because it was unsigned; when at the hearing of the motion to
declare Tallorin in default, it was shown that the affidavit bore Juanitos thumbmark.
The Courts Rulings
The first question, whether or not the CA erred in failing to dismiss the Taronas complaint for
not impleading Margarita Pastelero Vda. de Valdez and Dolores Valdez in whose names, like
their co-owner Tallorin, the annulled tax declaration had been issued, is a telling question.
The rules mandate the joinder of indispensable parties. Thus:
Sec. 7. Compulsory joinder of indispensable parties. Parties in interest without whom no
final determination can be had of an action shall be joined either as plaintiffs and
defendants.16
Indispensable parties are those with such an interest in the controversy that a final decree
would necessarily affect their rights, so that the courts cannot proceed without their
presence.17 Joining indispensable parties into an action is mandatory, being a requirement of
due process. Without their presence, the judgment of the court cannot attain real finality.
Judgments do not bind strangers to the suit. The absence of an indispensable party renders
all subsequent actions of the court null and void. Indeed, it would have no authority to act,
not only as to the absent party, but as to those present as well. And where does the
responsibility for impleading all indispensable parties lie? It lies in the plaintiff. 18
Here, the Taronas sought the annulment of the tax declaration in the names of defendant
Tallorin and two others, namely, Margarita Pastelero Vda. de Valdez and Dolores Valdez and,
in its place, the reinstatement of the previous declaration in their father Juanitos name.
Further, the Taronas sought to strike down as void the affidavit in which Juanito renounced
his tenancy right in favor of the same three persons. It is inevitable that any decision granting
what the Taronas wanted would necessarily affect the rights of such persons to the property
covered by the tax declaration.
The Court cannot discount the importance of tax declarations to the persons in whose
names they are issued. Their cancellation adversely affects the rights and interests of such
persons over the properties that the documents cover. The reason is simple: a tax

declaration is a primary evidence, if not the source, of the right to claim title of ownership
over real property, a right enforceable against another person. The Court held in Uriarte v.
People19 that, although not conclusive, a tax declaration is a telling evidence of the
declarants possession which could ripen into ownership.
In Director of Lands v. Court of Appeals,20 the Court said that no one in his right mind would
pay taxes for a property that he did not have in his possession. This honest sense of
obligation proves that the holder claims title over the property against the State and other
persons, putting them on notice that he would eventually seek the issuance of a certificate of
title in his name. Further, the tax declaration expresses his intent to contribute needed
revenues to the Government, a circumstance that strengthens his bona fide claim to
ownership.21
Here, the RTC and the CA annulled Tax Declaration 6164 that belonged not only to
defendant Tallorin but also to Margarita Pastelero Vda. de Valdez and Dolores Valdez, which
two persons had no opportunity to be heard as they were never impleaded. The RTC and the
CA had no authority to annul that tax declaration without seeing to it that all three persons
were impleaded in the case.
But the Taronas action cannot be dismissed outright. As the Court held in Plasabas v. Court
of Appeals,22 the non-joinder of indispensable parties is not a ground for dismissal. Section
11, Rule 3 of the 1997 Rules of Civil Procedure prohibits the dismissal of a suit on the ground
of non-joinder or misjoinder of parties and allows the amendment of the complaint at any
stage of the proceedings, through motion or on order of the court on its own initiative. Only if
plaintiff refuses to implead an indispensable party, despite the order of the court, may it
dismiss the action.
There is a need, therefore, to remand the case to the RTC with an order to implead
Margarita Pastelero Vda. de Valdez and Dolores Valdez as defendants so they may, if they
so desire, be heard.
In view of the Courts resolution of the first question, it would serve no purpose to consider
the other questions that the petition presents. The resolution of those questions seems to
depend on the complete evidence in the case. This will not yet happen until all the
indispensable party-defendants are impleaded and heard on their evidence.
WHEREFORE, the Court GRANTS the petition and SETS ASIDE the decision of the
Regional Trial Court of Balanga, Bataan in Civil Case 6739 dated January 30, 2002 and the
decision of the Court of Appeals in CA-G.R. CV 74762 dated May 22, 2006. The Court
REMANDS the case to the Regional Trial Court of Balanga, Bataan which is DIRECTED to
have Margarita Pastelero Vda. de Valdez and Dolores Valdez impleaded by the plaintiffs as
party-defendants and, afterwards, to hear the case in the manner prescribed by the rules.

G.R. No. 196894

March 3, 2014

JESUS G. CRISOLOGO and NANETTE B. CRISOLOGO, Petitioners,

vs.
JEWM AGRO-INDUSTRIAL CORPORATION, Respondent.

DECISION
MENDOZA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court challenging the
May 6, 2011 Decision of the Court of Appeals (CA), in CA-G.R. SP No. 03896-MIN, which
affirmed the September 27, 2010, October 7, 2010 and November 9, 2010 Orders of the
Regional Trial Court, Davao City, Branch 14 (RTC-Br. 14), in Civil Case No. 33,551-2010, an
action for Cancellation of Lien. It is entitled "JEWM Agro-Industrial Corporation v. The
Registry of Deeds for the City of Davao. Sheriff Robert Medialdea. John & Jane Does. and
all persons acting under their directions.
1

This controversy stemmed from various cases of collection for sum of money filed against So
Keng Kok, the owner of various properties including two (2) parcels of land covered by TCT
Nos. 292597 and 292600 (subject properties), which were attached by various creditors
including the petitioners in this case. As a result, the levies were annotated on the back of
the said titles.
Petitioners Jesus G. Crisologo and Nannette B. Crisologo (Spouses Crisologo) were the
plaintiffs in two (2) collection cases before RTC, Branch 15, Davao City (RTC-Br. 15),
docketed as Civil Case Nos. 26,810-98 and 26,811-98, against Robert Limso, So Keng Koc,
et al. Respondent JEWM Agro-Industrial Corporation (JEWM) was the successor-in-interest
of one Sy Sen Ben, the plaintiff in another collection case before RTC, Branch 8, Davao City
(RTC-Br. 8), docketed as Civil Case No. 26,513-98, against the same defendants.
On October 19, 1998, RTC-Br. 8 rendered its decision based on a compromise agreement,
dated October 15, 1998, between the parties wherein the defendants in said case were
directed to transfer the subject properties in favor of Sy Sen Ben. The latter subsequently
sold the subject properties to one Nilda Lam who, in turn, sold the same to JEWM on June 1,
2000. Thereafter, TCT Nos. 325675 and 325676 were eventually issued in the name of
JEWM, both of which still bearing the same annotations as well as the notice of lis pendens
in connection with the other pending cases filed against So Keng Kok.
A year thereafter, Spouses Crisologo prevailed in the separate collection case filed before
RTC-Br. 15 against Robert Lim So and So Keng Koc (defendants). Thus, on July 1, 1999,
the said defendants were ordered to solidarily pay the Spouses Crisologo. When this
decision attained finality, they moved for execution. On June 15, 2010, a writ was eventually
issued.
Acting on the same, the Branch Sheriff issued a notice of sale scheduling an auction on
August 26, 2010. The notice of sale included, among others, the subject properties covered
by TCT Nos. 325675 and 325676, now, in the name of JEWM.
In the same proceedings, JEWM immediately filed its Affidavit of Third Party Claim and the
Urgent Motion Ad Cautelam. It prayed for the exclusion of the subject properties from the
notice of sale. In an order, dated August 26, 2010, however, the motion was denied. In turn,
the Spouses Crisologo posted a bond in order to proceed with the execution.
To protect its interest, JEWM filed a separate action for cancellation of lien with prayer for the
issuance of a preliminary injunction before RTC-Br. 14, docketed as Civil Case No. 33,5512010. It prayed for the issuance of a writ of preliminary injunction to prevent the public sale of
the subject properties covered in the writ of execution issued pursuant to the ruling of RTCBr. 15; the cancellation of all the annotations on the back of the pertinent TCTs; and the

