Compiled Cases Civpro Escra

titled in the name of respondents through the use of fraud.
Such issue
cannot even be properly threshed out in an action for ejectment, as
Section 18, Rule 70 provides that [t]he judgment rendered in an action for
forcible entry or detainer shall be conclusive with respect to the possession
only and shall in no wise bind the title or affect the ownership of the land or
building. x x x In Malison v. Court of Appeals, 527 SCRA 109 (2007), the
Court held thus: Verily, in ejectment cases, the word possession means
nothing more than actual physical possession, not legal possession, in the
sense contemplated in civil law. The only issue in such cases is who is
entitled to the physical or material possession of the property involved,
independently of any claim of ownership set forth by any of the partylitigants. It does not even matter if the partys title to the property
is questionable. (Emphasis supplied) Hence, a just and complete
determination of petitioners rights could actually be had in the action for
annulment, revocation and reconveyance of title that she had previously
filed, not in the instant action for ejectment.184
G.R. No. 160280.March 13, 2009.*

SOFIA ANIOSA SALANDANAN, petitioner, vs. SPOUSES MA. ISABEL and
BAYANI MENDEZ, respondents.**
Civil Procedure; Intervention; Intervention is allowed at any time
before rendition of judgment by the trial courtafter the lapse of this
period, it will not be warranted anymore because an intervention is not an
independent action but is ancillary and supplemental to an existing
litigation.Intervention is allowed at any time before rendition of judgment
by the trial court. After the lapse of this period, it will not be warranted
anymore because intervention is not an independent action but is ancillary
and supplemental to an existing litigation. The permissive tenor of the
provision on intervention shows the intention of the Rules to give to the
court the full measure of discretion in permitting or disallowing the same,
but under Section 1, Rule 19 of the Rules of Court, the courts are
nevertheless mandated to consider several factors in determining whether
or not
_______________
*THIRD DIVISION.
** The Court of Appeals is deleted from the title per Section 4, Rule 45
of the Rules of Court.
183
VOL. 581, MARCH 13, 2009
Salndanan vs. Mendez
to allow intervention. The factors that should be reckoned
arewhether intervention will unduly delay or prejudice the adjudication
of the rights of the original parties and whether the intervenors rights
may be fully protected in a separate proceeding.
Civil Law; Ejectment; Actions for ejectment are designed to
summarily restore physical possession to one who has been illegally
deprived of such possessionit is primarily a quieting process intended to
provide an expeditious manner for protecting possession or right to
possession without involvement of the title.The courts have to give much
consideration to the fact that actions for ejectment are designed
to summarily restore physical possession to one who has been illegally
deprived of such possession. It is primarily a quieting process intended to
provide an expeditious manner for protecting possession or right to
possession without involvement of the title.
Same; Same; The judgment rendered in an action for forcible entry or
detainer shall be conclusive with respect to the possession only and shall in
no wise bind the title or affect the ownership of the land or building.
Petitioners intervention in the ejectment case would not result in a
complete adjudication of her rights. The issue raised by petitioner is mainly
that of ownership, claiming that the property in dispute was registered and
SUPREME COURT REPORTS ANNOTATED
84
183

Same; Unlawful Detainer; The Court emphasized that when property
is registered under the Torrens system, the registered owners title to the
property is presumed legal and cannot be collaterally attacked, especially
in a mere action for unlawful detainer.In Malison, 527 SCRA 109 (2007),
the Court emphasized that when property is registered under the Torrens
system, the registered owners title to the property is presumed legal and
cannot be collaterally attacked, especially in a mere action for unlawful
detainer. In this particular action where petitioners alleged ownership
cannot be established, coupled with the presumption that respondents title
to the property is legal, then the lower courts are correct in ruling that
respondents are the ones entitled to possession of the subject premises.
Same; Judgments; A judgment directing a party to deliver possession
of a property to another is in personamany judgment therein is binding
only upon the parties properly impleaded and duly heard or given an
opportunity to be heard.Petitioners ownership not having been fully
established in this case, she cannot, therefore, claim that the lower courts
decision divesting the Spouses Fernandez of possession should not apply to
her. InStilgrove v. Sabas, 508 SCRA 383 (2006), the Court held that: A
judgment directing a party to deliver possession of a property to another
is in personam. x x x Any judgment therein is binding only upon the parties
properly impleaded and duly heard or given an opportunity to be heard.
However, this rule admits of the exception, such that even a nonparty may be bound by the judgment in an ejectment suit where he
is any of the following: (a) trespasser, squatter or agent of the defendant
fraudulently occupying the property to frustrate the judgment; (b)
guest or occupant of the premises with the permission of the defendant; (c)
transferee pendente lite; (d) sublessee; (e) co-lessee; or (f) member of
the family, relative or privy of the defendant.
Same; Same; It is clear that petitioner, even though a non-party, is
bound by the judgment because aside from being a relative of or privy to
Spouses Fernandez, she is also acting as their agent when she occupied
the property after the Regional Trial Court (RTC) ordered execution pending
appeal in order to frustrate the judgment.Taking the foregoing into
account, it is clear that petitioner, even though a non-party, is bound by the
judgment because aside from185
VOL. 581, MARCH 13, 2009
being a relative of or privy to Spouses Fernandez, she is also acting
as their agent when she occupied the property after the RTC ordered
execution pending appeal in order to frustrate the judgment.
PETITION for review on certiorari of the decision and resolution of the Court
of Appeals.
The facts are stated in the opinion of the Court.
Pacito M. Pineda, Jr. and Lemuel M. Santos for petitioner.
Tristan B. Zoleta for private respondents.
AUSTRIA-MARTINEZ,J.:
This refers to the Petition for Review on Certiorari of the June 27, 2003
Decision1 of the Court of Appeals (CA) and its September 3, 2003
Resolution2 in CA-G.R. SP No. 76336 denying the petition for clarification
and intervention filed by Sofia Aniosa Salandanan (petitioner) and
affirming in toto the March 6, 2003 Decision of the Regional Trial Court
(RTC) of Manila, Branch 30 in Civil Case No. 02-104406 which affirmed the
August 9, 2002 Decision of the Metropolitan Trial Court (MeTC) of Manila,
Branch 15 in Civil Case No. 172530 ordering Delfin Fernandez 3 and Carmen
Fernandez (Spouses Fernandez) and all persons claiming rights under them
to vacate and surrender possession of a house and lot located at 1881
Antipolo St., corner Vision St., Sta. Cruz, Manila (subject lot) to Spouses
Bayani Mendez and Ma. Isabel S. Mendez (respondents) and to pay the
latter monthly rental of
_______________
1 Penned by Justice Perlita J. Tria-Tirona and concurred in by Justices
Oswaldo D. Agcaoili and Edgardo F. Sundiam, Rollo, pp. 49-57.
2 Id., at pp. 46-47.
3 Delfin Fernandez, Jr. in other pleadings, Records, pp. 21, 24, 26.
186
186

185
P5,000.00 from January 29, 2002 until they vacate the property and
P15,000.00 as attorneys fees.
The case stemmed from a complaint for ejectment instituted by
respondents against Spouses Fernandez before the MeTC on April 18, 2002.
In their Complaint,4 respondents alleged that they are the owners of the
subject property as evidenced by Transfer Certificate of Title No. 246767 of
the Registry of Deeds of Manila; that they became the owners thereof by
virtue of a deed of donation; that Spouses Fernandez and their families
were occupying the subject property for free through the generosity of
respondent Isabels father; that a letter of demand to vacate the subject
property was sent to Spouses Fernandez but they refused to vacate the
same; that respondents brought the matter to the Barangay Lupon for
possible settlement but the same failed.
In their Answer,5 Spouses Fernandez denied the allegations of the
complaint and averred that Spouses Pablo and Sofia Salandanan (Spouses
Salandanan) are the registered owners of the subject property and the
improvements therein; that respondent Isabel is not a daughter of Spouses
Salandanan; that Delfin Fernandez (Delfin) is the nearest of kin of Pablo
Salandanan being the nephew of the latter; that Delfin has continuously
occupied the said property since time immemorial with the permission of
Spouses Salandanan; that they did not receive any notice to vacate the
subject property either from respondents or their counsel.
Further, Spouses Fernandez claimed that respondents were able to
transfer the subject property to their name through fraud; that sometime in
November 1999, respondents went to the house of Spouses Salandanan in
Dasmarias, Cavite and asked the latter to sign a special power of attorney;
that the supposed special power of attorney was in fact a
_______________
4 Records, pp. 2-6.
5 Id., at pp. 15-19.
187
VOL. 581, MARCH 13, 2009
deed of donation wherein Spouses Salandanan was alleged to have
donated in favor of respondents the subject property; that said deed of
donation was simulated and fictitious and that by virtue of the alleged deed
of donation, respondent Isabel was able to transfer the title of the subject
property in her name; that in fact, the subject property is the subject of a
separate case filed on July 31, 2001 before the RTC of Manila docketed as
Civil Case No. 011014876 for annulment, revocation and reconveyance of
title. By way of counterclaim, Spouses Fernandez prayed for moral damages
and attorneys fees.
187
On August 9, 2002 the MeTC rendered its decision in favor of

respondents and against Spouses Fernandez, the dispositive portion of
which reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and
against the defendants, ordering the latter and all persons claiming rights
under them to peacefully vacate the premises and surrender possession
thereof to the plaintiffs and for the defendants to pay plaintiffs: 1)
P5,000.00 a month beginning January 29, 2002 (when the demand letter
was received by defendants by registered mail) until they finally vacate the
premises and 2) the amount of P15,000.00 as and for attorneys fees.
The counterclaim of the defendants is dismissed for lack of merit.
SO ORDERED.7
Dissatisfied, Spouses Fernandez appealed to the RTC. Respondents then
filed a Motion for Execution Pending Appeal with the RTC. On December 9,
2002, the RTC issued an Order directing the issuance of a writ of execution
to place respondents in possession of the disputed property on the ground
that Spouses Fernandez failed to periodically deposit
_______________
6Entitled, Sofia Aniosa Salandanan herein represented by Delfin L.
Fernandes, Jr. v. Sps. Bayani and Isabel Mendez and Expedito A. Javier of
the Registry of Deeds of Manila, Records, p. 21.
7 Id., at p. 73.
188
188

the monthly rentals as they fell due. The Writ of Execution was issued on
January 10, 2003. The Spouses Fernandez moved for reconsideration of the
Order for issuance of the writ of execution, but the same was denied.
Thus, on February 20, 2003, the sheriff went to the subject premises to
implement the writ of execution but found the place padlocked. The sheriff
also found the petitioner, an old woman, all alone inside the house. Taking
pity on the old woman, the sheriff was unable to implement the writ. On the
same day, respondents filed an Urgent Motion to Break Open, alleging that
Spouses Fernandez fetched petitioner earlier that day from her residence in
Dasmarias, Cavite and purposely placed her inside the subject premises
so the old woman could plead for mercy from the executing sheriff.
On March 6, 2003, the RTC promulgated its Decision affirming the
decision of the MeTC of Manila,8 and on April 8, 2003, the RTC also issued
an Order authorizing the sheriff to employ the necessary force to enable
him to enter the subject premises and place the plaintiffs-appellees in
actual possession thereof.9
Meanwhile, on April 4, 2003, Spouses Fernandez filed before the CA a
petition for review with prayer for a temporary restraining order seeking to
stay the immediate execution pending appeal. 10 In a Resolution dated April

15, 2003, the CA granted the prayer for a Temporary Restraining Order.
On June 27, 2003, the CA rendered its Decision affirming in toto the
decision of the RTC and ordered Spouses Fernandez and all persons
claiming rights under them including petitioner to vacate the premises,
ruling thus:
Verily, the only issue to be resolved in the present ejectment case is
who between petitioners [Spouses Fernandez] and respon_______________
8 Records, pp. 180-182.
9 Id., at pp. 228-229.
10 CA Rollo, pp. 2-27.
189
VOL. 581, MARCH 13, 2009
dents has the better right to possess the disputed premises. The issue
as to who between Sofia Aniosa Salandanan and respondents is the real
owner of subject premises could be properly threshed out in a separate
proceedings, which in this case is already pending resolution in another
court.
Interestingly, nowhere in any pleadings of petitioners submitted below
could We find any allegations to the effect that their possession of the
disputed premises sprung from their claim of ownership over the same nor,
at the very least, that they are in possession of any document that would
support their entitlement to enjoy the disputed premises.
As between respondents Torrens Title to the premises juxtaposed that
of petitioners barren claim of ownership and absence of any document
showing that they are entitled to possess the same, the choice is not
difficult. Simply put, petitioners plainly have no basis to insist that they
have a better right to possess the premises over respondents who have a
Torrens Title over the same. Hence, the MTC, as well as the RTC, correctly
ordered petitioners to vacate the premises since respondents have a better
right to possess the same by virtue of the latters Torrens Title. 11
The dispositive portion of the CA Decision reads as follows:
WHEREFORE, the instant appeal is DISMISSED for lack of merit. The
assailed Decision, dated 06 March 2003, of Hon. Judge Lucia Pea
Purugganan of the Regional Trial Court of Manila, Branch 50, affirming on
appeal the Decision of the Metropolitan Trial Court of Manila (MTC for
brevity), Branch 15, is hereby AFFIRMED in toto. Accordingly, the Temporary
Restraining Order is hereby LIFTED. As a legal consequence, petitioners
and all persons claiming rights under them, including Sofia Aniosa
Salandanan, are hereby ORDERED to vacate the premises
immediately upon receipt hereof. Costs against petitioners.
189
SO ORDERED.12 (Emphasis supplied)

_______________
and petitioners motion for clarification and intervention, for lack of

merit,16 thus:
We have carefully perused petitioners Motion and find the arguments
raised therein a mere rehash, if not a repetition, of the arguments raised in
their petition, which have already been thoroughly discussed and passed
upon in our Decision.
Anent the movant Sofia Salandanans Motion for Clarification and
Intervention, We hereby deny the same on the ground that it is belatedly
filed by virtue of the rendition of Our Decision on June 27, 2003.
Section 2, Rule 19 of 1997 Rules of Civil Procedure expressly provides:
Section2.Time to Intervene.The motion to intervene may be
filed at any time before rendition of judgment by the trial court. x x
x
Moreover, it is undisputed that on 31 July 2001, movant Sofia
Salandanan represented by petitioner has already instituted a Civil Case for
Revocation/Annulment of T.C.T. 246767 and Reconveyance before the
Regional Trial Court of Manila, Branch 50 and docketed as Civil Case No.
01101487. As such We find movants motion to be wanting of merit as her
rights are already fully protected in said separate proceeding.
WHEREFORE, the Motion for Reconsideration and Motion for Clarification
and Intervention are hereby DENIED for lack of merit.
SO ORDERED.17
Hence, herein petition anchored on the following assignment of errors:
1.THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT INCLUDED
PETITIONER IN ITS ADVERSE JUDGMENT IN VIOLATION OF THE LATTERS
CONSTITUTIONAL RIGHT TO DUE PROCESS DESPITE THE FACT THAT
PETITIONER WAS NOT PRIVY TO THE INSTANT CASE
_______________
11 CA Rollo, pp. 269-270.

12 Id., at pp. 272-273.
190
190

On July 29, 2003, Spouses Fernandez filed their motion for
reconsideration.13
On even date, Sofia Salandanan (petitioner) filed a Motion for
Clarification
and
Intervention 14 and
attached
a
Motion
for
Reconsideration.15 In her motion for clarification and intervention, she
alleged that she and her deceased spouse are the real owners of the
subject property; that she was not a party to the case for ejectment and did
not receive any notice therefrom; and that by virtue of the said decision,
she was about to be evicted from her property without having participated
in the entire process of the ejectment proceeding.
Petitioner further claims that sometime in 1999, respondents went to
their house and showed certain papers purportedly copies of a special
power of attorney but which turned out to be a deed of donation involving
the subject property; that by virtue of the said donation, respondents were
able to register the subject properties in their name and were issued
Transfer Certificate of Title No. 246767; that on July 31, 2001, Spouses
Salandanan with the assistance of Delfin, filed a civil case before the RTC of
Manila for Revocation/Annul-ment of the said title and Reconveyance; and
that consequently, petitioner was forced to intervene in order to protect her
interests over the subject property. Petitioner prayed for (1) clarification of
the CAs decision asking whether the said decision applies to her as a
relative of Spouses Fernandez claiming right under them or as possessor of
the subject property in her right as owner of the subject property; (2) that
she be allowed to intervene in the appeal; and (3) that the attached motion
for reconsideration be admitted.
In a Resolution dated September 3, 2003, the CA denied the motion for
reconsideration filed by Spouses Fernandez
_______________
192
192
13 Id., at pp. 288-301.

14 Id., at pp. 305-312.
15 Id., at pp. 313-336.
191
VOL. 581, MARCH 13, 2009
191
16 Annex A of the Petition, Rollo, p. 47.

17 Id., at pp. 46-47.

AND DOES NOT DERIVE HER RIGHT TO STAY IN THE CONTESTED PROPERTY
FROM THE SPOUSES DELFIN AND CARMEN FERNANDEZ.
AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT DENIED THE
MOTION FOR INTERVENTION BY PETITIONER DESPITE THE FACT IT WAS ONLY
BY VIRTUE OF ITS DECISION DATED JUNE 27, 2003 THAT PETITIONER WAS
INCLUDED IN THE EJECTMENT PROCEEDINGS, AND THE EARLIEST
OPPURTUNE TIME WHEN PETITIONER COULD HAVE INTERVENED WAS AFTER
THE COURT OF APPEALS RULED AGAINST HER.

AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT DID NOT TAKE
INTO ACCOUNT THE ISSUE OF OWNERSHIP IN RESOLVING THE ISSUE OF
WHO HAS BETTER POSSESSION.
AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT DID NOT
SUSPEND THE CASE DESPITE THE EQUITABLE CIRCUMSTANCES PRESENT IN
THE CASE AT BAR IN THE LIGHT OF THE AMAGAN VS. MARAMAG CASE.18
Petitioner contends that the CA committed grave abuse of discretion
when it included petitioner in its decision despite the fact that she is not a
party in the ejectment case, thus, violating her right to due process; and
considering that the court did not acquire jurisdiction over her person, she
cannot be bound by the Decision of the CA.
Petitioner also asserts that the CA committed grave abuse of discretion
amounting to lack or excess of jurisdiction when it denied petitioners
motion for clarification and intervention. According to her, she was
constrained to file a motion for clarification and intervention because the
CA included her in
_______________
Let us first tackle the issue of whether petitioner should have been
allowed to intervene even after the CA had promulgated its Decision.
Sections 1 and 2 of Rule 19 of the Rules of Court provide:
Section1.Who may intervene.A person who has a legal interest in
the matter in litigation, or in the success of either of the parties, or an
interest against both, or is so situated as to be adversely affected by a
distribution or other disposition of property in the custody of the court or of
an officer thereof may, with leave of court, be allowed to intervene in the
action. The court shall consider whether or not the intervention will
unduly delay or prejudice the adjudication of the rights of the
original parties, and whether or not the intervenors rights may be
fully protected in a separate proceeding.194
194
18 Id., at p. 19.
193
VOL. 581, MARCH 13, 2009
its decision in spite of the fact that she was not impleaded as a party to the
unlawful detainer case.
Petitioner ascribes grave abuse of discretion when the CA failed to
resolve the issue of ownership in order to determine the party who has the
better right to possess the subject property. She asserts that the CA should
have suspended the unlawful detainer case since the ownership of the
subject property is in issue.
Finally, petitioner maintains that she is the owner of the property by
virtue of Transfer Certificate of Title No. 9937 issued on October 2, 1947 by
the Register of Deeds of Manila. Hence, as the owner of the subject
property, she has all the right to use, the right to allow others to use and
the right to exclude others from using the same. Petitioner further claims
that respondents were able to transfer the title of the subject property in
their name through manipulation wherein respondents asked her and her
deceased husband to sign a special power of attorney but later turned out
to be a deed of donation. As a matter of fact, upon learning of the said
transfer, petitioner filed before the RTC of Manila a case for annulment
and/or revocation of the title.
We find the petition unmeritorious.
193

Section2.Time to intervene.The motion to intervene may be filed
at any time before rendition of judgment by the trial court. A copy of the
pleading-in-intervention shall be attached to the motion and served on the
original parties.
As a rule, intervention is allowed at any time before rendition of
judgment by the trial court. After the lapse of this period, it will not be
warranted anymore because intervention is not an independent action but
is ancillary and supplemental to an existing litigation. 19 The permissive
tenor of the provision on intervention shows the intention of the Rules to
give to the court the full measure of discretion in permitting or disallowing
the same,20 but under Section 1, Rule 19 of the Rules of Court, the courts
are nevertheless mandated to consider several factors in determining
whether or not to allow intervention. The factors that should be reckoned
are whether intervention will unduly delay or prejudice the
adjudication of the rights of the original parties andwhether the
intervenors rights may be fully protected in a separate
proceeding.
Keeping these factors in mind, the courts have to give much consideration
to the fact that actions for ejectment are designed to summarily restore
physical possession to one who has been illegally deprived of such
possession.21 It is primarily a quieting process intended to provide an
expeditious manner for protecting possession or right to possession without
involvement of the title.22 In Five Star Marketing Co.,
_______________
19 Manalo v. Court of Appeals, 419 Phil. 215, 234; 366 SCRA 752, 767
(2001).
20 Yau v. Manila Banking Corporation, 433 Phil. 701, 714; 384 SCRA
340, 352 (2002).
21 Keppel Bank Philippines, Inc. v. Adao, G.R. No. 158227, October 19,
2005, 473 SCRA 372, 379.
22 Cayabyab v. Gomez de Aquino, G.R. No. 159974, September 5,
2007, 532 SCRA 353, 361.
195
VOL. 581, MARCH 13, 2009
Inc. v. Booc,23 the Court elucidated the purpose of actions for ejectment in
this wise:
Forcible entry and unlawful detainer cases are summary proceedings
designed to provide for an expeditious means of protecting actual
possession or the right to the possession of the property involved. It does
not admit of a delay in the determination thereof. It is a time
procedure designed to remedy the situation. Stated in another way,
the avowed objective of actions for forcible entry and unlawful
detainer, which have purposely been made summary in nature, is
to provide a peaceful, speedy and expeditiousmeans of preventing
an alleged illegal possessor of property from unjustly continuing
his possession for a long time, thereby ensuring the maintenance
of peace and order in the community; otherwise, the party illegally
deprived of possession might feel the despair of long waiting and decide as
a measure of self-protection to take the law into his hands and seize the
same by force and violence. And since the law discourages continued
wrangling over possession of property for it involves perturbation of social
order which must be restored as promptly as possible, technicalities or
details of procedure which may cause unnecessary delays should
accordingly and carefully be avoided.24 (Emphasis supplied)
Thus, as stated above, ejectment cases must be resolved with great
dispatch.
Moreover, petitioners intervention in the ejectment case would not
result in a complete adjudication of her rights. The issue raised by
petitioner is mainly that of ownership, claiming that the property in dispute
was registered and titled in the name of respondents through the use of
fraud. Such issue cannot even be properly threshed out in an action for
ejectment, as Section 18, Rule 70 provides that [t]he judgment rendered in
an action for forcible entry or detainer shall be conclusive with respect to
the possession only and shall in no wise bind the title or affect the
ownership of the land or build_______________
196
196
23 G.R. No. 143331, October 5, 2007, 535 SCRA 28.

24 Id., at pp. 43-44.
195

ing. xxx In Malison v. Court of Appeals,25 the Court held thus:
Verily, in ejectment cases, the word possession means nothing more
than actual physical possession, not legal possession, in the sense
contemplated in civil law. The only issue in such cases is who is entitled to
the physical or material possession of the property involved, independently
of any claim of ownership set forth by any of the party-litigants. It does
not even matter if the partys title to the property is
questionable.26 (Emphasis supplied)
Hence, a just and complete determination of petitioners rights could
actually be had in the action for annulment, revocation and reconveyance
of title that she had previously filed, not in the instant action for ejectment.
It is likewise for this reason that petitioner is not an indispensable party
in the instant case. The records bear out that the disputed property is in the
possession of Spouses Fernandez. Even petitioner does not allege that she
was in the possession of subject premises prior to or during the
commencement of the ejectment proceedings. Since her claim of ownership
cannot be properly adjudicated in said action, she is, therefore, not an
indispensable party therein.
It is also misleading for petitioner to say that the earliest opportune
time when petitioner could have intervened was after the CA ordered her to
vacate the subject property in its Decision dated June 27, 2003. As early as
when the sheriff attempted to implement the writ of execution pending
appeal issued by the RTC, when she pleaded not to be evicted from the
subject premises, she already became aware that the RTC had ordered to
place respondents in possession of the subject property pending appeal
with the RTC. That would have been the proper time for her to intervene if
she truly believed that
_______________
25 G.R. No. 147776, July 10, 2007, 527 SCRA 109.
26 Id., at p. 121.
197
VOL. 581, MARCH 13, 2009
her interests would be best protected by being a party to the ejectment
case.
Verily, allowing petitioners intervention at this late stage of the
ejectment proceedings would only cause undue delay without affording
petitioner the relief sought since the issue of ownership cannot be
determined with finality in the unlawful detainer case.
There is also no merit to petitioners argument that it was grave abuse
of discretion for the CA to include her in its Decision because she is not a
197
party to the ejectment case, and neither is she claiming right to possession
under the Spouses Fernandez, but as its alleged rightful owner.
Note that the MeTC, RTC, and the CA unanimously found that the
disputed property is presently registered under the Torrens System in the
name of respondents. The lower courts then concluded that respondents
presented the best proof to establish the right to possess the same. It
should be borne in mind that unless the case falls under one of the
recognized exceptions, to wit:
(1) when the findings are grounded entirely on speculation, surmises or
conjectures; (2) when the inference made is manifestly mistaken, absurd or
impossible; (3) when there is grave abuse of discretion; (4) when the
judgment is based on a misapprehension of facts; (5) when the findings of
fact are conflicting; (6) when in making its findings the Court of Appeals
went beyond the issues of the case, or its findings are contrary to the
admissions of both the appellant and the appellee; (7) when the findings
are contrary to the trial court; (8) when the findings are conclusions without
citation of specific evidence on which they are based; (9) when the facts set
forth in the petition as well as in the petitioners main and reply briefs are
not disputed by the respondent; (10) when the findings of fact are premised
on the supposed absence of evidence and contradicted by the evidence on
record; and (11) when the Court of Appeals mani-198
198

festly overlooked certain relevant facts not disputed by the parties, which,
if properly considered, would justify a different conclusion. 27
factual findings of the trial court are conclusive on the parties and not
reviewable by this Court, more so when the CA affirms the factual findings
of the trial court.28 This case does not fall under any of the exceptions, thus,
the factual finding of the lower courts, that the new registered owners of
the subject premises are respondents, must be respected and upheld by
this Court.
In Malison, the Court emphasized that when property is registered
under the Torrens system, the registered owners title to the property is
presumed legal and cannot be collaterally attacked, especially in a mere
action for unlawful detainer.29 In this particular action where petitioners
alleged ownership cannot be established, coupled with the presumption
that respondents title to the property is legal, then the lower courts are
correct in ruling that respondents are the ones entitled to possession of the
subject premises.
Petitioners ownership not having been fully established in this case,
she cannot, therefore, claim that the lower courts decision divesting the
Spouses Fernandez of possession should not apply to her. In Stilgrove v.
Sabas,30the Court held that:
A judgment directing a party to deliver possession of a property to another

is in personam. x x x Any judgment therein is binding only upon the parties
properly impleaded and duly heard or given an opportunity to be heard.
However, this rule admits of the exception, such that even a nonparty may be bound by the judgment in an ejectment suit where he
is any of the following: (a) trespasser, squatter or agent of the defendant
fraudulently
_______________
27 C&S Fishfarm Corp. v. Court of Appeals, 442 Phil. 279, 288; 394
SCRA 82, 88 (2002).
28 Malison v. Court of Appeals, supra note 25, at p. 117.
29 Id., at p. 124.
30 A.M. No. P-06-2257, November 29, 2006, 508 SCRA 383.
199
VOL. 581, MARCH 13, 2009
occupying the property to frustrate the judgment; (b) guest or
occupant of the premises with the permission of the defendant; (c)
transferee pendente lite; (d) sublessee; (e) co-lessee; or (f)member of the
family, relative or privy of the defendant.31(Emphasis supplied)
Of particular significance is the fact that in Spouses Fernandezs
Answer, they never alleged that petitioner was in actual possession of the
disputed property. In fact, in said Answer, they stated that it was Delfin
Fernandez, Jr. who has continuously occupied the premises since time
immemorial and that petitioner resides in her house in Dasmarias, Cavite.
Likewise worthy of note is the fact that the Spouses Fernandez never
refuted in their Opposition to Amended Motion to Break Open the allegation
of respondents that petitioner was merely fetched by the Spouses
Fernandez from her residence in Dasmarias, Cavite on the day (February
20, 2003) that the sheriff was to implement the writ of execution, and
placed her inside the subject premises so the old woman could plead for
mercy from the executing sheriff. In the petition for review dated April 3,
2003 filed with the CA, Spouses Fernandez admitted that it was only after
the RTC issued its Order dated February 10, 2003, denying the motion for
reconsideration of the Order for issuance of the writ of execution, that
petitioner took possession of the subject premises.32
Taking the foregoing into account, it is clear that petitioner, even
though a non-party, is bound by the judgment because aside from being a
relative of or privy to Spouses Fernandez, she is also acting as their agent
when she occupied the property after the RTC ordered execution pending
appeal in order to frustrate the judgment.
199
WHEREFORE, the petition for review on certiorari is DENIED. The

assailed Decision of the Court of Appeals dated June 27, 2003 affirming the
decision of the Regional Trial
G.R. No. 175573.September 11, 2008.*

OFFICE
OF
THE
OMBUDSMAN,
petitioner, vs. JOEL
S.
SAMANIEGO,1 respondent.
Administrative Law; Ombudsman; The Ombudsman and his deputies
function essentially as a complaints and action bureau.The Office of the
Ombudsman is a unique position in the 1987 Constitution. The Ombudsman
and his deputies function essentially as a complaints and action bureau.
Congress enacted Republic Act (RA) 6770 providing broad powers, as well
as a functional and structural organization, to the Office of the Ombudsman
to enable it to perform its constitutionally-mandated functions.
Same; Same; To aid the Ombudsman in carrying out its tasks, it was
vested with disciplinary authority over government officials.To aid the
Ombudsman in carrying out its tasks, it was vested with disciplinary
authority over government officials. The scope of this authority was
discussed in Office of the Ombudsman v. CA, 507 SCRA 593, 608-611
(2006): [The Office of the Ombudsman] is vested with full administrative
disciplinary authority including the power to determine the appropriate
penalty imposable on erring public officers or employees as warranted by
the evidence, and necessarily, impose the said penalty. Thus, the
provisions in [RA] 6770 taken together reveal the manifest intent of the
lawmakers to bestow on the Office of the Ombudsman fulladministrative

disciplinary authority. These provisions cover the entire gamut of
administrative adjudication which entails the authority to, inter
alia, receive complaints, conduct investigations, hold hearings in
accordance with its rules of procedure, summon witnesses and
require the production of documents, place under preventive
suspension
public
officers
and
employees
pending
an
investigation, determine the appropriate penalty imposable on
erring public officers or employees as warranted by the evidence
and necessarily, impose the said penalty. x x x
_______________
* EN BANC.
1 The Former Seventh Division of the Court of Appeals was impleaded
as a respondent but the Court excluded it pursuant to Section 4, Rule 45 of
the Rules of Court.
568
5
68
Office of the Ombudsman vs. Samaniego
Same; Same; Actions of the Ombudsman that do not fall squarely
under any of these general headings are not to be construed outright as
illegal.Actions of the Ombudsman that do not fall squarely under any of
these general headings are not to be construed outright as illegal. The
avowed purpose of preserving public trust and accountability must be
considered. So long as the Ombudsmans actions are reasonably in line with
its official functions and are not contrary to law and the Constitution, they
should be upheld. Defending its decisions in the CA is one such power.
Same; Same; In Buenaseda v. Flavier, 226 SCRA 645, 653 (1993), we
held that any interpretation of RA 6770 that hampers the work of the
Ombudsman should be avoided.The Ombudsman is expected to be an
activist watchman, not merely a passive onlooker. A statute granting
powers to an agency created by the Constitutionsuch as RA 6770should
be liberally construed to advance the objectives for which it was created.
In Buenaseda v. Flavier, 226 SCRA 645, 653 (1993), we held that any
interpretation of RA 6770 that hampers the work of the Ombudsman should
be avoided.
Civil Procedure; Intervention; Intervention is not an absolute right as
it can be secured only in accordance with the terms of the applicable
statute or rule.Intervention is a remedy by which a third party, not
originally impleaded in the proceedings, becomes a litigant therein to
enable him to protect or preserve a right or interest which may be affected
by such proceeding. Its purpose is to settle in one action and by a single
judgment the whole controversy (among) the persons involved.
Intervention is not an absolute right as it can be secured only in accordance

with the terms of the applicable statute or rule. In claiming the right to
intervene, the intervenor must comply with the requirements laid down by
Rule 19 of the Rules of Court which provides that the intervenor must have
a legal interest in any of the following: (a) the matter in controversy; (b) the
success of either of the parties; (c) against both parties or (d) be so
situated as to be adversely affected by a distribution or other disposition of
property in the disposition of the court or of an officer thereof. Intervention
must not unduly delay or prejudice the adjudication of rights of the original
parties. Moreover, it must be shown that the intervenors rights may not be
fully protected in a separate proceeding.569
VOL. 564, SEPTEMBER 11, 2008
Same; Same; The legal interest must be actual and material, direct
and immediate.The legal interest must be actual and material, direct and
immediate. In Magsaysay-Labrador v. CA, 180 SCRA 266, 271 (1989), the
interest which entitles a person to intervene in a suit: [m]ust be on the
matter in litigation and of such direct and immediate character that the
intervenor will either gain or lose by the direct legal operation and effect of
the judgment. The words an interest in the subject mean a direct interest
in the cause of action as pleaded and which would put the intervenor in a
legal position to litigate a fact alleged in the complaint, without the
establishment of which plaintiff could not recover.
Same; Same; The Office of the Ombudsman had a clear legal interest
in the inquiry into whether respondent committed acts constituting grave
misconduct, an offense punishable under the Uniform Rules in
Administrative Cases in the Civil Service.The Office of the Ombudsman
had a clear legal interest in the inquiry into whether respondent committed
acts constituting grave misconduct, an offense punishable under the
Uniform Rules in Administrative Cases in the Civil Service. It was in keeping
with its duty to act as a champion of the people and preserve the integrity
of public service that petitioner had to be given the opportunity to act fully
within the parameters of its authority.
Same; Same; The Court of Appeals (CA) should have considered the
nature of the Ombudsmans powers as provided in the Constitution and RA
6770.It is true that under our rule on intervention, the allowance or
disallowance of a motion to intervene is left to the sound discretion of the
court after a consideration of the appropriate circumstances. However, such
discretion is not without limitations. One of the limits in the exercise of such
discretion is that it must not be exercised in disregard of law and the
Constitution. The CA should have considered the nature of the
Ombudsmans powers as provided in the Constitution and RA 6770.
Moreover, the rule on intervention is a rule of procedure whose object is to
569
Court assailing the resolutions 2 of the Court of Appeals (CA) dated

September 11, 2006 and November 21, 2006 in CA-G.R. SP No. 89999
captioned Joel S. Samaniego v. Commission on Audit, Provincial Auditors
Office of Albay, Legaspi City, Albay.
The facts follow.
Respondent Joel S. Samaniego was the City Treasurer of Ligao City,
Albay. On separate dates, the Commission on Audit (COA) through its
Regional Cluster Director Atty. Francisco R. Velasco 3 filed two administrative
complaints against Samaniego, docketed as OMB-L-A-03-1060-K 4 and OMBL-A-03-1061-K,5 for dishonesty and grave misconduct.
In these administrative complaints, the COA alleged that respondent
incurred
shortages
in
his
accountabilities
for
two
separate
periods.6 Respondent received letters of demand requiring him to explain
his side and settle his accountabilities.
In his counter-affidavit, respondent averred, among others, that OMB-LA-03-1060-K was bereft of factual basis. He likewise averred that the
alleged amount of his accountability in OMB-L-A-03-1061-K was the same
amount cited in OMB-L-A-03-1060-K. He also pleaded the defense of
restitution of his alleged accountabilities.
In a joint decision dated April 11, 2005, the Office of the Deputy
Ombudsman for Luzon found respondent liable for
_______________
make the powers of the court fully and completely available for justice, not
to hinder or delay it.
Administrative Law; Appeals; Rules of Procedure of the Ombudsman;
An appeal shall not stop the decision from being executory.The CA
anchored its denial of the motion to recall the writ of preliminary injunction
on its lack of authority over the case. (The Office of the Ombudsmans
motion for intervention was allegedly570
5
70
improper). But the Office of the Ombudsman could properly intervene
in the appeal filed by respondent and therefore, the CA could determine
whether a recall of the injunctive writ was proper. In the interest of justice
and practicality, we will rule on the propriety of the issuance of the
injunctive writ. The applicable provision of law is Section 7, Rule III of the
Rules of Procedure of the Ombudsman, as amended: Section 7. Finality and
execution of decision.x x x where the penalty imposed is public censure
or reprimand, suspension of not more than one month, or a fine equivalent
to one month salary, the decision shall be final, executory and
unappealable. In all other cases, the decision may be appealed to the Court
of Appeals x x x. An appeal shall not stop the decision from being
executory. x x x.
Same; Same; Following Office of the Ombudsman v. Laja, 488 SCRA
574 (2006), we hold that the mere filing by respondent of an appeal
sufficed to stay the execution of the joint decision against him.The
penalty meted out to respondent was suspension for one year without pay.
He filed an appeal of the Ombudsmans joint decision on time. In his
appeal, he included a prayer for the issuance of a writ of preliminary
injunction in order to stay the execution of the decision against him.
Following Office of the Ombudsman v. Laja, 488 SCRA 574 (2006), we hold
that the mere filing by respondent of an appeal sufficed to stay the
execution of the joint decision against him. Respondents prayer for the
issuance of a writ of preliminary injunction (for purposes of staying the
execution of the decision against him) was therefore a superfluity. The
execution of petitioners joint decision against respondent should be stayed
during the pendency of CA-G.R. SP No. 89999.
PETITION for review on certiorari of the resolutions of the Court of Appeals.
Efren L. Dizon for private respondent Joel S. Samaniego.
CORONA,J.:
This is a petition for review under Rule 45 of the Rules of571
2 Penned by Associate Justice Romulo V. Borja and concurred in by

Associate Justices Edgardo A. Camello and Rodrigo F. Lim, Jr. of the Former
Twenty-Third Division of the Court of Appeals. Rollo, pp. 41-42 and 44.
3 Regional Legal and Adjudication Office of the Commission on Audit.
4 Filed on October 7, 2003.
5 Filed on October 8, 2003.
6 OMB-L-A-03-1060-K was for the period of November 28, 2001 to June
19, 2002. OMB-L-A-031061-K was for the period of June 19, 2002 to October
7, 2002.
572
572
571

grave misconduct7 because he failed to explain his side and settle his
accountabilities in OMB-L-A-03-1060-K. He was meted the penalty of one
year suspension from office. In the same decision, however, OMB-L-A-031061-K was dismissed in view of respondents restitution of his
accountability.8
Via a petition for review on certiorari under Rule 43 with a motion for
the issuance of a writ of preliminary injunction in the CA, respondent
assailed the April 11, 2005 joint decision of the Office of the Ombudsman
insofar as it found him liable in OMB-L-A-03-1060-K. This petition was
captioned Joel Samaniego versus Commission on Audit, Provincial Auditors

Office, Legaspi City, Albay and docketed as CA-G.R. SP No. 89999. His
prayer for the issuance of a writ of preliminary injunction was granted.
Since it was not impleaded as a respondent in CA-G.R. SP No. 89999,
the Office of the Ombudsman filed a motion for intervention and to admit
the attached motion to recall the writ of preliminary injunction. The motions
were denied.
The Office of the Ombudsman now claims that the CA erred in denying
its right to intervene, considering that its joint decision was the subject of
the appeal. It also asserts that the writ of preliminary injunction should be
recalled.
We rule for the Office of the Ombudsman.9
_______________
corporations, and shall, in appropriate cases, notify the complainants of the

action taken and the result thereof.
The Office of the Ombudsman is a unique position in the 1987
Constitution.11 The Ombudsman and his deputies function essentially as a
complaints and action bureau.12Congress enacted Republic Act (RA)
677013 providing broad powers,14 as
_______________
10 Coquia, Jorge A., Annotation on the Excessive Powers of the
Philippine Ombudsman, 288 SCRA 676, 682.
11 Ledesma v. Court of Appeals, G.R. No. 161629, 29 July 2005, 465
SCRA 437, 446.
12 Bernas, Joaquin J., S.J., The 1987 Constitution of the Republic of the
Philippines: A Commentary, 1996 Edition, Rex Book Store, Inc., p. 999.
13 Ombudsman Act of 1989.
14 Estarija v. Ranada, G.R. No. 159314, 26 June 2006, 492 SCRA 652.
574
7 Joint Decision dated April 11, 2005. Rollo, p. 223.