issuance of a permanent injunction order after trial on the merits. "The Register of Deeds of
Davao City, Sheriff Robert Medialdea, John and Jane Does and all persons acting under
their direction" were impleaded as defendants.
At the scheduled hearing before RTC-Br. 14 on September 22, 2010, Spouses Crisologos
counsel appeared and filed in open court their Very Urgent Manifestation questioning the
authority of the said court to restrain the execution proceedings in RTC-Br. 15. JEWM
opposed it on the ground that Spouses Crisologo were not parties in the case.
On September 24, 2010, Spouses Crisologo filed an Omnibus Motion praying for the denial
of the application for writ or preliminary injuction filed by JEWM and asking for their
recognition as parties. No motion to intervene was, however, filed as the Spouses Crisologo
believed that it was unnecessary since they were already the John and Jane Does named in
the complaint.
In the Order, dated September 27, 2010, RTC-Br. 14 denied Spouses Crisologos Omnibus
Motion and granted JEWMs application for a writ of preliminary injunction.
On October 1, 2010, Spouses Crisologo filed a Very Urgent Omnibus Motion before RTC-Br.
14 praying for reconsideration and the setting aside of its September 27, 2010 Order. This
was denied in the RTC Br.-14s October 7, 2010 Order for lack of legal standing in court
considering that their counsel failed to make the written formal notice of appearance. The
copy of this order was received by Spouses Crisologo on October 22, 2010. It must be
noted, however, that on October 27, 2010, they received another order, likewise dated
October 7, 2010, giving JEWM time to comment on their Very Urgent Omnibus Motion filed
on October 1, 2010. In its Order, dated November 9, 2010, however, RTC-Br. 14 again
denied the Very Urgent Motion previously filed by Spouses Crisologo.
On November 12, 2010, JEWM moved to declare the "defendants" in default which was
granted in an order given in open court on November 19, 2010.
Spouses Crisologo then filed their Very Urgent Manifestation, dated November 30, 2010,
arguing that they could not be deemed as defaulting parties because they were not referred
to in the pertinent motion and order of default.
On November 19, 2010, Spouses Crisologo filed with the CA a petition for certiorari under
Rule 65 of the Rules of Court assailing the RTC-Br. 14 orders, dated September 27, 2010,
October 7, 2010 and November 9, 2010, all of which denied their motion to be recognized as
parties. They also prayed for the issuance of a Temporary Restraining Order (TRO) and/or a
Writ of Preliminary Injunction.
5

In its Resolution, dated January 6, 2011, the CA denied the application for a TRO, but
directed Spouses Crisologo to amend their petition. On January 19, 2011, the Spouses
Crisologo filed their Amended Petition with prayers for the issuance of a TRO and/or writ of
preliminary injunction, the annulment of the aforementioned orders of RTC Br. 14, and the
issuance of an order dissolving the writ of preliminary injunction issued in favor of JEWM.
6

Pending disposition of the Amended Petition by the CA, JEWM filed a motion on December
6, 2010 before RTC-Br. 14 asking for the resolution of the case on the merits.

On January 10, 2011, RTC-Br. 14 ruled in favor of JEWM, with the dispositive portion of its
Decision stating as follows:
7

WHEREFORE, in view of all the foregoing, judgment is hereby rendered in favor of the
plaintiff as follows:
1. the preliminary writ of injunction issued on October 5, 2010 is hereby made
permanent;
2. directing herein defendant Registry of Deeds of Davao City where the subject
lands are located, to cancel all existing liens and encumbrances on TCT No. T325675 and T-325676 registered in the name of the plaintiff, and pay the
3. cost of suit.
SO ORDERED.

Spouses Crisologo then filed their Omnibus Motion Ex Abudanti ad Cautelam, asking RTCBr. 14 to reconsider the above decision. Because no motion for intervention was filed prior to
the rendition of the judgment, a certificate, dated March 17, 2011, was issued declaring the
January 10, 2011 decision final and executory.
On May 6, 2011, the CA eventually denied the Amended Petition filed by Spouses Crisologo
for lack of merit. It ruled that the writ of preliminary injunction subject of the petition was
already fait accompli and, as such, the issue of grave abuse of discretion attributed to RTCBr. 14 in granting the relief had become moot and academic. It further held that the failure of
Spouses Crisologo to file their motion to intervene under Rule 19 rendered Rule 65
inapplicable as a vehicle to ventilate their supposed right in the case.
9

Hence, this petition.

ISSUES
I. The Court of Appeals erred in holding that the action for Cancellation of
Annotations may proceed even without notice to and impleading the party/ies who
caused the annotations, in clear contravention of the rule on joinder of parties and
basic due process.
II. The Court of Appeals erred in applying a very constrictive interpretation of the
rules in holding that a motion to intervene is the only way an otherwise real party in
interest could participate.
III. The Court of Appeals erred in denying our application for the issuance of a
temporary restraining order and/or a writ of preliminary injunction.
IV. The Court of Appeals erred in holding that the issues raised by petitioners before
it [had] been mooted by the January 10, 2011 decision of RTC Branch 14.
10

Spouses Crisologo submit as error the CA affirmation of the RTC- Br. 14 ruling that the
action for cancellation may proceed without them being impleaded. They allege deprivation
of their right to due process when they were not impleaded in the case before RTC-Br. 14

despite the claim that they stand, as indispensable parties, to be benefited or injured by the
judgment in the action for the cancellation of annotations covering the subject properties.
They cite Gonzales v. Judge Bersamin, among others, as authority. In that case, the Court
ruled that pursuant to Section 108 of Presidential Decree (P.D.) No. 1529, notice must be
given to all parties in interest before the court may hear and determine the petition for the
cancellation of annotations on the certificates of title.
11

The Spouses Crisologo also question the statement of the CA that their failure to file the
motion to intervene under Rule 19 before RTC-Br. 14 barred their participation in the
cancellation proceedings. They put emphasis on the courts duty to, at the very least,
suspend the proceedings before it and have such indispensable parties impleaded.
As to the ruling on the denial of their application for the issuance of a TRO or writ of
preliminary injunction, Spouses Crisologo claim that their adverse interest, evinced by the
annotations at the back of the certificates of title, warranted the issuance of a TRO or writ of
preliminary injunction against JEWMs attempt to cancel the said annotations in violation of
their fundamental right to due process.
Lastly, Spouses Crisologo cast doubt on the CA ruling that the issues presented in their
petition were mooted by the RTC-Br. 14 Decision, dated January 10, 2011. Having been
rendered without impleading indispensable parties, the said decision was void and could not
have mooted their petition.
In their Comment, JEWM asserts that Spouses Crisologos failure to file a motion to
intervene, pleadings-in-intervention, appeal or annulment of judgment, which were plain,
speedy and adequate remedies then available to them, rendered recourse to Rule 65 as
improper; that Spouses Crisologo lacked the legal standing to file a Rule 65 petition since
they were not impleaded in the proceedings before RTC-Br. 14; and that Spouses Crisologo
were not indispensable parties since their rights over the properties had been rendered
ineffective by the final and executory October 19, 1998 Decision of RTC-Br. 8 which
disposed unconditionally and absolutely the subject properties in favor of its predecessor-ininterest.
12

JEWM further argues that, on the assumption that Section 108 of P.D. No. 1529 applies, no
notice to Spouses Crisologo was required because they were not real parties-in-interest in
the case before RTC-Br. 14, or even if they were, their non-participation in the proceedings
was because of their failure to properly intervene pursuant to Rule 19; and, lastly, that the
case before RTC-Br. 14 became final and executory because Spouses Crisologos did not
perfect an appeal therefrom, thus, rendering the issues in the CA petition moot and
academic.
In their Reply, Spouses Crisologo restate the applicability of Section 108 of P.D. No. 1529 to
the effect that any cancellation of annotation of certificates of title must be carried out by
giving notice to all parties-in-interest. This they forward despite their recognition of the
mootness of their assertion over the subject properties, to wit:
13

Again, we respect JAICs position that "the claims of subsequent attaching creditors
(including petitioners) have been rendered moot and academic, and hence the entries in
favor of said creditors have no more legal basis and therefore must be cancelled." But we
likewise at least ask a modicum of respect by at least being notified and heard.
14

The Ruling of the Court

The crux of this controversy is whether the CA correctly ruled that RTC-Br. 14 acted without
grave abuse of discretion in failing to recognize Spouses Crisologo as indispensable parties
in the case for cancellation of lien.
In this respect, the Court agrees with Spouses Crisologo.
In an action for the cancellation of memorandum annotated at the back of a certificate of title,
the persons considered as indispensable include those whose liens appear as annotations
pursuant to Section 108 of P.D. No. 1529, to wit:
15

Section 108. Amendment and alteration of certificates. -No erasure, alteration or amendment
shall be made upon the registration book after the entry of a certificate of title or of a
memorandum thereon and the attestation of the same by the Register of Deeds, except by
order of the proper Court of First Instance. A registered owner or other person having an
interest in registered property, or, in proper cases, the Register of Deeds with the approval of
the Commissioner of Land Registration, may apply by petition to the court upon the ground
that the registered interests of any description, whether vested, contingent, expectant
inchoate appearing on the certificate, have terminated and ceased; or that new interest not
appearing upon the certificates have arisen or been created; or that an omission or error was
made in entering a certificate or memorandum thereon, or on any duplicate certificate; x x x
or upon any other reasonable ground; and the court may hear and determine the petition
after notice to all parties in interest, and may order the entry or cancellation of a new
certificate, the entry or cancellation of a memorandum upon a certificate, or grant any other
relief upon such terms and conditions, requiring security or bond if necessary, as it may
consider proper.
In Southwestern University v. Laurente, the Court held that the cancellation of the
annotation of an encumbrance cannot be ordered without giving notice to the parties
annotated in the certificate of title itself. It would, thus, be an error for a judge to contend that
no notice is required to be given to all the persons whose liens were annotated at the back of
a certificate of title.
16

Here, undisputed is the fact that Spouses Crisologos liens were indeed annotated at the
back of TCT Nos. 325675 and 325676. Thus, as persons with their liens annotated, they
stand to be benefited or injured by any order relative to the cancellation of annotations in the
pertinent TCTs. In other words, they are as indispensable as JEWM itself in the final
disposition of the case for cancellation, being one of the many lien holders.
As indispensable parties, Spouses Crisologo should have been joined as defendants in the
case pursuant to Section 7, Rule 3 of the Rules of Court, to wit:
SEC. 7. Compulsory joinder of indispensable parties. Parties in interest without whom no
final determination can be had of an action shall be joined either as plaintiffs or defendants.

17

The reason behind this compulsory joinder of indispensable parties is the complete
determination of all possible issues, not only between the parties themselves but also as
regards other persons who may be affected by the judgment.
18

In this case, RTC-Br. 14, despite repeated pleas by Spouses Crisologo to be recognized as
indispensable parties, failed to implement the mandatory import of the aforecited rule.

In fact, in Sps. Crisologo v. Judge George E. Omelio, a related administrative case, the
Court found the trial judge guilty of gross ignorance of the law when it disregarded the claims
of Spouses Crisologo to participate. In part, the Court stated:
19

This is not the first time Judge Omelio has rendered a decision affecting third parties
interests, without even notifying the indispensable parties. In the first disputed case, JEWM
Agro-Industrial Corporation v. Register of Deeds, Sheriff Medialdea, John & Jane Does and
all persons acting under their directions, Judge Omelio failed to cause the service of proper
summons upon the John and Jane Does impleaded in the complaint. Even when Sps.
Crisologo voluntarily appeared in court to be recognized as the John and Jane Does, Judge
Omelio refused to acknowledge their appearance and ordered the striking out of Sps.
Crisologos' pleadings. For this reason, the Investigating Justice recommended admonishing
Judge Omelio for failing to recognize the Sps.Crisologo as indispensable parties in that case.
xxx

xxx

xxx

Clearly, the cancellation of the annotation of the sale without notifying the buyers, Sps.
Crisologo, is a violation of the latters right to due process. Since this is the second time that
Judge Omelio has issued an order which fails to notify or summon the indispensable parties,
we find Judge Omelio guilty of gross ignorance of the law, with a warning that repetition of
the same or similar act will merit a stiffer penalty in the future.
xxx
WHEREFORE, We find Judge George E. Omelio GUILTY of four counts of the serious
charge of gross ignorance of the law for the following acts: (a) refusing to recognize Spouses
Jesus G. Crisologo and Nannette B. Crisologo as indispensable parties; in violation of the
latter's right to due process. Accordingly, we impose upon Judge George E. Omelio the
penalty of fine of Forty Thousand Pesos (P40,000.00), with a warning that repetition of the
same or similar acts will be dealt with more severely.
SO ORDERED.