8 Rollo, p. 222.
9 As will be discussed later, the Office of the Ombudsman had the right
to intervene in CA-G.R. SP No. 89999 and we fully agree with its position on
this matter. With regard to the recall of the writ of preliminary injunction,
the Office of the Ombudsman claims that respondent was not entitled to
the injunctive writ as his appeal did not stay the execution of the decision
of the Ombudsman. While we do not agree with the reasoning of the Office
of the Ombudsman on this issue, we lift the writ of preliminary injunction
nonetheless following our ruling in Ombudsman v. Laja (G.R. No. 169241, 2
May 2006, 488 SCRA 574).
573
Mandate
of
the
Office
Of the Ombudsman
Section 27, Article II of the Constitution reads:
The State shall maintain honesty and integrity in the public service
and take positive and effective measures against graft and corruption.
To implement this, the Constitution established the Office of the
Ombudsman, composed of the Ombudsman, one overall deputy and at
least one Deputy each for Luzon, Visayas and Mindanao. 10 It was the
intention of the Constitution to make the Ombudsman independent.
The purpose of the Office of the Ombudsman is enunciated in Section
12, Article XI of the Constitution:
The Ombudsman and his Deputies, as protectors of the people, shall act
promptly on complaints filed in any form or manner against public officials
or employees of the government, or any subdivision, agency or
instrumentality thereof, including government-owned or controlled
574
573

well as a functional and structural organization, to the Office of the
Ombudsman to enable it to perform its constitutionally-mandated functions.
RA 6770 states the mandate of the Ombudsman:
SEC.13.Mandate.The Ombudsman and his deputies, as protectors
of the people, shall act promptly on complaints filed in any form or manner
against officers or employees of the Government, or of any subdivision,
agency or instrumentality thereof, including government-owned or
controlled corporations, and enforce their administrative, civil and criminal
liability in every case where the evidence warrants in order to promote
efficient service by the Government to the people.
To aid the Ombudsman in carrying out its tasks, it was vested with
disciplinary authority over government officials.15 The scope of this
authority was discussed inOffice of the Ombudsman v. CA:16
[The Office of the Ombudsman] is vested with full administrative
disciplinary authority including the power to determine the appropriate
penalty imposable on erring public officers or employees as warranted by
the evidence, and necessarily, impose the said penalty. Thus, the
provisions in [RA] 6770 taken together reveal the manifest intent of the
lawmakers to bestow on the Office of the Ombudsman full administrative
disciplinary authority. These provisions cover the entire gamut of
administrative adjudication which entails the authority to, inter
alia, receive complaints, conduct investigations, hold hearings in
accordance with its rules of procedure, summon witnesses and
require the pro_______________
15 Section21.Officials Subject to Disciplinary Authority; Exceptions.

The Office of the Ombudsman shall have disciplinary authority over all
elective and appointive officials of the Government and its subdivisions,
instrumentalities and agencies, including Members of the Cabinet, local
government, government owned and controlled corporations and their
subsidiaries, except over officials who may be removed only by
impeachment or over Members of Congress, and the Judiciary.
16 G.R. No. 167844, 22 November 2006, 507 SCRA 593, 608-611.
575
duction of documents, place under preventive suspension public
officers and employees pending an investigation, determine the
appropriate penalty imposable on erring public officers or
employees as warranted by the evidence and necessarily, impose
the said penalty. x x x (emphasis supplied)
Full disciplinary authority is one of the broad powers granted to it by the
Constitution and RA 6770. These broad powers, functions and duties are
generally categorized into: investigatory power, prosecutory power, public
assistance functions, authority to inquire and obtain information, and the
function to adopt, institute and implement preventive measures.17
Actions of the Ombudsman that do not fall squarely under any of these
general headings are not to be construed outright as illegal. The avowed
purpose of preserving public trust and accountability must be considered.
So long as the Ombudsmans actions are reasonably in line with its official
functions and are not contrary to law and the Constitution, they should be
upheld. Defending its decisions in the CA is one such power.
The Ombudsman is expected to be an activist watchman, not merely
a passive onlooker.18 A statute granting powers to an agency created by the
Constitutionsuch as RA 6770should be liberally construed to advance
the objectives for which it was created.19 In Buenaseda v. Flavier,20 we held
that
_______________
17 Concerned Officials of the Metropolitan Waterworks and Sewerage
System (MWSS) v. Vasquez, 310 Phil. 549, 572; 240 SCRA 502, 523 (1995).
18 Office of the Ombudsman v. Lucero, G.R. No. 168718, 24 November
2006, 508 SCRA 107, 115, citing Office of the Ombudsman v. Court of
Appeals, G.R. No. 160675, 16 June 2006, 491 SCRA 92.
19 Buenaseda v. Flavier, G.R. No. 106719, 21 September 1993, 226
SCRA 645, 653, citing, Department of Public Utilities v. Arkansas Louisiana
Gas, Co., 200 Ark. 983, 142 SW (2d) 213 [1940]; Wallace v. Feehan, 206
Ind. 522, 190 N.E. 438 [1934]).
20 G.R. No. 106719, 21 September 1993, 226 SCRA 645, 653.
576
576
575

any interpretation of RA 6770 that hampers the work of the Ombudsman
should be avoided.
Taking all this into consideration, the Ombudsman is in a league of its
own. It is different from other investigatory and prosecutory agencies of the
government because the people under its jurisdiction are public officials
who, through pressure and influence, can quash, delay or dismiss
investigations directed against them.21 Its function is critical because public
interest (in the accountability of public officers and employees) is at stake.
The Ombudsman concept originated in Sweden and other Scandinavian
countries.22 Its original and classic notion was that of an independent and
politically neutral office which merely received and processed the peoples
complaints against corrupt and abusive government personnel. 23 The
Philippine Ombudsman deviated from the classic model. It retained the
characteristic independence and political neutrality but the range of its
functions and powers was enlarged.
Given the foregoing premises, we cannot limit the powers of the
Ombudsman if its acts are not contrary to law or the Constitution.
Intervention
by
the
Ombudsman
in
Cases In Which its Decision is Assailed
Section 1, Rule 19 of the Rules of Court provides:
Section1.Who may intervene.A person who has a legal interest in
the matter in litigation, or in the success of either parties, or an interest
against both, or is so situated as to be adversely af_______________
21 Almonte v. Vasquez, 314 Phil. 150, 179; 244 SCRA 286, 304 (1995).
22 Coquia, Jorge A., Annotation on the Excessive Powers of the
Philippine Ombudsman, 288 SCRA 676, 679-680, 683.
23 Office of the Ombudsman v. Court of Appeals, G.R. No. 167844, 22
November 2006, 507 SCRA 593, 611.
577
fected by a distribution or other disposition of property in the disposition of
the court or of an officer thereof may, with leave of court be allowed to
intervene in the action. x x x
Intervention is a remedy by which a third party, not originally
impleaded in the proceedings, becomes a litigant therein to enable him to
protect or preserve a right or interest which may be affected by such
577
proceeding.24 Its purpose is to settle in one action and by a single judgment

the whole controversy (among) the persons involved. 25
Intervention is not an absolute right26 as it can be secured only in
accordance with the terms of the applicable statute or rule. In claiming the
right to intervene, the intervenor must comply with the requirements laid
down by Rule 19 of the Rules of Court which provides that the intervenor
must have a legal interest in any of the following:
(a)the matter in controversy;
(b)the success of either of the parties;
(c)against both parties or
(d)be so situated as to be adversely affected by a distribution
or other disposition of property in the disposition of the court or of
an officer thereof.27
Intervention must not unduly delay or prejudice the adjudication of
rights of the original parties.28 Moreover, it must
_______________
24 Manalo v. Court of Appeals, G.R. No. 141297, 8 October 2001, 419
SCRA 215, 233.
25 First Philippine Holdings Corporation v. Sandiganbayan, G.R. No.
88345, 1 February 1996, 253 SCRA 30, 38.
26 Big Country Ranch Corp. v. Court of Appeals, G.R. No. 102927, 12
October 1993, 227 SCRA 161, 165.
27 Feria, Jose Y., Justice (Ret.) and Noche, Maria Concepcion S., Civil
Procedure Annotated, vol. 1, 2001 Edition, Central Lawbook Publishing Co.,
Inc., p. 480.
28 Id.
578
578

be shown that the intervenors rights may not be fully protected in a
separate proceeding.29
The legal interest must be actual and material, direct and
immediate.30 In Magsaysay-Labrador v. CA,31 the interest which entitles a
person to intervene in a suit:
[m]ust be on the matter in litigation and of such direct and immediate
character that the intervenor will either gain or lose by the direct legal
operation and effect of the judgment. The words an interest in the subject
mean a direct interest in the cause of action as pleaded and which would
put the intervenor in a legal position to litigate a fact alleged in the
complaint, without the establishment of which plaintiff could not recover.
The CA denied petitioners motion for intervention for lack of basis,
reasoning that:
In the instant case, the Ombudsmans intervention is not proper

considering that, other than its objection to the issuance of the injunctive
writ, no legal interest in the matter subject of litigation has been alleged by
the Ombudsman in the motion for intervention. x x x
We disagree.
The Office of the Ombudsman sufficiently alleged its legal interest in
the subject matter of litigation. Paragraph 2 of its motion for intervention
and to admit the attached motion to recall writ of preliminary injunction
averred:
2.As a competent disciplining body, the Ombudsman has the right to
seek redress on the apparently erroneous issuance by this Honorable Court
of the Writ of Preliminary Injunction enjoining the implementation of the
Ombudsmans Joint Decision imposing upon
_______________
29 Id.
30 Batama Farmers Cooperative Marketing Association, Inc., et al. v.
Hon. Rosal, et al., 149 Phil. 514, 519; 42 SCRA 408, 412 (1971).
31 Magsaysay-Labrador v. Court of Appeals, G.R. No. 58168, 19
December 1989, 180 SCRA 266, 271.
579
petitioner the penalty of suspension for one (1) year, consistent with the
doctrine laid down by the Supreme Court in PNB [vs]. Garcia, xxx
and CSC [vs]. Dacoycoy, xxx; (citations omitted; emphasis in the
original)
In asserting that it was a competent disciplining body, the Office of
the Ombudsman correctly summed up its legal interest in the matter in
controversy. In support of its claim, it invoked its role as a constitutionally
mandated protector of the people, a disciplinary authority vested with
quasi-judicial function to resolve administrative disciplinary cases against
public officials.32 To hold otherwise would have been tantamount to
abdicating its salutary functions as the guardian of public trust and
accountability.33
Moreover, the Office of the Ombudsman had a clear legal interest in the
inquiry into whether respondent committed acts constituting grave
misconduct,34 an offense punishable under the Uniform Rules in
Administrative Cases in the Civil Service. 35 It was in keeping with its duty to
act as a champion of the people and preserve the integrity of public
service36 that
_______________
32 Rollo, p. 23
579
33 Id., p. 24.
34 Grave misconduct is characterized by the existence of the elements
of corruption, clear intent to violate the law or flagrant disregard of an
established rule. Corruption as an element of grave misconduct consists in
the act of an official who unlawfully or wrongfully uses his station or
character to procure some benefit for himself, contrary to the rights of
others. Salazar v. Barriga, A.M. No. P-05-2016, 19 April 2007, 521 SCRA
449. Civil Service Commission v. Belagan, G.R. No. 132164, 19 October
2004, 440 SCRA 578.
35 Grave misconduct is punishable by dismissal even for the first
offense. Civil Service Commission Memorandum Circular No. 19 (series of
1999), Section 52 (A)(2).
36 The Presidential Ad Hoc Fact-Finding Committee on Behest Loans
and Presidential Commission on Good Government v. Ombudsman Desierto,
G.R. No. 138142, 19 September 2007, 533 SCRA 571.
580
580

petitioner had to be given the opportunity to act fully within the parameters
of its authority.
It is true that under our rule on intervention, the allowance or
disallowance of a motion to intervene is left to the sound discretion of the
court37 after a consideration of the appropriate circumstances. 38 However,
such discretion is not without limitations. 39 One of the limits in the exercise
of such discretion is that it must not be exercised in disregard of law and
the Constitution. The CA should have considered the nature of the
Ombudsmans powers as provided in the Constitution and RA 6770.
Moreover, the rule on intervention is a rule of procedure whose object is
to make the powers of the court fully and completely available for justice,
not to hinder or delay it.40
Both the CA41 and respondent likened the Office of the Ombudsman to a
judge whose decision was in question.42This was a tad too simplistic (or
perhaps even rather disdainful) of the power, duties and functions of the
Office of the Ombudsman. The Office of the Ombudsman cannot be
detached, disinterested and neutral specially when defending its decisions.
Moreover, in administrative cases against government personnel, the
offense is committed against the government and
_______________
37 Big Country Ranch Corp. v. Court of Appeals, supra note 26.
38 Mago v. Court of Appeals, 363 Phil. 225, 233; 303 SCRA 600, 608
(1999).
39 Batama Farmers Cooperative Marketing Association, Inc., et al. v.
Hon. Rosal, et al., supra note 30.
40 Office of the Ombudsman v. Masing, G.R. Nos. 165416, 165584 and

165731, 22 January 2008, 542 SCRA 253.
41 While we are of the view that there is nothing under Section 6, Rule
43 of the 1997 Rules of Procedure which prevents the courts or agencies in
which decisions are the subject of the appeal from impleading themselves,
at their own volition, in the action x x x. Rollo, p. 41-42.
42 Paragraph 11, Comment of respondent Joel S. Samaniego. Rollo, p.
298.
581
public interest. What further proof of a direct constitutional and legal
interest in the accountability of public officers is necessary?
Propriety
and
Necessity
of
Injunction
In Appeals of the Decisions of the Ombudsman
The CA anchored its denial of the motion to recall the writ of preliminary
injunction on its lack of authority over the case. (The Office of the
Ombudsmans motion for intervention was allegedly improper). But the
Office of the Ombudsman could properly intervene in the appeal filed by
respondent and therefore, the CA could determine whether a recall of the
injunctive writ was proper.
In the interest of justice and practicality, we will rule on the propriety of
the issuance of the injunctive writ.
The applicable provision of law is Section 7, Rule III of the Rules of
Procedure of the Ombudsman, as amended:43
Section7.Finality and execution of decision.x x x where the
penalty imposed is public censure or reprimand, suspension of not more
than one month, or a fine equivalent to one month salary, the decision shall
be final, executory and unappealable. In all other cases, the decision may
be appealed to the Court of Appeals x x x.
An appeal shall not stop the decision from being executory. x x x.
A literal reading of this rule shows that the mere filing of an appeal does
not prevent the decision of the Ombudsman from becoming executory.
However, we clarified this rule in Office of the Ombudsman v. Laja:44
[O]nly orders, directives or decisions of the Office of the Ombudsman in
administrative cases imposing the penalty of public censure,
_______________
43 Administrative Order No. 7 (series of 1990), as amended.
44 Supra note 9, citing Lopez v. Court of Appeals, 438 Phil. 351; 389
SCRA 570 (2002).
582
582
581
grave abuse of discretion, these judgments are not interfered with. (Cabrera vs. Lapid,
510 SCRA 55 [2006])
The legislative history of Republic Act No. 6770 bears out the conclusion that the
Office of the Ombudsman was intended to possess full administrative disciplinary
authority, including the power to impose penalty of removal, suspension, demotion,
fine, censure, or prosecution of a public officer or employee found to be at fault.
(Office of the Ombudsman vs. Lucero, 508 SCRA 106 [2006]

reprimand, or suspension of not more than one month, or a fine not
equivalent to one month salary shall be final and unappealable hence,
immediately executory. In all other disciplinary cases where the
penalty imposed is other than public censure, reprimand, or
suspension of not more than one month, or a fine not equivalent to
one month salary, the law gives the respondent the right to
appeal. In these cases, the order, directive or decision becomes
final and executory only after the lapse of the period to appeal if
no appeal is perfected, or after the denial of the appeal from the
said order, directive or decision. It is only then that execution shall
perforce issue as a matter of right. The fact that the Ombudsman Act
gives parties the right to appeal from its decisions should
generally carry with it the stay of these decisions pending
appeal. Otherwise, the essential nature of these judgments as being
appealable would be rendered nugatory. (emphasis in the original).
The penalty meted out to respondent was suspension for one year
without pay. He filed an appeal of the Ombudsmans joint decision on time.
In his appeal, he included a prayer for the issuance of a writ of preliminary
injunction in order to stay the execution of the decision against him.
Following Office of the Ombudsman v. Laja, we hold that the mere filing by
respondent of an appeal sufficed to stay the execution of the joint decision
against him. Respondents prayer for the issuance of a writ of preliminary
injunction (for purposes of staying the execution of the decision against
him) was therefore a superfluity. The execution of petitioners joint decision
against respondent should be stayed during the pendency of CA-G.R. SP No.
89999.
WHEREFORE, the petition is hereby GRANTED. The resolutions of the Court
of Appeals dated September 11, 2006 and November 21, 2006 are hereby
REVERSED and SET ASIDE. Accordingly, the Court of Appeals is ordered to
allow the intervention of the Office of the Ombudsman in CA-G.R. SP No.
89999. The writ of preliminary injunction is hereby LIFTED as the execution
of the decision in OMB-L-A-03-583
676

Government Service Insurance System vs. Nocom
G.R. No. 175989. February 4, 2008.*

GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner, vs. MARIANO A.
NOCOM, respondent.
Remedial
Law; Actions; Interventions; Requisites
for
a
Valid
Intervention; The legal interest which entitled a person to intervene must
be in the matter in litigation and of such direct and immediate character
that the intervenor will either gain or lose by direct legal operation and
effect of judgment.In Alfelor v. Halasan, 486 SCRA 451 (2006), we held
that an intervention is valid when a person has: (1) a legal interest in the
matter in litigation; (2) or in the success of any of the parties; (3) or an
interest against the parties; (4) or when he is so situated as to be adversely
affected by a distribution or disposition of property in the custody of the
court or an officer thereof. In Perez v. Court of Appeals, 480 SCRA 411
(2006), this Court ruled that the legal interest which entitles a person to
intervene must be in the matter in litigation and of such direct and
immediate character that the intervenor will either gain or lose by direct
legal operation and effect of judgment.
PETITION for review on certiorari of a decision of the Court of Appeals.
The Chief Legal Counsel for Government Service Insurance System.
Lorna Imelda M. Suarez for private respondent Mariano A. Nocom.
583
SANDOVAL-GUTIERREZ, J.:

1060-K was (and still is) stayed by the filing and pendency of CA-G.R. SP No. 89999.
No costs.
SO ORDERED.
Puno (C.J.), Quisumbing, Carpio-Morales, Tinga, Chico-Nazario, Velasco, Jr.,
Nachura, Reyes, Leonardo-De Castro and Brion, JJ., concur.
Ynares-Santiago, Carpio, Austria-Martinez andAzcuna, JJ., On Official Leave.
Petition granted, resolutions reversed and set aside.
Notes.Great respect must be accorded to the OMBs exercise of its
constitutionally mandated functions. Unless clearly shown to have been issued with
Before us is a petition for review on certiorari seeking to reverse the

Decision1 of the Court of Appeals (Eleventh Division) promulgated on
October 2, 2006 in CA-G.R. SP No. 87698.
_______________
*
FIRST DIVISION.
1
Rollo, pp. 59-74. Per Associate Justice Jose Catral Mendoza and
concurred in by Associate Justice Elvi John S. Asuncion (left the service) and
Associate Justice Sesinando E. Villon.
677
VOL. 543, FEBRUARY 4, 2008

The instant case is inextricably linked with two earlier consolidated cases
filed with this Court - G.R. No. 137448(GSIS v. Bengson Commercial
Buildings, Inc.) and G.R. No. 141454 (GSIS v. Court of Appeals). Both were
decided by the Court en banc on January 31, 2002.2 Accordingly, we adopt
the factual findings in these cases.
Bengson Commercial Buildings, Inc. (BENGSON) obtained loans from
the Government Service Insurance System (GSIS), herein petitioner, on
August 20, 1965 and November 23, 1971 in the amounts of P1.25 million
and P3 million, respectively, or in the aggregate sum of P4.25 million. As
security for the payment of these loans, BENGSON executed real estate and
chattel mortgages in favor of the GSIS. For BENGSONs failure to settle its
arrearages despite due notices, the mortgages were extrajudicially
foreclosed. Its properties then were sold at public auction to the highest
bidder, the GSIS itself. A certificate of sale and new certificates of title were
thereafter issued in its name.
On June 23, 1977, BENGSON filed with the then Court of First of
Instance of San Fernando, La Union an action for annulment of the auction
sale, docketed as Civil Case No. 2794. Later on, the case was transferred to
the Regional Trial Court (RTC), Branch 20, also in San Fernando, La Union.
After hearing, it rendered a Decision (1) nullifying the auction sale of
BENGSON's mortgaged properties; (2) ordering the cancellation of the titles
issued to the GSIS and the issuance of new ones in the name of BENGSON;
(3) ordering BENGSON to pay the GSIS P900,000 for the debenture bonds;
and (4) ordering GSIS to (a) restore to BENGSON full possession of the
foreclosed properties; (b) restructure the P4.25 million loans with legal rate
of interest from the finality of the judgment; (c) pay BENGSON P1.9 million
representing accrued monthly rentals and P20,000 monthly rental until the
proper_______________
2
Reported in 375 SCRA 431 (2002). The opinion of the Court was
written by then Chief Justice Hilario G. Davide, Jr.
678
678

ties are restored to BENGSONs possession, and (d) pay the costs of the
suit.
677
On appeal, docketed as CA-G.R. CV No. 09361, the Court of Appeals

rendered its Decision affirming the RTC judgment with modification. The
appellate court ordered the remand of the case to the trial court for
reception of evidence to determine the costs of suit. On February 10, 1988,
the Decision of the Court of Appeals became final and executory.
On April 6, 1995, the trial court issued an Order awarding BENGSON
P31 million as costs of suit. While Atty. Rogelio Terrado, counsel for GSIS,
received a copy of the Order on the same date, however, he did not file a
motion for reconsideration. It turned out that he was absent without official
leave since April 6, 1995. Hence, the Order became final and executory.
Eventually, BENGSONs ex parte motion for the issuance of a writ of
execution was granted by the trial court.
On May 4, 1995, the GSIS received a copy of the Order of execution.
Hence, on May 15, 1995, the GSIS, through its corporate counsel, Atty.
Oscar Garcia, filed with the trial court an urgent omnibus motion. Attached
thereto was an affidavit of merit executed by Margarito C. Recto, manager
of the GSIS Legal Services Group, praying that the motion should be
considered as a petition for relief from the April 6, 1995 Order and that Atty.
Terrados gross negligence should not bind the GSIS, for to do so would
result in the deprivation of its properties without due process.
On January 16, 1997, the trial court issued an Order denying the GSISs
urgent omnibus motion on the ground, among others, that the questioned
Order of April 6, 1995 has attained finality. The GSIS received a copy of the
Order on February 4, 1997.
On February 16, 1997, the GSIS filed a motion for reconsideration but
the trial court denied the same, prompting the GSIS to file, on June 11,
1998, a petition forcertiorari with the Court of Appeals, docketed as CA-G.R.
SP No. 47669.
679
However, on November 24, 1998, the Court of Appeals dismissed the
petition for the following reasons: (1) the petition was filed out of time; (2)
the Verification and Certification of Non-Forum Shopping were not signed by
an authorized officer of the GSIS; (3) no copy of the questioned writ of
execution dated April 24, 1995 was attached to the petition; (4) the copy of
the Order dated January 16, 1997 is not a certified true copy; (5) petitioner
did not rebut BENGSONs evidence; and (6) the assailed Order of April 6,
1995 has become final and executory.
The GSIS filed a motion for reconsideration, but this was denied by the
Court of Appeals in a Resolution dated January 29, 1999. The GSIS then
filed a petition for review on certiorari with the Supreme Court, docketed
as G.R. No. 137448.
679
Meanwhile, on December 16, 1998, the trial court issued an Order

directing the issuance of an alias writ of execution for the satisfaction of the
award of P31 million representing the costs of suit awarded to BENGSON in
its Order of April 6, 1995. The sheriff then garnished the 6.2 million Class
A shares of stock of San Miguel Corporation owned by the GSIS. They were
sold at public auction, with BENGSON as the sole bidder.
The GSIS filed a motion for reconsideration with motion to quash
the alias writ of execution, but this was denied by the trial court on January
8, 1999. Hence, the GSIS filed with the Supreme Court a petition
for certiorari docketed as G.R. No. 136874, seeking to annul both the
December 16, 1998 and January 8, 1999 Orders of the trial court directing
the execution of its April 6, 1995 Order and the issuance of the
corresponding writ of execution.
On January 21, 1999, this Court issued a Temporary Restraining Order
(TRO) enjoining the implementation of the April 6, 1995 Order (directing the
transfer, registration, or issuance of new certificates of stock in the name of
BENGSON). Thereafter, this Court referred the petition forcertio680
680

rari in G.R. No. 136874 to the Court of Appeals for adjudication. It was then
re-docketed as CA-G.R. SP No. 51131.
In its Decision on January 14, 2000, the trial court dismissed the
petition of the GSIS in CA-G.R. SP No. 51131. Consequently, the GSIS filed
with this Court a petition for certiorari with very urgent motion for the
issuance of preliminary injunction and/or TRO, docketed asG.R. No. 141454.
Forthwith, this case was consolidated with G.R. No. 137448.
On January 31, 2002, the Supreme Court rendered a Decision in G.R.
Nos. 137448 and 141454, granting the petitions. This Court held:
Similarly, in the higher interest of justice and equity, and the ground for
relief from the 6 April 1995 Order of the trial court being evident, we shall
reverse and set aside the 24 November 1998 and 8 January 1999
Resolutions of the Court of Appeals, as well as the 16 January 1997 Decision
and 23 April 1998 Order of the trial court. We shall then remand the case to
the trial court, and pursuant to Section 6 of Rule 38 of the 1997 Rules of
Civil Procedure the case shall stand as if the 6 April 1995 Order has
never been issued. Thereafter, the court shall proceed to hear and
determine the case as if a timely motion for a new trial or reconsideration
has been granted by it.
The dispositive portion of the decision reads:
WHEREFORE, the petitions at bar are GRANTED. The Resolutions of the
Court of Appeals dated 24 November 1998, 8 January 1999, and 14 January
2000, as well as the 16 January 1997 and 23 April 1998 Orders of the
Regional Trial Court, Branch 26, San Fernando, La Union, are hereby
REVERSED and SET ASIDE. The cases are hereby ordered remanded to the
trial court, which shall then proceed to hear and determine the case as if a
timely motion for a new trial or reconsideration has been granted by it.
Since the issues raised in CA-G.R. SP No. 51131 are irretrievably linked with,
or are but a consequence of the 6 April 1995 Order of the trial court, the
said case shall be suspended or held in abeyance until after the
aforementioned proceedings in the trial court shall have been finally
resolved. The Temporary Restraining Order we issued on 7 February 2000
shall remain in effect until further orders from this court.
681
SO ORDERED.
The records were eventually remanded to the trial court for hearing to
determine the merits of the case.
On March 19, 2004, in the course of the proceedings, Mariano A.
Nocom, respondent herein, filed a motion for intervention. Attached thereto
is his Complaint-in-Intervention.
The GSIS filed its opposition, but in an Order dated June 14, 2004, the
trial court denied the same and admitted the Complaint-in-Intervention.
The GSIS then filed a motion for reconsideration, but it was denied in an
Order dated September 8, 2004.
On October 27, 2004, the trial court rendered a Partial Decision, the
dispositive portion of which reads:
WHEREFORE, and in view of all the foregoing, the Order of this Court dated
April 06, 1995, awarding the amount of THIRTYONE MILLION PESOS
(P31,000,000.00) as costs of suit to plaintiff is hereby reinstated.
Considering, however, that the garnished SIX POINT TWO (6.2) MILLION
Class A SMC shares of defendant GSIS had already been sold to plaintiff at
public auction for the satisfaction of the Alias Writ of Execution by virtue of
the abovementioned Order, the awarded costs of suit is hereby declared
paid and satisfied.
In view thereof, let an Entry of Satisfaction of Judgment under Section
44 of Rule 39 of the Revised Rules of Court be entered in the record of the
case.
SO ORDERED.
The GSIS moved for reconsideration, but it was denied by the trial court.
The GSIS then interposed an appeal to the Court of Appeals, docketed
as CA-G.R. CV No. 8462. This case is still pending resolution.
Meanwhile, on November 23, 2004, the GSIS filed a petition
for certiorari and prohibition with the Court of Appeals, docketed as CA-G.R.
SP No. 87698, contending that the trial court gravely abused its discretion
in allowing respondent
682
681
682
of such direct and immediate character that the intervenor will either gain
or lose by direct legal operation and effect of judgment.
In the instant case, records show that BENGSON transferred and
assigned 2,406,666 SMC Class A shares to respondent, as evidenced by
their Memorandum of Agreement and Deed of Assignment executed on
August 24, 1999. We recall that these shares of stock in question were sold
to BENGSON to satisfy the costs of suit awarded to it by the trial court in its
April 6, 1995 Order. Clearly, respondent has an interest in the outcome of
the case before the trial court. The Court of Appeals, therefore, did not err
in ruling that respondents motion for intervention is in order.
WHEREFORE, we DENY the petition. The Decision of the Court of
Appeals (Eleventh Division) promulgated on October 2, 2006 in CA-G.R. SP
No. 87698 is AFFIRMED. Costs against the petitioner.
SO ORDERED.
Puno (C.J., Chairperson), Corona, Azcuna andLeonardoDe Castro,
JJ., concur.
Petition denied, judgment affirmed.
Note.An intervention is ordinarily not permitted if the prospective
intervenors rights can be fully protected in a separate proceeding. (FosterGallego vs. Galang, 435 SCRA 275 [2004])

Nocom to intervene. However, the Court of Appeals denied the petition in
its Resolution of October 2, 2006.
Hence, the instant petition anchored on the sole issue of whether the
Court of Appeals erred in holding that respondent has a right to intervene.
Intervention is a proceeding in a suit or action by which a third person
is permitted by the court to make himself a party, either joining plaintiff in
claiming what is sought by the complaint, or uniting with defendant in
resisting the claims of plaintiff, or demanding something adversely to both
of them; the act or proceeding by which a third person becomes a party in
a suit pending between others; the admission, by leave of court, of a
person not an original party to pending legal proceedings, by which such
person becomes a party thereto for the protection of some right of interest,
alleged by him to be affected by such proceedings.3
Section 1, Rule 19 of the 1997 Rules of Civil Procedure, as amended,
provides for the parameters before a person, not a party to a case, can
intervene, thus:
SECTION 1. Who may intervene.A person who has a legal interest in the
matter in litigation, or in the success of either of the parties, or an interest
against both, or is so situated as to be adversely affected by a distribution
or other disposition of property in the custody of the court or of an officer
thereof, may with leave of court, be allowed to intervene in the action. The
court shall consider whether or not the intervention will unduly delay or
prejudice the adjudication of the rights of the original parties, and whether
or not the intervenors rights may be fully protected in a separate
proceeding.
In Alfelor v. Halasan,4 we held that an intervention is valid when a person
has: (1) a legal interest in the matter in litigation; (2) or in the success of
any of the parties; (3) or an inter_______________
3
Metropolitan Bank & Trust Co. v. Presiding Judge, RTC, Manila, Br.
39, G.R. No. 89909, September 21, 1990, 189 SCRA 820.
4
G.R. No. 165987, March 31, 2006, 486 SCRA 451.
683
est against the parties; (4) or when he is so situated as to be adversely
affected by a distribution or disposition of property in the custody of the
court or an officer thereof.
In Perez v. Court of Appeals,5 this Court ruled that the legal interest
which entitles a person to intervene must be in the matter in litigation and
683
ASIA EMERGING DRAGON v DOTC

CHICO-NAZARIO, J.:
This Court is still continuously besieged by Petitions arising from the
awarding of the Ninoy Aquino International Airport International Passenger
Terminal III (NAIA IPT III) Project to the Philippine International Air Terminals
Co., Inc. (PIATCO), despite the promulgation by this Court of Decisions and
Resolutions in two cases, Agan, Jr. v. Philippine International Air Terminals
Co., Inc.[1] and Republic v. Gingoyon,[2] which already resolved the more
basic and immediate issues arising from the said award. The sheer
magnitude of the project, the substantial cost of its building, the expected
high profits from its operations, and its remarkable impact on the Philippine
economy, consequently raised significant interest in the project from
various quarters.
Once more, two new Petitions concerning the NAIA IPT III Project are before
this Court. It is only appropriate, however, that the Court first recounts its
factual and legal findings in Agan and Gingoyon to ascertain that its ruling
in the Petitions at bar shall be consistent and in accordance therewith.
Agan,
Jr.
v. Philippine
International
Air
Terminals
Co.,
Inc. (G.R.
Nos.
155001,
155547,
and 155661)
Already established and incontrovertible are the following facts in Agan:
In August 1989, the [Department of Trade and
Communications (DOTC)] engaged the services of
Aeroport de Paris (ADP) to conduct a comprehensive
study of the Ninoy Aquino International Airport (NAIA) and
determine whether the present airport can cope with the
traffic development up to the year 2010. The study
consisted of two parts: first, traffic forecasts, capacity of
existing facilities, NAIA future requirements, proposed
master plans and development plans; and second,
presentation of the preliminary design of the passenger
terminal building. The ADP submitted a Draft Final Report
to the DOTC in December 1989.
Some time in 1993, six business leaders consisting of
John Gokongwei, Andrew Gotianun, Henry Sy, Sr., Lucio
Tan, George Ty and Alfonso Yuchengco met with then
President Fidel V. Ramos to explore the possibility of
investing in the construction and operation of a new
international airport terminal. To signify their commitment
to pursue the project, they formed the Asias Emerging
Dragon Corp. (AEDC) which was registered with the
Securities and Exchange Commission (SEC) on September

15, 1993.
On October 5, 1994, AEDC submitted an unsolicited
proposal to the Government through the DOTC/[Manila
International
Airport
Authority
(MIAA)]
for
the
development of NAIA International Passenger Terminal III
(NAIA IPT III) under a build-operate-and-transfer
arrangement pursuant to RA 6957 as amended by RA
7718 (BOT Law).
On December 2, 1994, the DOTC issued Dept. Order No.
94-832 constituting the Prequalification Bids and Awards
Committee (PBAC) for the implementation of the NAIA IPT
III project.
On March 27, 1995, then DOTC Secretary Jose Garcia
endorsed the proposal of AEDC to the National Economic
and Development Authority (NEDA). A revised proposal,
however, was forwarded by the DOTC to NEDA
on December 13, 1995. On January 5, 1996, the NEDA
Investment Coordinating Council (NEDA ICC) - Technical
Board favorably endorsed the project to the ICC - Cabinet
Committee which approved the same, subject to certain
conditions, on January 19, 1996. On February 13, 1996,
the NEDA passed Board Resolution No. 2 which approved
the NAIA IPT III project.
On June 7, 14, and 21, 1996, DOTC/MIAA caused the
publication in two daily newspapers of an invitation for
competitive or comparative proposals on AEDCs
unsolicited proposal, in accordance with Sec. 4-A of RA
6957, as amended. The alternative bidders were required
to submit three (3) sealed envelopes on or before 5:00
p.m. of September 20, 1996. The first envelope should
contain the Prequalification Documents, the second
envelope the Technical Proposal, and the third envelope
the Financial Proposal of the proponent.
On June 20, 1996, PBAC Bulletin No. 1 was issued,
postponing the availment of the Bid Documents and the
submission of the comparative bid proposals. Interested
firms were permitted to obtain the Request for Proposal
Documents beginning June 28, 1996, upon submission of
a written application and payment of a non-refundable
fee ofP50,000.00 (US$2,000).
The Bid Documents issued by the PBAC provided among

others that the proponent must have adequate capability
to sustain the financing requirement for the detailed
engineering, design, construction, operation, and
maintenance phases of the project. The proponent would
be evaluated based on its ability to provide a minimum
amount of equity to the project, and its capacity to secure
external financing for the project.
On July 23, 1996, the PBAC issued PBAC Bulletin No. 2
inviting all bidders to a pre-bid conference on July 29,
1996.
On August 16, 1996, the PBAC issued PBAC Bulletin No. 3
amending the Bid Documents. The following amendments
were made on the Bid Documents:
a. Aside from the fixed Annual
Guaranteed Payment, the
proponent shall include in its
financial proposal an additional
percentage of gross revenue
share of the Government, as
follows:
i. First 5 years 5.0%
ii. Next 10 years 7.5%
iii. Next 10 years 10.0%
b. The amount of the fixed
Annual Guaranteed Payment
shall be subject of the price
challenge. Proponent may offer
an Annual Guaranteed
Payment which need not be of
equal amount, but payment of
which shall start upon site
possession.
c. The project proponent must
have adequate capability to
sustain the financing
requirement for the detailed
engineering, design,
construction, and/or operation
and maintenance phases of
the project as the case may
be. For purposes of prequalification, this capability
shall be measured in terms of:
i. Proof of the
availability of the
project proponent
and/or the consortium
to provide the
minimum amount of
equity for the project;
and
ii. a letter testimonial
from reputable banks
attesting that the
project proponent
and/or the members
of the consortium are
banking with them,
that the project
proponent and/or the
members are of good
financial standing,
and have adequate
resources.
d. The basis for the prequalification
shall be the proponents compliance
with the minimum technical and
financial requirements provided in the
Bid Documents and the [Implementing
Rules and Regulations (IRR)] of the BOT
Law. The minimum amount of equity
shall be 30% of the Project Cost.
e. Amendments to the draft Concession
Agreement shall be issued from time to
time. Said amendments shall only cover
items that would not materially affect
the preparation of the proponents
proposal.
On August 29, 1996, the Second Pre-Bid Conference was

held where certain clarifications were made. Upon the
request of prospective bidder Peoples Air Cargo &
Warehousing Co., Inc (Paircargo), the PBAC warranted
that based on Sec. 11.6, Rule 11 of the Implementing
Rules and Regulations of the BOT Law, only the proposed
Annual
Guaranteed
Payment
submitted
by
the
challengers would be revealed to AEDC, and that the
challengers technical and financial proposals would
remain confidential. The PBAC also clarified that the list of
revenue sources contained in Annex 4.2a of the Bid
Documents was merely indicative and that other revenue
sources may be included by the proponent, subject to
approval by DOTC/MIAA. Furthermore, the PBAC clarified
that only those fees and charges denominated as Public
Utility Fees would be subject to regulation, and those
charges which would be actually deemed Public Utility
Fees could still be revised, depending on the outcome of
PBACs query on the matter with the Department of
Justice.
In September 1996, the PBAC issued Bid Bulletin No. 5,
entitled Answers to the Queries of PAIRCARGO as Per
Letter Dated September 3 and 10, 1996. Paircargos
queries and the PBACs responses were as follows:
1. It is difficult for Paircargo and Associates to
meet the required minimum equity requirement
as prescribed in Section 8.3.4 of the Bid
Documents considering that the capitalization of
each member company is so structured to meet
the requirements and needs of their current
respective business undertaking/activities. In
order to comply with this equity requirement,
Paircargo is requesting PBAC to just allow each
member of (sic) corporation of the Joint Venture
to just execute an agreement that embodies a
commitment to infuse the required capital in
case the project is awarded to the Joint Venture
instead of increasing each corporations current
authorized capital stock just for prequalification
purposes.
In prequalification, the agency is interested in
ones financial capability at the time of
prequalification, not future or potential

capability.
A commitment to put up equity once awarded
the project is not enough to establish that
present financial capability. However, total
financial capability of all member companies of
the Consortium, to be established by submitting
the respective companies audited financial
statements, shall be acceptable.
2. At present, Paircargo is negotiating with
banks and other institutions for the extension of
a Performance Security to the joint venture in
the event that the Concessions Agreement (sic)
is awarded to them. However, Paircargo is being
required to submit a copy of the draft
concession as one of the documentary
requirements. Therefore, Paircargo is requesting
that theyd (sic) be furnished copy of the
approved negotiated agreement between the
PBAC and the AEDC at the soonest possible time.
A copy of the draft Concession Agreement is
included in the Bid Documents. Any material
changes would be made known to prospective
challengers through bid bulletins.However, a
final version will be issued before the award of
contract.
The PBAC also stated that it would require AEDC to sign
Supplement C of the Bid Documents (Acceptance of
Criteria and Waiver of Rights to Enjoin Project) and to
submit the same with the required Bid Security.
On September 20, 1996, the consortium composed of
Peoples Air Cargo and Warehousing Co., Inc. (Paircargo),
Phil. Air and Grounds Services, Inc. (PAGS) and Security
Bank Corp. (Security Bank) (collectively, Paircargo
Consortium) submitted their competitive proposal to the
PBAC. On September 23, 1996, the PBAC opened the first
envelope containing the prequalification documents of
the
Paircargo
Consortium. On
the
following
day, September 24, 1996, the PBAC prequalified the
Paircargo Consortium.
On September 26, 1996, AEDC informed the PBAC in

writing of its reservations as regards the Paircargo
Consortium, which include:
a. The lack of corporate approvals and
financial capability of PAIRCARGO;
b. The lack of corporate approvals and
financial capability of PAGS;
c. The prohibition imposed by RA 337,
as amended (the General Banking Act)
on the amount that Security Bank could
legally invest in the project;
d. The inclusion of Siemens as a
contractor of the PAIRCARGO Joint
Venture, for prequalification purposes;
and
e. The appointment of Lufthansa as the
facility operator, in view of the
Philippine requirement in the operation
of a public utility.
The PBAC gave its reply on October 2, 1996, informing
AEDC that it had considered the issues raised by the
latter, and that based on the documents submitted by
Paircargo and the established prequalification criteria, the
PBAC had found that the challenger, Paircargo, had
prequalified to undertake the project. The Secretary of
the DOTC approved the finding of the PBAC.
The PBAC then proceeded with the opening of the second
envelope of the Paircargo Consortium which contained its
Technical Proposal.
On October 3, 1996, AEDC reiterated its objections,
particularly with respect to Paircargos financial capability,
in view of the restrictions imposed by Section 21-B of the
General Banking Act and Sections 1380 and 1381 of the
Manual Regulations for Banks and Other Financial
Intermediaries. On October
7,
1996,
AEDC
again
manifested its objections and requested that it be
furnished with excerpts of the PBAC meeting and the
accompanying technical evaluation report where each of

the issues they raised were addressed.
On October 16, 1996, the PBAC opened the third
envelope submitted by AEDC and the Paircargo
Consortium
containing
their
respective
financial
proposals. Both proponents offered to build the NAIA
Passenger Terminal III for at least $350 million at no cost
to the government and to pay the government: 5% share
in gross revenues for the first five years of operation,
7.5% share in gross revenues for the next ten years of
operation, and 10% share in gross revenues for the last
ten years of operation, in accordance with the Bid
Documents. However, in addition to the foregoing, AEDC
offered to pay the government a total of P135 million as
guaranteed payment for 27 years while Paircargo
Consortium offered to pay the government a total
of P17.75 billion for the same period.
Thus, the PBAC formally informed AEDC that it had
accepted the price proposal submitted by the Paircargo
Consortium, and gave AEDC 30 working days or
untilNovember 28, 1996 within which to match the said
bid, otherwise, the project would be awarded to Paircargo.
As AEDC failed to match the proposal within the 30-day
period, then DOTC Secretary Amado Lagdameo,
on December 11, 1996, issued a notice to Paircargo
Consortium regarding AEDCs failure to match the
proposal.
On February 27, 1997, Paircargo Consortium incorporated
into Philippine International Airport Terminals Co., Inc.
(PIATCO).
AEDC subsequently protested the alleged undue
preference given to PIATCO and reiterated its objections
as regards the prequalification of PIATCO.
On April 11, 1997, the DOTC submitted the concession
agreement for the second-pass approval of the NEDA-ICC.
On April 16, 1997, AEDC filed with the Regional Trial Court
of Pasig a Petition for Declaration of Nullity of the
Proceedings, Mandamus and Injunction against the
Secretary of the DOTC, the Chairman of the PBAC, the
voting members of the PBAC and Pantaleon D. Alvarez, in

his capacity as Chairman of the PBAC Technical
Committee.
On October 15, 2002, the service providers, joining the

cause of the petitioning workers, filed a motion for
intervention and a petition-in-intervention.
xxxx
On October 24, 2002, Congressmen Salacnib Baterina,

Clavel Martinez and Constantino Jaraula filed a similar
petition with this Court.
On July 9, 1997, the DOTC issued the notice of award for

the project to PIATCO.
On July 12, 1997, the Government, through then DOTC
Secretary Arturo T. Enrile, and PIATCO, through its
President, Henry T. Go, signed the Concession Agreement
for the Build-Operate-and-Transfer Arrangement of the
Ninoy Aquino International Airport Passenger Terminal III
(1997 Concession Agreement). x x x.
On November 26, 1998, the Government and PIATCO
signed an Amended and Restated Concession Agreement
(ARCA). x x x.
Subsequently, the Government and PIATCO signed three
Supplements to the ARCA. The First Supplement was
signed on August 27, 1999; the Second Supplement
onSeptember 4, 2000; and the Third Supplement on June
22, 2001 (collectively, Supplements).
xxxx
Meanwhile, the MIAA which is charged with the
maintenance and operation of the NAIA Terminals I and II,
had existing concession contracts with various service
providers to offer international airline airport services,
such as in-flight catering, passenger handling, ramp and
ground support, aircraft maintenance and provisions,
cargo handling and warehousing, and other services, to
several international airlines at the NAIA. x x x.
On September 17, 2002, the workers of the international
airline service providers, claiming that they stand to lose
their employment upon the implementation of the
questioned agreements, filed before this Court a petition
for prohibition to enjoin the enforcement of said
agreements.
On November 6, 2002, several employees of the MIAA

likewise filed a petition assailing the legality of the
various agreements.
On December 11, 2002, another group of Congressmen,
Hon. Jacinto V. Paras, Rafael P. Nantes, Eduardo C.
Zialcita, Willie B. Villarama, Prospero C. Nograles,
Prospero A. Pichay, Jr., Harlin Cast Abayon and Benasing
O. Macaranbon, moved to intervene in the case as
Respondents-Intervenors. They filed their Comment-InIntervention defending the validity of the assailed
agreements and praying for the dismissal of the petitions.
During the pendency of the case before this Court,
President Gloria Macapagal Arroyo, on November 29,
2002, in her speech at the 2002 Golden Shell Export
Awards atMalacaang Palace, stated that she will not honor
(PIATCO) contracts which the Executive Branchs legal
offices have concluded (as) null and void.[3]
The Court first dispensed with the procedural issues raised in Agan, ruling
that (a) the MIAA service providers and its employees, petitioners in G.R.
Nos. 155001 and 155661, had the requisite standing since they had a direct
and substantial interest to protect by reason of the implementation of the
PIATCO Contracts which would affect their source of livelihood; [4] and (b) the
members of the House of Representatives, petitioners in G.R. No. 155547,
were granted standing in view of the serious legal questions involved and
their impact on public interest.[5]
As to the merits of the Petitions in Agan, the Court concluded that:
In sum, this Court rules that in view of the absence of the
requisite financial capacity of the Paircargo Consortium,
predecessor of respondent PIATCO, the award by the
PBAC of the contract for the construction, operation and
maintenance of the NAIA IPT III is null and void. Further,
considering that the 1997 Concession Agreement
contains material and substantial amendments, which

amendments had the effect of converting the 1997
Concession Agreement into an entirely different
agreement from the contract bidded upon, the 1997
Concession Agreement is similarly null and void for being
contrary to public policy. The provisions under Sections
4.04(b) and (c) in relation to Section 1.06 of the 1997
Concession Agreement and Section 4.04(c) in relation to
Section 1.06 of the ARCA, which constitute a direct
government guarantee expressly prohibited by, among
others, the BOT Law and its Implementing Rules and
Regulations are also null and void. The Supplements,
being accessory contracts to the ARCA, are likewise null
and void.[6]
Hence, the fallo of the Courts Decision in Agan reads:
WHEREFORE, the 1997 Concession Agreement, the
Amended and Restated Concession Agreement and the
Supplements thereto are set aside for being null and void.
[7]
In a Resolution[8] dated 21 January 2004, the Court denied with finality the
Motions for Reconsideration of its 5 May 2003 Decision in Agan filed by
therein respondents PIATCO and Congressmen Paras, et al., and
respondents-intervenors.[9] Significantly, the Court declared in the same
Resolution that:
This Court, however, is not unmindful of the reality that
the structures comprising the NAIA IPT III facility are
almost complete and that funds have been spent by
PIATCO in their construction. For the government to take
over the said facility, it has to compensate
respondent PIATCO as builder of the said
structures. The compensation must be just and in
accordance with law and equity for the government
can not unjustly enrich itself at the expense of PIATCO
and its investors.[10] (Emphasis ours.)
It is these afore-quoted pronouncements that gave rise to the Petition
in Gingoyon.
Republic
v.
Gingoyon (G.R. No.
166429)
According to the statement of facts in Gingoyon:
After the promulgation of the rulings in Agan, the NAIA 3
facilities have remained in the possession of PIATCO,
despite the avowed intent of the Government to put the
airport terminal into immediate operation.
The
Government and PIATCO conducted several rounds of
negotiation regarding the NAIA 3 facilities. It also appears
that arbitral proceedings were commenced before the
International Chamber of Commerce International Court
of Arbitration and the International Centre for the
Settlement of Investment Disputes, although the
Government has raised jurisdictional questions before
those two bodies.
Then, on 21 December 2004, the Government filed
a Complaint for expropriation with the Pasay City Regional
Trial Court (RTC), together with an Application for Special
Raffle seeking the immediate holding of a special raffle.
The Government sought upon the filing of the complaint
the issuance of a writ of possession authorizing it to take
immediate possession and control over the NAIA 3
facilities. The Government also declared that it had
deposited the amount of P3,002,125,000.00 (3 Billion) in
Cash with the Land Bank of the Philippines, representing
the NAIA 3 terminals assessed value for taxation
purposes.
The case was raffled to Branch 117 of the Pasay City RTC,
presided by respondent judge Hon. Henrick F. Gingoyon
(Hon. Gingoyon). On the same day that the Complaintwas
filed, the RTC issued an Order directing the issuance of a
writ of possession to the Government, authorizing it to
take or enter upon the possession of the NAIA 3 facilities.
Citing the case of City of Manila v. Serrano, the RTC noted
that it had the ministerial duty to issue the writ of
possession upon the filing of a complaint for expropriation
sufficient in form and substance, and upon deposit made
by the government of the amount equivalent to the
assessed value of the property subject to expropriation.
The RTC found these requisites present, particularly
noting that [t]he case record shows that [the Government

has] deposited the assessed value of the [NAIA 3
facilities] in the Land Bank of thePhilippines, an
authorized depositary, as shown by the certification
attached to their complaint. Also on the same day, the
RTC issued a Writ of Possession. According to PIATCO, the
Government was able to take possession over the NAIA 3
facilities immediately after the Writ of Possession was
issued.
However,
on 4
January
2005,
the RTC issued
another Order designed to supplement its 21 December
2004 Order and the Writ of Possession. In the 4 January
2005 Order, now assailed in the present petition, the RTC
noted that its earlier issuance of its writ of possession
was pursuant to Section 2, Rule 67 of the 1997 Rules of
Civil Procedure. However, it was observed that Republic
Act No. 8974 (Rep. Act No. 8974), otherwise known as An
Act to Facilitate the Acquisition of Right-of-Way, Site or
Location for National Government Infrastructure Projects
and For Other Purposes and its Implementing Rules and
Regulations (Implementing Rules) had amended Rule 67
in many respects.
There are at least two crucial differences between the
respective procedures under Rep. Act No. 8974 and Rule
67. Under the statute, the Government is required to
make immediate payment to the property owner upon the
filing of the complaint to be entitled to a writ of
possession, whereas in Rule 67, the Government is
required only to make an initial deposit with an
authorized government depositary. Moreover, Rule 67
prescribes that the initial deposit be equivalent to the
assessed value of the property for purposes of taxation,
unlike Rep. Act No. 8974 which provides, as the relevant
standard for initial compensation, the market value of the
property as stated in the tax declaration or the current
relevant zonal valuation of the Bureau of Internal
Revenue (BIR), whichever is higher, and the value of the
improvements and/or structures using the replacement
cost method.
Accordingly, on the basis of Sections 4 and 7 of Rep. Act
No. 8974 and Section 10 of the Implementing Rules, the
RTC made key qualifications to its earlier issuances.First,
it directed the Land Bank of the Philippines, Baclaran
Branch (LBP-Baclaran), to immediately release the

amount of US$62,343,175.77 to PIATCO, an amount which
the RTC characterized as that which the Government
specifically made available for the purpose of this
expropriation; and such amount to be deducted from the
amount of just compensation due PIATCO as eventually
determined by the RTC. Second, the Government was
directed to submit to the RTC a Certificate of Availability
of Funds signed by authorized officials to cover the
payment of just compensation. Third, the Government
was directed to maintain, preserve and safeguard the
NAIA 3 facilities or perform such as acts or activities in
preparation for their direct operation of the airport
terminal, pending expropriation proceedings and full
payment of just compensation. However, the Government
was prohibited from performing acts of ownership like
awarding concessions or leasing any part of [NAIA 3] to
other parties.
The very next day after the issuance of the assailed 4
January 2005 Order, the Government filed an Urgent
Motion for Reconsideration, which was set for hearing
on 10 January 2005. On 7 January 2005, the RTC issued
another Order, the second now assailed before this Court,
which appointed three (3) Commissioners to ascertain the
amount of just compensation for the NAIA 3 Complex.
That same day, the Government filed a Motion for
Inhibition of Hon. Gingoyon.
The
RTC
heard
the Urgent
Motion
for
Reconsideration and Motion for Inhibition on 10 January
2005. On the same day, it denied these motions in
an Omnibus Order dated10 January 2005. This is the
third Order now assailed before this Court. Nonetheless,
while the Omnibus Order affirmed the earlier dispositions
in the 4 January 2005 Order, it excepted from affirmance
the superfluous part of the Order prohibiting the plaintiffs
from awarding concessions or leasing any part of [NAIA 3]
to other parties.
Thus, the present Petition for Certiorari and
Prohibition under Rule 65 was filed on 13 January 2005.
The petition prayed for the nullification of the RTC orders
dated 4 January 2005, 7 January 2005, and 10 January
2005, and for the inhibition of Hon. Gingoyon from taking
further action on the expropriation case. A concurrent
prayer for the issuance of a temporary restraining order

and preliminary injunction was granted by this Court in
a Resolution dated 14 January 2005.[11]
The Court resolved the Petition of the Republic of the Philippines and Manila
International Airport Authority in Gingoyon in this wise:
In conclusion, the Court summarizes its rulings as follows:
(1)
The
2004 Resolution in Agan sets
the
base
requirement that has to be observed before the
Government may take over the NAIA 3, that there must
be payment to PIATCO of just compensation in
accordance with law and equity. Any ruling in the present
expropriation case must be conformable to the dictates of
the Court as pronounced in the Agan cases.
(2) Rep. Act No. 8974 applies in this case, particularly
insofar as it requires the immediate payment by the
Government of at least the proffered value of the NAIA 3
facilities to PIATCO and provides certain valuation
standards or methods for the determination of just
compensation.
(3) Applying Rep. Act No. 8974, the implementation of
Writ of Possession in favor of the Government over NAIA
3 is held in abeyance until PIATCO is directly paid the
amount of P3 Billion, representing the proffered value of
NAIA 3 under Section 4(c) of the law.
(4) Applying Rep. Act No. 8974, the Government is
authorized to start the implementation of the NAIA 3
Airport terminal project by performing the acts that are
essential to the operation of the NAIA 3 as an
international airport terminal upon the effectivity of the
Writ of Possession, subject to the conditions above-stated.
As prescribed by the Court, such authority encompasses
the repair, reconditioning and improvement of the
complex, maintenance of the existing facilities and
equipment, installation of new facilities and equipment,
provision of services and facilities pertaining to the
facilitation of air traffic and transport, and other services
that are integral to a modern-day international airport.
5) The RTC is mandated to complete its determination of

the just compensation within sixty (60) days from finality
of this Decision. In doing so, the RTC is obliged to comply
with the standards set under Rep. Act No. 8974 and its
Implementing Rules. Considering that the NAIA 3 consists
of structures and improvements, the valuation thereof
shall be determined using the replacements cost method,
as prescribed under Section 10 of the Implementing
Rules.
(6) There was no grave abuse of discretion attending the
RTC Order appointing the commissioners for the purpose
of determining just compensation. The provisions on
commissioners under Rule 67 shall apply insofar as they
are not inconsistent with Rep. Act No. 8974, its
Implementing Rules, or the rulings of the Court in Agan.
(7) The Government shall pay the just compensation fixed
in the decision of the trial court to PIATCO immediately
upon the finality of the said decision.
(8) There is no basis for the Court to direct the inhibition
of Hon. Gingoyon.
All told, the Court finds no grave abuse of discretion on
the part of the RTC to warrant the nullification of the
questioned orders. Nonetheless, portions of these orders
should be modified to conform with law and the
pronouncements made by the Court herein. [12]
The decretal portion of the Courts Decision in Gingoyon thus reads:
WHEREFORE, the Petition is GRANTED in PART with
respect to the orders dated 4 January 2005 and 10
January 2005 of the lower court. Said orders are
AFFIRMED with the following MODIFICATIONS:
1) The implementation of the Writ of Possession dated 21
December 2004 is HELD IN ABEYANCE, pending payment
by petitioners to PIATCO of the amount of Three Billion
Two Million One Hundred Twenty Five Thousand Pesos
(P3,002,125,000.00), representing the proffered value of
the NAIA 3 facilities;
2) Petitioners, upon the effectivity of the Writ of

Possession, are authorized [to] start the implementation
of the Ninoy Aquino International Airport Pasenger
Terminal III project by performing the acts that are
essential to the operation of the said International Airport
Passenger Terminal project;
3) RTC Branch 117 is hereby directed, within sixty (60)
days from finality of this Decision, to determine the just
compensation to be paid to PIATCO by the Government.
The Order dated 7 January 2005 is AFFIRMED in all
respects subject to the qualification that the parties are
given ten (10) days from finality of this Decision to file, if
they so choose, objections to the appointment of the
commissioners decreed therein.
The Temporary
Restraining
2005 is hereby LIFTED.
Order dated 14
January
No pronouncement as to costs.[13]
Motions for Partial Reconsideration of the foregoing Decision were filed by
therein petitioners Republic and MIAA, as well as the three other parties
who sought to intervene, namely, Asakihosan Corporation, Takenaka
Corporation, and Congressman Baterina.
In a Resolution dated 1 February 2006, this Court denied with finality the
Motion for Partial Reconsideration of therein petitioners and remained
faithful to its assailed Decision based on the following ratiocination:
Admittedly, the 2004 Resolution in Agan could be
construed as mandating the full payment of the final
amount of just compensation before the Government may
be permitted to take over the NAIA 3. However, the
Decision ultimately rejected such a construction,
acknowledging the public good that would result from the
immediate operation of the NAIA 3. Instead, the Decision
adopted an interpretation which is in consonance with
Rep. Act No. 8974 and with equitable standards as well,
that allowed the Government to take possession of the
NAIA 3 after payment of the proffered value of the
facilities to PIATCO. Such a reading is substantially
compliant
with
the
pronouncement
in
the
2004Agan Resolution, and is in accord with law and
equity. In contrast, the Governments position, hewing to

the strict application of Rule 67, would permit the
Government to acquire possession over the NAIA 3 and
implement its operation without having to pay PIATCO a
single centavo, a situation that is obviously unfair.
Whatever animosity the Government may have towards
PIATCO does not acquit it from settling its obligations to
the latter, particularly those which had already been
previously affirmed by this Court.[14]
The Court, in the same Resolution, denied all the three motions for
intervention of Asakihosan Corporation, Takenaka Corporation, and
Congressman Baterina, and ruled as follows:
We now turn to the three (3) motions for intervention all
of which were filed after the promulgation of the Courts
Decision. All three (3) motions must be denied. Under
Section 2, Rule 19 of the 1997 Rules of Civil Procedure the
motion to intervene may be filed at any time before
rendition of judgment by the court. Since this case
originated from an original action filed before this Court,
the appropriate time to file the motions-in-intervention in
this case if ever was before and not after resolution of this
case. To allow intervention at this juncture would be
highly irregular. It is extremely improbable that the
movants were unaware of the pendency of the present
case before the Court, and indeed none of them allege
such lack of knowledge.
Takenaka and Asahikosan rely on Mago v. Court of
Appeals wherein the Court took the extraordinary step of
allowing the motion for intervention even after the
challenged order of the trial court had already become
final. Yet it was apparent in Mago that the movants
therein were not impleaded despite being indispensable
parties, and had not even known of the existence of the
case before the trial court, and the effect of the final
order was to deprive the movants of their land. In this
case, neither Takenaka nor Asahikosan stand to be
dispossessed by reason of the Courts Decision. There is
no palpable due process violation that would militate the
suspension of the procedural rule.
Moreover, the requisite legal interest required of a partyin-intervention has not been established so as to warrant
the extra-ordinary step of allowing intervention at this

late stage. As earlier noted, the claims of Takenaka and
Asahikosan have not been judicially proved or
conclusively established as fact by any trier of facts in
this jurisdiction. Certainly, they could not be considered
as indispensable parties to the petition for certiorari. In
the case of Representative Baterina, he invokes his
prerogative as legislator to curtail the disbursement
without appropriation of public funds to compensate
PIATCO, as well as that as a taxpayer, as the basis of his
legal standing to intervene. However, it should be noted
that the amount which the Court directed to be paid by
the Government to PIATCO was derived from the money
deposited by the Manila International Airport Authority,
an agency which enjoys corporate autonomy and
possesses a legal personality separate and distinct from
those of the National Government and agencies thereof
whose budgets have to be approved by Congress.
It is also observed that the interests of the
movants-in-intervention may be duly litigated in
proceedings which are extant before lower courts. There
is no compelling reason to disregard the established rules
and permit the interventions belatedly filed after the
promulgation of the Courts Decision.[15]
Asias
Emerging
Dragon Corporation
v. Department of
Transportation and
Communications
and Manila Internat
ionalAirport Author
ity
(G.R.
No.
169914)
Banking on this Courts declaration in Agan that the award of the NAIA IPT III
Project to PIATCO is null and void, Asias Emerging Dragon Corporation
(AEDC) filed before this Court the present Petition for Mandamus and
Prohibition (with Application for Temporary Restraining Order), praying of
this Court that:
(1) After due hearing, judgment be rendered commanding
the Respondents, their officers, agents, successors,
representatives or persons or entities acting on their

behalf, to formally award the NAIA-APT [sic] III PROJECT to
Petitioner AEDC and to execute and formalize with
Petitioner AEDC the approved Draft Concession
Agreement embodying the agreed terms and conditions
for the operation of the NAIA-IPT III Project and directing
Respondents to cease and desist from awarding the NAIAIPT Project to third parties or negotiating into any
concession contract with third parties.
(2) Pending resolution on the merits, a Temporary
Restraining Order be issued enjoining Respondents, their
officers, agents, successors or representatives or persons
or entities acting on their behalf from negotiating, rebidding, awarding or otherwise entering into any
concession contract with PIATCO and other third parties
for the operation of the NAIA-IPT III Project.
Other relief and remedies, just and equitable under the
premises, are likewise prayed for.[16]
AEDC bases its Petition on the following grounds:
I.
PETITIONER AEDC, BEING THE
RECOGNIZED AND UNCHALLENGED ORIGINAL
PROPONENT, HAS THE EXCLUSIVE, CLEAR AND
VESTED STATUTORY RIGHT TO THE AWARD OF
THE NAIA-IPT III PROJECT;
II.
RESPONDENTS HAVE A STATUTORY
DUTY TO PROTECT PETITIONER AEDC AS THE
UNCHALLENGED ORIGINAL PROPONENT AS A
RESULT
OF
THE
SUPREME
COURTS
NULLIFICATION OF THE AWARD OF THE NAIA-IPT
III PROJECT TO PIATCO[; and]
III.
RESPONDENTS HAVE NO LEGAL
BASIS OR AUTHORITY TO TAKE OVER THE NAIAIPT III PROJECT, TO THE EXCLUSION OF
PETITIONER AEDC, OR TO AWARD THE PROJECT
TO THIRD PARTIES.[17]
At the crux of the Petition of AEDC is its claim that, being the recognized
and unchallenged original proponent of the NAIA IPT III Project, it has the
exclusive, clear, and vested statutory right to the award thereof. However,
the Petition of AEDC should be dismissed for lack of merit, being as it is,
substantially and procedurally flawed.
SUBSTANTIVE INFIRMITY
A petition for mandamus is governed by Section 3 of Rule 65 of the Rules of
Civil Procedure, which reads
SEC. 3. Petition for mandamus. When any tribunal,
corporation, board, officer or person unlawfully neglects
the performance of an act which the law specifically
enjoins as a duty resulting from an office, trust, or station,
or unlawfully excludes another from the use and
enjoyment of a right or office to which such other is
entitled, and there is no other plain, speedy and adequate
remedy in the ordinary course of law, the person
aggrieved thereby may file a verified petition in the
proper court, alleging the facts with certainty and praying
that judgment be rendered commanding the respondent,
immediately or some other time to be specified by the
court, to do the act required to be done to protect the
rights of the petitioner, and to pay the damages
sustained by the petitioner by reason of the wrongful acts
of the respondent.
It is well-established in our jurisprudence that only specific legal rights are
enforceable by mandamus, that the right sought to be enforced must be
certain and clear, and that the writ will not issue in cases where the right is
doubtful. Just as fundamental is the principle governing the issuance
of mandamus that the duties to be performed must be such as are clearly
and peremptorily enjoined by law or by reason of official station. [18]
A rule long familiar is that mandamus never issues in doubtful cases. It
requires a showing of a complete and clear legal right in the petitioner to
the performance of ministerial acts. In varying language, the principle
echoed and reechoed is that legal rights may be enforced
by mandamus only if those rights are well-defined, clear and
certain. Otherwise, the mandamus petition must be dismissed.[19]
The right that AEDC is seeking to enforce is supposedly enjoined by Section
4-A of Republic Act No. 6957,[20] as amended by Republic Act No. 7718, on
unsolicited proposals, which provides
SEC. 4-A. Unsolicited proposals. Unsolicited proposals for
projects may be accepted by any government agency or
local government unit on a negotiated basis: Provided,

That, all the following conditions are met: (1) such
projects involve a new concept or technology and/or are
not part of the list of priority projects, (2) no direct
government guarantee, subsidy or equity is required, and
(3) the government agency or local government unit has
invited by publication, for three (3) consecutive weeks, in
a newspaper of general circulation, comparative or
competitive proposals and no other proposal is received
for a period of sixty (60) working days: Provided, further,
That in the event another proponent submits a lower
price proposal, the original proponent shall have the right
to match the price within thirty (30) working days.
In furtherance of the afore-quoted provision, the Implementing Rules and
Regulations (IRR) of Republic Act No. 6957, as amended by Republic Act No.
7718, devoted the entire Rule 10 to Unsolicited Proposals, pertinent
portions of which are reproduced below
Sec. 10.1. Requisites for Unsolicited Proposals. Any
Agency/LGU may accept unsolicited proposals on a
negotiated basis provided that all the following conditions
are met:
a. the project involves a new concept or technology
and/or is not part of the list of priority projects;
b. no direct government guarantee, subsidy or equity is
required; and
c. the Agency/LGU concerned has invited by publication,
for three (3) consecutive weeks, in a newspaper of
general circulation, comparative or competitive proposals
and no other proposal is received for a period of sixty (60)
working days. In the event that another project proponent
submits a price proposal lower than that submitted by the
original proponent, the latter shall have the right to
match said price proposal within thirty (30) working
days. Should the original proponent fail to match the
lower price proposal submitted within the specified
period, the contract shall be awarded to the tenderer of
the lowest price. On the other hand, if the original project
proponent matches the submitted lowest price within the
specified period, he shall be immediately be awarded the
project.
xxxx
Sec. 10.6. Evaluation of Unsolicited Proposals. The
Agency/LGU is tasked with the initial evaluation of the
proposal. The Agency/LGU shall: 1) appraise the merits of
the project; 2) evaluate the qualification of the proponent;
and 3) assess the appropriateness of the contractual
arrangement
and
reasonableness
of
the
risk
allocation. The Agency/LGU is given sixty (60) days to
evaluate the proposal from the date of submission of the
complete proposal. Within this 60-day period, the
Agency/LGU, shall advise the proponent in writing
whether it accepts or rejects the proposal. Acceptance
means commitment of the Agency/LGU to pursue
the project and recognition of the proponent as the
original proponent. At this point, the Agency/LGU
will no longer entertain other similar proposals
until the solicitation of comparative proposals. The
implementation of the project, however, is still contingent
primarily on the approval of the appropriate approving
authorities consistent with Section 2.7 of these IRR, the
agreement between the original proponent and the
Agency/LGU of the contract terms, and the approval of
the contract by the [Investment Coordination Committee
(ICC)] or Local Sanggunian.
xxxx
Sec.
10.9. Negotiation
With
the
Original
Proponent. Immediately after ICC/Local Sanggunians
clearance of the project, the Agency/LGU shall
proceed with the in-depth negotiation of the
project scope, implementation arrangements and
concession agreement, all of which will be used in
the Terms of Reference for the solicitation of
comparative proposals. The Agency/LGU and the
proponent are given ninety (90) days upon receipt of ICCs
approval of the project to conclude negotiations. The
Agency/LGU and the original proponent shall negotiate in
good faith. However, should there be unresolvable
differences
during
the
negotiations,
the
Agency/LGU shall have the option to reject the
proposal and bid out the project. On the other
hand, if the negotiation is successfully concluded,
the original proponent shall then be required to
reformat and resubmit its proposal in accordance

with the requirements of the Terms of Reference to
facilitate
comparison
with
the
comparative
proposals. The Agency/LGU shall validate the
reformatted proposal if it meets the requirements
of the TOR prior to the issuance of the invitation
for comparative proposals.
xxxx
Sec. 10.11. Invitation for Comparative Proposals. The
Agency/LGU shall publish the invitation for comparative
or competitive proposals only after ICC/Local Sanggunian
issues a no objection clearance of the draft contract. The
invitation for comparative or competitive proposals
should be published at least once every week for three
(3) weeks in at least one (1) newspaper of general
circulation. It shall indicate the time, which should not be
earlier than the last date of publication, and place where
tender/bidding documents could be obtained. It shall
likewise explicitly specify a time of sixty (60) working
days reckoned from the date of issuance of the
tender/bidding documents upon which proposals shall be
received. Beyond said deadline, no proposals shall be
accepted. A pre-bid conference shall be conducted ten
(10) working days after the issuance of the tender/bidding
documents.
Sec. 10.12. Posting of Bid Bond by Original Proponent.
The original proponent shall be required at the date of the
first date of the publication of the invitation for
comparative proposals to submit a bid bond equal to
the amount and in the form required of the
challengers.
Sec. 10.13. Simultaneous Qualification of the Original
Proponent. The Agency/LGU shall qualify the original
proponent based on the provisions of Rule 5 hereof,
within thirty (30) days from start of negotiation. For
consistency, the evaluation criteria used for qualifying the
original proponent should be the same criteria used for
qualifying the original proponent should be the criteria
used in the Terms of Reference for the challengers.
xxxx
Sec. 10.16. Disclosure of the Price Proposal. The

disclosure of the price proposal of the original proponent
in the Tender Documents will be left to the discretion of
the Agency/LGU. However, if it was not disclosed in the
Tender Documents, the original proponents price proposal
should be revealed upon the opening of the financial
proposals of the challengers. The right of the original
proponent to match the best proposal within thirty
(30) working days starts upon official notification
by the Agency/LGU of the most advantageous
financial proposal. (Emphasis ours.)
In her sponsorship speech on Senate Bill No. 1586 (the precursor of
Republic Act No. 7718), then Senator (now President of the Republic of
the Philippines) Gloria Macapagal-Arroyo explained the reason behind the
proposed amendment that would later become Section 4-A of Republic Act
No. 6957, as amended by Republic Act No. 7718:
The object of the amendment is to protect proponents
which have already incurred costs in the conceptual
design and in the preparation of the proposal, and which
may have adopted an imaginative method of construction
or innovative concept for the proposal. The amendment
also aims to harness the ingenuity of the private sector to
come up with solutions to the countrys infrastructure
problems.[21]
It is irrefragable that Section 4-A of Republic Act No. 6957, as amended by
Republic Act No. 7718, and Section 10 of its IRR, accord certain rights or
privileges to the original proponent of an unsolicited proposal for an
infrastructure project. They are meant to encourage private sector initiative
in conceptualizing infrastructure projects that would benefit the
public. Nevertheless, none of these rights or privileges would justify the
automatic award of the NAIA IPT III Project to AEDC after its previous award
to PIATCO was declared null and void by this Court in Agan.
The rights or privileges of an original proponent of an unsolicited proposal
for an infrastructure project are never meant to be absolute. Otherwise, the
original proponent can hold the Government hostage and secure the award
of the infrastructure project based solely on the fact that it was the first to
submit a proposal. The absurdity of such a situation becomes even more
apparent when considering that the proposal is unsolicited by the
Government. The rights or privileges of an original proponent depends on
compliance with the procedure and conditions explicitly provided by the
statutes and their IRR.
An unsolicited proposal is subject to evaluation, after which, the