20

The trial court should have exercised prudence in denying Spouses Crisologos pleas to be
recognized as indispensable parties. In the words of the Court, "Judge Omelio should be
penalized for failing to recognize Sps. Crisologo as indispensable parties and for requiring
them to file a motion to intervene, considering that a simple perusal of the certificates of title
would show Sps. Crisologos adverse rights because their liens are annotated at the back of
the titles."
21

This manifest disregard of the basic rules and procedures constitutes a grave abuse of
discretion.
In State Prosecutors II Comilang and Lagman v. Judge Medel Belen, the Court held as
inexcusable abuse of authority the trial judges "obstinate disregard of basic and established
rule of law or procedure." Such level of ignorance is not a mere error of judgment. It amounts
to "evasion of a positive duty or to a virtual refusal to perform a duty enjoined by law, or to
act at all in contemplation of law," or in essence, grave abuse of discretion amounting to
lack of jurisdiction.
22

23

Needless to say, judges are expected to exhibit more than just a cursory acquaintance with
statutes and procedural laws. They must know the laws and apply them properly in good
faith as judicial competence requires no less.
24

Despite the clear existence of grave abuse of discretion on the part of RTC-Br. 14, JEWM
asserts technical grounds on why the CA did not err in dismissing the petition via Rule 65. It
states that:
a) The Crisologos could have used other available remedies such as intervention
under Rule 19, an appeal of the judgment, or even an annulment of judgment, which
are, by all means, plain, speedy and adequate remedies in the ordinary course of
law;
b) The Crisologos lack legal standing to file the Rule 65 petition since they were not
impleaded in the Branch 14 case.
The rule is that a petition for certiorari under Rule 65 is proper only if there is no appeal, or
any plain speedy, and adequate remedy in the ordinary course of law.
In this case, no adequate recourse, at that time, was available to Spouses Crisologo, except
resorting to Rule 65.
Although Intervention under Rule 19 could have been availed of, failing to use this remedy
should not prejudice Spouses Crisologo. It is the duty of RTC-Br. 14, following the rule on
joinder of indispensable parties, to simply recognize them, with or without any motion to
intervene. Through a cursory reading of the titles, the Court would have noticed the adverse
rights of Spouses Crisologo over the cancellation of any annotations in the subject TCTs.
Neither will appeal prove adequate as a remedy since only the original parties to an action
can appeal. Here, Spouses Crisologo were never impleaded. Hence, they could not have
utilized appeal as they never possessed the required legal standing in the first place.
25

And even if the Court assumes the existence of the legal standing to appeal, it must be
remembered that the questioned orders were interlocutory in character and, as such,
Spouses Crisologo would have to wait, for the review by appeal, until the rendition of the
judgment on the merits, which at that time may not be coming as speedy as practicable.
While waiting, Spouses Crisologo would have to endure the denial of their right, as
indispensable parties, to participate in a proceeding in which their indispensability was
obvious. Indeed, appeal cannot constitute an adequate, speedy and plain remedy.
The same is also true if recourse to Annulment of Judgment under Rule 47 is made since
this remedy presupposes a final judgment already rendered by a trial court.
At any rate, the remedy against an interlocutory order, not subject of an appeal, is an
appropriate special civil action under Rule 65, provided that the interlocutory order is
rendered without or in excess of jurisdiction or with grave abuse of discretion. Only then is
certiorari under Rule 65 allowed to be resorted to.
26

This takes particular relevance in this case where, as previously discussed, RTC-Br. 14
acted with grave abuse of discretion in not recognizing Spouses Crisologo as indispensable
parties to the pertinent action.

Based on the above, recourse to the CA via Rule 65 would have already been proper, except
for one last issue, that is, Spouses Crisologos legal standing to file the same. JEWM cites
DBP v. COA where the Court held:
27

The petition for certiorari under Rule 65, however, is not available to any person who feels
injured by the decision of a tribunal, board or officer exercising judicial or quasi judicial
functions. The person aggrieved under Section 1 of Rule 65 who can avail of the special
civil action of certiorari pertains only to one who was a party in the proceedings before the
court a quo, or in this case before the COA. To hold otherwise would open the courts to
numerous and endless litigations.
Under normal circumstances, JEWM would be correct in their averment that the lack of legal
standing on the part of Spouses Crisologo in the case before RTC-Br. 14 prevents the latters
recourse via Rule 65.
This case, however, is an exception. In many instances, the Court has ruled that technical
rules of procedures should be used to promote, not frustrate the cause of justice. Rules of
procedure are tools designed not to thwart but to facilitate the attainment of justice; thus,
their strict and rigid application may, for good and deserving reasons, have to give way to,
and be subordinated by, the need to aptly dispense substantial justice in the normal cause.

28

Be it noted that the effect of their non-participation as indispensable parties is to preclude the
judgment, orders and the proceedings from attaining finality. Time and again, the Court has
ruled that the absence of an indispensable party renders all subsequent actions of the court
null and void for want of authority to act, not only as to the absent parties but even to those
present. Consequently, the proceedings before RTC-Br. 14 were null and void including the
assailed orders, which may be "ignored wherever and whenever it exhibits its head."
29

To turn a blind eye to the said nullity and, in turn, rule as improper the recourse to Rule 65 by
the lack of legal standing is to prolong the denial of due process to the persons whose
interests are indispensible to the final disposition of the case. It will only result in a protracted
litigation as Spouses Crisologo will be forced to rely on a petition for the annulment of
judgment before the CA (as the last remaining remedy), which may again reach this
Court. To prevent multiplicity of suits and to expedite the swift administration of justice, the
CA should have applied liberality by striking down the assailed orders despite the lack of
legal standing on the part of Spouses Crisologo to file the Rule 65 petition before it. Besides,
this lacking requirement, of which Spouses Crisologo were not even at fault, is precisely the
reason why this controversy arose.
1wphi1

All told, the CA erred in dismissing the amended petition filed before it and in not finding
grave abuse of discretion on the part of RTC-Br. 14.
WHEREFORE, the petition is GRANTED. The May 6, 2011 Decision of the Court of Appeals
is NULLIFIED and SET ASIDE. The September 27, 2010, October 7, 2010 and November 9,
2010 Orders of the Regional Trial Court, Branch 14, Davao City, are likewise NULLIFIED and
SET ASIDE. Civil Case No. 33,551-2010 is hereby REMANDED to the trial court for further
proceedings. The respondent is ordered to implead all parties whose annotations appear at
the back of Transfer Certificate of Title Nos. 325675 and 325676.
G.R. No. 186610