government agency or local government unit (LGU) concerned may accept
or reject the proposal outright.
Under Section 10.6 of the IRR, the acceptance of the unsolicited proposal
by the agency/LGU is limited to the commitment of the [a]gency/LGU to
pursue the project and recognition of the proponent as the original
proponent. Upon acceptance then of the unsolicited proposal, the original
proponent is recognized as such but no award is yet made to
it. The commitment of the agency/LGU upon acceptance of the unsolicited
proposal is to the pursuit of the project, regardless of to whom it shall
subsequently award the same. The acceptance of the unsolicited proposal
only precludes the agency/LGU from entertaining other similar
proposals until the solicitation of comparative proposals.
Consistent in both the statutes and the IRR is the requirement that
invitations
be
published
for
comparative
or
competitive
proposals. Therefore, it is mandatory that a public bidding be held before
the awarding of the project. The negotiations between the agency/LGU and
the original proponent, as provided in Section 10.9 of the IRR, is for the sole
purpose of coming up with draft agreements, which shall be used in the
Terms of Reference (TOR) for the solicitation of comparative
proposals. Even at this point, there is no definite commitment made to the
original proponent as to the awarding of the project. In fact, the same IRR
provision even gives the concerned agency/LGU, in case of unresolvable
differences during the negotiations, the option to reject the original
proponents proposal and just bid out the project.
Generally, in the course of processing an unsolicited proposal, the original
proponent is treated in much the same way as all other prospective bidders
for the proposed infrastructure project. It is required to reformat and
resubmit its proposal in accordance with the requirements of the TOR. [22] It
must submit a bid bond equal to the amount and in the form required of the
challengers.[23] Its qualification shall be evaluated by the concerned
agency/LGU, using evaluation criteria in accordance with Rule 5 [24] of the
IRR, and which shall be the same criteria to be used in the TOR for the
challengers.[25] These requirements ensure that the public bidding under
Rule 10 of IRR on Unsolicited Proposals still remain in accord with the three
principles in public bidding, which are: the offer to the public, an
opportunity for competition, and a basis for exact comparison of bids. [26]
The special rights or privileges of an original proponent thus come into play
only when there are other proposals submitted during the public bidding of
the infrastructure project. As can be gleaned from the plain language of the
statutes and the IRR, the original proponent has: (1) the right to match the
lowest or most advantageous proposal within 30 working days from notice

thereof, and (2) in the event that the original proponent is able to match
the lowest or most advantageous proposal submitted, then it has the right
to be awarded the project. The second right or privilege is contingent upon
the actual exercise by the original proponent of the first right or
privilege. Before the project could be awarded to the original proponent, he
must have been able to match the lowest or most advantageous proposal
within the prescribed period. Hence, when the original proponent is able to
timely match the lowest or most advantageous proposal, with all things
being equal, it shall enjoy preference in the awarding of the infrastructure
project.
This is the extent of the protection that Legislature intended to afford the
original proponent, as supported by the exchange between Senators
Neptali Gonzales and Sergio Osmea during the Second Reading of Senate
Bill No. 1586:
Senator Gonzales:
xxxx
The concept being that in case of an unsolicited proposal
and nonetheless public bidding has been held, then [the
original proponent] shall, in effect, be granted
what is the equivalent of the right of first refusal
by offering a bid which shall equal or better the bid
of the winning bidder within a period of, let us say,
30 days from the date of bidding.
Senator Osmea:
xxxx
To capture the tenor of the proposal of the distinguished
Gentleman, a subsequent paragraph has to be added
which says, IF THERE IS A COMPETITIVE PROPOSAL,
THE ORIGINAL PROPONENT SHALL HAVE THE RIGHT
TO EQUAL THE TERMS AND CONDITIONS OF THE
COMPETITIVE PROPOSAL.
In other words, if there is nobody who will submit a
competitive proposal, then nothing is lost. Everybody
knows it, and it is open and transparent. But if somebody
comes in with another proposal and because it was the
idea of the original proponent that proponent now has the
right to equal the terms of the original proposal.
SENATOR GONZALES:
That is the idea, Mr. President. Because it seems to me
that it is utterly unfair for one who has conceived an idea
or a concept, spent and invested in feasibility studies, in
the drawing of plans and specifications, and the project is
submitted to a public bidding, then somebody will win on
the basis of plans and specifications and concepts
conceived by the original proponent. He should at least
be given the right to submit an equalizing bid. x x x.
[27]
(Emphasis ours.)
As already found by this Court in the narration of facts in Agan, AEDC failed
to match the more advantageous proposal submitted by PIATCO by the time
the 30-day working period expired on 28 November 1996; [28] and, without
exercising its right to match the most advantageous proposal, it cannot now
lay claim to the award of the project.
The bidding process as to the NAIA IPT III Project was already over after the
award thereof to PIATCO, even if eventually, the said award was nullified
and voided. The nullification of the award to PIATCO did not revive the
proposal nor re-open the bidding. AEDC cannot insist that this Court turn
back the hands of time and award the NAIA IPT III Project to it, as if the bid
of PIATCO never existed and the award of the project to PIATCO did not take
place. Such is a simplistic approach to a very complex problem that is the
NAIA IPT III Project.
In his separate opinion in Agan, former Chief Justice Artemio V. Panganiban
noted that [T]here was effectively no public bidding to speak of, the entire
bidding process having been flawed and tainted from the very outset,
therefore, the award of the concession to Paircargos successor Piatco was
void, and the Concession Agreement executed with the latter was likewise
void ab initio. x x x.[29] (Emphasis ours.) In consideration of such a
declaration that the entire bidding process was flawed and tainted from the
very beginning, then, it would be senseless to re-open the same to
determine to whom the project should have been properly awarded to. The
process and all proposals and bids submitted in participation thereof, and
not just PIATCOs, were placed in doubt, and it would be foolhardy for the
Government to rely on them again. At the very least, it may be declared
that there was a failure of public bidding.[30]
In addition, PIATCO is already close to finishing the building of the
structures comprising NAIA IPT III,[31] a fact that this Court cannot simply
ignore. The NAIA IPT III Project was proposed, subjected to bidding, and
awarded as a build-operate-transfer (BOT) project. A BOT project is defined

as
A contractual arrangement whereby the project
proponent undertakes the construction, including
financing,
of
a
given
infrastructure
facility,
and the operation
and
maintenancethereof. The
project proponent operates the facility over a fixed term
during which it is allowed to charge facility users
appropriate tolls, fees, rentals, and charges not exceeding
those proposed in its bid or as negotiated and
incorporated in the contract to enable the project
proponent to recover its investment, and operating and
maintenance expenses in the project. The project
proponent transfers the facility to the government
agency or local government unit concerned at the end of
the fixed term that shall not exceed fifty (50) years.This
shall include a supply-and-operate situation which is a
contractual arrangement whereby the supplier of
equipment and machinery for a given infrastructure
facility, if the interest of the Government so requires,
operates the facility providing in the process technology
transfer and training to Filipino nationals.[32] (Emphasis
ours.)
The original proposal of AEDC is for a BOT project, in which it undertook
to build, operate, and transfer to the Government the NAIA IPT III
facilities. This is clearly no longer applicable or practicable under the
existing circumstances. It is undeniable that the physical structures
comprising the NAIA IPT III Project are already substantially built, and there
is almost nothing left for AEDC to construct. Hence, the project could no
longer be awarded to AEDC based on the theory of legal impossibility of
performance.
Neither can this Court revert to the original proposal of AEDC and award to
it only the unexecuted components of the NAIA IPT III Project. Whoever shall
assume the obligation to operate and maintain NAIA IPT III and to
subsequently transfer the same to the Government (in case the operation is
not assumed by the Government itself) shall have to do so on terms and
conditions that would necessarily be different from the original proposal of
AEDC. It will no longer include any undertaking to build or construct the
structures. An amendment of the proposal of AEDC to address the present
circumstances is out of the question since such an amendment would be
substantive and tantamount to an entirely new proposal, which must again
be subjected to competitive bidding.
AEDCs offer to reimburse the Government the amount it shall pay to PIATCO
for the NAIA IPT III Project facilities, as shall be determined in the ongoing
expropriation proceedings before the RTC of Pasay City, cannot restore
AEDC to its status and rights as the project proponent. It must be stressed
that the law requires the project proponent to undertake the construction of
the project, including financing; financing, thus, is but a component of the
construction of the structures and not the entirety thereof.
Moreover, this reimbursement arrangement may even result in the unjust
enrichment of AEDC. In its original proposal, AEDC offered to construct the
NAIA IPT III facilities for $350 million or P9 billion at that time. In exchange,
AEDC would share a certain percentage of the gross revenues with, and pay
a guaranteed annual income to the Government upon operation of the NAIA
IPT III. In Gingoyon, the proferred value of the NAIA IPT III facilities was
already determined to beP3 billion. It seems improbable at this point that
the balance of the value of said facilities for which the Government is still
obligated to pay PIATCO shall reach or exceed P6 billion. There is thus the
possibility that the Government shall be required to pay PIATCO an amount
less than P9 billion. If AEDC is to reimburse the Government only for the
said amount, then it shall acquire the NAIA IPT III facilities for a price less
than its original proposal of P9 billion. Yet, per the other terms of its original
proposal, it may still recoup a capital investment of P9 billion plus a
reasonable rate of return of investment. A change in the agreed value of
the NAIA IPT III facilities already built cannot be done without a
corresponding amendment in the other terms of the original proposal as
regards profit sharing and length of operation; otherwise, AEDC will be
unjustly enriched at the expense of the Government.
Again, as aptly stated by former Chief Justice Panganiban, in his separate
opinion in Agan:
If the PIATCO contracts are junked altogether as I think
they should be, should not AEDC automatically be
considered the winning bidder and therefore allowed to
operate the facility? My answer is a stone-cold No. AEDC
never won the bidding, never signed any contract, and
never built any facility. Why should it be allowed
to automatically step in and benefit from the greed of
another?[33]
The claim of AEDC to the award of the NAIA IPT III Project, after the award
thereof to PIATCO was set aside for being null and void, grounded solely on
its being the original proponent of the project, is specious and an apparent
stretch in the interpretation of Section 4-A of Republic Act No. 6957, as

amended by Republic Act No. 7718, and Rule 10 of the IRR.
commence negotiations with its financial partners,

investors and creditors;
In all, just as AEDC has no legal right to the NAIA IPT III Project, corollarily, it
has no legal right over the NAIA IPT III facility. AEDC does not own the NAIA
IPT III facility, which this Court already recognized in Gingoyon as owned by
PIATCO; nor does AEDC own the land on which NAIA IPT III stands, which is
undisputedly owned by the Republic through the Bases Conversion
Development Authority (BCDA). AEDC did not fund any portion of the
construction of NAIA IPT III, which was entirely funded by PIATCO. AEDC also
does not have any kind of lien over NAIA IPT III or any kind of legal
entitlement to occupy the facility or the land on which it stands. Therefore,
nothing that the Government has done or will do in relation to the project
could possibly prejudice or injure AEDC. AEDC then does not possess any
legal personality to interfere with or restrain the activities of the
Government as regards NAIA IPT III. Neither does it have the legal
personality to demand that the Government deliver or sell to it the NAIA IPT
III facility despite the express willingness of AEDC to reimburse the
Government the proferred amount it had paid PIATCO and complete NAIA
IPT III facility at its own cost.
e. commitment of Respondent DOTC and Petitioner

AEDC to fast track evaluation of competitive
proposals, screening and eliminating nuisance
comparative bids;[34]
AEDC invokes the Memorandum of Agreement, purportedly executed

between the DOTC and AEDC on 26 February 1996, following the approval
of the NAIA IPT III Project by the National Economic Development Authority
Board in a Resolution dated 13 February 1996, which provided for the
following commitments by the parties:
a. commitment of Respondent DOTC to target mid
1996 as the time frame for the formal award of the
project and commencement of site preparation and
construction activities with the view of a partial
opening of the Terminal by the first quarter of 1998;
b. commitment of Respondent DOTC to pursue the
project envisioned in the unsolicited proposal and
commence and conclude as soon as possible
negotiations with Petitioner AEDC on the BOT
contract;
c. commitment of Respondent DOTC to make
appropriate arrangements through which the formal
award of the project can be affected[;]
d. commitment of Petitioner AEDC to a fast track
approach to project implementation and to
It is important to note, however, that the document attached as Annex E to

the Petition of AEDC is a certified photocopy of records on file. This Court
cannot give much weight to said document considering that its existence
and due execution have not been established. It is not notarized, so it does
not enjoy the presumption of regularity of a public document. It is not even
witnessed by anyone. It is not certified true by its supposed signatories,
Secretary Jesus B. Garcia, Jr. for DOTC and Chairman Henry Sy, Sr. for AEDC,
or by any government agency having its custody. It is certified as a
photocopy of records on file by an Atty. Cecilia L. Pesayco, the Corporate
Secretary, of an unidentified corporation.
Even assuming for the sake of argument, that the said Memorandum of
Agreement, is in existence and duly executed, it does little to support the
claim of AEDC to the award of the NAIA IPT III Project. The commitments
undertaken by the DOTC and AEDC in the Memorandum of Agreement may
be simply summarized as a commitment to comply with the procedure and
requirements provided in Rules 10 and 11 of the IRR. It bears no
commitment on the part of the DOTC to award the NAIA IPT III Project to
AEDC. On the contrary, the document includes express stipulations that
negate any such government obligation. Thus, in the first clause,[35]the
DOTC affirmed its commitment to pursue, implement and complete the
NAIA IPT III Project on or before 1998, noticeably without mentioning that
such commitment was to pursue the project specifically with
AEDC. Likewise, in the second clause,[36] it was emphasized that the DOTC
shall pursue the project under Rules 10 and 11 of the IRR of Republic Act
No. 6957, as amended by Republic Act No. 7718. And most significantly, the
tenth clause of the same document provided:
10. Nothing
in
this
Memorandum
of
Understanding shall be understood, interpreted
or construed as permitting, allowing or
authorizing the circumvention of, or noncompliance with, or as waiving, the provisions of,
and requirements and procedures under,
existing laws, rules and regulations.[37]
AEDC further decries that:

24. In carrying out its commitments under the DOTCAEDC MOU, Petitioner AEDC undertook the following
activities, incurring in the process tremendous costs and
expenses.
a. pre-qualified
46
design
and
contractor firms to assist in the NAIA-IPT
III Project;
b. appointed a consortium of six (6)
local banks as its financial advisor in
June 1996;
c. hired the services of GAIA South, Inc.
to prepare the Project Description
Report and to obtain the Environmental
Clearance Certificate (ECC) for the
NAIA-IPT III Project;
d. coordinated
with
the
Airline
Operators
Association,
Bases
Conversion
Development
Authority,
Philippine Air Force, Bureau of Customs,
Bureau of Immigration, relative to their
particular requirements regarding the
NAIA-IPT III [P]roject; and
e. negotiated and entered into firm
commitments with Ital Thai, Marubeni
Corporation and Mitsui Corporation as
equity partners.[38]
While the Court may concede that AEDC, as the original proponent, already
expended resources in its preparation and negotiation of its unsolicited
proposal, the mere fact thereof does not entitle it to the instant award of
the NAIA IPT III Project. AEDC was aware that the said project would have to
undergo public bidding, and there existed the possibility that another
proponent may submit a more advantageous bid which it cannot match; in
which case, the project shall be awarded to the other proponent and AEDC
would then have no means to recover the costs and expenses it already
incurred on its unsolicited proposal. It was a given business risk that AEDC
knowingly undertook.
Additionally, the very defect upon which this Court nullified the award of
the NAIA IPT III Project to PIATCO similarly taints the unsolicited proposal of
AEDC. This Court found Paircargo Consortium financially disqualified after
striking down as incorrect the PBACs assessment of the consortiums
financial capability.According to the Courts ratio in Agan:
As the minimum project cost was estimated to be
US$350,000,000.00 or roughly P9,183,650,000.00, the
Paircargo Consortium had to show to the satisfaction of
the PBAC that it had the ability to provide the minimum
equity for the project in the amount of at
least P2,755,095,000.00.
xxxx
Thus, the maximum amount that Security Bank could
validly
invest
in
the
Paircargo
Consortium
is
only P528,525,656.55, representing 15% of its entire net
worth. The total net worth therefore of the Paircargo
Consortium,
after
considering
the maximum
amounts that may be validly invested by each of its
members is P558,384,871.55 or only 6.08% of the
project cost, an amount substantially less than the
prescribed minimum equity investment required for the
project in the amount of P2,755,095,000.00 or 30% of the
project cost.
The purpose of pre-qualification in any public bidding is to
determine, at the earliest opportunity, the ability of the
bidder to undertake the project. Thus, with respect to the
bidders financial capacity at the pre-qualification stage,
the law requires the government agency to examine and
determine the ability of the bidder to fund the entire cost
of the project by considering the maximum amounts
that each bidder may invest in the project at the
time of pre-qualification.
xxxx
Thus, if the maximum amount of equity that a bidder
may invest in the project at the time the bids are
submitted falls short of the minimum amounts required
to be put up by the bidder, said bidder should be properly
disqualified. Considering that at the pre-qualification
stage, the maximum amounts which the Paircargo
Consortium may invest in the project fell short of the
minimum amounts prescribed by the PBAC, we hold that

Paircargo Consortium was not a qualified bidder. Thus the
award of the contract by the PBAC to the Paircargo
Consortium, a disqualified bidder, is null and void. [39]
Pursuant to the above-quoted ruling, AEDC, like the Paircargo Consortium,
would not be financially qualified to undertake the NAIA IPT III
Project. Based on AEDCs own submissions to the Government, it had then a
paid-in capital of only P150,000,000.00,[40] which was less than
the P558,384,871.55 that Paircargo Consortium was capable of investing
in the NAIA IPT III Project, and even far less that what this Court prescribed
as the minimum equity investment required for the project in the amount
of P2,755,095,000.00 or 30% of the project cost. AEDC had not
sufficiently demonstrated that it would have been financially qualified to
undertake the project at the time of submission of the bids.
Instead, AEDC took pains to present to this Court that allowing it to take
over and operate NAIA IPT III at present would be beneficial to the
Government. This Court must point out, however, that AEDC is precisely
making a new proposal befitting the current status of the NAIA IPT III
Project, contrary to its own argument that it is merely invoking its original
BOT proposal. And it is not for this Court to evaluate AEDCs new proposal
and assess whether it would truly be most beneficial for the Government,
for the same is an executive function rather than judicial, for which the
statutes and regulations have sufficiently provided standards and
procedures for evaluation.
It can even be said that if the award of the NAIA IPT III Project was merely a
matter of choosing between PIATCO and AEDC (which it is not), there could
be no doubt that PIATCO is more qualified to operate the structure that
PIATCO itself built and PIATCOs offer of P17.75 Billion in annual guaranteed
payments to the Government is far better that AEDCs offer of P135 Million.
Hence, AEDC is not entitled to a writ of mandamus, there being no specific,
certain, and clear legal right to be enforced, nor duty to be performed that
is clearly and peremptorily enjoined by law or by reason of official station.
PROCEDURAL LAPSES
In addition to the substantive weaknesses of the Petition of AEDC, the said
Petition also suffers from procedural defects.
AEDC revived its hope to acquire the NAIA IPT III Project when this Court
promulgated its Decision in Agan on 5 May 2003. The said Decision became
final and executory on 17 February 2004 upon the denial by this Court of
the Motion for Leave to File Second Motion for Reconsideration submitted
by PIATCO. It is this Decision that declared the award of the NAIA IPT III
Project to PIATCO as null and void; without the same, then the award of the
NAIA IPT III Project to PIATCO would still subsist and other persons would
remain precluded from acquiring rights thereto, including AEDC. Irrefutably,
the present claim of AEDC is rooted in the Decision of this Court
in Agan. However, AEDC filed the Petition at bar only 20 months after the
promulgation of the Decision in Agan on 5 May 2003.
It must be emphasized that under Sections 2 and 3, Rule 65 of the revised
Rules of Civil Procedure, petitions for prohibition and mandamus, such as in
the instant case, can only be resorted to when there is no other plain,
speedy and adequate remedy for the party in the ordinary course of law.
In Cruz v. Court of Appeals,[41] this Court elucidates that
Although Rule 65 does not specify any period for the filing
of a petition for certiorari and mandamus, it must,
nevertheless, be filed within a reasonable time. In
certiorari cases, the definitive rule now is that such
reasonable time is within three months from the
commission of the complained act. The same rule should
apply to mandamus cases.
The unreasonable delay in the filing of the
petitioner's mandamus suit unerringly negates any claim
that the application for the said extraordinary remedy
was the most expeditious and speedy available to the
petitioner. (Emphasis ours.)
As the revised Rules now stand, a petition for certiorari may be filed within
60 days from notice of the judgment, order or resolution sought to be
assailed.[42]Reasonable time for filing a petition for mandamus should
likewise be for the same period. The filing by the AEDC of its petition
for mandamus 20 months after its supposed right to the project arose is
evidently beyond reasonable time and negates any claim that the said
petition for the extraordinary writ was the most expeditious and speedy
remedy available to AEDC.
AEDC contends that the reasonable time within which it should have filed
its petition should be reckoned only from 21 September 2005, the date
when AEDC received the letter from the Office of the Solicitor General
refusing to recognize the rights of AEDC to provide the available funds for
the completion of the NAIA IPT III Project and to reimburse the costs of the
structures already built by PIATCO. It has been unmistakable that even long
before said letter especially when the Government instituted with the RTC
of Pasay City expropriation proceedings for the NAIA IPT III on 21 December
2004 that the Government would not recognize any right that AEDC
purportedly had over the NAIA IPT III Project and that the Government is
intent on taking over and operating the NAIA IPT III itself.
Another strong argument against the AEDCs Petition is that it is already
barred by res judicata.
In Agan,[43] it was noted that on 16 April 1997, the AEDC instituted before
the RTC of Pasig City Civil Case No. 66213, a Petition for the Declaration of
Nullity of the Proceedings, Mandamus and Injunction, against the DOTC
Secretary and the PBAC Chairman and members.
In Civil Case No. 66213, AEDC prayed for:
i) the nullification of the proceedings before the
DOTC-PBAC, including its decision to qualify
Paircargo Consortium and to deny Petitioner
AEDCs access to Paircargo Consortiums technical
and financial bid documents;
ii) the protection of Petitioner AEDCs right to
match considering the void challenge bid of the
Paircargo Consortium and the denial by DOTCPBAC of access to information vital to the
effective exercise of its right to match;
iii) the declaration of the absence of any other
qualified proponent submitting a competitive bid
in an unsolicited proposal.[44]
Despite the pendency of Civil Case No. 66213, the DOTC issued the notice
of award for the NAIA IPT III Project to PIATCO on 9 July 1997. The DOTC and
PIATCO
also
executed
on 12
July
1997 the
1997
Concession
Agreement. AEDC then alleges that:
k) On September 3, 1998, then Pres. Joseph Ejercito
Estrada convened a meeting with the members of the
Board of Petitioner AEDC to convey his desire for the
dismissal of the mandamus case filed by Petition AEDC
and in fact urged AEDC to immediately withdraw said
case.
l) The Presidents direct intervention in the disposition of

this mandamus case was a clear imposition that
Petitioner AEDC had not choice but to accept. To do
otherwise was to take a confrontational stance against
the most powerful man in the country then under the risk
of catching his ire, which could have led to untold
consequences upon the business interests of the
stakeholders in AEDC. Thus, Petitioner AEDC was
constrained to agree to the signing of a Joint Motion to
Dismiss and to the filing of the same in court.
m) Unbeknownst to AEDC at that time was that
simultaneous with the signing of the July 12, 1997
Concession Agreement, the DOTC and PIATCO executed a
secret side agreement grossly prejudicial and detrimental
to the interest of Government. It stipulated that in the
event that the Civil Case filed by AEDC on April 16, 1997
is not resolved in a manner favorable to the Government,
PIATCO shall be entitled to full reimbursement for all costs
and expenses it incurred in order to obtain the NAIA IPT III
BOT project in an amount not less than One Hundred
Eighty Million Pesos (Php 180,000,000.00). This was
apparently the reason why the President was determined
to have AEDCs case dismissed immediately.
n) On February 9, 1999, after the Amended and Restated
Concession Agreement (hereinafter referred to as ARCA)
was signed without Petitioner AEDCs knowledge,
Petitioner AEDC signed a Joint Motion to Dismiss upon the
representation of the DOTC that it would provide AEDC
with a copy of the 1997 Concession Agreement. x x x.[45]
On 30 April 1999, the RTC of Pasig City issued an Order dismissing with
prejudice Civil Case No. 66213 upon the execution by the parties of a Joint
Motion to Dismiss. According to the Joint Motion to Dismiss
The parties, assisted
respectfully state:
by
their
respective
counsel,
1. Philippine International Air Terminals Company, Inc.

(PIATCO) and the respondents have submitted to
petitioner, through the Office of the Executive Secretary,
Malacaang, a copy of the Concession Agreement which
they executed for the construction and operation of the
Ninoy Aquino International Airport International Passenger
Terminal III Project (NAIA IPT III Project), which petitioner

requested.
2. Consequently, the parties have decided to amicably
settle the instant case and jointly move for the
dismissal thereof without any of the parties admitting
liability or conceding to the position taken by the other in
the instant case.
3. Petitioner, on the other hand, and the respondents, on
the other hand, hereby release and forever discharge
each other from any and all liabilities, direct or
indirect, whether criminal or civil, which arose in
connection with the instant case.
4. The parties agree to bear the costs, attorneys fees and
other expenses they respectively incurred in connection
with the instant case. (Emphasis ours.)
AEDC, however, invokes the purported pressure exerted upon it by then
President Joseph E. Estrada, the alleged fraud committed by the DOTC, and
paragraph 2 in the afore-quoted Joint Motion to Dismiss to justify the nonapplication of the doctrine of res judicata to its present Petition.
The elements of res judicata, in its concept as a bar by former judgment,
are as follows: (1) the former judgment or order must be final; (2) it must
be a judgment or order on the merits, that is, it was rendered after a
consideration of the evidence or stipulations submitted by the parties at the
trial of the case; (3) it must have been rendered by a court having
jurisdiction over the subject matter and the parties; and (4) there must be,
between the first and second actions, identity of parties, of subject matter
and of cause of action.[46] All of the elements are present herein so as to bar
the present Petition.
First, the Order of the RTC of Pasig City, dismissing Civil Case No. 66213,
was issued on 30 April 1999. The Joint Motion to Dismiss, deemed a
compromise agreement, once approved by the court is immediately
executory and not appealable.[47]
Second, the Order of the RTC of Pasig City dismissing Civil Case No. 66213
pursuant to the Joint Motion to Dismiss filed by the parties constitutes a
judgment on the merits.
The Joint Motion to Dismiss stated that the parties were willing to settle the
case amicably and, consequently, moved for the dismissal thereof. It also
contained a provision in which the parties the AEDC, on one hand, and the
DOTC Secretary and PBAC, on the other released and forever discharged
each other from any and all liabilities, whether criminal or civil, arising in
connection with the case. It is undisputable that the parties entered into a
compromise agreement, defined as a contract whereby the parties, by
making reciprocal concessions, avoid a litigation or put an end to one
already commenced.[48] Essentially, it is a contract perfected by mere
consent, the latter being manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute the
contract. Once an agreement is stamped with judicial approval, it becomes
more than a mere contract binding upon the parties; having the sanction of
the court and entered as its determination of the controversy, it has the
force and effect of any other judgment.[49] Article 2037 of the Civil Code
explicitly provides that a compromise has upon the parties the effect and
authority of res judicata.
Because of the compromise agreement among the parties, there was
accordingly a judicial settlement of the controversy, and the Order, dated
30 April 1999, of the RTC of Pasig City was no less a judgment on the merits
which may be annulled only upon the ground of extrinsic fraud. [50] Thus, the
RTC of Pasig City, in the same Order, correctly granted the dismissal of Civil
Case No. 66213 with prejudice.
A scrutiny of the Joint Motion to Dismiss submitted to the RTC of Pasig City
would reveal that the parties agreed to discharge one another from any and
all liabilities, whether criminal or civil, arising from the case, after AEDC was
furnished with a copy of the 1997 Concession Agreement between the
DOTC and PIATCO. This complete waiver was the reciprocal concession of
the parties that puts to an end the present litigation, without any residual
right in the parties to litigate the same in the future. Logically also, there
was no more need for the parties to admit to any liability considering that
they already agreed to absolutely discharge each other therefrom, without
necessarily conceding to the others position. For AEDC, it was a declaration
that even if it was not conceding to the Governments position, it was
nonetheless waiving any legal entitlement it might have to sue the
Government on account of the NAIA IPT III Project. Conversely, for the
Government, it was an avowal that even if it was not accepting AEDCs
stance, it was all the same relinquishing its right to file any suit against
AEDC in connection with the same project.That none of the parties
admitted liability or conceded its position is without bearing on the validity
or binding effect of the compromise agreement, considering that these
were not essential to the said compromise.
Third, there is no question as to the jurisdiction of the RTC of Pasig City over
the subject matter and parties in Civil Case No. 66213. The RTC can
exercise original jurisdiction over cases involving the issuance of writs
of certiorari, prohibition, mandamus, quo warranto, habeas corpus and

injunction.[51] To recall, the Petition of AEDC before the RTC of Pasig City was
for the declaration of nullity of proceedings, mandamus and injunction. The
RTC of Pasig City likewise had jurisdiction over the parties, with the
voluntary submission by AEDC and proper service of summons on the DOTC
Secretary and the PBAC Chairman and members.
Lastly, there is, between Civil Case No. 66213 before the RTC of Pasig City
and the Petition now pending before this Court, an identity of parties, of
subject matter, and of causes of action.
There is an identity of parties. In both petitions, the AEDC is the
petitioner. The respondents in Civil Case No. 66213 are the DOTC Secretary
and the PBAC Chairman and members. The respondents in the instant
Petition are the DOTC, the DOTC Secretary, and the Manila International
Airport Authority (MIAA). While it may be conceded that MIAA was not a
respondent and did not participate in Civil Case No. 66213, it may be
considered a successor-in-interest of the PBAC. When Civil Case No. 66213
was initiated, PBAC was then in charge of the NAIA IPT III Project, and had
the authority to evaluate the bids and award the project to the one offering
the lowest or most advantageous bid. Since the bidding is already over, and
the structures comprising NAIA IPT III are now built, then MIAA has taken
charge thereof. Furthermore, it is clear that it has been the intention of the
AEDC to name as respondents in their two Petitions the government
agency/ies and official/s who, at the moment each Petition was filed, had
authority over the NAIA IPT III Project.
There is an identity of subject matter because the two Petitions involve
none other than the award and implementation of the NAIA IPT III Project.
There is an identity of cause of action because, in both Petitions, AEDC is
asserting the violation of its right to the award of the NAIA IPT III Project as
the original proponent in the absence of any other qualified bidders. As
early as in Civil Case No. 66213, AEDC already sought a declaration by the
court of the absence of any other qualified proponent submitting a
competitive bid for the NAIA IPT III Project, which, ultimately, would result in
the award of the said project to it.
AEDC attempts to evade the effects of its compromise agreement by
alleging that it was compelled to enter into such an agreement when
former President Joseph E. Estrada asserted his influence and intervened in
Civil Case No. 66213. This allegation deserves scant consideration. Without
any proof that such events did take place, such statements remain mere
allegations that cannot be given weight. One who alleges any defect or the
lack of a valid consent to a contract must establish the same by full, clear
and convincing evidence, not merely by preponderance thereof.[52] And,
even assuming arguendo, that the consent of AEDC to the compromise

agreement was indeed vitiated, then President Estrada was removed from
office in January 2001. AEDC filed the present Petition only on 20 October
2005. The four-year prescriptive period, within which an action to annul a
voidable contract may be brought, had already expired.[53]
The AEDC further claims that the DOTC committed fraud when, without
AEDCs knowledge, the DOTC entered into an Amended and Restated
Concession Agreement (ARCA) with PIATCO. The fraud on the part of the
DOTC purportedly also vitiated AEDCs consent to the compromise
agreement. It is true that a judicial compromise may be set aside if fraud
vitiated the consent of a party thereof; and that the extrinsic fraud, which
nullifies a compromise, likewise invalidates the decision approving it.
[54]
However,
once
again,
AEDCs
allegations
of
fraud
are
unsubstantiated. There is no proof that the DOTC and PIATCO willfully and
deliberately suppressed and kept the information on the execution of the
ARCA from AEDC. The burden of proving that there indeed was fraud lies
with the party making such allegation. Each party must prove his own
affirmative allegations. The burden of proof lies on the party who would be
defeated if no evidence were given on either side. In this jurisdiction, fraud
is never presumed.[55]
Moreover, a judicial compromise may be rescinded or set aside on the
ground of fraud in accordance with Rule 38 of the Rules on Civil Procedure
on petition for relief from judgment. Section 3 thereof prescribes the
periods within which the petition for relief must be filed:
SEC. 3. Time for filing petition; contents and
verification. A petition provided for in either of the
preceding sections of this Rule must be verified, filed
within sixty (60) days after the petitioner learns of the
judgment, final order or other proceeding to be set aside,
and not more than six (6) months after such judgment or
final order was entered, or such proceeding was taken,
and must be accompanied with affidavits showing the
fraud, accident, mistake or excusable negligence relied
upon, and the facts constituting the petitioners good and
substantial cause of action or defense, as the case may
be.
According to this Courts ruling in Argana v. Republic,[56] as applied to a
judgment based on compromise, both the 60-day and six-month
reglementary periods within which to file a petition for relief should be
reckoned from the date when the decision approving the compromise
agreement was rendered because such judgment is considered
immediately executory and entered on the date that it was approved by the
court. In the present case, the Order of the RTC of Pasig City granting the
Joint Motion to Dismiss filed by the parties in Civil Case No. 66213 was
issued on 30 April 1999, yet AEDC only spoke of the alleged fraud which
vitiated its consent thereto in its Petition before this Court filed on 20
October 2005, more than six years later.
It is obvious that the assertion by AEDC of its vitiated consent to the Joint
Motion to Dismiss Civil Case No. 66213 is nothing more than an afterthought and a desperate attempt to escape the legal implications thereof,
including the barring of its present Petition on the ground of res judicata.
It is also irrelevant to the legal position of AEDC that the Government
asserted in Agan that the award of the NAIA IPT III Project to PIATCO was
void. That the Government eventually took such a position, which this Court
subsequently upheld, does not affect AEDCs commitments and obligations
under its judicially-approved compromise agreement in Civil Case No.
66213, which AEDC signed willingly, knowingly, and ably assisted by legal
counsel.
In addition, it cannot be said that there has been a fundamental change in
the Governments position since Civil Case No. 66213, contrary to the
allegation of AEDC. The Government then espoused that AEDC is not
entitled to the award of the NAIA IPT III Project. The Government still
maintains the exact same position presently. That the Government
eventually reversed its position on the validity of its award of the project to
PIATCO is not inconsistent with its position that neither should AEDC be
awarded the project.
For the foregoing substantive and procedural reasons, the instant Petition of
AEDC should be dismissed.
Republic
of
the Philippines v.
Court of Appeals
and Baterina (G.R.
No. 174166)
As mentioned in Gingoyon, expropriation proceedings for the NAIA IPT III
was instituted by the Government with the RTC of Pasay City, docketed as
Case No. 04-0876CFM. Congressman Baterina, together with other
members of the House of Representatives, sought intervention in Case No.
04-0876CFM by filing a Petition for Prohibition in Intervention (with
Application for Temporary Restraining Order and Writ of Preliminary
Injunction). Baterina, et al. believe that the Government need not file
expropriation proceedings to gain possession of NAIA IPT III and that PIATCO
is not entitled to payment of just compensation, arguing thus
A) Respondent PIATCO does not own Terminal III because
BOT Contracts do not vest ownership in PIATCO. As such,
neither
PIATCO
nor
FRAPORT
are
entitled
to
compensation.
B) Articles 448, ET SEQ., of the New Civil Code, as regards
builders in good faith/bad faith, do not apply to PIATCOs
Construction of Terminal III.
C) Article 1412(2) of the New Civil Code allows the
Government to demand the return of what it has given
without any obligation to comply with its promise.
D) The payment of compensation to PIATCO is
unconstitutional, violative of the Build-Operate-Transfer
Law, and violates the Civil Code and other laws. [57]
On 27 October 2005, the RTC of Pasay City issued an Order admitting the
Petition in Intervention of Baterina, et al., as well as the Complaint in
Intervention of Manuel L. Fortes, Jr. and the Answer in Intervention of Gina
B. Alnas, et al. The Republic sought reconsideration of the 27 October
2005 Order of the RTC of Pasay City, which, in an Omnibus Order dated 13
December 2005, was denied by the RTC of Pasay City as regards the
intervention of Baterina, et al. and Fortes, but granted as to the
intervention of Alnas, et al. On 22 March 2006, Baterina, et al. filed with the
RTC of Pasay City a Motion to Declare in Default and/or Motion for Summary
Judgment considering that the Republic and PIATCO failed to file an answer
or any responsive pleading to their Petition for Prohibition in Intervention.
In the meantime, on 19 December 2005, the Courts Decision
in Gingoyon was promulgated. Baterina also filed a Motion for Intervention
in said case and sought reconsideration of the Decision therein. However,
his Motion for Intervention was denied by this Court in a Resolution dated 1
February 2006.
On 27 March 2006, the RTC of Pasay City issued an Order and Writ of
Execution, the dispositive portion of which reads
WHEREFORE, let a writ of execution be issued in this case
directing the Sheriff of this court to immediately
implement the Order dated January 4, 2005 and January
10, 2005, as affirmed by the Decision of the Supreme
Court in G.R. No. 166429 in the above-entitled case dated

December 19, 2005, in the following manner:
1. Ordering the General Manager, the Senior Assistant
General Manager and the Vice President of Finance of the
Manila International Airport Authority (MIAA) to
immediately withdraw the amount of P3,002,125,000.00
from the above-mentioned Certificates of US Dollar Time
Deposits with the Land Bank of the Philippines, Baclaran
Branch;
2. Ordering the Branch Manager, Land Bank of
the Philippines, Baclaran Branch to immediately release
the sum of P3,002,125,000.00 to PIATCO;
Return of Service of the Writs shall be made by the Sheriff
of this court immediately thereafter;[58]
The RTC of Pasay City, in an Order, dated 15 June 2006, denied the Motions
for Reconsideration of its Order and Writ of Execution filed by the
Government and Fortes. Baterina, meanwhile, went before the Court of
Appeals via a Petition for Certiorari and Prohibition (With Urgent Prayer for
the Issuance of a Temporary Restraining Order and Writ of Preliminary
Injunction), docketed as CA-G.R. No. 95539, assailing the issuance, in grave
abuse of discretion, by the RTC of Pasay City of its Orders dated 27 March
2006 and 15 June 2006 and Writ of Execution dated 27 March 2006.
During the pendency of CA-G.R. No. 95539 with the Court of Appeals, the
RTC of Pasay City issued an Order, dated 7 August 2006, denying the
Urgent Manifestation and Motion filed by the Republic in which it relayed
willingness to comply with the Order and Writ of Execution dated 27 March
2006, provided that the trial court shall issue an Order expressly
authorizing the Republic to award concessions and lease portions of the
NAIA IPT III to potential users. The following day, on 8 August 2006, the RTC
of Pasay City issued an Order denying the intervention of Baterina, et
al. and Fortes in Case No. 04-0876CFM. In a third Order, dated9 August
2006, the RTC of Pasay City directed PIATCO to receive the amount
of P3,002,125,000.00 from the Land Bank of the Philippines, Baclaran
Branch.
By 24 August 2006, the Republic was all set to comply with the 9 August
2006 Order of the RTC of Pasay City. Hence, the representatives of the
Republic and PIATCO met before the RTC of Pasay City for the supposed
payment by the former to the latter of the proferred amount. However, on
the same day, the Court of Appeals, in CA G.R. No. 95539, issued a
Temporary Restraining Order (TRO) enjoining, among other things, the RTC
of Pasay City from implementing the questioned Orders, dated 27 March
2006 and 15 June 2006, or from otherwise causing payment and from
further proceeding with the determination of just compensation in the
expropriation case involved herein, until such time that petitioners motion
to declare in default and motion for partial summary judgment shall have
been resolved by the trial court; or it is clarified that PIATCO categorically
disputes the proferred value for NAIA Terminal 3. The TRO was to be
effective for 30 days. Two days later, on 26 August 2006, the Republic filed
with the Court of Appeals an Urgent Motion to Lift Temporary Restraining
Order, which the appellate court scheduled for hearing on 5 September
2006.
While the Urgent Motion to lift the TRO was still pending with the Court of
Appeals, the Republic already filed the present Petition for Certiorari and
Prohibition With Urgent Application for a Temporary Restraining Order
and/or Writ of Preliminary Injunction, attributing to the Court of Appeals
grave abuse of discretion in granting the TRO and seeking a writ of
prohibition against the Court of Appeals to enjoin it from giving due course
to Baterinas Petition in CA-G.R. No. 95539. The Republic thus raises before
this Court the following arguments:
I
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO AN EXCESS OR LACK OF
JURISDICTION WHEN IT GRANTED THE TEMPORARY
RESTRAINING ORDER.
A.
THIS HONORABLE COURTS
DECISION IN GINGOYON CONSTITUTES
THE LAW OF THE CASE.
B.
THE TRO IS IN DIRECT
CONTRAVENTION OF THIS COURTS
DECISION
WICH
HAD
ATTAINED
FINALITY.
II
THE REPUBLIC IS SUFFERING IRREPARABLE DAMAGE.
III
THE COURT OF APPEALS MUST BE PROHIBITED FROM

GIVING DUE COURSE TO A PETITION THAT IS DEFECTIVE
IN FORM AND SUBSTANCE.
A.
PRIVATE RESPONDENT HAS
NO LEGAL STANDING.
1.
THIS HONORABLE
COURT HAS RULED THAT
PRIVATE RESPONDENT HAS NO
LEGAL STANDING.
2.
PRIVATE
RESPONDENT HAS LOST HIS
STANDING AS AN INTERVENOR.
B.
PRIVATE
RESPONDENT
FAILED TO DEMONSTRATE THAT HE IS
ENTITLED TO THE INJUNCTIVE RELIEFS
PRAYED FOR.
C.
THE
INSUFFICIENT.
BOND
POSTED
IS
Appeals from implementing the writ of preliminary

injunction in CA-G.R. SP No. 95539 and proceeding in said
case such as hearing it on September 5, 2006. After both
parties have been heard, the preliminary injunction be
MADE PERMANENT;
(b) The Resolution date 24 August 2006 of the Court of
Appeals be SET ASIDE; and
(c) CA-G.R. SP No. 95539 be ORDERED DISMISSED.
Other just and equitable reliefs are likewise prayed for. [60]
On 4 September 2006, the Republic filed a Manifestation and Motion to
Withdraw Urgent Motion to Lift Temporary Restraining Order with the Court
of Appeals stating, among other things, that it had decided to withdraw the
said Motion as it had opted to avail of other options and remedies. Despite
the Motion to Withdraw filed by the Government, the Court of Appeals
issued a Resolution, dated 8 September 2006, lifting the TRO it issued, on
the basis of the following
A.
THE MOTION TO DECLARE
IN DEFAULT AND/OR MOTION FOR
PARTIAL SUMMARY JUDGMENT HAS
ALREADY BEEN RESOLVED.
In view of the pronouncement of the Supreme Court in

the Gingoyon case upholding the right of PIATCO to be
paid
the
proferred
value
in
the
amount
ofP3,002,125,000.00 prior to the implementation of the
writ of possession issued by the trial court on December
21, 2004 over the NAIA Passenger Terminal III, and
directing the determination of just compensation, there is
no practical and logical reason to maintain the effects of
the Temporary Restraining Order contained in our
Resolution dated August 24, 2006. Thus, We cannot
continue restraining what has been mandated in a final
and executory decision of the Supreme Court.
B.
PIATCO
HAS
CATEGORICALLY
DISPUTED
THE
PROFFERED VALUE FOR NAIA TERMINAL
III.[59]
WHEREFORE, Our Resolution dated 24 August 2006 be

SET ASIDE. Consequently, the Motion to Withdraw the
Motion to Lift the Temporary Restraining Order is rendered
moot and academic.[61]
IV
GRANTING ARGUENDO THAT PRIVATE RESPONDENTS
PETITION IS SUFFICIENT IN FORM AND SUBSTANCE, THE
SAME HAS BECOME MOOT AND ACADEMIC.
The Republic prays of this Court that:

(a) Pending the determination of the merits of this
petition, a temporary restraining order and/or a writ of
preliminary injunction be ISSUED restraining the Court of
There being no more legal impediment, the Republic tendered on 11

September 2006 Land Bank check in the amount of P3,002,125,000.00
representing the proferred value of NAIA IPT III, which was received by a
duly authorized representative of PIATCO.
On 27 December 2006, the Court of Appeals rendered a Decision in CA G.R.

No. 95539 dismissing Baterinas Petition.
The latest developments before the Court of Appeals and the RTC of Pasay
City render the present Petition of the Republic moot.
Nonetheless, Baterina, as the private respondent in the instant Petition,
presented his own prayer that a judgment be rendered as follows:
A. For this Honorable Court, in the exercise of its judicial
discretion
to
relax
procedural
rules
consistent
with Metropolitan Traffic Command v. Gonong and deem
that justice would be better served if all legal
issues involved in the expropriation case and in Baterina
are resolved in this case once and for all,
to DECLARE that:
i.
TERMINAL 3, as a matter
of law, is public property and thus not a
proper object of eminent domain
proceedings; and
ii.
PIATCO, as a matter of
law, is merely the builder of TERMINAL
3 and, as such, it may file a claim for
recovery on quantum meruit with the
Commission
on
Audi[t]
for
determination of the amount thereof, if
any.
bad faith, etc., to this Honorable Court and the

Commission on Audit, and to DECLARE such evidence to
be admissible in any proceeding for the determination of
any compensation due to PIATCO, if any.
[F]. In the alternative, to:
i.
SET
ASIDE the
trial
courts Order dated 08 August 2006
denying Private Respondents motion for
intervention in the expropriation case,
and
ii.
Should this Honorable
Court lend credence to the argument of
the
Solicitor
General
in
its Comment dated 20 April 2006 that
there are issues as to material fact that
require
presentation
of
evidence,
to REMAND the resolution of the legal
issues raised by Private Respondent to
the trial court consistent with this
Honorable
Courts
holding
in
the Gingoyon
Resolution that the
interests
of
the
movants-inintervention [meaning Takenaka,
Asahikosan, and herein Private
Respondent] may be duly litigated
in proceedings which are extant
before the lower courts.[62]
B. To DIRECT the Regional Trial Court of Pasay City,

Branch 117 to dismiss the expropriation case;
C. To DISMISS the instant Petition and DENY The
Republics application for TRO and/or writ of preliminary
injunction for lack of merit;
D. To DECLARE that the P3 Billion (representing the
proferred value of TERMINAL 3) paid to PIATCO on 11
September 2006 as funds held in trust by PIATCO for
the benefit of the Republic and subject to the outcome of
the proceedings for the determination of recovery
on quantum meruit due to PIATCO, if any.
E. To DIRECT the Solicitor General to disclose the
evidence it has gathered on corruption, bribery, fraud,
In essence, Baterina is opposing the expropriation proceedings on the

ground that NAIA IPT III is already public property. Hence, PIATCO is not
entitled to just compensation for NAIA IPT III. He is asking the Court to make
a definitive ruling on this matter considering that it was not settled in
either Agan or Gingoyon.
We disagree. Contrary to Baterinas stance, PIATCOs entitlement to just and
equitable consideration for its construction of NAIA IPT III and the propriety
of the Republics resort to expropriation proceedings were already
recognized and upheld by this Court in Agan and Gingoyon.
The Courts Decisions in both Agan and Gingoyon had attained finality, the
former on 17 February 2004 and the latter on 17 March 2006.
This Court already made an unequivocal pronouncement in its Resolution

dated 21 January 2004 in Agan that for the Government of the Republic to
take over the NAIA IPT III facility, it has to compensate PIATCO as a builder
of the structures; and that [t]he compensation must be just and in
accordance with law and equity for the government cannot unjustly enrich
itself at the expense of PIATCO and its investors. [63] As between the Republic
and PIATCO, the judgment on the need to compensate PIATCO before the
Government may take over NAIA IPT III is already conclusive and beyond
question.
Hence, in Gingoyon, this Court declared that:
This pronouncement contains the fundamental premises
which permeate this decision of the Court. Indeed, Agan,
final and executory as it is, stands as governing law in
this case, and any disposition of the present petition must
conform to the conditions laid down by the Court in its
2004 Resolution.
xxxx
The pronouncement in the 2004 Resolution is
especially significant to this case in two aspects,
namely: (i) that PIATCO must receive payment of
just compensation determined in accordance with
law and equity; and (ii) that the government is
barred from taking over NAIA 3 until such just
compensation is paid. The parties cannot be allowed to
evade the directives laid down by this Court through any
mode of judicial action, such as the complaint for eminent
domain.
It cannot be denied though that the Court in the 2004
Resolution prescribed mandatory guidelines which the
Government must observe before it could acquire the
NAIA 3 facilities. Thus, the actions of respondent judge
under review, as well as the arguments of the parties
must, to merit affirmation, pass the threshold test of
whether such propositions are in accord with the 2004
Resolution.[64]
The Court then, in Gingoyon, directly addressed the issue on the
appropriateness of the Republics resort to expropriation proceedings:
The Government has chosen to resort to

expropriation, a remedy available under the
law, which has the added benefit of an integrated
process for the determination of just compensation
and the payment thereof to PIATCO. We appreciate
that the case at bar is a highly unusual case, whereby
the Government seeks to expropriate a building complex
constructed on land which the State already owns. There
is an inherent illogic in the resort to eminent domain on
property already owned by the State. At first blush, since
the State already owns the property on which NAIA 3
stands, the proper remedy should be akin to an action for
ejectment.
However, the reason for the resort by the
Government to expropriation proceedings is
understandable in this case. The 2004 Resolution, in
requiring the payment of just compensation prior to the
takeover by the Government of NAIA 3, effectively
precluded it from acquiring possession or ownership of
the NAIA 3 through the unilateral exercise of its rights as
the owner of the ground on which the facilities stood.
Thus, as things stood after the 2004 Resolution, the right
of the Government to take over the NAIA 3 terminal was
preconditioned by lawful order on the payment of just
compensation to PIATCO as builder of the structures.
xxxx
The right of eminent domain extends to personal and real
property, and the NAIA 3 structures, adhered as they are
to the soil, are considered as real property. The public
purpose for the expropriation is also beyond dispute. It
should also be noted that Section 1 of Rule 67 (on
Expropriation) recognizes the possibility that the
property sought to be expropriated may be
titled in the name of the Republic of the
Philippines,
although
occupied
by
private
individuals, and in such case an averment to that effect
should be made in the complaint. The instant
expropriation complaint did aver that the NAIA 3 complex
stands on a parcel of land owned by the Bases
Conversion Development Authority, another agency of
[the Republic of the Philippines].
Admittedly, eminent domain is not the sole judicial

recourse by which the Government may have acquired
the NAIA 3 facilities while satisfying the requisites in the
2004 Resolution. Eminent domain though may be the
most effective, as well as the speediest means by
which such goals may be accomplished. Not only
does it enable immediate possession after satisfaction of
the requisites under the law, it also has a built-in
procedure through which just compensation may be
ascertained. Thus, there should be no question as to the
propriety of eminent domain proceedings in this case.
Still, in applying the laws and rules on expropriation in the
case at bar, we are impelled to apply or construe these
rules in accordance with the Courts prescriptions in the
2004 Resolution to achieve the end effect that the
Government may validly take over the NAIA 3 facilities.
Insofar as this case is concerned, the 2004 Resolution is
effective not only as a legal precedent, but as the source
of rights and prescriptions that must be guaranteed, if not
enforced, in the resolution of this petition. Otherwise, the
integrity and efficacy of the rulings of this Court will be
severely diminished.[65] (Emphasis ours.)
The Court, also in Gingoyon, categorically recognized PIATCOs ownership
over the structures it had built in NAIA IPT III, to wit:
There can be no doubt that PIATCO has ownership
rights over the facilities which it had financed and
constructed. The 2004 Resolution squarely recognized
that right when it mandated the payment of just
compensation to PIATCO prior to the takeover by the
Government of NAIA 3. The fact that the Government
resorted to eminent domain proceedings in the first place
is a concession on its part of PIATCOs ownership. Indeed,
if no such right is recognized, then there should be no
impediment for the Government to seize control of NAIA 3
through ordinary ejectment proceedings.
xxxx
Thus, the property subject of expropriation, the
NAIA 3 facilities, are real property owned by
PIATCO. x x x (Emphasis ours.)[66]
It was further settled in Gingoyon that the expropriation proceedings shall

be held in accordance with Republic Act No. 8974,[67] thus:
Unlike in the case of Rule 67, the application of Rep. Act
No. 8974 will not contravene the 2004 Resolution, which
requires the payment of just compensation before any
takeover of the NAIA 3 facilities by the Government. The
2004 Resolution does not particularize the extent such
payment must be effected before the takeover, but it
unquestionably requires at least some degree of payment
to the private property owner before a writ of possession
may issue. The utilization of Rep. Act No. 8974
guarantees compliance with this bare minimum
requirement, as it assures the private property owner the
payment of, at the very least, the proffered value of the
property to be seized. Such payment of the proffered
value to the owner, followed by the issuance of the writ of
possession in favor of the Government, is precisely the
schematic under Rep. Act No. 8974, one which facially
complies with the prescription laid down in the 2004
Resolution.
And finally, as to the determination of the amount due PIATCO, this Court
ruled in Gingoyon that:
Under Rep. Act No. 8974, the Government is required to
immediately pay the owner of the property the amount
equivalent to the sum of (1) one hundred percent (100%)
of the value of the property based on the current relevant
zonal valuation of the [BIR]; and (2) the value of the
improvements and/or structures as determined under
Section 7. As stated above, the BIR zonal valuation
cannot apply in this case, thus the amount subject to
immediate payment should be limited to the value of the
improvements and/or structures as determined under
Section 7, with Section 7 referring to the implementing
rules and regulations for the equitable valuation of the
improvements and/or structures on the land. Under the
present implementing rules in place, the valuation of the
improvements/structures are to be based using the
replacement cost method. However, the replacement
cost is only one of the factors to be considered in
determining the just compensation.
In
addition
to
Rep.
Act
No.
8974,
the
2004 Resolution in Agan also mandated that the payment
of just compensation should be in accordance with
equity as well. Thus, in ascertaining the ultimate
amount of just compensation, the duty of the trial court is
to ensure that such amount conforms not only to the law,
such as Rep. Act No. 8974, but to principles of equity as
well.
Admittedly, there is no way, at least for the present, to
immediately ascertain the value of the improvements and
structures since such valuation is a matter for factual
determination. Yet Rep. Act No. 8974 permits an
expedited means by which the Government can
immediately take possession of the property without
having to await precise determination of the valuation.
Section 4(c) of Rep. Act No. 8974 states that in case the
completion of a government infrastructure project is of
utmost urgency and importance,and there is no
existing valuation of the area concerned, the
implementing agency shall immediately pay the owner of
the
property
its proferred
value,
taking
into
consideration the standards prescribed in Section 5 [of
the law]. The proffered value may strike as a highly
subjective standard based solely on the intuition of the
government, but Rep. Act No. 8974 does provide relevant
standards by which proffered value should be based, as
well as the certainty of judicial determination of the
propriety of the proffered value.
In filing the complaint for expropriation, the Government
alleged to have deposited the amount of P3 Billion
earmarked for expropriation, representing the assessed
value of the property. The making of the deposit,
including the determination of the amount of the deposit,
was undertaken under the erroneous notion that Rule 67,
and not Rep. Act No. 8974, is the applicable law. Still, as
regards the amount, the Court sees no impediment to
recognize this sum of P3 Billion as the proffered value
under Section 4(b) of Rep. Act No. 8974. After all, in the
initial determination of the proffered value, the
Government is not strictly required to adhere to any
predetermined standards, although its proffered value
may later be subjected to judicial review using the
standards enumerated under Section 5 of Rep. Act No.
8974.[68]
Gingoyon constitutes as the law of the case for the expropriation

proceedings, docketed as Case No. 04-0876CFM, before the RTC of Pasay
City. Law of the case has been defined in the following manner
By "law of the case" is meant that "whatever is once
irrevocably established as the controlling legal rule or
decision between the same parties in the same case
continues to be the law of the case" so long as the "facts
on which such decision was predicated continue to be the
facts of the case before the court" (21 C.J.S. 330). And
once the decision becomes final, it is binding on all
inferior courts and hence beyond their power and
authority to alter or modify (Kabigting vs. Acting Director
of Prisons, G.R. L-15548, October 30, 1962).[69]
A ruling rendered on the first appeal, constitutes the law of the case, and,
even if erroneous, it may no longer be disturbed or modified since it has
become final long ago.[70]
The extensive excerpts from Gingoyon demonstrate and emphasize that
the Court had already adjudged the issues raised by Baterina, which he
either conveniently overlooked or stubbornly refused to accept.
The general rule precluding the relitigation of material facts or questions
which were in issue and adjudicated in former action are commonly applied
to all matters essentially connected with the subject matter of the
litigation. Thus, it extends to questions necessarily involved in an
issue, and necessarily adjudicated, or necessarily implied in the
final judgment, although no specific finding may have been made in
reference thereto, and although such matters were directly referred to in
the pleadings and were not actually or formally presented. Under this rule,
if the record of the former trial shows that the judgment could not have
been rendered without deciding the particular matter, it will be considered
as having settled that matter as to all future actions between the parties
and if a judgment necessarily presupposes certain premises, they are
as conclusive as the judgment itself. Reasons for the rule are that a
judgment is an adjudication on all the matters which are essential to
support it, and that every proposition assumed or decided by the court
leading up to the final conclusion and upon which such conclusion is based
is as effectually passed upon as the ultimate question which is finally
solved.[71]
Since the issues Baterina wishes to raise as an intervenor in Case No. 040876CFM were already settled with finality in both Agan and Gingoyon,
then there is no point in still allowing his intervention. His Petition-inIntervention would only be a relitigation of matters that had been
previously adjudicated by no less than the Highest Court of the land. And,
in no manner can the RTC of Pasay City in Case No. 04-0876CFM grant the
reliefs he prayed for without departing from or running afoul of the final and
executory Decisions of this Court in Agan and Gingoyon.
Uniwide Holdings, Inc. vs. Cruz

other venues.The general rule on venue of personal actions, as in
petitioners complaint for collection of sum of money, is embodied in
Section 2, Rule 4 of the Rules of Court which provides: Sec. 2. Venue of
personal actions.All other actions may be commenced and tried
where the plaintiff or any of the principal plaintiffs resides, or where the
defendant or any of the principal defendants resides, or in the case of a
nonresident defendant, where he may be found, at the election of the
plaintiff. (Emphasis and italics supplied) The aforequoted provision is,
however, qualified by Section 4 of the same rule which allows parties,
before the filing of the action, to validly agree in writing on an exclusive
venue. The forging of a written agreement on an exclusive venue of an
action does not, however, preclude parties from bringing a case to other
venues. Where there is a joinder of causes of action between the same
parties one of which does not arise out of the contract where the exclusive
venue was stipulated upon, the complaint, as in the one at bar, may be
brought before other venues provided that such other cause of action falls
within the jurisdiction of the court and the venue lies therein.
Same; Same; The restriction should be strictly construed as relating
solely to the agreement for which the exclusive venue stipulation is
embodied.In fine, since the other causes of action in petitioners
complaint do not relate to a breach of the agreement it forged with Cruz
embodying the exclusive venue stipulation, they should not be subjected
thereto. As San Miguelfurther enlightens: Restrictive stipulations are in
derogation of the general policy of making it more convenient for the
parties to institute actions arising from or in relation to their agreements.
Thus, the restriction should be strictly construed as relating solely to the
agreement
for
which
the
exclusive
venue
stipulation
is
embodied. Expanding the scope of such limitation on a contracting party
will create unwarranted restrictions which the parties might find unintended
or worse, arbitrary and oppressive.
While it is true that when this Court, in a Resolution dated 1 February 2006,
dismissed the Motions for Intervention in Gingoyon, including that of
Baterina, it also observed that the interests of the movants-in-intervention
may be duly litigated in proceedings which are extant before the lower
courts. This does not mean, however, that the said movants-in-interest
were assured of being allowed as intervenors or that the reliefs they sought
as such shall be granted by the trial courts. The fate of their intervention
still rests on their interest or legal standing in the case and the merits of
their arguments.
WHEREFORE, in view of the foregoing:
a.
The Petition in G.R. No. 169914 is hereby DISMISSED for
lack of merit; and
b.
The Petition in G.R. No. 174166 is hereby likewise
DISMISSED for being moot and academic.
G.R. No. 171456. August 9, 2007.*
UNIWIDE HOLDINGS, INC., petitioner, vs. ALEXANDER M. CRUZ, respondent.
Remedial Law; Actions; Venue; The general rule on venue of personal
actions as in petitioners complaint for collection of sum of money, is
embodied in Section 2, Rule 4 of the Rules of Court; Said provision is
qualified by Section 4 of the same rule which allows parties before the filing
of the action to validly agree in writing on an exclusive venue; Forging of a
written agreement on an exclusive venue of an action does not however
preclude parties from bringing a case to
_______________
PETITION for review on certiorari of an order of the Regional Trial Court of

Paraaque City, Br. 258.
Farcon, Gabriel, Farcon and Associates for respondent.
666
666
SECOND DIVISION.
665
VOL. 529, AUGUST 9, 2007
665
CARPIO-MORALES, J.:
Petitioner, Uniwide Holdings, Inc. (UHI), whose principal office is located in

Paraaque City, entered into a Franchise Agreement1 (the agreement)
granting respondent, Alexander M. Cruz (Cruz), a five-year franchise to
adopt and use the Uniwide Family Store System for the establishment and
operation of a Uniwide Family Store along Marcos Highway, Sta. Cruz,
Cogeo, Marikina City.
Article 10.22 of the agreement called for Cruz as franchisee to pay UHI a
monthly service fee of P50,000 or three percent of gross monthly
purchases, whichever is higher, payable within five days after the end of
each month without need of formal billing or demand from UHI. In case of
any delay in the payment of the monthly service fee, Cruz would, under
Article 10.33 of the agreement, be liable to pay an interest charge of three
percent per month.
It appears that Cruz had purchased goods from UHIs affiliated
companies First Paragon Corporation (FPC) and Uniwide Sales Warehouse
Club, Inc. (USWCI).
In August 2002, FPC and USWCI executed Deeds of Assignment 4 in
favor of UHI assigning all their rights and interests over Cruzs accounts
payable to them.
As of August 13, 2002, Cruz had outstanding obligations with UHI, FPC,
and USWCI in the total amount of P1,358,531.89, drawing UHI to send him
a letter of even date for the settlement thereof in five days. His receipt of
the letter notwithstanding, Cruzs accounts remained unsettled.
Thus UHI filed a complaint5 for collection of sum of money before the
Regional Trial Court (RTC) of Paraaque docketed
_______________
be held liable together with legal interest thereon from the date of filing of
this Complaint, until fully paid.
SECOND CAUSE OF ACTION
11. Being the assignee of the receivable of FPC, which
receivable defendant failed to pay despite demand, plaintiff
suffered actual damages in the amount of Phil. Peso: Sixty Four
Thousand One Hundred Sixty Five & 96/100 (P64,165.96) for which
defendant should be held liable together with the legal interest thereon
computed from date of receipt of plaintiffs demand letter, or on August 16,
2002 to be exact, until fully paid.
THIRD CAUSE OF ACTION
12. Being the assignee of the receivable of USWCI, which
receivable defendant failed to pay despite demand, plaintiff
suffered actual damages in the total amount of Phil. Peso: One Million
Five Hundred Seventy Nine Thousand Sixty One & 36/100 (P1,579,061.36),
computed as of 05 April 2004, inclusive of the two and a half percent
(2.5%) monthly interest, as and by way of penalty, and the three (3%)
annual interest on the unpaid amount, for which defendant should be held
liable, with legal interest thereon from the date of filing of this Complaint,
until fully paid.
FOURTH CAUSE OF ACTION
Records, pp. 10-26.

Id., at p. 14.
3
Ibid.
4
Id., at pp. 27-32.
5
Id., at pp. 1-9.
667
2
VOL. 529, AUGUST 9, 2007

as Civil Case No. 04-0278 against Cruz on the following causes of action:
FIRST CAUSE OF ACTION
10. Being entitled to the payment of monthly service fee pursuant
to the FA, which defendant failed to pay despite demand, plaintiff
suffered actual damages in the amount of Phil. Peso: One Million Three
Hundred Twenty Seven Thousand Six Hundred Sixty Nine & 83/100
(P1,327,669.83), computed as of 05 April 2004, for which defendant should
13. By reason of defendants obstinate refusal or failure to pay his

indebtedness, plaintiff was constrained to file this Complaint and in the
process incur expenses by way of attorneys fees, which could be
reasonably estimated to reach at least Phil. Peso: Two Hun
668
667
668

dred Fifty Thousand (P250,000.00) and for which defendant should be held
answerable for.6 (Emphasis and underscoring supplied)
To the complaint Cruz filed a motion to dismiss 7 on the ground of improper
venue, he invoking Article 27.5 of the agreement which reads:
27.5 Venue StipulationThe Franchisee consents to the exclusive
jurisdiction of the courts of Quezon City, the Franchisee waiving any
other venue.8 (Emphasis supplied)
Branch 258 of the Paraaque RTC, by Order 9 of December 12, 2005,
granted Cruzs motion to dismiss.
Hence, the present petition before this Court, raising the sole legal
issue of:
WHETHER A CASE BASED ON SEVERAL CAUSES OF ACTION IS DISMISSIBLE
ON THE GROUND OF IMPROPER VENUE WHERE ONLY ONE OF THE CAUSES
OF ACTION ARISES FROM A CONTRACT WITH EXCLUSIVE VENUE
STIPULATION.10 (Italics supplied)
Petitioner contends that nowhere in the agreement is there a mention of
FPC and USWCI, and neither are the two parties thereto, hence, they cannot
be bound to the stipulation on exclusive venue.
The petition is impressed with merit.
The general rule on venue of personal actions, as in petitioners
complaint for collection of sum of money, is embodied in Section 2, Rule 4
of the Rules of Court which provides:
Sec. 2. Venue of personal actions.All other actions may be
commenced and tried where the plaintiff or any of the
_______________
_______________
11
Capati v. Dr. Ocampo, 199 Phil. 230, 233; 113 SCRA 794, 796 (1982).
Rule 2, Section 5 of the Rules of Court provides:
SECTION 5. Joinder of causes of action.A party may in one pleading
assert, in the alternative or otherwise, as many causes of action as may
have against an opposing party, subject to the following conditions:
xxxx
(c) Where the causes of action are between the same parties but
pertain to different venues or jurisdictions, the joinder may be allowed in
the Regional Trial Court provided one of the causes of action falls within the
jurisdiction of said court and the venue lies therein; x x x (italics supplied)
670
12
670
Id., at pp. 4-6.

Id., at pp. 199-207.
8
Id., at p. 25.
9
Id., at p. 272.
10
Rollo, p. 20.
669
7
VOL. 529, AUGUST 9, 2007

principal plaintiffs resides, or where the defendant or any of the
principal defendants resides, or in the case of a nonresident defendant,
where he may be found, at the election of the plaintiff. (Emphasis and
italics supplied)
The afore-quoted provision is, however, qualified by Section 4 of the same
rule which allows parties, before the filing of the action, to validly agree in
writing on an exclusive venue.11
The forging of a written agreement on an exclusive venue of an action
does not, however, preclude parties from bringing a case to other venues.
Where there is a joinder of causes of action between the same parties
one of which does not arise out of the contract where the exclusive venue
was stipulated upon, the complaint, as in the one at bar, may be brought
before other venues provided that such other cause of action falls within
the jurisdiction of the court and the venue lies therein. 12
Based on the allegations in petitioners complaint, the second and third
causes of action are based on the deeds of assignment executed in its favor
by FPC and USWCI. The deeds bear no exclusive venue stipulation with
respect to the causes of action thereunder. Hence, the general rule on
venue ap-
669

pliesthat the complaint may be filed in the place where the plaintiff or
defendant resides.13
It bears emphasis that the causes of action on the assigned accounts
are not based on a breach of the agreement between UHI and Cruz. They
are based on separate, distinct and independent contracts-deeds of
assignment in which UHI is the assignee of Cruzs obligations to the
assignors FPC and USWCI. Thus, any action arising from the deeds of
assignment cannot be subjected to the exclusive venue stipulation
embodied
in
the
agreement.
So San
Miguel
Corporation
v.
Monasterio 14enlightens:
Exclusive venue stipulation embodied in a contract restricts or confines
parties thereto when the suit relates to breach of said contract. But where
the exclusivity clause does not make it necessarily encompassing,
such that even those not related to the enforcement of the
contract should be subject to the exclusive venue, the stipulation
designating exclusive venues should be strictly confined to the
specific undertaking or agreement. Otherwise, the basic principles of
freedom to contract might work to the great disadvantage of a weak partysuitor who ought to be allowed free access to courts of justice. 15 (Emphasis
and italics supplied)
In fine, since the other causes of action in petitioners complaint do not
relate to a breach of the agreement it forged with Cruz embodying the
exclusive venue stipulation, they should not be subjected thereto. As San
Miguel further enlightens:
Restrictive stipulations are in derogation of the general policy of making it
more convenient for the parties to institute actions arising from or in
relation to their agreements. Thus, the restriction should be strictly
construed as relating solely to the agreement for
_______________
13
Polytrade Corporation v. Blanco, 140 Phil. 604, 607; 30 SCRA 187, 190
(1969).
14
G.R. No. 151037, June 23, 2005, 461 SCRA 89.
15
Id., at pp. 94-95.
671
VOL. 529, AUGUST 9, 2007

which the exclusive venue stipulation is embodied. Expanding the scope of
such limitation on a contracting party will create unwarranted restrictions
which the parties might find unintended or worse, arbitrary and
oppressive.16 (Italics supplied)
WHEREFORE, the petition is GRANTED. The December 12, 2005 Order of
Regional Trial Court of Paraaque City, Branch 258 in Civil Case No. 04-0278
is SET ASIDE. The case is REMANDED to said court which is directed to
reinstate the case to its docket and conduct further proceedings thereon
with dispatch.
SO ORDERED.
Quisumbing (Chairperson), Carpio, Tinga andVelasco,
Jr.,
JJ.,
concur.
Petition granted, judgment set aside. Case remanded to trial court.
Note.A mere stipulation on the venue of an action is not enough to
preclude parties from bringing a case in other venuesthe parties must be
able to show that such stipulation is exclusive. (Mangila vs. Court of
Appeals, 387 SCRA 162 [2002])
671
VOL. 531, AUGUST 24, 2007
Infante vs. Aran Builders, Inc.
G.R. No. 156596. August 24, 2007.*

ADELAIDA INFANTE, petitioner, vs. ARAN BUILDERS, INC., respondent.**
Actions; Venue; Judgments; Revival of Judgment; The proper venue in
an action for revival of judgment depends on the determination of whether
the present action for revival of judgment is a real action or a personal
action.The proper venue depends on the determination of whether the
present action for revival of judgment is a real action or a personal action.
Applying the afore-quoted rules on venue, if the action for revival of
judgment affects title to or possession of real property, or interest therein,
then it is a real action that must be filed with the court of the place where
the real property is located. If such action does not fall under the category
of real actions, it is then a personal action that may be filed with the court
of the place where the plaintiff or defendant resides.
Same; Same; Same; Same; Pleadings and Practice; The allegations in
the complaint for revival of judgment determine whether it is a real action
or a personal action; Where the sole reason for action to revive is the
enforcement of adjudged rights over a piece of property, the action falls
under the category of a real action for which the complaint should be filed
with the Regional Trial Court of the place where the realty is located.The
allegations in the complaint for revival of judgment determine whether it is
a real action or a personal action. The complaint for revival of judgment
alleges that a final and executory judgment has ordered herein petitioner to
123
execute a deed of sale over a parcel of land in Ayala Alabang Subdivision in

favor of herein private respondent; pay all pertinent taxes in connection
with said sale; register the deed of sale with the Registry of Deeds and
deliver to Ayala Corporation the certificate of title issued in the name of
private respondent. The same judgment ordered private respondent to pay
petitioner the sum of P321,918.25
_______________
*
THIRD DIVISION.
**
The Court of Appeals was originally impleaded as respondent. Per
Section 4, Rule 45 of the Rules of Court, the Court of Appeals is deleted
from the title of the case.
124
revival of judgment being a real action, the complaint should indeed be

filed with the Regional Trial Court of the place where the realty is located.
Courts; A branch of the Regional Trial Court shall exercise its
authority only over a particular territory defined by the Supreme Court.It
is quite clear that a branch of the Regional Trial Court shall exercise its
authority only over a particular territory defined by the Supreme Court.
Originally, Muntinlupa City was under the territorial jurisdiction of the
Makati Courts. However, Section 4 of Republic Act No. 7154, entitled An Act
to Amend Section Fourteen of Batas Pambansa Bilang 129, Otherwise
Known As The Judiciary Reorganization Act of 1981, took effect on
September 4, 1991. Said law provided for the creation of a branch of the
Regional Trial Court in Muntinlupa. Thus, it is now the Regional Trial Court in
Muntinlupa City which has territorial jurisdiction or authority to validly issue
orders and processes concerning real property within Muntinlupa City.
PETITION for review on certiorari of the decision and resolution of the Court
of Appeals.

De Belen and Nagui for petitioner.
24
125
VOL. 531, AUGUST 24, 2007
upon petitioners compliance with the aforementioned order. It is
further alleged that petitioner refused to comply with her judgment
obligations despite private respondents repeated requests and demands,
and that the latter was compelled to file the action for revival of judgment.
Private respondent then prayed that the judgment be revived and a writ of
execution be issued to enforce said judgment. The previous judgment has
conclusively declared private respondents right to have the title over the
disputed property conveyed to it. It is, therefore, undeniable that private
respondent has an established interest over the lot in question; and to
protect such right or interest, private respondent brought suit to revive the
previous judgment. The sole reason for the present action to revive is the
enforcement of private respondents adjudged rights over a piece of realty.
Verily, the action falls under the category of a real action, for it affects
private respondents interest over real property. The present case for
Gancayco, Balasbas and Associates Law Offices for private respondent.