July 29, 2013

POLICE SENIOR SUPERINTENDENT DIMAPINTO MACAWADIB, Petitioner,

vs.
THE PHILIPPINE NATIONAL POLICE DIRECTORATE FOR PERSONNEL AND
RECORDS MANAGEMENT,Respondent.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court
seeking to nullify and set aside the Decision1 and Resolution2 of the Court of Appeals (CA),
dated December 17, 2008 and February 25, 2009, respectively, in CA-G.R. SP No. 02120MIN. The assailed CA judgment nullified the December 4, 2001 Decision 3 of the Regional
Trial Court (RTC) of Marawi City, Branch 8, in Spl. Proc. No. 782-01, while the questioned
CA Resolution denied petitioner's Motion for Reconsideration.
The factual and procedural antecedents of the case are as follows:
Petitioner was a police officer with the rank of Police Senior Superintendent. On July 30,
2001, pursuant to the provisions of Section 39 of Republic Act 6975, otherwise known as the
"Department of the Interior and Local Government Act of 1990," the Chief of Directorial Staff
of the Philippine National Police (PNP) issued General Order No. 1168, enumerating the
names of commissioned officers who were subject to compulsory retirement on various
dates in the month of January 2002 by virtue of their attainment of the compulsory retirement
age of 56. Among the names included in the said Order was that of petitioner, who was
supposed to retire on January 11, 2002, as the files of the PNP Records Management
Division indicate that he was born on January 11, 1946.
On September 3, 2001, petitioner filed an application for late registration of his birth with the
Municipal Civil Registrar's Office of Mulondo, Lanao del Sur. In the said application,
petitioner swore under oath that he was born on January 11, 1956. The application was,
subsequently, approved.
On October 15, 2001, petitioner filed with the RTC of Marawi City, Branch 8, a Petition for
Correction of Entry in the Public Service Records Regarding the Birth Date. Pertinent
portions of his allegations are as follows:
xxxx
1. That herein petitioner is 45 years old, married, Filipino citizen, PNP (Police
Superintendent) by occupation and resident of Camp Bagong Amai, Pakpak, Marawi
City. x x x;
2. That on January 11, 1956, herein petitioner was born in Mulondo, Lanao del Sur, x
x x, copy of his live birth certificate is attached and marked as Annex "A", for ready
reference;
3. That when petitioner herein joined with (sic) the government service, particularly
the local police force and later on the Integrated National Police, he honestly entered
his birth date as January 11, 1946, while in his (sic) Government Service Insurance
System (GSIS, in short) and National Police Commission, he erroneously entered his

birth date as January 11, 1946, which entry are honestly based on estimation, as
Muslim (sic) in the south do not register their marriages and births before;
4. That herein petitioner has correctly entered his true and correct birth date, January
11, 1956, in his Service Record at the National Headquarters, Philippine National
Police, Directorate for Personnel and Records Management, Camp Crame, Quezon
City, copy of which is attached and marked as Annex "B", x x x;
5. That herein petitioner is submitting Joint Affidavit of two (2) disinterested person
(sic) x x x;
6. That this petition is not intended to defraud anybody but to establish the true and
correct birth date of herein petitioner.
x x x x4
The petition was docketed as Spl. Proc. No. 782-01.
On December 4, 2001, the RTC rendered its Decision, disposing as follows:
WHEREFORE, judgment is hereby rendered in favor of petitioner DIMAPINTO BABAI
MACAWADIB, to wit:
1. Ordering the Chief, Records Management, PNP NHQ, Camp Crame, Quezon City,
to make a correction upon the birth date of herein petitioner to January 11, 1956;
2. Ordering the Director, Personnel and Records Management Service, NAPOLCOM,
Makati City, to make correction upon the birth date of herein petitioner from January
11, 1946 to January 11, 1956; and
3. Ordering the Chief, Records of the Civil Service Commission, Manila and all other
offices concern (sic), to make the necessary correction in the Public Records of
herein petitioner to January 11, 1956.
SO ORDERED.5
Subsequently, the RTC issued an Entry of Final Judgment6 indicating therein that its
December 4, 2001 Decision in Spl. Proc. No. 782-01 has become final and executory on
March 13, 2002.
On January 8, 2008, herein respondent filed a Petition for Annulment of Judgment with
Prayer for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary
Injunction with the CA, seeking to nullify the above-mentioned Decision of the RTC on the
ground that the trial court failed to acquire jurisdiction over the PNP, "an unimpleaded
indispensable party."7
On December 17, 2008, the CA promulgated its assailed Decision with the following
dispositive portion:
WHEREFORE, finding the instant petition impressed with merit, the same is hereby
GRANTED. The assailed Decision dated December 4, 2001 of the respondent court in Spl.

Proc. No. 782-01 is NULLIFIED and SET ASIDE. Also, so as to prevent further damage upon
the PNP, let a permanent injunction issue in the meantime, barring the private respondent
Dimapinto Babai Macawadib from continuing and prolonging his tenure with the PNP beyond
the mandatory retirement age of fifty-six (56) years.
SO ORDERED.8
Petitioner filed a Motion for Reconsideration,9 but the CA denied it in its Resolution10 dated
February 25, 2009.
Hence, the instant petition with the following Assignment of Errors:
1. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PNPDPRM IS AN INDISPENSABLE PARTY IN SPECIAL PROCEEDING NO. 782-01
AND THAT THE RTC HAVE (sic) NOT ACQUIRED JURISDICTION OVER THE
PERSON OF THE PNPDPRM.
2. THE HONORABLE COURT OF APPEALS ERRED IN NOT DISMISSING CA-G.R.
SP NO. 02120-MIN DESPITE THE FACT THAT THE ASSAILED RTC DECISION
DATED DECEMBER 4, 2001 IN SPECIAL PROCEEDING NO. 782-01 HAS LONG
BECOME FINAL AND EXECUTORY AND WAS IN FACT FULLY AND COMPLETELY
EXECUTED AFTER THE PNP-DPRM CORRECTED THE DATE OF BIRTH OF THE
PETITIONER FROM JANUARY 11, 1946 TO JANUARY 11, 1956.
3. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PNPDPRM IS NOT ESTOPPED FROM ASSAILING THE VALIDITY OF THE RTC
DECISION IN SPECIAL PROCEEDING NO. 782-01.
4. THE HONORABLE COURT OF APPEALS ERRED IN NOT DISMISSING CA-G.R.
SP NO. 02120-MIN FOR BEING INSUFFICIENT IN FORM AND SUBSTANCE. 11
In his first assigned error, petitioner contends that respondent is not an indispensable
party. The Court is not persuaded. On the contrary, the Court agrees with the ruling of the
CA that it is the integrity and correctness of the public records in the custody of the PNP,
National Police Commission (NAPOLCOM) and Civil Service Commission (CSC) which are
involved and which would be affected by any decision rendered in the petition for correction
filed by herein petitioner. The aforementioned government agencies are, thus, required to be
made parties to the proceeding. They are indispensable parties, without whom no final
determination of the case can be had. An indispensable party is defined as one who has
such an interest in the controversy or subject matter that a final adjudication cannot be
made, in his absence, without injuring or affecting that interest. 12 In the fairly recent case of
Go v. Distinction Properties Development and Construction, Inc.,13 the Court had the
occasion to reiterate the principle that:
1wphi1