AUSTRIA-MARTINEZ, J.:
This resolves the Petition for Review on Certiorari under Rule 45 of the
Rules of Court, seeking the reversal of the Decision 1 of the Court of Appeals
125
(CA) promulgated on August 12, 2002, which upheld the Order dated
September 4, 2001, issued by the Regional Trial Court of Muntinlupa City
(RTC).
The undisputed facts and issues raised in the lower courts are
accurately summarized by the CA as follows:
Before the Regional Trial Court of Muntinlupa City (or Muntinlupa RTC;
Branch 276), presided over by Hon. Norma C. Perello (or respondent
judge), was an action for revival of judgment filed on June 6, 2001 by Aran
Builders, Inc. (or private respondent) against Adelaida Infante (or
petitioner), docketed as Civil Case No. 01-164.
The judgment sought to be revived was rendered by the Regional Trial
Court of Makati City (or Makati RTC; Branch 60) in an action for specific
performance and damages, docketed as Civil Case No. 15563.
The Makati RTC judgment, which became final and executory on
November 16, 1994, decreed as follows:
1. date payment of Subdivision Association dues referred to in the

CONTRACT TO SELL dated November 10, 1986 (Exh. A or Exh.
1);
2. 26.1.2.To execute the deed of sale of Lot No. 11, Block 9, Phase 3A1, Ayala Alabang Subdivision covered by TCT No. 114015 for
P500,000.00 in favor of the plaintiff;
1. 26.WHEREFORE, the Court hereby renders judgment as follows:
3. 26.1.3.To pay the capital gains tax, documentary stamp taxes and
other taxes which the Bureau of Internal Revenue may assess in
connection with the sale mentioned in the preceding paragraph
and to submit to the plaintiff proof of such payment;
2. 26.1The defendant ADELAIDA B. INFANTE is ordered to do the

following within thirty (30) days from finality hereof:
4. 26.1.4.To secure the written conformity of AYALA CORPORATION to

the said sale and to give such written conformity to the plaintiff;
3. 26.1.1.To deliver to the plaintiff ARAN BUILDERS, INC. the

following: (a) the complete plans (lot plan, location map and
vicinity map); (b) Irrevocable Power of Attorney; (c) Real Estate
Tax clearance; (d) tax receipts; (e) proof of up to
5. 26.1.5.To register the deed of sale with the Registry of Deeds and
deliver to AYALA CORPORATION the certificate of title issued in
the name of plaintiff pursuant to such registration;
6. 26.2Upon the compliance of the defendant with the preceding
directives, the plaintiff must immediately pay to the defendant
the sum of P321,918.25;
_______________
1
Penned by Associate Justice Edgardo P. Cruz, with Associate Justices
Hilarion L. Aquino and Regalado E. Maambong, concurring, Rollo, pp. 19-26.
7. 26.3The defendant is ordered to pay plaintiff P10,000.00 as

attorneys fees;
126
8. 26.4The Complaint
DISMISSED;
126
for
moral
and
exemplary
9. 26.5The COUNTERCLAIM is DISMISSED; and
damages
is
10. 26.6Cost is taxed against the defendant.
Defendant may answer the complaint within the remaining period, but
no less than five (5) days, otherwise a default judgment might be taken
against her.
Petitioner filed a motion to dismiss the action (for revival of judgment)

on the grounds that the Muntinlupa RTC has no jurisdiction over the persons
of the parties and that venue was improperly laid. Private respondent
opposed the motion.
It is SO ORDERED.
Her motion for reconsideration having been denied per order dated
September 28, 2001, petitioner came to this Court [CA] viathe instant
special civil action for certiorari. She ascribes grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of respondent judge
for erroneously holding that Civil Case No. 01-164 is a revival of judgment
which declared private respondent as the owner of a parcel of land located
in Muntinlupa City and (that) the judgment rendered by the (Makati RTC) in
Civil Case No. 15563 sought to be enforced necessarily involves the
interest, possession, title and ownership of the parcel of land located in
Muntinlupa City.
On September 4, 2001, the Muntinlupa RTC issued an order which

reads:
The MOTION TO DISMISS is denied.
Admittedly, the Decision was rendered by the Makati Regional Trial
Court, but it must be emphasized that at that time there was still no
Regional Trial Court in Muntinlupa
127
VOL. 531, AUGUST 24, 2007
127
Petitioner asserts that the complaint for specific performance and

damages before the Makati RTC is a personal action and, therefore, the suit
to revive the judgment therein is also personal in nature; and that,
consequently, the venue of the action for revival of judgment is either
Makati City or Paraaque City where private respondent and petitioner
respectively reside, at the election of private respondent.
On the other hand, private respondent maintains that the subject action
for revival judgment is quasi in rem because it involves and affects vested
or adjudged right on a real property; and that,
128
City, then under the territorial jurisdiction of the Makati Courts, so that
cases from this City were tried and heard at Makati City. With the creation
of the Regional Trial Courts of Muntinlupa City, matters involving properties
located in this City, and cases involving Muntinlupa City residents were all
ordered to be litigated before these Courts.
The case at bar is a revival of a judgment which declared the plaintiff as
the owner of a parcel of land located in Muntinlupa City. It is this judgment
which is sought to be enforced thru this action which necessarily involves
the interest, possession, title, and ownership of the parcel of land located in
Muntinlupa city and adjudged to Plaintiff. It goes without saying that the
complaint should be filed in the latter City where the property is located, as
there are now Regional Trial Courts hereat.
128
consequently, venue lies in Muntinlupa City where the property is

situated.2
On August 12, 2002, the CA promulgated its Decision ruling in favor of

herein private respondent. The CA held that since the judgment sought to
be revived was rendered in an action involving title to or possession of real
property, or interest therein, the action for revival of judgment is then an
action in rem which should be filed with the Regional Trial Court of the place
where the real property is located. Petitioner moved for reconsideration of
the CA Decision but the motion was denied per Resolution dated January 7,
2003.
Hence, herein petition. Petitioner claims that the CA erred in finding
that the complaint for revival of judgment is an action in rem which was
correctly filed with the RTC of the place where the disputed real property is
located.
The petition is unmeritorious.
Petitioner insists that the action for revival of judgment is an action in
personam; therefore, the complaint should be filed with the RTC of the
place where either petitioner or private respondent resides. Petitioner then
concludes that the filing of the action for revival of judgment with the RTC
of Muntinlupa City, the place where the disputed property is located, should
be dismissed on the ground of improper venue.
Private respondent is of the opinion that the judgment it is seeking to
revive involves interest over real property. As such, the present action for
revival is a real action, and venue was properly laid with the court of the
place where the realty is located.
Thus, the question that must be answered is: where is the proper venue
of the present action for revival of judgment?
Section 6, Rule 39 of the 1997 Rules of Civil Procedure provides that
after the lapse of five (5) years from entry of judgment and before it is
barred by the statute of limitations, a
_______________
2
Rollo, pp. 19-23.
129
VOL. 531, AUGUST 24, 2007
final and executory judgment or order may be enforced by action. The Rule
does not specify in which court the action for revival of judgment should be
filed.
In Aldeguer v. Gemelo,3 the Court held that:
x x x an action upon a judgment must be brought either in the same court
where said judgment was rendered or in the place where the plaintiff or
defendant resides, or in any other place designated by the statutes
which treat of the venue of actions in general. (Emphasis supplied)4
but emphasized that other provisions in the rules of procedure which fix the
venue of actions in general must be considered. 5
Under the present Rules of Court, Sections 1 and 2 of Rule 4 provide:
Section 1. Venue of real actions.Actions affecting title to or possession of
real property, or interest therein, shall be commenced and tried in the
proper court which has jurisdiction over the area wherein the real property
involved, or a portion thereof, is situated.
xxxx
Section 2. Venue of personal actions.All other actions may be
commenced and tried where the plaintiff or any of the principal plaintiffs
resides, or where the defendant or any of the principal defendants resides,
or in the case of a non-resident defendant where he may be found, at the
election of the plaintiff.
Thus, the proper venue depends on the determination of whether the
present action for revival of judgment is a real action or a personal action.
129
Applying the afore-quoted rules on venue, if the action for revival of

judgment affects title to or possession of real property, or interest therein,
then it is a real action that must be filed with the court of the place
_______________
3
68 Phil. 421 (1939).
Id., at pp. 424-425.
Id., at p. 423.
In Donnelly, the portion of the Decision being relied upon by petitioner

stated thus:
Petitioner raises before this Court two (2) issues, namely: (a) whether an
action for revival of judgment is one quasi in rem and, therefore, service of
summons may be effected thru publication; and (b) whether the second
action for revival of judgment (Civil Case No.
130
130
considered as a personal one. This thinking is incorrect. The Court specified

that the judgment sought to be revived in said case was a judgment
for damages. The judgment subject of the action for revival did not involve
or affect any title to or possession of real property or any interest therein.
The complaint filed in the revival case did not fall under the category of real
actions and, thus, the action necessarily fell under the category of personal
actions.

VOL. 531, AUGUST 24, 2007
where the real property is located. If such action does not fall under the
category of real actions, it is then a personal action that may be filed with
the court of the place where the plaintiff or defendant resides.
In support of her contention that the action for revival of judgment is a
personal action and should be filed in the court of the place where either
the plaintiff or defendant resides, petitioner cites the statements made by
the Court in Aldeguer v. Gemelo6 and Donnelly v. Court of First Instance of
Manila.7 Petitioner, however, seriously misunderstood the Courts rulings in
said cases.
In Aldeguer, what the Court stated was that [t]he action for the
execution of a judgment for damages is a personal one, and under
section 377 [of the Code of Civil Procedure], it should be brought in any
province where the plaintiff or the defendant resides, at the election of the
plaintiff8 (Emphasis and italics supplied). Petitioner apparently took such
statement to mean that any action for revival of judgment should be
76166) has already prescribed. To our mind, the first is not a proper
and justiciable issue in the present proceedings x x x. Nevertheless,
let it be said that an action to revive a judgment is a personal one.
(Emphasis supplied)9
The Court clearly pointed out that in said case, the issue on whether an
action for revival of judgment is quasi in remwas not yet proper and
justiciable. Therefore, the foregoing statement cannot be used as a
precedent, as it was merely an obiter dictum. Moreover, as inAldeguer, the
judgment sought to be revived in Donnellyinvolved judgment for a certain
sum of money. Again, no title or interest in real property was involved. It is
then understandable that the action for revival in said case was categorized
as a personal one.
131
Clearly, the Courts classification in Aldeguer andDonnelly of the actions

for revival of judgment as being personal in character does not apply to the
present case.
The allegations in the complaint for revival of judgment determine
whether it is a real action or a personal action.
The complaint for revival of judgment alleges that a final and executory
judgment has ordered herein petitioner to execute a deed of sale over a
parcel of land in Ayala Alabang Subdivision in favor of herein private
respondent; pay all pertinent taxes in connection with said sale; register the
deed of sale with the Registry of Deeds and deliver to Ayala Corporation the
certificate of title issued in the name of private respondent. The same
judgment ordered private respondent to pay petitioner the sum of
P321,918.25 upon petitioners compliance with the aforementioned order. It
is further alleged that petitioner refused to comply with her judgment
obligations despite private respondents repeated requests and demands,
and that the latter was compelled to file the action for revival of judgment.
Private respondent then
_______________
9
383.
Donnelly v. Court of First Instance of Manila, supra note 7, at p. 169; p.
132
132
The previous judgment has conclusively declared private respondents

right to have the title over the disputed property conveyed to it. It is,
therefore, undeniable that private respondent has an established interest
over the lot in question; and to protect such right or interest, private
respondent brought suit to revive the previous judgment. The sole reason
for the present action to revive is the enforcement of private respondents
adjudged rights over a piece of realty. Verily, the action falls under the
category of a real action, for it affects private respondents interest over
real property.
The present case for revival of judgment being a real action, the
complaint should indeed be filed with the Regional Trial Court of the place
where the realty is located.
Section 18 of Batas Pambansa Bilang 129 provides:
Sec. 18. Authority to define territory appurtenant to each branch.The
Supreme Court shall define the territory over which a branch of the
Regional Trial Court shall exercise its authority. The territory thus
defined shall be deemed to be the territorial area of the branch
concerned for purposes of determining the venue of all suits,
proceedings or actions, whether civil or criminal, as well as determining
the Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit
Trial Courts over which the said branch may exercise appellate jurisdiction.
The power herein granted shall be exercised with a view to making the
courts readily accessible to the people of the different parts of the region
and making the attendance of litigants and witnesses as inexpensive as
possible. (Emphasis supplied)
From the foregoing, it is quite clear that a branch of the Regional Trial
Court shall exercise its authority only over a particular territory
defined by the Supreme Court. Originally, Muntinlupa City was under
the territorial jurisdiction of the Makati Courts. However, Section 4 of
Republic Act No. 7154, entitled An Act to Amend Section Fourteen of Batas
Pambansa Bilang 129, Otherwise Known As
133
prayed that the judgment be revived and a writ of execution be issued to

enforce said judgment.
VOL. 531, AUGUST 24, 2007
133
The Judiciary Reorganization Act of 1981, took effect on September 4, 1991.

Said law provided for the creation of a branch of the Regional Trial Court in
Muntinlupa. Thus, it is now the Regional Trial Court in Muntinlupa City which
has territorial jurisdiction or authority to validly issue orders and processes
concerning real property within Muntinlupa City.
Thus, there was no grave abuse of discretion committed by the
Regional Trial Court of Muntinlupa City, Branch 276 when it denied
petitioners motion to dismiss; and the CA did not commit any error in
affirming the same.
WHEREFORE, the petition is DENIED. The Decision dated August 12, 2002 and
Resolution dated January 7, 2003 of the Court of Appeals are AFFIRMED.
SO ORDERED.
Ynares-Santiago (Chairperson), Chico-Nazario,Nachura and Reyes,
JJ.,
concur.
Petition denied, judgment and resolution affirmed.
Notes.The doctrine of res judicata has no application where the latter action is
for revival of a prior judgment. (Caia vs. Court of Appeals, 239 SCRA 252 [1994])
An action for revival of judgment is no more than a procedural means of securing
the execution of a previous judgment which has become dormant after the passage of
five years without it being executed upon motion of the prevailing party. (Panotes vs.
City Townhouse Development Corporation, 512 SCRA 269 [2007])
G.R. No. 154096.August 22, 2008.*

IRENE MARCOS-ARANETA, DANIEL RUBIO, ORLANDO G. RESLIN, and JOSE G.
RESLIN, petitioners,vs. COURT OF APPEALS, JULITA C. BENEDICTO, and
FRANCISCA BENEDICTO-PAULINO, respondents.
Actions; Pleadings and Practice; Verification; Verification is, under the

Rules, not a jurisdictional but merely a formal requirement which the court may
motu proprio direct a party to comply with or correct, as the case may be.
Verification is, under the Rules, not a jurisdictional but merely a formal
requirement which the court may motu proprio direct a party to comply with or
correct, as the case
_______________
* SECOND DIVISION.
42
4
2
Marcos-Araneta vs. Court of Appeals
may be. As the Court articulated in Kimberly Independent Labor Union for
Solidarity, Activism and Nationalism (KILUSAN)-Organized Labor Associations in
Line Industries and Agriculture (OLALIA) v. Court of Appeals, 528 SCRA 45
(2007): [V]erification is a formal, not a jurisdictional requisite, as it is mainly
intended to secure an assurance that the allegations therein made are done in
good faith or are true and correct and not mere speculation. The Court may
order the correction of the pleading, if not verified, or act on the unverified
pleading if the attending circumstances are such that a strict compliance with
the rule may be dispensed with in order that the ends of justice may be served.
Given this consideration, the CA acted within its sound discretion in ordering the
submission of proof of Franciscas authority to sign on Julitas behalf and
represent her in the proceedings before the appellate court.
Same; Same; Certificate of Non-Forum Shopping; The signature of any of
the principal petitioners or principal parties would constitute a substantial
compliance with the rule on verification and certification of non-forum shopping,
and, should there exist a commonality of interest among the parties, or where
the parties filed the case as a collective, raising only one common cause of
action or presenting a common defense, then the signature of one of the
petitioners or complainants, acting as representative, is sufficient compliance.
Regarding the certificate of non-forum shopping, the general rule is that all the
petitioners or plaintiffs in a case should sign it. However, the Court has time and
again stressed that the rules on forum shopping, which were designed to
promote the orderly administration of justice, do not interdict substantial
compliance with its provisions under justifiable circumstances. As has been ruled
by the Court, the signature of any of the principal petitioners or principal parties,
as Francisca is in this case, would constitute a substantial compliance with the
rule on verification and certification of non-forum shopping. It cannot be
overemphasized that Francisca herself was a principal party in Civil Case No.
3341-17 before the RTC and in thecertiorari proceedings before the CA. Besides
being an heir of Benedicto, Francisca, with her mother, Julita, was substituted for
Benedicto in the instant case after his demise. And should there exist a
commonality of interest among the parties, or where the parties filed the case as
a collective, raising only one common cause of action or presenting a common
defense, then the signature of one of the petitioners or complainants, acting as

representative, is suffi-43
VOL. 563, AUGUST 22, 2008
cient compliance. We said so in Cavile v. Heirs of Clarita Cavile, 400 SCRA
255 (2003). Like Thomas Cavile, Sr. and the other petitioners in Cavile, Francisca
and Julita, as petitioners before the CA, had filed their petition as a collective,
sharing a common interest and having a common single defense to protect their
rights over the shares of stocks in question.
Same; Words and Phrases; Questions of Law and Questions of Fact,
Distinguished.Whether a determinative question is one of law or of fact
depends on the nature of the dispute. A question of law exists when the doubt or
controversy concerns the correct application of law or jurisprudence to a certain
given set of facts; or when the issue does not call for an examination of the
probative value of the evidence presented, the truth or falsehood of facts being
admitted. A question of fact obtains when the doubt or difference arises as to
the truth or falsehood of facts or when the query invites the calibration of the
whole evidence considering mainly the credibility of the witnesses, the existence
and relevancy of specific surrounding circumstances, as well as their relation to
each other and to the whole, and the probability of the situation.
Certiorari; The Court of Appeals oversteps its boundaries when, in
disposing of a petition for certiorari, it does not confine itself to determining
whether or not lack of jurisdiction or grave abuse of discretion tainted the
issuance of the assailed lower court orders, but proceeds to pass on the merits
of the case pending before the trial court; The onus of factually determining
whether a trust allegedly established in favor of a party, if one was indeed
established, was implied or express properly pertains, at the first instance, to
the trial court and not to the appellate court in a special civil action for
certiorari.The CA overstepped its boundaries when, in disposing of private
respondents petition forcertiorari, it did not confine itself to determining
issuance of the assailed RTC orders, but proceeded to pass on the factual issue
of the existence and enforceability of the asserted trust. In the process, the CA
virtually resolved petitioner Irenes case for reconveyance on its substantive
merits even before evidence on the matter could be adduced. Civil Case Nos.
3341-17 and 3342-17 in fact have not even reached the pre-trial stage. To stress,
the nature of the trust allegedly constituted in Irenes favor and its
enforceability, being evidentiary in nature, are44
4
4
best determined by the trial court. The original complaints and the
amended complaint certainly do not even clearly indicate whether the asserted
trust is implied or express. To be sure, an express trust differs from the implied
variety in terms of the manner of proving its existence. Surely, the onus of
43
factually determining whether the trust allegedly established in favor of Irene, if

one was indeed established, was implied or express properly pertains, at the first
instance, to the trial court and not to the appellate court in a special civil action
for certiorari, as here. In the absence of evidence to prove or disprove the
constitution and necessarily the existence of the trust agreement between Irene,
on one hand, and the Benedicto Group, on the other, the appellate court cannot
intelligently pass upon the issue of trust. A pronouncement on said issue of trust
rooted on speculation and conjecture, if properly challenged, must be struck
down. So it must be here.
Actions; Pleadings and Practice; Amendment of Pleadings; Motion to
Dismiss; Words and Phrases; Responsive pleadings are those which seek
affirmative relief and/or set up defenses, like an answer; A motion to dismiss is
not a responsive pleading for purposes of Sec. 2 of Rule 10 of the Rules of Court.
We agree with petitioners and turn to the governing Sec. 2 of Rule 10 of the
Rules of Court which provides: SEC. 2. Amendments as a matter of right.A
party may amend his pleading once as a matter of right at any time before a
responsive pleading is served or in the case of a reply, at any time within ten
(10) days after it is served. As the aforequoted provision makes it abundantly
clear that the plaintiff may amend his complaint once as a matter of right, i.e.,
without leave of court, before any responsive pleading is filed or served.
Responsive pleadings are those which seek affirmative relief and/or set up
defenses, like an answer. A motion to dismiss is not a responsive pleading for
purposes of Sec. 2 of Rule 10. Assayed against the foregoing perspective, the
RTC did not err in admitting petitioners amended complaint, Julita and Francisca
not having yet answered the original complaints when the amended complaint
was filed. At that precise moment, Irene, by force of said Sec. 2 of Rule 10, had,
as a matter of right, the option of amending her underlying reconveyance
complaints. As aptly observed by the RTC, Irenes motion to admit amended
complaint was not even necessary. The Court notes though that the RTC has not
offered an explanation why it saw fit to grant the motion to admit in the first
place.45
VOL. 563, AUGUST 22, 2008
Same; Venue; Venue essentially concerns a rule of procedure which, in
personal actions, is fixed for the greatest convenience possible of the plaintiff
and his witnesses, and where the ground of improperly laid venue is not raised
seasonably it is deemed waived.Venue essentially concerns a rule of procedure
which, in personal actions, is fixed for the greatest convenience possible of the
plaintiff and his witnesses. The ground of improperly laid venue must be raised
seasonably, else it is deemed waived. Where the defendant failed to either file a
motion to dismiss on the ground of improper venue or include the same as an
affirmative defense, he is deemed to have waived his right to object to improper
venue. In the case at bench, Benedicto and Francisca raised at the earliest time
possible, meaning within the time for but before filing the answer to the
complaint, the matter of improper venue. They would thereafter reiterate and
pursue their objection on venue, first, in their answer to the amended complaints
and then in their petition for certiorari before the CA. Any suggestion, therefore,
45
that Francisca and Benedicto or his substitutes abandoned along the way
improper venue as ground to defeat Irenes claim before the RTC has to be
rejected.
Same; Same; Words and Phrases; The venue of personal actions is the
court where the plaintiff or any of the principal plaintiffs resides, or where the
defendant or any of the principal defendants resides, or in the case of a nonresident defendant where he may be found, at the election of the plaintiff; In a
personal action, the plaintiff seeks the recovery of personal property, the
enforcement of a contract, or the recovery of damages, while real actions are
those affecting title to or possession of real property, or interest therein.In a
personal action, the plaintiff seeks the recovery of personal property, the
enforcement of a contract, or the recovery of damages. Real actions, on the
other hand, are those affecting title to or possession of real property, or interest
therein. In accordance with the wordings of Sec. 1 of Rule 4, the venue of real
actions shall be the proper court which has territorial jurisdiction over the area
wherein the real property involved, or a portion thereof, is situated. The venue of
personal actions is the court where the plaintiff or any of the principal plaintiffs
resides, or where the defendant or any of the principal defendants resides, or in
the case of a non-resident defendant where he may be found, at the election of
the plaintiff.46
4
6
Same; Same; An action seeking to compel recognition of an alleged trust
arrangement is an action in personam.In the instant case, petitioners are
basically asking Benedicto and his Group, as defendants a quo, to acknowledge
holding in trust Irenes purported 65% stockownership of UEC and FEMII,
inclusive of the fruits of the trust, and to execute in Irenes favor the necessary
conveying deed over the said 65% shareholdings. In other words, Irene seeks to
compel recognition of the trust arrangement she has with the Benedicto Group.
The fact that FEMIIs assets include real properties does not materially change
the nature of the action, for the ownership interest of a stockholder over
corporate assets is only inchoate as the corporation, as a juridical person, solely
owns such assets. It is only upon the liquidation of the corporation that the
stockholders, depending on the type and nature of their stockownership, may
have a real inchoate right over the corporate assets, but then only to the extent
of their stockownership. The amended complaint is an action in personam, it
being a suit against Francisca and the late Benedicto (now represented by Julita
and Francisca), on the basis of their alleged personal liability to Irene upon an
alleged trust constituted in 1968 and/or 1972. They are not actions in remwhere
the actions are against the real properties instead of against persons. We
particularly note that possession or title to the real properties of FEMII and UEC
is not being disputed, albeit part of the assets of the corporation happens to be
real properties.
Same; Same; Residence; Community Tax Certificates (CTCs); A plaintiff
who is not a resident of a particular place cannot, in a personal action,
contextually opt for said place as venue of her reconveyance complaint; One
can easily secure a basic residence certificate practically anytime in any Bureau
of Internal Revenue or treasurers office and dictate whatever relevant data one
desires entered.We point out at the outset that Irene, as categorically and
peremptorily found by the RTC after a hearing, is not a resident of Batac, Ilocos
Norte, as she claimed. The Court perceives no compelling reason to disturb, in
the confines of this case, the factual determination of the trial court and the
premises holding it together. Accordingly, Irene cannot, in a personal action,
contextually opt for Batac as venue of her reconveyance complaint. As to her,
Batac, Ilocos Norte is not what Sec. 2, Rule 4 of the Rules of Court adverts to as
the place where the plaintiff or any of the principal plaintiffs resides at the
time she filed her amended complaint. That Irene holds CTC No.47
VOL. 563, AUGUST 22, 2008
17019451 issued sometime in June 2000 in Batac, Ilocos Norte and in
which she indicated her address as Brgy. Lacub, Batac, Ilocos is really of no
moment. Let alone the fact that one can easily secure a basic residence
certificate practically anytime in any Bureau of Internal Revenue or treasurers
office and dictate whatever relevant data one desires entered, Irene procured
CTC No. 17019451 and appended the same to her motion for reconsideration
following the RTCs pronouncement against her being a resident of Batac.
Same; Same; Parties; Trusts; When there is more than one plaintiff in a
personal action case, the residences of the principal parties should be the basis
for determining proper venue; Trustees can only serve as mere representatives
of the beneficiary.There can be no serious dispute that the real party-ininterest plaintiff is Irene. As self-styled beneficiary of the disputed trust, she
stands to be benefited or entitled to the avails of the present suit. It is
undisputed too that petitioners Daniel Rubio, Orlando G. Reslin, and Jose G.
Reslin, all from Ilocos Norte, were included as co-plaintiffs in the amended
complaint as Irenes new designated trustees. As trustees, they can only serve
as mere representatives of Irene. Upon the foregoing consideration, the
resolution of the crucial issue of whether or not venue had properly been laid
should not be difficult. Sec. 2 of Rule 4 indicates quite clearly that when there is
more than one plaintiff in a personal action case, the residences of
the principal parties should be the basis for determining proper venue.
According to the late Justice Jose Y. Feria, the word principal has been added
[in the uniform procedure rule] in order to prevent the plaintiff from choosing the
residence of a minor plaintiff or defendant as the venue. Eliminate the
qualifying term principal and the purpose of the Rule would, to borrow from
Justice Regalado, be defeated where a nominal or formal party is impleaded in
the action since the latter would not have the degree of interest in the subject of
the action which would warrant and entail the desirably active participation
expected of litigants in a case.
Same; Same; Same; Same; The trustees may be accorded the right to
prosecute a suit, but only on behalf of the beneficiary who must be included in
the title of the case and shall be deemed to be the real party-in-interesttheir
residences cannot be made the basis in determining the venue of the suit. The
47
G.R. SP No. 64246 and its Resolution 2 of June 20, 2002 denying petitioners
motion for reconsideration. The assailed CA decision annulled and set aside the
Orders dated October 9, 2000, December 18, 2000, and March 15, 2001 of the
Regional Trial Court (RTC), Branch 17 in Batac, Ilocos Norte which admitted
petitioners amended complaint in Civil Case Nos. 3341-17 and 3342-17.
Court can concede that Irenes three co-plaintiffs are all residents of Batac,
Ilocos Norte. But48
4
8
it ought to be stressed in this regard that not one of the three can be
considered as principal party-plaintiffs in Civil Case Nos. 3341-17 and 3342-17,
included as they were in the amended complaint as trustees of the principal
plaintiff. As trustees, they may be accorded, by virtue of Sec. 3 of Rule 3, the
right to prosecute a suit, but only on behalf of the beneficiary who must be
included in the title of the case and shall be deemed to be the real party-ininterest. In the final analysis, the residences of Irenes co-plaintiffs cannot be
made the basis in determining the venue of the subject suit. This conclusion
becomes all the more forceful considering that Irene herself initiated and was
actively prosecuting her claim against Benedicto, his heirs, assigns, or
associates, virtually rendering the impleading of the trustees unnecessary.
Same; Same; Courts; It is high time that courts, judges, and those who
come to court for redress keep this ideal in mind, that litigants ought to bank on
the righteousness of their causes, the superiority of their cases, and the
persuasiveness of arguments to secure a favorable verdict.Irene was a
resident during the period material of Forbes Park, Makati City. She was not a
resident of Brgy. Lacub, Batac, Ilocos Norte, although jurisprudence has it that
one can have several residences, if such were the established fact. The Court
will not speculate on the reason why petitioner Irene, for all the inconvenience
and expenses she and her adversaries would have to endure by a Batac trial,
preferred that her case be heard and decided by the RTC in Batac. On the heels
of the dismissal of the original complaints on the ground of improper venue,
three new personalities were added to the complaint doubtless to insure, but in
vain as it turned out, that the case stays with the RTC in Batac. Litigants ought to
bank on the righteousness of their causes, the superiority of their cases, and the
persuasiveness of arguments to secure a favorable verdict. It is high time that
courts, judges, and those who come to court for redress keep this ideal in mind.
PETITION for review on certiorari of the decision and resolution of the Court of
Appeals.
Britanico, Sarmiento & Franco Law Offices for petitioners.49
VOL. 563, AUGUST 22, 2008
Dominador R. Santiago for private respondents.
VELASCO, JR.,J.:
The Case
This Petition for Review on Certiorari under Rule 45 assails and seeks to
nullify the Decision1 dated October 17, 2001 of the Court of Appeals (CA) in CA-
The Facts
Sometime in 1968 and 1972, Ambassador Roberto S. Benedicto, now
deceased, and his business associates (Benedicto Group) organized Far East
Managers and Investors, Inc. (FEMII) and Universal Equity Corporation (UEC),
respectively. As petitioner Irene Marcos-Araneta would later allege, both
corporations were organized pursuant to a contract or arrangement whereby
Benedicto, as trustor, placed in his name and in the name of his associates, as
trustees, the shares of stocks of FEMII and UEC with the obligation to hold those
shares and their fruits in trust and for the benefit of Irene to the extent of 65% of
such shares. Several years after, Irene, through her trustee-husband, Gregorio
Ma. Araneta III, demanded the reconveyance of said 65% stockholdings, but the
Benedicto Group refused to oblige.
_______________
1 Rollo, pp. 306-317. Penned by Associate Justice Elvi John S. Asuncion and
concurred in by Associate Justices Perlita J. Tria-Tirona and Amelita G. Tolentino.
2 Id., at pp. 341-341A.
50
50
49

In March 2000, Irene thereupon instituted before the RTC two similar
complaints
for conveyance
of
shares
of
stock,
accounting
and
receivership against the Benedicto Group with prayer for the issuance of a
temporary restraining order (TRO). The first, docketed as Civil Case No. 3341-17,
covered the UEC shares and named Benedicto, his daughter, and at least 20
other individuals as defendants. The second, docketed as Civil Case No. 3342-17,
sought the recovery to the extent of 65% of FEMII shares held by Benedicto and
the other defendants named therein.
Respondent Francisca Benedicto-Paulino,3 Benedictos daughter, filed a
Motion to Dismiss Civil Case No. 3341-17, followed later by an Amended Motion
to Dismiss. Benedicto, on the other hand, moved to dismiss 4 Civil Case No. 334217, adopting in toto the five (5) grounds raised by Francisca in her amended
motion to dismiss. Among these were: (1) the cases involved an intra-corporate
dispute over which the Securities and Exchange Commission, not the RTC, has
jurisdiction; (2) venue was improperly laid; and (3) the complaint failed to state a
cause of action, as there was no allegation therein that plaintiff, as beneficiary of
the purported trust, has accepted the trust created in her favor.
To the motions to dismiss, Irene filed a Consolidated Opposition, which
Benedicto and Francisca countered with a Joint Reply to Opposition.
Upon Benedictos motion, both cases were consolidated.

During the preliminary proceedings on their motions to dismiss, Benedicto and
Francisca, by way of bolstering their contentions on improper venue, presented
the Joint Affidavit5 of Gilmia B. Valdez, Catalino A. Bactat, and Conchita R. Rasco
who all attested being employed as household staff at
_______________
52
3 She admitted in the motion to be defendant Franscisca De Leon referred to

in the first complaint.
4 Rollo, pp. 98-99.
5 Id., at p. 143.
51
VOL. 563, AUGUST 22, 2008
the Marcos Mansion in Brgy. Lacub, Batac, Ilocos Norte and that Irene did not
maintain residence in said place as she in fact only visited the mansion twice in
1999; that she did not vote in Batac in the 1998 national elections; and that she
was staying at her husbands house in Makati City.
Against the aforesaid unrebutted joint affidavit, Irene presented her PhP 5
community tax certificate6 (CTC) issued on 11/07/99 in Curimao, Ilocos Norte
to support her claimed residency in Batac, Ilocos Norte.
In the meantime, on May 15, 2000, Benedicto died and was substituted by
his wife, Julita C. Benedicto, and Francisca.
On June 29, 2000, the RTC dismissed both complaints, stating that these
partly constituted real action, and that Irene did not actually reside in Ilocos
Norte, and, therefore, venue was improperly laid. In its dismissal order, 7 the
court also declared all the other issues raised in the different Motions to Dismiss
x x x moot and academic.
From the above order, Irene interposed a Motion for Reconsideration 8 which
Julita and Francisca duly opposed.
Pending resolution of her motion for reconsideration, Irene filed on July 17,
2000 a Motion (to Admit Amended Complaint), 9 attaching therewith a copy of
the Amended Complaint10 dated July 14, 2000 in which the names of Daniel
Rubio, Orlando G. Reslin, and Jose G. Reslin appeared as additional plaintiffs. As
stated in the amended complaint, the added plaintiffs, all from Ilocos Norte,
were Irenes new trustees. Parenthetically, the amended complaint stated
practically the same cause of action but, as couched, sought the reconveyance
of the FEMII shares only.
_______________
6 Id., at p. 128, CTC No. 12308513.
7 Id., at p. 152.
8 Id., at pp. 153-157.
9 Id., at pp. 345-346.
10 Id., at pp. 347-357.
52
51

During the August 25, 2000 hearing, the RTC dictated in open court an order
denying Irenes motion for reconsideration aforementioned, but deferred action
on her motion to admit amended complaint and the opposition thereto. 11
On October 9, 2000, the RTC issued an Order 12entertaining the amended
complaint, dispositively stating:
WHEREFORE, the admission of the Amended Complaint being tenable and
legal, the same is GRANTED.
Let copies of the Amended Complaint be served to the defendants who are
ordered to answer within the reglementary period provided by the rules.
The RTC predicated its order on the following premises:
(1)Pursuant to Section 2, Rule 10 of the Rules of Court, 13 Irene may opt to
file, as a matter of right, an amended complaint.
(2)The inclusion of additional plaintiffs, one of whom was a Batac, an
Ilocos Norte resident, in the amended complaint setting out the same cause of
action cured the defect of improper venue.
(3)Secs. 2 and 3 of Rule 3 in relation to Sec. 2 of Rule 4 allow the filing of
the amended complaint in question in the place of residence of any of Irenes coplaintiffs.
In time, Julita and Francisca moved to dismiss the amended complaint, but
the RTC, by Order14 dated December 18, 2000, denied the motion and reiterated
its directive for the two to answer the amended complaint.
_______________
11 Id., at pp. 165-166.
12 Id., at pp. 167-171.
13 Sec.2.Amendments as a matter of right.A party may amend his
pleading once as a matter of right at any time before a responsive pleading is
served x x x.
14 Rollo, pp. 358-365A.
53
VOL. 563, AUGUST 22, 2008
In said order, the RTC stood pat on its holding on the rule on amendments of
pleadings. And scoffing at the argument about there being no complaint to
amend in the first place as of October 9, 2000 (when the RTC granted the motion
to amend) as the original complaints were dismissed with finality earlier, i.e., on
August 25, 2000 when the court denied Irenes motion for reconsideration of the
June 29, 2000 order dismissing the original complaints, the court stated thusly:
there was actually no need to act on Irenes motion to admit, it being her right
as plaintiff to amend her complaints absent any responsive pleading thereto.
Pushing its point, the RTC added the observation that the filing of the amended
complaint on July 17, 2000ipso facto superseded the original complaints, the
dismissal of which, per the June 29, 2000 Order, had not yet become final at the
time of the filing of the amended complaint.
53
Following the denial on March 15, 2001 of their motion for the RTC to
reconsider its December 18, 2000 order aforestated, Julita and Francisca, in a bid
to evade being declared in default, filed on April 10, 2001 their Answer to the
amended complaint.15 But on the same day, they went to the CA via a petition
for certiorari, docketed as CA-G.R. SP No. 64246, seeking to nullify the following
RTC orders: the first, admitting the amended complaint; the second, denying
their motion to dismiss the amended complaint; and the third, denying their
motion for reconsideration of the second issuance.
Inasmuch as the verification portion of the joint petition and the certification on
non-forum shopping bore only Franciscas signature, the CA required the joint
petitioners to submit x x x either the written authority of Julita C. Benedicto to
Francisca B. Paulino authorizing the latter to represent her in these proceedings,
or a supplemental verifi_______________
15 Id., at pp. 238-245 & 246-253, for Civil Case Nos. 3341-17 and 3342-17,
respectively.
54
54

cation and certification duly signed by x x x Julita C. Benedicto.16 Records show
the submission of the corresponding authorizing Affidavit17 executed by Julita in
favor of Francisca.
Later developments saw the CA issuing a TRO 18 and then a writ of
preliminary injunction19 enjoining the RTC from conducting further proceedings
on the subject civil cases.
On October 17, 2001, the CA rendered a Decision, setting aside the assailed
RTC orders and dismissing the amended complaints in Civil Case Nos. 3341-17
and 3342-17. The fallo of the CA decision reads:
WHEREFORE, based on the foregoing premises, the petition is hereby
GRANTED. The assailed Orders admitting the amended complaints are SET
ASIDE for being null and void, and the amended complaints a quo are,
accordingly, DISMISSED.20
Irene and her new trustees motion for reconsideration of the assailed
decision was denied through the equally assailed June 20, 2002 CA Resolution.
Hence, this petition for review is before us.
The Issues
Petitioners urge the setting aside and annulment of the assailed CA decision and
resolution on the following submissions that the appellate court erred in: (1)
allowing the submission of an affidavit by Julita as sufficient compliance with the
requirement on verification and certification of non-forum shopping; (2) ruling on
the merits of the trust issue which involves factual and evidentiary
determination, processes not proper in a petition forcertiorari under Rule 65 of
the Rules of Court; (3) ruling that the amended complaints in the lower
_______________
16
17
18
19
20
Id., at p. 261.
Id., at p. 258.
Id., at p. 262, CA Resolution.
Id., at pp. 300-301.
Supra note 1, at p. 316.
55
VOL. 563, AUGUST 22, 2008
court should be dismissed because, at the time it was filed, there was no more
original complaint to amend; (4) ruling that the respondents did not waive
improper venue; and (5) ruling that petitioner Irene was not a resident of Batac,
Ilocos Norte and that none of the principal parties are residents of Ilocos Norte. 21
The Courts Ruling
We affirm, but not for all the reasons set out in, the CAs decision.
First Issue: Substantial Compliance with the Rule on
Verification and Certification of Non-Forum Shopping
Petitioners tag private respondents petition in CA-G.R. SP No. 64246 as
defective for non-compliance with the requirements of Secs. 4 22 and 523 of Rule 7
of the Rules of Court at
_______________
21 Rollo, p. 677.
22 SEC.4.Verification.x x x A pleading is verified by an affidavit that the
affiant has read the pleading and that the allegations therein are true and
correct of his personal knowledge or based on authentic records. x x x
23 SEC.5.Certification against forum shopping.The plaintiff or principal
party shall certify under oath in the complaint or other initiatory pleading
asserting a claim for relief, or in a sworn certification annexed thereto and
simultaneously filed therewith: (a) that he has not theretofore commenced any
action or filed any claim involving the same issues in any court, [or] tribunal
x x x and, to the best of his knowledge, no such other action or claim is pending
therein; (b) if there is such other pending action or claim, a complete statement
of the present status thereof; and (c) if he should thereafter learn that the same
or similar action or claim has been filed or is pending, he shall report that fact
x x x to the court wherein his aforesaid complaint or initiatory pleading has been
filed.
Failure to comply with the foregoing requirements shall not be curable by
mere amendment of the complaint or other initiatory
56
55
56
of the principal petitioners 27 or principal parties,28 as Francisca is in this case,

would constitute a substantial compliance with the rule on verification and
certification of non-forum shopping. It cannot be overemphasized that Francisca
herself was a principal party in Civil Case No. 3341-17 before the RTC and in
the certiorari proceedings before the CA. Besides being an heir of Benedicto,
Francisca, with her mother, Julita, was substituted for Benedicto in the instant
case after his demise.
And should there exist a commonality of interest among the parties, or
where the parties filed the case as a collective, raising only one common
cause of action or presenting a common defense, then the signature of one of
the petitioners or complainants, acting as representative, is sufficient
compliance. We said so in Cavile v. Heirs of Clarita Cavile.29 Like Thomas Cavile,
Sr. and the other petitioners in Cavile, Francisca and Julita, as petitioners before
the CA, had filed their petition as a collective, sharing a common interest and
having a common single defense to protect their rights over the shares of stocks
in question.
_______________

least with regard to Julita, who failed to sign the verification and certification of
non-forum shopping. Petitioners thus fault the appellate court for directing
Julitas counsel to submit a written authority for Francisca to represent Julita in
the certiorari proceedings.
We are not persuaded.
Verification not Jurisdictional; May be Corrected
Verification is, under the Rules, not a jurisdictional but merely a formal
requirement which the court may motu proprio direct a party to comply with or
correct, as the case may be. As the Court articulated in Kimberly Independent
Labor Union for Solidarity, Activism and Nationalism (KILUSAN)-Organized Labor
Associations in Line Industries and Agriculture (OLALIA) v. Court of Appeals:
[V]erification is a formal, not a jurisdictional requisite, as it is mainly
intended to secure an assurance that the allegations therein made are done in
good faith or are true and correct and not mere speculation. The Court may
order the correction of the pleading, if not verified, or act on the unverified
pleading if the attending circumstances are such that a strict compliance with
the rule may be dispensed with in order that the ends of justice may be
served.24
Given this consideration, the CA acted within its sound discretion in ordering
the submission of proof of Franciscas authority to sign on Julitas behalf and
represent her in the proceedings before the appellate court.
25 Enopia v. Court of Appeals, G.R. No. 147396, July 31, 2006, 497 SCRA
211, 219.
26 Heirs of Venancio Bajenting v. Ibaez, G.R. No. 166190, September 20,
2006, 502 SCRA 531, 547-548; citing Cavile v. Heirs of Clarita Cavile, G.R. No.
148635, April 1, 2003, 400 SCRA 255.
27 Calo v. Villanueva, G.R. No. 153756, January 30, 2006, 480 SCRA 561,
567.
28 Condo Suite Travel, Inc. v. National Labor Relations Commission, G.R. No.
125671, January 28, 2000, 323 SCRA 679, 687.
29 Supra note 26, at p. 262.
58
Signature by Any of the Principal Petitioners

is Substantial Compliance
58
Regarding the certificate of non-forum shopping, the general rule is that all
the petitioners or plaintiffs in a case
_______________
pleading but shall be cause for the dismissal of the case without prejudice,
unless otherwise provided, upon motion and after hearing.
57
24 G.R. Nos. 149158-59, July 24, 2007, 528 SCRA 45, 60.
VOL. 563, AUGUST 22, 2008

should sign it.25 However, the Court has time and again stressed that the rules
on forum shopping, which were designed to promote the orderly administration
of justice, do not interdict substantial compliance with its provisions under
justifiable circumstances.26 As has been ruled by the Court, the signature of any
57

Second Issue: Merits of the Case cannot be Resolved
on Certiorari under Rule 65
Petitioners posture on the second issue is correct. As they aptly pointed out,
the CA, in the exercise of itscertiorari jurisdiction under Rule 65, is limited to
reviewing and correcting errors of jurisdiction only. It cannot validly delve into
the issue of trust which, under the premises, cannot be judiciously resolved
without first establishing certain facts based on evidence.
Whether a determinative question is one of law or of fact depends on the
nature of the dispute. A question of law exists when the doubt or controversy
concerns the correct application of law or jurisprudence to a certain given set of
facts; or when the issue does not call for an examination of the probative value
of the evidence presented, the truth or falsehood of facts being admitted. A
question of fact obtains when the doubt or difference arises as to the truth or
falsehood of facts or when the query invites the calibration of the whole
evidence considering mainly the credibility of the witnesses, the existence and
relevancy of specific surrounding circumstances, as well as their relation to each

other and to the whole, and the probability of the situation. 30
Clearly then, the CA overstepped its boundaries when, in disposing of private
respondents petition for certiorari, it did not confine itself to determining
issuance of the assailed RTC orders, but proceeded to pass on the factual issue
of the existence and enforceability of the asserted trust. In the process, the CA
virtually resolved petitioner Irenes case for reconveyance on its substantive
merits even before evidence on the matter could be adduced. Civil Case Nos.
_______________
Code requires that the beneficiary of an express trust must accept the trust if it
imposes onerous conditions.
60
60
30 Estate of the Late Encarnacion Vda. de Panlilio v. Dizon, G.R. No. 148777,
October 18, 2007, 536 SCRA 565, 587; citing Heirs of Cipriano Reyes v.
Calumpang, G.R. No. 138463, October 30, 2006, 506 SCRA 56, 70.
59
VOL. 563, AUGUST 22, 2008
3341-17 and 3342-17 in fact have not even reached the pre-trial stage. To stress,
the nature of the trust allegedly constituted in Irenes favor and its
enforceability, being evidentiary in nature, are best determined by the trial
court. The original complaints and the amended complaint certainly do not even
clearly indicate whether the asserted trust is implied or express. To be sure, an
express trust differs from the implied variety in terms of the manner of proving
its existence.31 Surely, the onus of factually determining whether the trust
allegedly established in favor of Irene, if one was indeed established, was
implied or express properly pertains, at the first instance, to the trial court and
not to the appellate court in a special civil action for certiorari, as here. In the
absence of evidence to prove or disprove the constitution and necessarily the
existence of the trust agreement between Irene, on one hand, and the Benedicto
Group, on the other, the appellate court cannot intelligently pass upon the issue
of trust. A pronouncement on said issue of trust rooted on speculation and
conjecture, if properly challenged, must be struck down. So it must be here.
Third Issue: Admission of Amended Complaint Proper
As may be recalled, the CA veritably declared as reversibly erroneous the
admission of the amended complaint. The flaw in the RTCs act of admitting the
amended complaint lies, so the CA held, in the fact that the filing of the
amended complaint on July 17, 2000 came after the RTC had ordered with
finality the dismissal of the original complaints. According to petitioners, scoring
the CA for its declaration adverted to and debunking its posture on the finality of
the said RTC order,
_______________
31 Art. 1443 of the Civil Code provides that no express trust concerning an
immovable property may be proved by parol evidence, while Art. 1446 of the
59

the CA failed to take stock of their motion for reconsideration of the said
dismissal order.
We agree with petitioners and turn to the governing Sec. 2 of Rule 10 of the
Rules of Court which provides:
SEC.2.Amendments as a matter of right.A party may amend his
pleading once as a matter of right at any time before a responsive pleading is
served or in the case of a reply, at any time within ten (10) days after it is
served.
As the aforequoted provision makes it abundantly clear that the plaintiff may
amend his complaint once as a matter of right, i.e., without leave of court,
before any responsive pleading is filed or served. Responsive pleadings are
those which seek affirmative relief and/or set up defenses, 32 like an answer. A
motion to dismiss is not a responsive pleading for purposes of Sec. 2 of Rule
10.33Assayed against the foregoing perspective, the RTC did not err in admitting
petitioners amended complaint, Julita and Francisca not having yet answered
the original complaints when the amended complaint was filed. At that precise
moment, Irene, by force of said Sec. 2 of Rule 10, had, as a matter of right, the
option of amending her underlying reconveyance complaints. As aptly observed
by the RTC, Irenes motion to admit amended complaint was not even necessary.
The Court notes though that the RTC has not offered an explanation why it saw
fit to grant the motion to admit in the first place.
In Alpine Lending Investors v. Corpuz, the Court, expounding on the
propriety of admitting an amended complaint before a responsive pleading is
filed, wrote:
_______________
32 Fernandez v. International Corporate Bank, G.R. No. 131283, October 7,
1999, 316 SCRA 326, 335; citing Diaz v. Adiong, G.R. No. 106847, March 5, 1993,
219 SCRA 631, 637.
33 Alpine Lending Investors v. Corpuz, November 24, 2006, 508 SCRA 45,
48; citations omitted.
61
VOL. 563, AUGUST 22, 2008
[W]hat petitioner Alpine filed in Civil Case No. C-20124 was a motion to
dismiss, not an answer. Settled is the rule that a motion to dismiss is not a
responsive pleading for purposes of Section 2, Rule 10. As no responsive
pleading had been filed, respondent could amend her complaint in Civil Case No.
C-20124 as a matter of right. Following this Courts ruling in Breslin v. Luzon
Stevedoring Co. considering that respondent has the right to amend her
complaint, it is the correlative duty of the trial court to accept the amended
61
complaint; otherwise, mandamus would lie against it. In other words, the trial
courts duty to admit the amended complaint was purely ministerial. In fact,
respondent should not have filed a motion to admit her amended complaint. 34
It may be argued that the original complaints had been dismissed through
the June 29, 2000 RTC order. It should be pointed out, however, that the finality
of such dismissal order had not set in when Irene filed the amended complaint
on July 17, 2000, she having meanwhile seasonably sought reconsideration
thereof. Irenes motion for reconsideration was only resolved on August 25,
2000. Thus, when Irene filed the amended complaint on July 17, 2000, the order
of dismissal was not yet final, implying that there was strictly no legal
impediment to her amending her original complaints. 35
Fourth Issue: Private Respondents did not Waive
Improper Venue
Petitioners maintain that Julita and Francisca were effectively precluded from
raising the matter of improper venue by their subsequent acts of filing numerous
pleadings. To petitioners, these pleadings, taken together, signify a waiver of
private respondents initial objection to improper venue.
This contention is without basis and, at best, tenuous. Venue essentially
concerns a rule of procedure which, in per_______________62
62

sonal actions, is fixed for the greatest convenience possible of the plaintiff and
his witnesses. The ground of improperly laid venue must be raised seasonably,
else it is deemed waived. Where the defendant failed to either file a motion to
dismiss on the ground of improper venue or include the same as an affirmative
defense, he is deemed to have waived his right to object to improper venue. 36 In
the case at bench, Benedicto and Francisca raised at the earliest time possible,
meaning within the time for but before filing the answer to the complaint, 37 the
matter of improper venue. They would thereafter reiterate and pursue their
objection on venue, first, in their answer to the amended complaints and then in
their petition forcertiorari before the CA. Any suggestion, therefore, that
Francisca and Benedicto or his substitutes abandoned along the way improper
venue as ground to defeat Irenes claim before the RTC has to be rejected.
Fifth Issue: The RTC Has No Jurisdiction
on the Ground of Improper Venue
Subject Civil Cases are Personal Actions
It is the posture of Julita and Francisca that the venue was in this case
improperly laid since the suit in question partakes of a real action involving real
properties located outside the territorial jurisdiction of the RTC in Batac.
This contention is not well-taken. In a personal action, the plaintiff seeks the
recovery of personal property, the enforcement of a contract, or the recovery of
damages.38Real actions, on the other hand, are those affecting title to or
possession of real property, or interest therein. In accordance with the
_______________
VOL. 563, AUGUST 22, 2008
wordings of Sec. 1 of Rule 4, the venue of real actions shall be the proper court
which has territorial jurisdiction over the area wherein the real property involved,
or a portion thereof, is situated. The venue of personal actions is the court where
the plaintiff or any of the principal plaintiffs resides, or where the defendant or
any of the principal defendants resides, or in the case of a non-resident
defendant where he may be found, at the election of the plaintiff. 39
In the instant case, petitioners are basically asking Benedicto and his Group,
as defendants a quo, to acknowledge holding in trust Irenes purported 65%
stockownership of UEC and FEMII, inclusive of the fruits of the trust, and to
execute in Irenes favor the necessary conveying deed over the said 65%
shareholdings. In other words, Irene seeks to compel recognition of the trust
arrangement she has with the Benedicto Group. The fact that FEMIIs assets
include real properties does not materially change the nature of the action, for
the ownership interest of a stockholder over corporate assets is only inchoate as
the corporation, as a juridical person, solely owns such assets. It is only upon the
liquidation of the corporation that the stockholders, depending on the type and
nature of their stockownership, may have a real inchoate right over the
corporate assets, but then only to the extent of their stockownership.
The amended complaint is an action in personam, it being a suit against
Francisca and the late Benedicto (now represented by Julita and Francisca), on
the basis of their alleged personal liability to Irene upon an alleged trust
constituted in 1968 and/or 1972. They are not actions in rem where the actions
are against the real properties instead of against persons. 40 We particularly note
that possession or title to the real properties of FEMII and UEC is not being
disputed, albeit
_______________
39 Rules of Court, Rule 4, Sec. 2.
40 Asiavest Limited v. Court of Appeals, G.R. No. 128803, September 25,
1998, 296 SCRA 539, 552.
64
64

part of the assets of the corporation happens to be real properties.
Given the foregoing perspective, we now tackle the determinative question
of venue in the light of the inclusion of additional plaintiffs in the amended
complaint.
63
Interpretation of Secs. 2 and 3 of Rule 3; and Sec. 2 of Rule 4

We point out at the outset that Irene, as categorically and peremptorily
found by the RTC after a hearing, is not a resident of Batac, Ilocos Norte, as she
claimed. The Court perceives no compelling reason to disturb, in the confines of
this case, the factual determination of the trial court and the premises holding it
together. Accordingly, Irene cannot, in a personal action, contextually opt for
Batac as venue of her reconveyance complaint. As to her, Batac, Ilocos Norte is
not what Sec. 2, Rule 4 of the Rules of Court adverts to as the place where the
plaintiff or any of the principal plaintiffs resides at the time she filed her
amended complaint. That Irene holds CTC No. 17019451 41 issued sometime in
June 2000 in Batac, Ilocos Norte and in which she indicated her address as Brgy.
Lacub, Batac, Ilocos is really of no moment. Let alone the fact that one can
easily secure a basic residence certificate practically anytime in any Bureau of
Internal Revenue or treasurers office and dictate whatever relevant data one
desires entered, Irene procured CTC No. 17019451 and appended the same to
her motion for reconsideration following the RTCs pronouncement against her
being a resident of Batac.
Petitioners, in an attempt to establish that the RTC in Batac, Ilocos Norte is
the proper court venue, asseverate that Batac, Ilocos Norte is where the
principal parties reside.
Pivotal to the resolution of the venue issue is a determination of the status of
Irenes co-plaintiffs in the context of Secs.
VOL. 563, AUGUST 22, 2008
2 and 3 of Rule 3 in relation to Sec. 2 of Rule 4, which pertinently provide as
follows:
Rule3
PARTIES TO CIVIL ACTIONS
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.
SEC.3.Representatives as parties.Where the action is allowed to be
prosecuted or defended by a representative or someone acting in a fiduciary
capacity, the beneficiary shall be included in the title of the case and shall be
deemed to be the real party in interest. A representative may be a trustee of an
express trust, a guardian, an executor or administrator, or a party authorized by
law or these Rules. An agent acting in his own name and for the benefit of an
undisclosed principal may sue or be sued without joining the principal except
when the contract involves things belonging to the principal.
Rule4
VENUE OF ACTIONS
SEC.2.Venue of personal actions.All other actions may be commenced
and tried where the plaintiff or any of the principal plaintiffs resides, or where
the defendant or any of the principal defendants resides, or in the case of a nonresident defendant where he may be found, at the election of the plaintiff.
Venue is Improperly Laid

There can be no serious dispute that the real party-in-interest plaintiff is Irene.
As self-styled beneficiary of the disputed trust, she stands to be benefited or
entitled to the avails of the present suit. It is undisputed too that petitioners
Daniel Rubio, Orlando G. Reslin, and Jose G. Reslin, all from Ilocos Norte, were
included as co-plaintiffs in the amended66
66
65

complaint as Irenes new designated trustees. As trustees, they can only serve
as mere representatives of Irene.
Upon the foregoing consideration, the resolution of the crucial issue of
whether or not venue had properly been laid should not be difficult.
Sec. 2 of Rule 4 indicates quite clearly that when there is more than one
plaintiff in a personal action case, the residences of the principal parties should
be the basis for determining proper venue. According to the late Justice Jose Y.
Feria, the word principal has been added [in the uniform procedure rule] in
order to prevent the plaintiff from choosing the residence of a minor plaintiff or
defendant as the venue.42 Eliminate the qualifying term principal and the
purpose of the Rule would, to borrow from Justice Regalado, be defeated where
a nominal or formal party is impleaded in the action since the latter would not
have the degree of interest in the subject of the action which would warrant and
entail the desirably active participation expected of litigants in a case. 43
Before the RTC in Batac, in Civil Case Nos. 3341-17 and 3342-17, Irene
stands undisputedly as the principal plaintiff, the real party-in-interest. Following
Sec. 2 of Rule 4, the subject civil cases ought to be commenced and prosecuted
at the place where Irene resides.
Principal Plaintiff not a Resident in Venue of Action
As earlier stated, no less than the RTC in Batac declared Irene as not a
resident of Batac, Ilocos Norte. Withal, that court was an improper venue for her
conveyance action.
The Court can concede that Irenes three co-plaintiffs are all residents of Batac,
Ilocos Norte. But it ought to be stressed in this regard that not one of the three
can be considered as principal party-plaintiffs in Civil Case Nos. 3341-17 and
VOL. 563, AUGUST 22, 2008
3342-17, included as they were in the amended complaint as trustees of the
principal plaintiff. As trustees, they may be accorded, by virtue of Sec. 3 of Rule
3, the right to prosecute a suit, but only on behalf of the beneficiary who must
be included in the title of the case and shall be deemed to be the real party-ininterest. In the final analysis, the residences of Irenes co-plaintiffs cannot be
made the basis in determining the venue of the subject suit. This conclusion
becomes all the more forceful considering that Irene herself initiated and was
actively prosecuting her claim against Benedicto, his heirs, assigns, or
associates, virtually rendering the impleading of the trustees unnecessary.
67
And this brings us to the final point. Irene was a resident during the period
material of Forbes Park, Makati City. She was not a resident of Brgy. Lacub,
Batac, Ilocos Norte, although jurisprudence 44 has it that one can have several
residences, if such were the established fact. The Court will not speculate on the
reason why petitioner Irene, for all the inconvenience and expenses she and her
adversaries would have to endure by a Batac trial, preferred that her case be
heard and decided by the RTC in Batac. On the heels of the dismissal of the
original complaints on the ground of improper venue, three new personalities
were added to the complaint doubtless to insure, but in vain as it turned out,
that the case stays with the RTC in Batac.
Litigants ought to bank on the righteousness of their causes, the superiority
of their cases, and the persuasiveness of arguments to secure a favorable
verdict. It is high time that courts, judges, and those who come to court for
redress keep this ideal in mind.
WHEREFORE, the instant petition is hereby DISMISSED. The Decision and
Resolution dated October 17, 2001 and June 20, 2002, respectively, of the CA in
CA-G.R. SP No. 64246,
68

insofar as they nullified the assailed orders of the RTC, Branch 17 in Batac, Ilocos
Norte in Civil Case Nos. 3341-17 and 3342-17 on the ground of lack of
jurisdiction due to improper venue, are hereby AFFIRMED. The Orders dated
October 9, 2000, December 18, 2000, and March 15, 2001 of the RTC in Civil
Case Nos. 3341-17 and 3342-17 are accordingly ANNULLED and SET ASIDE and
said civil cases are DISMISSED.
Costs against petitioners.
SO ORDERED.
Quisumbing (Chairperson), Carpio-Morales, Tinga andBrion, JJ., concur.
Petition dismissed, judgment and resolution affirmed.
Notes.The purpose of requiring a verification is to secure an assurance
that the allegations of the petition have been made in good faith, or are true and
correct, not merely speculative. (Sarmiento vs. Zaratan, 514 SCRA 246 [2007])
There is a question of law in a given case when the doubt or difference
arises as to what the law is on a certain state of facts, and there is a question of
fact when the doubt or difference arises as to the truth or falsehood of alleged
facts. (Atlas Consolidated Mining and Development Corporation vs.
Commissioner of Internal Revenue, 524 SCRA 73 [2007])
Under Section 4, Rule 7 of the Rules of Court, a pleading is verified by an
affidavit that the affiant has read the pleading and that the allegations therein
are true and correct of his personal knowledge or based on authentic records
mere belief is insufficient basis and negates the verification. Verification is
required to secure an assurance that the allegation of the petition have been
made in good faith, or are true and correct and not merely speculative. (Go vs.
Court of Appeals, 531 SCRA 158 [2007]).
VOL.230,FEBRUARY28,1994
PhilippineBankingCorporationvs.Tensuan
G.R. No. 104649. February 28, 1994.*

PHILIPPINE BANKING CORPORATION, petitioner, vs.HON. SALVADOR S.
TENSUAN, Judge of the Regional Trial Court, National Capital Region, Branch
146 Makati; BRINELL METAL WORKS CORP.; SPS. JOSE & NALLY ANG,
respondents.
Actions; Venue; Venue relates to the place of trial and not to the jurisdiction
of the court.Under Section 1(c), Rule 16 of the Revised Rules of Court, a motion
to dismiss an action may be made within the time for pleading on the ground that
venue is improperly laid. Venue relates to the place of trial or geographical
location in which an action or proceeding should be brought and not to the
jurisdiction of the court. The matter of venue is regulated by the Rules of Court, so
that the choice of venue is not left to the caprices of plaintiff.
Same; Same; Venue is waivable.As a general rule, all personal actions
may be commenced and tried where the defendant or any of the defendants resides
may be found, or where the plaintiff or any of the plaintiffs resides, at the election
of the plaintiff. However, by written agreement of the parties, the venue of an
action may be changed or transferred from one province to another. Besides, when
improper venue is not objected to in a motion to dismiss it is deemed waived. In
other words, venue is waivable. It is procedural, not a jurisdictional matter. It is
intended to provide convenience to the parties, rather than restrict their access to
the courts. The rules on venue simply arrange for the convenient and effective
transaction of business in the courts and do not relate to their power, authority or
jurisdiction over the subject matter of the action.
413
_________________
*
PETITION for review on certiorari of the orders of the Regional Trial Court of
Makati, Br. 146. Tensuan, J.
SECOND DIVISION.
414
Abelardo G. Luzano for petitioner.
4
SUPREMECOURTREPORTSANNOTATED
14
Samson Law Offices for private respondents.

NOCON, J.:
Same; Same; In the absence of qualifying or restrictive words, venue

stipulations in a contract should be considered merely as agreement on additional
forum, not as limiting venue to the specified place.The later cases of Lamis Ents.
v. Lagamon, Capati v. Ocampo, Western Minolco v. Court of Appeals, Moles v.
Intermediate Appellate Court, Hongkong and Shanghai Banking Corporation v.
Sherman, Nasser v. Court of Appeals and just recently, Surigao Century Sawmill
Co. v. Court of Appeals, all treaded the path blazed by Polytrade. The conclusion to
be drawn from all these is that the more recent jurisprudence shall properly be
deemed modificatory of the old ones. Restating the rule, venue stipulations in a
contract, while considered valid and enforceable, do not as rule supersede the
general rule set forth in Rule 4 of the Revised Rules of Court. In the absence of
qualifying or restrictive words, they should be considered merely as an agreement
on additional forum, not as limiting venue to the specified place. They are not
exclusive but, rather permissive. For, to restrict venue only to that place stipulated
in the agreement is a construction purely based on technicality which, on the
contrary, should be liberally construed. Thus, we hold that the petitioner in this
case is not barred nor proscribed from filing its case against private respondents in
Makati where petitioner holds its residence, pursuant to Section 2(b) of Rule 4 of
the Revised Rules of Court.
On the strength of the provision in the promissory notes sued upon that Manila
shall be the venue of any action which may arise out of the promissory notes, the
Regional Trial Court of Makati, Metro Manila granted the motion to dismiss the
complaint in Civil Case No. 91-3366 entitled Philippine Banking Corporation v.
Brinell Metal Works Corp., et al. for improper venue. Supported by a plethora of
decisions evincing a view contrary to that of the trial court, petitioner comes to us
on a petition for review on certiorari.
Briefly, the facts show that petitioner, Philippine Banking
415
Corporation, filed a complaint below with prayer for preliminary attachment on

December 5, 1991 against private respondents herein, Brinell Metal Works
415
Corporation and Spouses Jose and Nally Ang, for collection of a loan evidenced by
two (2) promissory notes.
On December 16, 1991, respondent Court issued an order granting the
petitioners prayer for the issuance of writ of preliminary attachment.
On January 28, 1992, private respondents filed with the respondent court a
motion to dismiss on the grounds of (a) lack of jurisdiction over the persons of the
defendants; and (b) improper venue. They claim that summons was served on
defendant corporations customer who was not authorized to receive the same for
and in behalf of the corporation. They likewise object to the venue claiming that
the plaintiffs complaint is based on two promissory notes which commonly declare,
among others:
WHEREFORE, said motion to dismiss is hereby granted forthwith on

grounds of impropriety of venue. The above-entitled case is accordingly dismissed
without pronouncement as to costs.
________________
1
Rollo, pp. 21 and 28.
416
416
I/WE HEREBY EXPRESSLY SUBMIT TO THE JURISDICTION OF THE

COURTS OF MANILA, ANY LEGAL ACTION WHICH MAY ARISE OUT OF
THIS PROMISSORY NOTE.1
On February 28, 1992 respondent Court issued the following questioned order, to
wit:
Acting on defendants Motion to Dismiss dated January 28, 1992, on grounds of a)
lack of jurisdiction over the corporate defendant insofar as service of summons
upon it was effected on a person not authorized in law to receive the same; and b)
improper venue; and plaintiff having failed to appear for todays hearing and/or to
formally oppose the same notwithstanding a showing of receipt of the subject
motion as early as January 31, 1992.
Finding the motion to be studiously well-taken particularly in connection
with the dismissal of this action on grounds of improper venue consistent with the
provisions of Sec. 13, Rule 14 of the Rules of Court, it appearing on the face of the
actionable document sued upon that venue had been by agreement of the parties
laid in Manila.
SO ORDERED.2
On March 2, 1992, petitioner moved for reconsideration of the aforesaid order
granting the motion to dismiss anchored on the ground that in view of the absence
of qualifying or restrictive words in the agreement which would indicate that
Manila alone is the venue agreed upon by the parties, the plaintiff still has the
choice to file the action in the place of his residence citing the case ofPolytrade
Corporation v. Blanco.3
On March 11, 1992, respondent court denied petitioners motion for
reconsideration and remained steadfast in its position explaining that its
dismissal order is predicated on the doctrinal rule enunciated in Bautista v. Hon.
Juan de Borja, et al.4 that the proper court of Manila is the venue for an action
upon a document stipulating such in case of any litigation herefrom, or in
connection herewith, on a rationale that neither party reserved the right to
choose venue as provided for in Section 2(b), Rule 4 of the Rules of Court, as would
have been done had the parties intended to retain such right of election.
Respondent court brushed aside Polytrade v. Blanco5stating that Bautista and

Polytrade appear not to square with each other and that perhaps, the clear
parameters on the rule vis-a-vis proper venue should be defined.
Thus, the sole issue to be resolved in this petition is whether or not the
respondent court erred in holding that the venue of the action was improperly laid.
As a general rule, all personal actions may be commenced and tried where the
defendant or any of the defendants resides or may be found, or where the plaintiff
or any of the plaintiffs resides, at the election of the plaintiff. 7 However, by written
agreement of the parties, the venue of an action may be changed or transferred
from one province to another. 8 Besides, when improper venue is not objected to in a
motion to dismiss it is deemed waived.9 In other words, venue is waivable. It is
procedural, not a jurisdictional matter, it is intended to provide convenience to the
parties, rather than restrict their access to the courts. The rules on venue simply
arrange for the convenient and effective transaction of business in the courts and
do not relate to their power, authority or jurisdiction over the subject matter of the
action.
Under Section 1(c), Rule 16 of the Revised Rules of Court, a motion to dismiss
an action may be made within the time for pleading on the ground that venue is
improperly laid. Venue relates to the place of trial or geographical location in
which an action or proceeding should be brought and not to the jurisdiction of the
court. The matter of venue is regulated by the Rules of Court, so that the choice of
venue is not left to the caprices of plaintiff.6
________________
2
Rollo, p. 39.
G.R. No. 27033, 30 SCRA 187 (1969).
G.R. No. L-20600, 18 SCRA 474 (1966).
Supra.
Clavecilla Radio System v. Antillon, G.R. No. L-22238, 19 SCRA
As early as the case of Central Azucarera de Tarlac v. De Leon,10 this Court

ruled that an agreement in a contract fixing the venue of actions arising therefrom
is a valid waiver of the venue is fixed by law.
Interpreting a stipulation in the written contracts sued upon that in case of
any litigation arising (t)herefrom or in connection (t)herewith, the venue of action
shall be in the City of Manila, Philippines, this Court held in Bautista v. De
Borja,11 that the parties must reserve their right of election if they want to file in a
place other than the venue agreed upon, thus:
417
417
x x x. We note that neither party to the contracts reserved the right to choose the
venue of action as fixed by law (i.e., where the plaintiff or defendant resides, at the
election of the plaintiff (par. [b], Section 2, Rule 4, Revised Rules of Court), as is
usually done if the parties purported to retain that right of election granted by the
Rules. Such being the case, it can reasonably be inferred that the parties intended
to definitely fix the venue of action, in connection with the written contracts sued
upon in the proper courts of the City of Manila
________________
379 (1967).
7
Sec. 2(b), Rule 4 of the Revised Rules of Court.
Sec. 3, Rule 4 of the Revised Rules of Court.
Sec. 4, Rule 4 of the Revised Rules of Court.
10
56 Phil. 169.
11
Supra.
418
418
only, notwithstanding that neither party is a resident of Manila. x x x

Subsequently, in Polytrade Corporation vs. Blanco,12 this Court expostulated a
contrary doctrine that as long as the stipulation does not set forth qualifying or
restrictive words to indicate that the agreed place alone and none other is the
venue of the action, the parties do not lose the option of choosing the venue, to wit:
x x x. An accurate reading, however, of the stipulation, The parties agree to sue
and be sued in the Courts of Manila, does not preclude the filing of suits in the
residence of plaintiff or defendant. The plain meaning is that the parties merely
consented to be sued in Manila. Qualifying or restrictive words which would
indicate that Manila and Manila alone is the venue are totally absent therefrom.
We cannot read into that clause that plaintiff and defendant bound themselves to
file suits with respect to the last two transactions in question only or exclusively in
Manila. For, that agreement did not change or transfer venue. It simply is
permissive. The parties solely agreed to add the courts of Manila as tribunals to
which they may resort. They did not waive their right to pursue remedy in the
courts specifically mentioned in Section 2(b) of Rule 4. Renuntiatio non
praesumitur.
The latter case made reference to Engel v. Shubert Theatrical Co.13 where an
analogous stipulation which read: In case of dispute, both contracting parties
agree to submit to the jurisdiction of the Vienna courts was interpreted as
follows: By the clause in question the parties do not agree to submit their dispute
to the jurisdiction of the Viennese court, and to those courts only. There is nothing
exclusive in the language used. They do agree to submit to the Viennese
jurisdiction, but they say not a word in restriction of the jurisdiction of courts
elsewhere; and whatever may be said on the subject of the legality of contracts to
submit controversies to courts of certain jurisdictions exclusively, it is entirely
plain that such agreements should be strictly construed, and should not be
extended by implication.
The doctrine in Polytrade was reiterated in Nicolas v. Reparations
Commission14 where the issue posed was also whether the
________________
12
Supra.
13
151 N.Y.S. 593, 594.
14
G.R. No. L-28649, 64 SCRA 110.
419
stipulation on venue is restrictive or merely permissive. The Court therein held:
419
only to the courts either of Rizal, of which private respondent is a resident, or of

Bulacan, where petitioner resides, pursuant to Section 2(b) of Rule 4 of the
Revised Rules of Court.
On the other hand, private respondents cite the case ofHoechst Philippines, Inc. v.
Torres16 in support of the trial courts decision. The stipulation: In case of
litigation arising out of this agreement, the venue of any action shall be in the
competent courts of the Province of Rizal was interpreted therein that any
_________________
x x x venue in personal actions is fixed for the convenience of the plaintiff and his
witnesses and to promote the ends of justice. We cannot conceive how the interests
of justice may be served by confining the situs of the action to Manila, considering
that the residences or offices of all the parties, including the situs of the acts
sought to be restrained or required to be done, are all within the territorial
jurisdiction of Rizal.
While the parties have agreed to submit their dispute to the jurisdiction of
the Manila courts, there is nothing in the language used in the aforecited
stipulation which clearly shows that the intention of the parties was to limit the
venue of the action to the City of Manila only. Such agreements should be
construed reasonably and should not be applied in such a manner that it would
work more to the inconvenience of the parties without promoting the ends of
justice.
Without reference to Polytrade nor to Nicolas cases, this Court enunciated the
same doctrine in Tantoco v. Court of Appeals,15 to wit:
It is elementary that venue is waivable, since it is a procedural, not a
jurisdictional, matter. The record shows that the parties agreed that the courts of
Manila shall have jurisdiction to try this case. The agreement is evidenced by
sales contracts duly presented at the ex parte hearing of March 25, 1966, whereby
the parties submitted themselves to the jurisdiction of the courts of Manila for any
legal action arising out of their transaction. In short, the parties agreed to add the
courts of Manila as tribunals to which they may resort in the event of suit, and not
15
G.R. No. L-29345, 77 SCRA 225 (1977).
16
G.R. No. L-44351, 83 SCRA 297.
420
420
action by either of the parties would have to be filed only in the competent courts
of Rizal province exclusively. Noteworthy, however, is the fact that on May 19,
1978, or the day following the promulgation of the Hoechst case in May 18, 1978,
this Court interpreted a similar stipulation on venue as unenforceable in Sweet
Lines, Inc. v. Teves.17Condition 14 of the shipping ticket issued by Sweet Lines, Inc.
which provides that any and all actions arising out of the condition and provisions
of this ticket, irrespective of where it is issued, shall be filed in the competent
courts in the City of Cebu was held subversive of public policy on transfers of
venue of actions. The Court therein explained that the philosophy underlying the
provisions on transfer of venue of actions is the convenience of the plaintiffs as well
as his witnesses and to promote the end of justice. Considering the expense and
trouble a passenger residing outside of Cebu City would incur to prosecute a claim
in the City of Cebu, he would most probably decide not to file the action at all, the
Court said.
The later cases of Lamis Ents. v. Lagamon,18 Capati v. Ocampo,19 Western
Minolco v. Court of Appeals,20 Moles v. Intermediate Appellate Court,21 Hongkong
and Shanghai Banking Corporation v. Sherman,22 Nasser v. Court of
Appeals,23 and just recently, Surigao Century Sawmill Co. v. Court of Appeals,24 all
treaded the path blazed byPolytrade. The conclusion to be drawn from all these is
that the more recent jurisprudence shall properly be deemed modificatory of the
old ones. Restating the rule, venue stipulations in a contract, while considered
valid and enforceable, do not as a rule supersede the general rule set forth in Rule
4 of the Revised Rules of Court. In the absence of qualifying or restrictive words,
they should be considered merely as an agreement on additional forum, not as
limiting venue to the specified place. They are not exclusive but, rather permissive.
_________________
421
For, to restrict venue only to that place stipulated in the agreement is a

construction purely based on technicality which, on the contrary, should be
liberally construed. Thus, we hold that the petitioner in this case is not barred nor
proscribed from filing its case against private respondents in Makati where
petitioner holds its residence, pursuant to Section 2(b) of Rule 4 of the Revised
Rules of Court.
WHEREFORE, the petition in this case is GRANTED and the orders of
respondent Presiding Judge of the Regional Trial Court Branch 146, at Makati,
dated February 28, 1992 and March 11, 1992 dismissing the complaint and
denying the motion for reconsideration are hereby REVERSED and the complaint
in the captioned civil case is REINSTATED.
17
G.R. No. L-37750, 83 SCRA 361 (1978).
18
G.R. No. 57250, 108 SCRA 740 (1981).
19
G.R. No. 28742, 113 SCRA 794 (1982).
20
G.R. No. 51996, 167 SCRA 592 (1988).
Narvasa (C.J., Chairman), Regalado and Puno, JJ., concur.
21
G.R. No. 73913, 169 SCRA 777 (1989)
Padilla, J., See dissenting opinion.
22
G.R. No. 72494, 176 SCRA 331 (1989).
DISSENTING OPINION
23
G.R. Nos. 32945-46, 191 SCRA 783 (1990).
PADILLA, J.:
24
G.R. No. 83889, 218 SCRA 619 (1993).
SO ORDERED.
421
Section 3, Rule 4 of the Rules of Court allows the parties to agree on the change or
transfer of venue.
parties. The waiver of venue in such cases is sanctioned by the Rules of Court and
would still be subject to and limited by the rules on jurisdiction.
The doctrine in Polytrade Corporation vs. Blanco, 30 SCRA 187 (1969) which
is upheld by the majority in this case, that the general rules on venue remain
applicable in the absence of qualifying or restrictive words in the agreement which
indicate that the place specified is the only venue agreed upon, was laid down to
prevent undue hardship or inconvenience to the parties.
In the case at bench, there is no showing that any party would, in any way, be
unduly inconvenienced in adhering to their agreed venue; besides, the two (2)
venues involved, namely Makati and Manila, are so geographically close to each
other, such that there is no perceivable reason why there would be any substantial
difference between the said two (2) venues. In such a case, the venue agreed by the
parties should control.
In my view, the issue of whether or not an agreement fixing the venue of

actions prevents the application of the general rule on venue under Sections 1 and
2 of Rule 4, Rules of Court, should be settled by keeping the purpose of the
doctrine in mind.
I therefore vote to DENY the petition and uphold the decision of the court a
quo.
Petition granted; Assailed orders reversed.
There is hardly any question that a stipulation in contracts of adhesion, fixing

venue to a specified place only, is void for, in such cases, there would appear to be
no valid and free waiver of the venue fixed by the Rules of Court. However, in cases
where
422
422
Notes.Venue of personal action should be at the place of abode where

plaintiff actually resides not in domicile or legal residence (Esuerte vs. Court of
Appeals, 193 SCRA 541 [1991]).
The trial court cannot pre-empt the defendants prerogative to object to the
improper laying of the venue by motu proprio dismissing the case (Dacoycoy vs.
Intermediate Appellate Court, 195 SCRA 641 [1991])
both parties freely and voluntarily agree on a specified place to be the venue of
actions, if any, between them, then the only considerations should be whether the
waiver (of the venue fixed by the Rules of Court) is against public policy and
whether the parties would suffer, by reason of such waiver, undue hardship and
inconvenience: otherwise, such waiver of venue should be upheld as binding on the
718
Lantinvs.Lantion
G.R. No. 160053. August 28, 2006.*