Under Section 7, Rule 3 of the Rules of Court, "parties in interest without whom no final
determination can be had of an action shall be joined as plaintiffs or defendants." If there is a
failure to implead an indispensable party, any judgment rendered would have no
effectiveness.
It is "precisely when an indispensable party is not before the court (that) an action should be
dismissed. The absence of an indispensable party renders all subsequent actions of the

court null and void for want of authority to act, not only as to the absent parties but even to
those present." The purpose of the rules on joinder of indispensable parties is a complete
determination of all issues not only between the parties themselves, but also as regards
other persons who may be affected by the judgment. A decision valid on its face cannot
attain real finality where there is want of indispensable parties.14
Citing previous authorities, the Court also held in the Go case that:
The general rule with reference to the making of parties in a civil action requires the joinder
of all indispensable parties under any and all conditions, their presence being a sine qua non
of the exercise of judicial power. (Borlasa v. Polistico, 47 Phil. 345, 348) For this reason, our
Supreme Court has held that when it appears of record that there are other persons
interested in the subject matter of the litigation, who are not made parties to the action, it is
the duty of the court to suspend the trial until such parties are made either plaintiffs or
defendants. (Pobre, et al. v. Blanco, 17 Phil. 156). x x x Where the petition failed to join as
party defendant the person interested in sustaining the proceeding in the court, the same
should be dismissed. x x x When an indispensable party is not before the court, the action
should be dismissed.15
The burden of procuring the presence of all indispensable parties is on the plaintiff. 16
In the instant case, there is a necessity to implead the PNP, NAPOLCOM and CSC because
they stand to be adversely affected by petitioner's petition which involves substantial and
controversial alterations in petitioner's service records. Moreover, as correctly pointed out by
the
Office of the Solicitor General (OSG), if petitioner's service is extended by ten years, the
government, through the PNP, shall be burdened by the additional salary and benefits that
would have to be given to petitioner during such extension. Thus, aside from the OSG, all
other agencies which may be affected by the change should be notified or represented as
the truth is best ascertained under an adversary system of justice.
As the above-mentioned agencies were not impleaded in this case much less given notice of
the proceedings, the decision of the trial court granting petitioner's prayer for the correction
of entries in his service records, is void. As mentioned above, the absence of an
indispensable party renders all subsequent actions of the court null and void for want of
authority to act, not only as to the absent parties but even as to those present. 17
On the question of whether or not respondent is estopped from assailing the decision of the
RTC for failure of the OSG, as government representative, to participate in the proceedings
before the trial court or to file an opposition to petitioner's petition for correction of entries in
his service records, this Court rules that such an apparent oversight has no bearing on the
validity of the appeal which the petitioner filed before the CA. Neither can the State, as
represented by the government, be considered in estoppel due to the petitioner's seeming
acquiescence to the judgment of the RTC when it initially made corrections to some of
petitioner's records with the PNP. This Court has reiterated time and again that the absence
of opposition from government agencies is of no controlling significance, because the State
cannot be estopped by the omission, mistake or error of its officials or agents. 18 Nor is the
Republic barred from assailing the decision granting the petition for correction of entries if,
on the basis of the law and the evidence on record, such petition has no merit. 19

As to the second and last assigned errors, suffice it to say that considering that the assailed
decision of the RTC is null and void, the same could not have attained finality. Settled is the
rule that a void judgment cannot attain finality and its execution has no basis in law.20
At this juncture, it may not be amiss to point out that, like the CA, this Court cannot help but
entertain serious doubts on the veracity of petitioner's claim that he was indeed born in 1956.
The late registration of petitioner's certificate of live birth on September 3, 2001 was made
forty-five (45) years after his supposed birth and a mere 34 days after the PNP's issuance of
its Order for his compulsory retirement. He had all the time to make such registration but why
did he do it only when he was about to retire?
The Court, likewise, agrees with the observation of the OSG that, if petitioner was indeed
born in 1956, he would have been merely 14 years old in 1970 when he was appointed as
Chief of Police of Mulondo, Lanao del Sur. This would not have been legally tenable,
considering that Section 9 of RA 4864, otherwise known as the Police Act of 1966, provides,
among others, that a person shall not be appointed to a local police agency if he is less than
twenty-three years of age. Moreover, realistically speaking, it would be difficult to believe that
a 14-year old minor would serve as a police officer, much less a chief of police.
The Court also gives credence to the pronouncement made by the CA which took judicial
notice that in the several hearings of the petition before the appellate court where the
petitioner was present, the CA observed that "in the several hearings of this petition before
Us where the private respondent was present, he does not really appear to be 52 years old
but his old age of 62."21
It can be argued that petitioner's belatedly registered certificate of live birth, as a public
document, enjoys the presumption of validity. However, petitioner merely relied on such
presumption without presenting any other convincing or credible evidence to prove that he
was really born in 1956. On the contrary, the specific facts attendant in the case at bar, as
well as the totality of the evidence presented during the hearing of the case in the court a
quo, sufficiently negate the presumption of regularity accorded to petitioner's belatedly
registered birth certificate.
In this regard, it is also apropos to mention that, in cases of correction or change of
information based on belatedly registered birth certificates, the CSC no longer requires a
court order to warrant such correction or change of information in its records. However, in an
apparent move to safeguard its records, the CSC imposes the submission of additional
evidence that would prove the veracity of the entries in a belatedly registered birth certificate.
Thus, the CSC, in its Memorandum Circular No. 31, dated November 20, 2001, demands
that, aside from the said birth certificate, the person requesting the correction or change of
information must submit other authenticated supporting documents, such as baptismal
certificate, affidavits of two disinterested witnesses, and "other employment, personal or
school records which would support the entry reflected in the delayed registered birth
certificate and which entry is requested to be reflected in the records of the Commission as
the true and correct entry." In the instant case, petitioner was only able to submit affidavits of
two witnesses, who were not really proven to be disinterested and whose testimonies were
not even tested in the crucible of cross-examination. On the contrary, the other pieces of
documentary evidence on record, such as his marriage certificate, and his school and
service records, contradict his claims and show that he was, in fact, born in 1946.

WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated
December 17, 2008 and the Resolution dated February 25, 2009 of the Court of Appeals, in
CA-G.R. SP No. 02120-MIN, are hereby AFFIRMED.
G.R. No. 198010

August 12, 2013

REPUBLIC OF THE PHILIPPINES, PETITIONER,

vs.
DR. NORMA S. LUGSANAY UY, RESPONDENT.
DECISION
PERALTA, J.:
Assailed in this petition for review on certiorari under Rule 45 of the Rules of Court are the
Court of Appeals (CA)1Decision2 dated February 18, 2011 and Resolution3 dated July 27,
2011 in CA-G.R. CV No. 00238-MIN. The assailed decision dismissed the appeal filed by
petitioner Republic of the Philippines and, consequently, affirmed in toto the June 28, 2004
Order4 of the Regional Trial Court (RTC), Branch 27, Gingoog City in Special Proceedings
No. 230-2004 granting the Petition for Correction of Entry of Certificate of Live Birth filed by
respondent Dr. Norma S. Lugsanay Uy; while the assailed resolution denied petitioner's
motion for reconsideration.
The facts of the case are as follows:
On March 8, 2004, respondent filed a Petition for Correction of Entry in her Certificate of Live
Birth.5 Impleaded as respondent is the Local Civil Registrar of Gingoog City. She alleged that
she was born on February 8, 1952 and is the illegitimate daughter of Sy Ton and Sotera
Lugsanay6 Her Certificate of Live Birth7 shows that her full name is "Anita Sy" when in fact
she is allegedly known to her family and friends as "Norma S. Lugsanay." She further
claimed that her school records, Professional Regulation Commission (PRC) Board of
Medicine Certificate,8 and passport9 bear the name "Norma S. Lugsanay." She also alleged
that she is an illegitimate child considering that her parents were never married, so she had
to follow the surname of her mother.10 She also contended that she is a Filipino citizen and
not Chinese, and all her siblings bear the surname Lugsanay and are all Filipinos. 11
Respondent allegedly filed earlier a petition for correction of entries with the Office of the
Local Civil Registrar of Gingoog City to effect the corrections on her name and citizenship
which was supposedly granted.12 However, the National Statistics Office (NSO) records did
not bear such changes. Hence, the petition before the RTC.
On May 13, 2004, the RTC issued an Order13 finding the petition to be sufficient in form and
substance and setting the case for hearing, with the directive that the said Order be
published in a newspaper of general circulation in the City of Gingoog and the Province of
Misamis Oriental at least once a week for three (3) consecutive weeks at the expense of
respondent, and that the order and petition be furnished the Office of the Solicitor General
(OSG) and the City Prosecutors Office for their information and guidance. 14 Pursuant to the
RTC Order, respondent complied with the publication requirement.
On June 28, 2004, the RTC issued an Order in favor of respondent, the dispositive portion of
which reads:

WHEREFORE, premises considered, the instant petition is hereby GRANTED. THE CITY
CIVIL REGISTRAR OF GINGOOG CITY, or any person acting in his behalf is directed and
ordered to effect the correction or change of the entries in the Certificate of Live Birth of
petitioners name and citizenship so that the entries would be:
a)

b)

As to petitioners name :
First Name

: NORMA

Middle Name

: SY

Last Name

: LUGSANAY

As to petitioners nationality/citizenship :
: FILIPINO

SO ORDERED.15
The RTC concluded that respondents petition would neither prejudice the government nor
any third party. It also held that the names "Norma Sy Lugsanay" and "Anita Sy" refer to one
and the same person, especially since the Local Civil Registrar of Gingoog City has effected
the correction. Considering that respondent has continuously used and has been known
since childhood as "Norma Sy Lugsanay" and as a Filipino citizen, the RTC granted the
petition to avoid confusion.16
On February 18, 2011, the CA affirmed in toto the RTC Order. The CA held that respondents
failure to implead other indispensable parties was cured upon the publication of the Order
setting the case for hearing in a newspaper of general circulation for three (3) consecutive
weeks and by serving a copy of the notice to the Local Civil Registrar, the OSG and the City
Prosecutors Office.17 As to whether the petition is a collateral attack on respondents filiation,
the CA ruled in favor of respondent, considering that her parents were not legally married
and that her siblings birth certificates uniformly state that their surname is Lugsanay and
their citizenship is Filipino.18 Petitioners motion for reconsideration was denied in a
Resolution dated July 27, 2011.
Hence, the present petition on the sole ground that the petition is dismissible for failure to
implead indispensable parties.
Cancellation or correction of entries in the civil registry is governed by Rule 108 of the Rules
of Court, to wit:
SEC. 1. Who may file petition. Any person interested in any act, event, order or decree
concerning the civil status of persons which has been recorded in the civil register, may file a
verified petition for the cancellation or correction of any entry relating thereto, with the
Regional Trial Court of the province where the corresponding civil registry is located.
SEC. 2. Entries subject to cancellation or correction. Upon good and valid grounds, the
following entries in the civil register may be cancelled or corrected: (a) births; (b) marriages;
(c) deaths; (d) legal separations; (e) judgments of annulments of marriage; (f) judgments
declaring marriages void from the beginning; (g) legitimations; (h) adoptions; (i)
acknowledgments of natural children; (j) naturalization; (k) election, loss or recovery of
citizenship; (l) civil interdiction; (m) judicial determination of filiation; (n) voluntary
emancipation of a minor; and (o) changes of name.

SEC. 3. Parties. When cancellation or correction of an entry in the civil register is sought,
the civil registrar and all persons who have or claim any interest which would be affected
thereby shall be made parties to the proceeding.
SEC. 4. Notice and Publication. Upon the filing of the petition, the court shall, by an order,
fix the time and place for the hearing of the same, and cause reasonable notice thereof to be
given to the persons named in the petition. The court shall also cause the order to be
published once a week for three (3) consecutive weeks in a newspaper of general circulation
in the province.
SEC. 5. Opposition. The civil registrar and any person having or claiming any interest
under the entry whose cancellation or correction is sought may, within fifteen (15) days from
notice of the petition, or from the last date of publication of such notice, file his opposition
thereto.
SEC. 6. Expediting proceedings. The court in which the proceeding is brought may make
orders expediting the proceedings, and may also grant preliminary injunction for the
preservation of the rights of the parties pending such proceedings.
SEC. 7. Order. After hearing, the court may either dismiss the petition or issue an order
granting the cancellation or correction prayed for. In either case, a certified copy of the
judgment shall be served upon the civil registrar concerned who shall annotate the same in
his record.19
In this case, respondent sought the correction of entries in her birth certificate, particularly
those pertaining to her first name, surname and citizenship. She sought the correction
allegedly to reflect the name which she has been known for since childhood, including her
legal documents such as passport and school and professional records. She likewise relied
on the birth certificates of her full blood siblings who bear the surname "Lugsanay" instead of
"Sy" and citizenship of "Filipino" instead of "Chinese." The changes, however, are obviously
not mere clerical as they touch on respondents filiation and citizenship. In changing her
surname from "Sy" (which is the surname of her father) to "Lugsanay" (which is the surname
of her mother), she, in effect, changes her status from legitimate to illegitimate; and in
changing her citizenship from Chinese to Filipino, the same affects her rights and obligations
in this country. Clearly, the changes are substantial.
It has been settled in a number of cases starting with Republic v. Valencia20 that even
substantial errors in a civil registry may be corrected and the true facts established provided
the parties aggrieved by the error avail themselves of the appropriate adversary
proceeding.21 The pronouncement of the Court in that case is illuminating:
It is undoubtedly true that if the subject matter of a petition is not for the correction of clerical
errors of a harmless and innocuous nature, but one involving nationality or citizenship, which
is indisputably substantial as well as controverted, affirmative relief cannot be granted in a
proceeding summary in nature. However, it is also true that a right in law may be enforced
and a wrong may be remedied as long as the appropriate remedy is used. This Court
adheres to the principle that even substantial errors in a civil registry may be corrected and
the true facts established provided the parties aggrieved by the error avail themselves of the
appropriate adversary proceeding. x x x
What is meant by "appropriate adversary proceeding?" Blacks Law Dictionary defines
"adversary proceeding" as follows:

One having opposing parties; contested, as distinguished from an ex parte application, one
of which the party seeking relief has given legal warning to the other party, and afforded the
latter an opportunity to contest it. Excludes an adoption proceeding. 22
In sustaining the RTC decision, the CA relied on the Courts conclusion in Republic v.
Kho,23 Alba v. Court of Appeals,24 and Barco v. Court of Appeals,25 that the failure to implead
indispensable parties was cured by the publication of the notice of hearing pursuant to the
provisions of Rule 108 of the Rules of Court. In Republic v. Kho, 26 petitioner therein appealed
the RTC decision granting the petition for correction of entries despite respondents failure to
implead the minors mother as an indispensable party. The Court, however, did not strictly
apply the provisions of Rule 108, because it opined that it was highly improbable that the
mother was unaware of the proceedings to correct the entries in her childrens birth
certificates especially since the notices, orders and decision of the trial court were all sent to
the residence she shared with them.27
In Alba v. Court of Appeals,28 the Court found nothing wrong with the trial courts decision
granting the petition for correction of entries filed by respondent although the proceedings
was not actually known by petitioner. In that case, petitioners mother and guardian was
impleaded in the petition for correction of entries, and notices were sent to her address
appearing in the subject birth certificate. However, the notice was returned unserved,
because apparently she no longer lived there. Thus, when she allegedly learned of the
granting of the petition, she sought the annulment of judgment which the Court denied.
Considering that the petition for correction of entries is a proceeding in rem, the Court held
that acquisition of jurisdiction over the person of the petitioner is, therefore, not required and
the absence of personal service was cured by the trial courts compliance with Rule 108
which requires notice by publication.29
In Barco v. Court of Appeals,30 the Court addressed the question of whether the court
acquired jurisdiction over petitioner and all other indispensable parties to the petition for
correction of entries despite the failure to implead them in said case. While recognizing that
petitioner was indeed an indispensable party, the failure to implead her was cured by
compliance with Section 4 of Rule 108 which requires notice by publication. In so ruling, the
Court pointed out that the petitioner in a petition for correction cannot be presumed to be
aware of all the parties whose interests may be affected by the granting of a petition. It
emphasized that the petitioner therein exerted earnest effort to comply with the provisions of
Rule 108. Thus, the publication of the notice of hearing was considered to have cured the
failure to implead indispensable parties.
In this case, it was only the Local Civil Registrar of Gingoog City who was impleaded as
respondent in the petition below. This, notwithstanding, the RTC granted her petition and
allowed the correction sought by respondent, which decision was affirmed in toto by the CA.
We do not agree with the RTC and the CA.
This is not the first time that the Court is confronted with the issue involved in this case.
Aside from Kho, Alba and Barco, the Court has addressed the same in Republic v.
Coseteng-Magpayo,31 Ceruila v. Delantar,32 and Labayo-Rowe v. Republic.33
In Republic v. Coseteng-Magpayo,34 claiming that his parents were never legally married,
respondent therein filed a petition to change his name from "Julian Edward Emerson
Coseteng Magpayo," the name appearing in his birth certificate to "Julian Edward Emerson
Marquez Lim Coseteng." The notice setting the petition for hearing was published and there

being no opposition thereto, the trial court issued an order of general default and eventually
granted respondents petition deleting the entry on the date and place of marriage of parties;
correcting his surname from "Magpayo" to "Coseteng"; deleting the entry "Coseteng" for
middle name; and deleting the entry "Fulvio Miranda Magpayo, Jr." in the space for his
father. The Republic of the Philippines, through the OSG, assailed the RTC decision on the
grounds that the corrections made on respondents birth certificate had the effect of changing
the civil status from legitimate to illegitimate and must only be effected through an
appropriate adversary proceeding. The Court nullified the RTC decision for respondents
failure to comply strictly with the procedure laid down in Rule 108 of the Rules of Court.
Aside from the wrong remedy availed of by respondent as he filed a petition for Change of
Name under Rule 103 of the Rules of Court, assuming that he filed a petition under Rule 108
which is the appropriate remedy, the petition still failed because of improper venue and
failure to implead the Civil Registrar of Makati City and all affected parties as respondents in
the case.
In Ceruila v. Delantar,35 the Ceruilas filed a petition for the cancellation and annulment of the
birth certificate of respondent on the ground that the same was made as an instrument of the
crime of simulation of birth and, therefore, invalid and spurious, and it falsified all material
entries therein. The RTC issued an order setting the case for hearing with a directive that the
same be published and that any person who is interested in the petition may interpose his
comment or opposition on or before the scheduled hearing. Summons was likewise sent to
the Civil Register of Manila. After which, the trial court granted the petition and nullified
respondents birth certificate. Few months after, respondent filed a petition for the annulment
of judgment claiming that she and her guardian were not notified of the petition and the trial
courts decision, hence, the latter was issued without jurisdiction and in violation of her right
to due process. The Court annulled the trial courts decision for failure to comply with the
requirements of Rule 108, especially the non-impleading of respondent herself whose birth
certificate was nullified.
1wphi1

In Labayo-Rowe v. Republic,36 petitioner filed a petition for the correction of entries in the
birth certificates of her children, specifically to change her name from Beatriz V.
Labayu/Beatriz Labayo to Emperatriz Labayo, her civil status from "married" to "single," and
the date and place of marriage from "1953-Bulan" to "No marriage." The Court modified the
trial courts decision by nullifying the portion thereof which directs the change of petitioners
civil status as well as the filiation of her child, because it was the OSG only that was made
respondent and the proceedings taken was summary in nature which is short of what is
required in cases where substantial alterations are sought.
Respondents birth certificate shows that her full name is Anita Sy, that she is a Chinese
citizen and a legitimate child of Sy Ton and Sotera Lugsanay. In filing the petition, however,
she seeks the correction of her first name and surname, her status from "legitimate" to
"illegitimate" and her citizenship from "Chinese" to "Filipino." Thus, respondent should have
impleaded and notified not only the Local Civil Registrar but also her parents and siblings as
the persons who have interest and are affected by the changes or corrections respondent
wanted to make.
The fact that the notice of hearing was published in a newspaper of general circulation and
notice thereof was served upon the State will not change the nature of the proceedings
taken.37 A reading of Sections 4 and 5, Rule 108 of the Rules of Court shows that the Rules
mandate two sets of notices to different potential oppositors: one given to the persons
named in the petition and another given to other persons who are not named in the petition
but nonetheless may be considered interested or affected parties.38 Summons must,

therefore, be served not for the purpose of vesting the courts with jurisdiction but to comply
with the requirements of fair play and due process to afford the person concerned the
opportunity to protect his interest if he so chooses.39
While there may be cases where the Court held that the failure to implead and notify the
affected or interested parties may be cured by the publication of the notice of hearing,
earnest efforts were made by petitioners in bringing to court all possible interested
parties.40 Such failure was likewise excused where the interested parties themselves initiated
the corrections proceedings;41 when there is no actual or presumptive awareness of the
existence of the interested parties;42 or when a party is inadvertently left out.43
It is clear from the foregoing discussion that when a petition for cancellation or correction of
an entry in the civil register involves substantial and controversial alterations, including those
on citizenship, legitimacy of paternity or filiation, or legitimacy of marriage, a strict
compliance with the requirements of Rule 108 ofthe Rules of Court is mandated. 44 If the
entries in the civil register could be corrected or changed through mere summary
proceedings and not through appropriate action wherein all parties who may be affected by
the entries are notified or represented, the door to fraud or other mischief would be set open,
the consequence of which might be detrimental and far reaching.45
WHEREFORE, premises considered, the petition is hereby GRANTED. The Court of
Appeals Decision dated February 18, 2011 and Resolution dated July 27, 20011 in CA-G.R.
CV No. 00238-MIN, are SET ASIDE. Consequently, the June 28, 2004 Order of the Regional
Trial Court, Branch 27, Gingoog City, in Spl. Proc. No. 230-2004 granting the Petition for
Correction of Entry of Certificate of Live Birth filed by respondent Dr. Norma S. Lugsanay Uy,
is NULLIFIED.