SPS. RENATO & ANGELINA LANTIN, petitioners, vs.HON. JANE AURORA C.
LANTION, PRESIDING JUDGE OF THE REGIONAL TRIAL COURT OF LIPA
CITY,
FOURTH
JUDICIAL
REGION,
BRANCH
13,
PLANTERS
DEVELOPMENT BANK, ELIZABETH C. UMALI, ALICE PERCE, JELEN
MOSCA, REGISTER OF DEEDS FOR LIPA CITY, BATANGAS, THE CLERK OF
COURT and EX-OFFICIO SHERIFF OF THE REGIONAL TRIAL COURT OF
BATANGAS, respondents.
Actions; Venue; In the absence of qualifying or restrictive words, the
stipulation on venue should be deemed as merely an agreement on an addi_______________
THIRD DIVISION.
719
*
VOL.499,AUGUST28,2006
Lantinvs.Lantion
tional forum, not as limiting venue to the specified place.At the outset, we
must make clear that under Section 4 (b) of Rule 4 of the 1997 Rules of Civil
Procedure, the general rules on venue of actions shall not apply where the parties,
before the filing of the action, have validly agreed in writing on an exclusive venue.
The mere stipulation on the venue of an action, however, is not enough to preclude
parties from bringing a case in other venues. The parties must be able to show
that such stipulation is exclusive. In the absence of qualifying or restrictive words,
the stipulation should be deemed as merely an agreement on an additional forum,
not as limiting venue to the specified place.
PETITION for review on certiorari of the orders of the Regional Trial Court of
Lipa City, Batangas, Br. 13.
Dulay, Pagunsan and Ty Law Offices for petitioners.
Raymundo, Santos, Sega and Associates for private respondents.
719
QUISUMBING, J.:
This is a petition for certiorari assailing the orders dated May 15, 2003 1 and
September 15, 20032 in Civil Case No. 2002-0555 issued by public respondent,
Presiding Judge Jane Aurora C. Lantion, of the Regional Trial Court (RTC) of
Lipa City, Batangas.
The facts of the case are as follows:
Petitioners Renato and Angelina Lantin took several peso and dollar loans
from respondent Planters Development Bank and executed several real estate
mortgages and promissory notes to cover the loans. They defaulted on the
payments so respondent bank foreclosed the mortgaged lots. The foreclosed
properties, in partial satisfaction of petitioners debt, were sold at a public auction
where the respondent bank was the winning bidder. On November 8, 2003,
petitioners filed against Planters Development Bank and its officers Elizabeth
Umali,
_______________
Rollo, pp. 30-31.
2
Id., at pp. 32-34.
720
1
720
Lantinvs.Lantion
Alice Perce and Jelen Mosca (private respondents), a Complaint for Declaration of
Nullity and/or Annulment of Sale and/or Mortgage, Reconveyance, Discharge of
Mortgage, Accounting, Permanent Injunction, and Damages with the RTC of Lipa
City, Batangas. Petitioners alleged that only their peso loans were covered by the
mortgages and that these had already been fully paid, hence, the mortgages
should have been discharged. They challenged the validity of the foreclosure on the
alleged non-payment of their dollar loans as the mortgages did not cover those
loans.
Private respondents moved to dismiss the complaint on the ground of
improper venue since the loan agreements restricted the venue of any suit in
Metro Manila.
On May 15, 2003, the respondent judge dismissed the case for improper venue.
Petitioners sought reconsideration. They argued that the trial court in effect
prejudged the validity of the loan documents because the trial court based its
dismissal on a venue stipulation provided in the agreement. The motion for

reconsideration was denied and the lower court held that the previous order did
not touch upon the validity of the loan documents but merely ruled on the
procedural issue of venue.
Petitioners now come before us alleging that:
I
THE HONORABLE JUDGE COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN HOLD-ING THAT
THE VENUE STIPULATIONS IN THE REAL ESTATE MORT-GAGE AND
PROMISSORY NOTES FALL WITHIN THE PURVIEW OF SECTION 4(B) OF
RULE 4 OF THE 1997 RULES OF CIVIL PROCEDURE IN THAT IT LIMITED
THE VENUE OF ACTIONS TO A DEFINITE PLACE.
II
THE HONORABLE JUDGE COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN
NOT FINDING THAT THE MERE USE OF THE WORD EXCLUSIVELY
DOES NOT, BY ITSELF, MEAN THAT SUCH STIPULATIONS AUTOMATI721
Lantinvs.Lantion
CALLY PROVIDE FOR AN EXCLUSIVE VENUE, AS CONTEMPLATED BY
SECTION 4(B) OF RULE 4 OF THE 1997 RULES OF CIVIL PROCEDURE,
SPECIALLY WHEN THE TENOR OR LANGUAGE OF THE ENTIRE VENUE
STIPULATION CLEARLY PROVIDES OTHERWISE.
III
DISREGARDING THE FACT THAT HEREIN PETITIONERS COMPLAINT
INVOLVES
SEVERAL
CAUSES
OF
ACTION
WHICH
DO NOT ARISE SOLELY FROM THE REAL ESTATE MORTGAGE AND
PROMISSORY NOTES AND WHICH OTHER CAUSES OF ACTION MAY BE
721
FILED IN OTHER VENUES UNDER SECTIONS 1 AND 2 OF RULE 4 OF THE

1997 RULES OF CIVIL PROCEDURE.
IV
DISREGARDING THE PRINCIPLE THAT THE RULE ON VENUE OF ACTIONS
IS ESTABLISHED FOR THE CONVENIENCE OF THE PLAIN-TIFFS. 3
The main issue in the present petition is whether respondent judge committed
grave abuse of discretion when she dismissed the case for improper venue.
Petitioners contend that, since the validity of the loan documents were
squarely put in issue, necessarily this meant also that the validity of the venue
stipulation also was at issue. Moreover, according to the petitioners, the venue
stipulation in the loan documents is not an exclusive venue stipulation under
Section 4(b) of Rule 4 of the 1997 Rules of Civil Procedure. 4 The venue in the loan
agreement was not specified with particularity. Besides, petitioners posit, the rule
on venue of action was established for the convenience of the plaintiff,
_______________
Id., at pp. 10-11.
SEC. 4. When Rule not applicable.This Rule shall not apply
xxxx
(b) Where the parties have validly agreed in writing before the filing of the
action on the exclusive venue thereof.
722
3
4
722
Lantinvs.Lantion
herein petitioners. Further, petitioners also contend that since the complaint
involves several causes of action which did not arise solely from or connected with
the loan documents, the cited venue stipulation should not be made to apply.
Private respondents counter that, in their complaint, petitioners did not assail
the loan documents, and the issue of validity was merely petitioners afterthought
to avoid being bound by the venue stipulation. They also aver that the venue
stipulation was not contrary to the doctrine inUnimasters,5 which requires that a
venue stipulation employ categorical and suitably limiting language to the effect
that the parties agree that the venue of actions between them should be laid only
and exclusively at a definite place. According to private respondents, the language
of the stipulation is clearly exclusive.
At the outset, we must make clear that under Section 4 (b) of Rule 4 of the
1997 Rules of Civil Procedure, the general rules on venue of actions shall not apply
where the parties, before the filing of the action, have validly agreed in writing on
an exclusive venue. The mere stipulation on the venue of an action, however, is not
enough to preclude parties from bringing a case in other venues. The parties must
be able to show that such stipulation is exclusive.6 In the absence of qualifying or
restrictive words, the stipulation should be deemed as merely an agreement on an
additional forum, not as limiting venue to the specified place.7
The pertinent provisions of the several real estate mortgages and promissory
notes executed by the petitioner respectively read as follows:
_______________
Unimasters Conglomeration, Inc. v. Court of Appeals, G.R. No. 119657,
February 7, 1997, 267 SCRA 759.
6
Mangila v. Court of Appeals, G.R. No. 125027, August 12, 2002, 387 SCRA
162, 175; Philippine Banking Corporation v. Tensuan, G.R. No. 104649, February
28, 1994, 230 SCRA 413, 420.
7
Langkaan Realty Development, Inc. v. United Coconut Planters Bank,G.R.
No. 139437, December 8, 2000, 347 SCRA 542, 555-556.
723
5
Lantinvs.Lantion
18. In the event of suit arising out of or in connection with this mortgage and/or
the promissory note/s secured by this mortgage, the parties hereto agree to bring
their causes of auction (sic)exclusively in the proper court of Makati, Metro Manila
or at such other venue chosen by the Mort-gagee, the Mortgagor waiving for this
purpose any other venue.8 (Emphasis supplied.)
I/We further submit that the venue of any legal action arising out of this note
shall exclusively be at the proper court of Metropolitan Manila, Philippines or any
other venue chosen by the BANK, waiving for this purpose any other venue
provided by the Rules of Court.9 (Emphasis supplied.)
Clearly, the words exclusively and waiving for this purpose any other venue are
restrictive and used advisedly to meet the requirements.
723
Petitioners claim that effecting the exclusive venue stipulation would be

tantamount to a prejudgment on the validity of the loan documents. We note
however that in their complaint, petitioners never assailed the validity of the
mortgage contracts securing their peso loans. They only assailed the terms and
coverage of the mortgage contracts. What petitioners claimed is that their peso
loans had already been paid thus the mortgages should be discharged, and that
the mortgage contracts did not include their dollar loans. In our view, since the
issues of whether the mortgages should be properly discharged and whether these
also cover the dollar loans, arose out of the said loan documents, the stipulation on
venue is also applicable thereto.
Considering all the circumstances in this controversy, we find that the
respondent judge did not commit grave abuse of discretion, as the questioned
orders were evidently in accord with law and jurisprudence.
WHEREFORE, the petition is DISMISSED. The assailed orders dated May
15, 2003 and September 15, 2003 of the Regional Trial Court of Lipa City,
Batangas, in Civil Case No. 2002-0555 are AFFIRMED.
_______________
Rollo, pp. 63(b), 65(b), 67(b), 69(b), 71(b), 75, 77.
Id., at pp. 91-92.
724
8
9
724
Silvavs.Mationg
Costs against petitioners.
SO ORDERED.
Carpio, Carpio-Morales, Tinga and Velasco, Jr., JJ., concur.
Petition dismissed, assailed orders affirmed.
Note.Venue relates to the place of trial and not to the jurisdiction of the
court. (Philippine Banking Corporation vs. Tensuan, 230 SCRA 413 [1994])
G.R. No. 136051. June 8, 2006.*

ALFREDO P. ROSETE, OSCAR P. MAPALO and CHITO P. ROSETE,
petitioners, vs. JULIANO LIM and LILIA LIM, respondents.
Criminal Procedure; Rights of the Accused; Self-Incrimination; The right
against self-incrimination is accorded to every person who gives evidence, whether
voluntary or under compulsion of subpoena, in any civil, criminal or
administrative proceeding.The right against self-incrimination is accorded to
every person who gives evidence, whether voluntary or under compulsion of
subpoena, in any civil, criminal or administrative proceeding. The right is not to be
compelled to be a witness against himself. It secures to a witness, whether he be a
party or not, the right to refuse to answer any particular incriminatory

question, i.e., one the answer to which has a
_______________
FIRST DIVISION
126
*
opinion of the Court that said exception applies to parties in civil actions which
are criminal in nature. As long as the suit is criminal in nature, the party thereto
can altogether decline to take the witness stand. It is not the character of the suit
involved but the nature of the proceedings that controls.
Actions; Pleadings and Practice; Issues; Issues are joined when all the
parties have pleaded their respective theories and the terms of
127
VOL.490,JUNE8,2006
26
Rosetevs.Lim
tendency to incriminate him for some crime. However, the right can be
claimed only when the specific question, incriminatory in character, is actually put
to the witness. It cannot be claimed at any other time. It does not give a witness
the right to disregard a subpoena, decline to appear before the court at the time
appointed, or to refuse to testify altogether. The witness receiving a subpoena
must obey it, appear as required, take the stand, be sworn and answer questions.
It is only when a particular question is addressed to which may incriminate
himself for some offense that he may refuse to answer on the strength of the
constitutional guaranty.
Same; Same; Same; Under the Rules of Court, in all criminal prosecutions
the defendant is entitled among others, to the following.An accused occupies a
different tier of protection from an ordinary witness. Under the Rules of Court, in
all criminal prosecutions the defendant is entitled among others1) to be exempt
from being a witness against himself, and 2) to testify as witness in his own
behalf; but if he offers himself as a witness he may be cross-examined as any other
witness; however, his neglect or refusal to be a witness shall not in any manner
prejudice or be used against him.
Same; Same; Same; As long as the suit is criminal in nature, the party
thereto can altogether decline to take the witness standit is not the character of
the suit involved but the nature of the proceedings that controls.It is clear,
therefore, that only an accused in a criminal case can refuse to take the witness
stand. The right to refuse to take the stand does not generally apply to parties in
administrative cases or proceedings. The parties thereto can only refuse to answer
if incriminating questions are propounded. This Court applied the exceptiona
party who is not an accused in a criminal case is allowed not to take the witness
standin administrative cases/ proceedings that partook of the nature of a
criminal proceeding or analogous to a criminal proceeding. It is likewise the
Rosetevs.Lim
the dispute are plain before the court.Issues are joined when all the
parties have pleaded their respective theories and the terms of the dispute are
plain before the court. In the present case, the issues have, indeed, been joined
when petitioners, as well as the other defendants, filed their answers. The
respective claims and defenses of the parties have been defined and the issues to
be decided by the trial court have been laid down.
Appeals.
Piera, Marcella, Romero and Associates for private respondents Sps. Lim.
(Ret.) Justice Cuevas Law Office co-counsel for Sps. Lim.
CHICO-NAZARIO, J.:
Before Us is a petition for review on certiorari which seeks to set aside the
Decision1 of the Court of Appeals in CA-G.R. SP No. 45400 dated 24 August 1998
which upheld the Orders of Branch 77 of the Regional Trial Court (RTC) of
Quezon City in Civil Case No. Q-95-25803 dated 22 July 19972 and 27 August
1997,3 allowing the taking of deposition upon oral examination of petitioners Oscar
P. Mapalo and Chito P. Rosete, and its Resolution 4 dated 19 October 1998 denying
petitioners Motion for Reconsideration.
Relevant to the petition are the following antecedents:
On 5 December 1995, respondents Juliano Lim and Lilia Lim filed before
Branch 77 of the RTC of Quezon City a Complaint for Annulment, Specific
Performance with Damages
_______________
127
CA Rollo, pp. 140-158; Penned by Associate Justice Artemon D. Luna with

Associate Justices Eugenio S. Labitoria and Marina L. Buzon, concurring.
2
Records, Vol. 2, pp. 883-884.
3
Id., Vol. 3, pp. 1053-1055.
4
CA Rollo, p. 221.
128
1
128
Rosetevs.Lim
against AFP Retirement and Separation Benefits System (AFP-RSBS), Espreme
Realty and Development Corporation (Espreme Realty), Alfredo P. Rosete, Maj.
Oscar Mapalo, Chito P. Rosete, Bank of the Philippine Islands (BPI), and Register
of Deeds of the Province of Mindoro Occidental, docketed as Civil Case No. Q-9525803.5 It asked, among other things, that the Deed of Sale executed by AFP-RSBS
covering certain parcels of lands in favor of Espreme Realty and the titles thereof
under the name of the latter be annulled; and that the AFP-RSBS and Espreme
Realty be ordered to execute the necessary documents to restore ownership and
title of said lands to respondents, and that the Register of Deeds be ordered to
cancel the titles of said land under the name of Espreme Realty and to transfer
the same in the names of respondents.
On 18 January 1996, petitioners filed a Motion to Dismiss on the grounds that
the court has no jurisdiction over the subject matter of the action or suit and that
venue has been improperly laid.6 A Supplemental Motion to Dismiss was filed by
petitioner Alfredo P. Rosete on 23 January 1996.7 Respondents opposed the Motion
to Dismiss filed by petitioners8 to which petitioners filed their Reply.9Respondents
filed a Comment on the Reply.10 AFP-RSBS,11Espreme Realty,12 and, BPI13 filed
their respective Motions to Dismiss which respondents opposed.
_______________
Id., pp. 107-110.
7
Id., pp. 125-127.
8
Id., pp. 141-149.
9
Id., pp. 156-160.
10
Id., pp. 176-178.
11
Id., pp. 136-139.
12
Id., pp. 151-155.
5
6
Id., pp. 171-174.

129
13
VOL.490,JUNE8,2006
Rosetevs.Lim
In an Order dated 12 March 1996, the Motions to Dismiss filed by all the
defendants were denied.14 The Motions for Reconsideration filed by
petitioners15 and BPI,16 which respondents opposed,17 were also denied in an Order
dated 24 May 1996.18
On 6 June 1996, BPI filed its Answer with Compulsory Counterclaim and
Cross-claim19 to which respondents filed their Reply and Answer to
Counterclaim.20 Respondents also filed a Motion21 to Serve Supplemental
Allegation against BPI and petitioner Chito Rosete which the trial court granted
in an order dated 28 July 1996.22
On 7 June 1996, petitioners manifested that on 5 June 1996, they filed a
Petition23 for Certiorari and Prohibition in the Court of Appeals, docketed as CAG.R. SP No. 40837, challenging the trial courts Orders dated 12 March 1996 and
24 May 1996 that denied their Motions to Dismiss and Reconsideration,
respectively.24 They likewise informed the trial court that on 6 June 1996, they
filed an Ex ParteMotion25 to Admit Answers Ex Abudanti Cautela.26
_______________
Id., pp. 186-189.
Id., pp. 209-212.
16
Id., pp. 190-195.
17
Id., pp. 220-224.
18
Id., p. 248.
19
Id., pp. 254-260.
20
21
Id., pp. 597-598.
22
Id., p. 602.
23
The Court of Appeals dismissed the petition on 30 October 1996 (Records,
Vol. 2, pp. 715-725) and denied petitioners motion for reconsideration on 9 May
1997 (Records, Vol. 2, pp. 748-752). On appeal to the Supreme Court, the appeal
(G.R. No. 129864) was dismissed on 29 August 2000.
24
25
14
15
129
The Latin phrase Ex Abudanti Cautela means out of abundant caution.

130
Id., pp. 832-852.

131
26
130
32
Rosetevs.Lim
On 7 August 1996, petitioner Chito Rosete filed a motion asking that the order
granting the Motion to Serve Supplemental Allegation against BPI and him be
reconsidered and set aside, and that respondents be ordered to reduce their
supplemental allegations in the form and manner required by the Rules of
Court.27 Same was denied in an order dated 12 August 1996. 28 This denial was
appealed to the Court of Appeals on 26 August 1996, which was docketed as CAG.R. SP No. 41821.29
Petitioner Chito Rosete filed his Supplemental Answer (Ex Abudanti Cautela)
on 9 September 1996.30
On 28 May 1997, respondents filed a Notice to Take Deposition Upon Oral
Examination giving notice that on June 18 and 20, 1997 at 9:00 a.m., they will
cause the deposition of petitioners Oscar Mapalo and Chito Rosete. 31
On 13 June 1997, petitioners filed an Urgent Ex ParteMotion and Objection to
Take Deposition Upon Oral Examination.32 They argued that the deposition may
not be taken without leave of court as no answer has yet been served and the
issues have not yet been joined since their Answer was filed ex abudanti cautela,
pending resolution of the Petition for Certiorari challenging the orders dated 12
March 1996 and 24 May 1996 that denied their Motions to Dismiss and for
Reconsideration, respectively. This is in addition to the fact that they
challenged via a Petition forCertiorari before the Court of Appeals the lower
courts Orders dated 23 July 1996 and 12 August 1996 which, respectively, granted
respondents
_______________
VOL.490,JUNE8,2006
Rosetevs.Lim
Motion to Serve Supplemental Allegation Against Defendants BPI and Chito
Rosete, and for the latter to plead thereto, and denied Chito Rosetes Motion for
Reconsideration of the order dated 23 July 1996. Moreover, they contend that since
there are two criminal cases pending before the City Prosecutors of Mandaluyong
City and Pasig City involving the same set of facts as in the present case wherein
respondent Juliano Lim is the private complainant and petitioners are the
respondents, to permit the taking of the deposition would be violative of their right
against self-incrimination because by means of the oral deposition, respondents
would seek to establish the allegations of fact in the complaint which are also the
allegations of fact in the complaint-affidavits in the said criminal cases.
Respondents filed their Comment on the Objection to Deposition Taking 33 to
which petitioners filed their Reply.34
In an Order dated 22 July 1997, the lower court denied petitioners motion and
objection to take deposition upon oral examination, and scheduled the taking
thereof.35 On 7 August 1997, petitioners filed a Motion for Reconsideration. 36 They
filed a Supplemental Motion for Reconsideration on 11 August 1997.37
On 13 August 1997, petitioners filed an Urgent Ex ParteMotion to Cancel or
Suspend the Taking of the Deposition Upon Oral Examination.38
In an Order dated 27 August 1997, the lower court denied petitioners Motion
for Reconsideration and Supplemental
_______________
Id., pp. 858-864.
Id., pp. 865-874.
35
Id., pp. 883-884.
36
Id., pp. 912-925.
37
38
Id., pp. 933-935.
132
33
34

Id., p. 614.
29
Id., pp. 623-639. The petition for certiorari was denied on 27 April 1998 and
the motion for reconsideration was denied on 13 July 1998. On appeal to the
Supreme Court (G.R. No. 134646), the Court considered the case closed and
terminated.
30
Id., pp. 673-674.
31
Id., pp. 820-822.
27
28
132
Rosetevs.Lim
131
Motion for Reconsideration, and scheduled the taking of the Deposition Upon Oral
Examination.39
On 22 September1997, respondents filed an Omnibus Motion: (1) To Strike
Out Answer of Defendants Mapalo and Chito Rosete; (2) to Declare Defendants
Mapalo and Chito Rosete In Default; and (3) For Reception of Plaintiffs
Evidence Ex Parte,40 which petitioners opposed.41
On 29 September 1997, petitioners filed with the Court of Appeals a Petition
for Certiorari and Prohibition (CA-G.R. SP No. 45400) assailing the Orders of the
lower court dated 22 July 1997 and 27 August 1997.42
In an Order dated 29 October 1997, the lower court: (1) ordered the striking
out from the record of the Answer ex abudanti cautela filed by petitioners Mapalo
and Chito Rosete for their continued unjustified refusal to be sworn pursuant to
Rule 29 of the 1997 Rules of Civil Procedure; (2) declared defendants Mapalo and
Chito Rosete in default; and I allowed plaintiffs to present their evidence ex
parte as regards the latter.43 On 25 November 1997, petitioners filed an
Urgent Exparte Omnibus Motion (1) For Reconsideration; (2) To Lift Order of
Default; and (3) To Hold In Abeyance Presentation of Plaintiffs EvidenceEx
Parte.44 The day after, petitioners filed an Amended Omnibus Motion.45
On 28 November 1997, respondents filed a Motion to Set Case for Ex
Parte Presentation of Evidence46 which the lower court set for 11 December 1997.47
_______________
In an Order dated 11 December 1997, the lower court denied petitioners urgent ex
parte omnibus motion.48 On even date, the ex parte presentation of evidence
against petitioners Mapalo and Chito Rosete was terminated. 49
On 10 February 1998, petitioners filed a Petition 50 forCertiorari and
Prohibition before the Court of Appeals (CA-G.R. SP No. 46774) questioning the
lower courts Orders dated 29 October 1997 and 11 December 1997. 51
On 24 August 1998, the Court of Appeals dismissed the Petition
for Certiorari and Prohibition, and upheld the Orders of the lower court dated 22
July 1997 and 27 August 1997 (CA-G.R. SP No. 45400). 52 The Motion for
Reconsideration53 which was opposed54 by respondents was denied on 19 October
1998.55
Petitioners assail the ruling of the Court of Appeals viaa Petition for Review
on Certiorari. They anchor their petition on the following grounds:
I.
THE TRIAL COURT ERRED AND ACTED IN GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF OR IN EXCESS OF JURISDICTION IN
DECLARING IN ITS ORDER DATED AUGUST 27, 1997 THAT THE
CONSTITUTIONAL RIGHT AGAINST SELF INCRIMINATION OF OSCAR
MAPALO AND CHITO ROSETE WOULD NOT BE VIOLATED BY THE TAKING
OF THEIR DEPO-
Id., pp. 1053-1055.

Id., pp. 1072-1077.
41
Id., pp. 1078-1087.
42
CA Rollo, pp. 2-111.
43
Records, Vol. 3, pp. 1205-1207.
44
Id., pp. 1213-1222.
45
Id., pp. 1223-1233.
46
Id., pp. 1235-1237.
47
Id., p. 1257.
133
39
134
40
Rosetevs.Lim
SITION IN THE CIVIL CASE FILED IN THE LOWER COURT ALTHOUGH
THEY ARE ALSO RESPONDENTS OR DEFENDANTS IN THE
AFOREMENTIONED CRIMINAL CASES FILED BY HEREIN PRIVATE
RESPONDENT JULIANO LIM INVOLVING THE SAME OR IDENTICAL SET
OF FACTS; AND
II.
VOL.490,JUNE8,2006
Rosetevs.Lim
133
THE TRIAL COURT ERRED AND ACTED IN GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OF OR IN EXCESS OF JURISDICTION
IN DECLARING IN ITS ORDER DATED JULY 22, 1997 THAT (A) THE NOTICE
TO TAKE DEPOSITION UPON ORAL EXAMINATION NEED NOT BE WITH
LEAVE OF COURT BECAUSE AN ANSWER EX ABUDANTE CAUTELA HAS

BEEN FILED; AND (B) JOINDER OF ISSUES IS NOT REQUIRED IN ORDER
THAT THE SECTION 1, RULE 23 56 OF THE RULES OF CIVIL PROCEDURE
MAY BE AVAILED OF.
Petitioners argue that the Court of Appeals gravely erred when it found that the
trial court did not abuse its discretion when it refused to recognize petitioners
Oscar Mapalo and Chito Rosetes constitutional right against self-incrimination
when, through its Orders dated 22 July 1997 and 27 August 1997, it allowed and
scheduled the taking of their depositions by way of oral examination. They explain
they refuse to give their depositions due to the pendency of two criminal cases
against them, namely, Batas Pambansa Blg. 22 and Estafa, because their answers
would expose them to criminal action or liability since they would be furnishing
evidence against themselves in said criminal cases. They allege there can be no
doubt that the questions to be asked during the taking of the deposition would
revolve around the allegations in the complaint in the civil case which are identical
to the allegations in the complaint-affidavits in the two criminal cases, thus, there
is a tendency to incriminate both Oscar Mapalo and Chito Rosete. Moreover, they
explain that while an ordinary witness may be compelled to take the witness stand
and claim the
_______________
In order to resolve this issue, we must determine the extent of a persons right
against self-incrimination. A persons right against self-incrimination is enshrined
in Section 17, Article III of the 1987 Constitution which reads: No person shall be
compelled to be a witness against himself.
The right against self-incrimination is accorded to every person who gives
evidence, whether voluntary or under compulsion of subpoena, in any civil,
criminal or administrative proceeding. The right is not to be compelled to be a
witness against himself. It secures to a witness, whether he be a party or not, the
right to refuse to answer any particular incriminatory question, i.e., one the
answer to which has a tendency to incriminate him for some crime. However, the
right can be claimed only when the specific question, incriminatory in character, is
actually put to the witness. It cannot be claimed at any other time. It does not give
a witness the right to disregard a subpoena, decline to appear before the court at
the time appointed, or to refuse to testify altogether. The witness receiving a
subpoena must obey it, appear as required, take the stand, be sworn and answer
questions. It is only when a particular question is addressed to which may
incriminate
136
136
Now Section 1, Rule 23 of the 1997 Rules of Civil Procedure.

135
56
VOL.490,JUNE8,2006
Rosetevs.Lim
privilege against self-incrimination as each question requiring an incriminating
answer is shot at him, an accused may altogether refuse to answer any and all
questions because the right against self-incrimination includes the right to refuse
to testify.
In short, petitioners Mapalo and Chito Rosete refuse to have their depositions
taken in the civil case because they allegedly would be incriminating themselves in
the criminal cases because the testimony that would be elicited from them may be
used in the criminal cases. As defendants in the civil case, it is their claim that to
allow their depositions to be taken would violate their constitutional right against
self-incrimination because said right includes the right to refuse to take the
witness stand.
135
Rosetevs.Lim
himselfforsomeoffensethathemayrefusetoansweronthe
strength
of
the
constitutional guaranty.57
As to an accused in a criminal case, it is settled that he can refuse outright to
take the stand as a witness. InPeople v. Ayson,58 this Court clarified the rights of
an accused in the matter of giving testimony or refusing to do so. We said:
An accused occupies a different tier of protection from an ordinary witness.
Under the Rules of Court, in all criminal prosecutions the defendant is entitled
among others
1) to be exempt from being a witness against himself, and
2) to testify as witness in his own behalf; but if he offers himself as a witness
he may be cross-examined as any other witness; however, his neglect or refusal to
be a witness shall not in any manner prejudice or be used against him.
The right of the defendant in a criminal case to be exempt from being a
witness against himself signifies that he cannot be compelled to testify or produce
evidence in the criminal case in which he is the accused, or one of the accused. He
cannot be compelled to do so even by subpoena or other process or order of the
Court. He cannot be required to be a witness either for the prosecution, or for a coaccused, or even for himself. In other wordsunlike an ordinary witness (or a
party in a civil action) who may be compelled to testify by subpoena, having only
the right to refuse to answer a particular incriminatory question at the time it is
put to himthe defendant in a criminal action can refuse to testify altogether. He
can refuse to take the witness stand, be sworn, answer any question. x x x (Italics
supplied.)
It is clear, therefore, that only an accused in a criminal case can refuse to take the
witness stand. The right to refuse to take the stand does not generally apply to
parties in administrative cases or proceedings. The parties thereto can only refuse
to answer if incriminating questions are pro137
VOL.490,JUNE8,2006
Rosetevs.Lim
pounded. This Court applied the exceptiona party who is not an accused in a
criminal case is allowed not to take the witness standin administrative
cases/proceedings that partook of the nature of a criminal proceeding or analogous
to a criminal proceeding. 59 It is likewise the opinion of the Court that said
exception applies to parties in civil actions which are criminal in nature. As long
as the suit is criminal in nature, the party thereto can altogether decline to take
the witness stand. It is not the character of the suit involved but the nature of the
proceedings that controls.60
In the Ayson case, it is evident that the Court treats a party in a civil case as
an ordinary witness, who can invoke the right against self-incrimination only
when the incriminating question is propounded. Thus, for a party in a civil case to
possess the right to refuse to take the witness stand, the civil case must also
partake of the nature of a criminal proceeding.
In the present controversy, the case is civil it being a suit for Annulment,
Specific Performance with Damages. In order for petitioners to exercise the right
to refuse to take the witness stand and to give their depositions, the case must
partake of the nature of a criminal proceeding. The case on hand certainly cannot
be categorized as such. The fact that there are two criminal cases pending which
are allegedly based on the same set of facts as that of the civil case will not give
them the right to refuse to take the witness stand and to give their depositions.
They are not facing criminal charges in the civil case. Like an ordinary witness,
they can invoke the right against self-incrimination only when the incriminating
question is actually asked of them. Only if and when incriminating questions are
thrown their way can they refuse to answer on the ground of their right against
self-incrimination.
_______________
Cabal v. Hon. Kapunan, Jr., 116 Phil. 1361, 1367-1368; 6 SCRA 1059, 1063
(1962); Pascual, Jr. v. Board of Medical Examiners, 138 Phil. 361, 363; 28 SCRA
344, 348 (1969).
60
Galman v. Pamaran, G.R. Nos. L-71208-09 and L-71212-13, 30 August
1985, 138 SCRA 294, 323.
138
59
138
137
Rosetevs.Lim
On the second assigned error, petitioners contend that the taking of their oral
depositions should not be allowed without leave of court as no answer has yet been
served and the issues have not yet been joined because their answers were filed ex
abudanti cautela pending final resolution of the petition for certiorari challenging
the trial courts Orders dated 12 March 1996 and 24 May 1996 that denied their
motions to dismiss and for reconsideration, respectively.
Section 1 of Rule 2461 of the Revised Rules of Court reads:
Section 1. Depositions pending action, when may be taken.By leave of court after
jurisdiction has been obtained over any defendant or over property which is the
subject of the action, or without such leave after an answer has been served, the
testimony of any person, whether a party or not, may be taken, at the instance of
any party, by deposition upon oral examination or written interrogatories. The
attendance of witnesses may be compelled by the use of a subpoena as provided in
Rule 23. Depositions shall be taken only in accordance with these rules. The
deposition of a person confined in prison may be taken only by leave of court on
such terms as the court prescribes.
From the quoted section, it is evident that once an answer has been served, the
testimony of a person, whether a party or not, may be taken by deposition upon
oral examination or written interrogatories. In the case before us, petitioners
contend they have not yet served an answer to respondents because the answers
that they have filed with the trial court were made ex abudanti cautela. In other
words, they do not consider the answers they filed in court and served on
respondents as answers contemplated by the Rules of Court on the ground that

same were filed ex abudanti cautela.
We find petitioners contention to be untenable. Ex abudanti cautela means
out of abundant caution or to be on the
_______________
_______________
140
140
Substantially reproduced in 1997 RULES OF CIVIL PROCEDURE, Rule 23,

Section 1.
139
61
VOL.490,JUNE8,2006
Rosetevs.Lim
safe side.62 An answer ex abudanti cautela does not make their answer less of an
answer. A cursory look at the answers filed by petitioners shows that they contain
their respective defenses. An answer is a pleading in which a defending party sets
forth his defenses63 and the failure to file one within the time allowed herefore may
cause a defending party to be declared in default. 64 Thus, petitioners, knowing
fully well the effect of the non-filing of an answer, filed their answers despite the
pendency of their appeal with the Court of Appeals on the denial of their motion to
dismiss.
Petitioners argument that the issues of the case have not yet been joined must
necessarily fail in light of our ruling that petitioners have filed their answers
although the same were made ex abudanti cautela. Issues are joined when all the
parties have pleaded their respective theories and the terms of the dispute are
plain before the court.65 In the present case, the issues have, indeed, been joined
when petitioners, as well as the other defendants, filed their answers. The
respective claims and defenses of the parties have been defined and the issues to
be decided by the trial court have been laid down.
We cannot also sustain petitioners contention that the lower court erred when
it said that the joinder of issues is not required in order that Section 1, Rule 23 of
the 1997 Rules of Civil Procedure may be availed of. Under said section, a
deposition pending action may be availed of: (1) with leave of court when an
answer has not yet been filed but after jurisdiction has been obtained over any
defendant or property subject of the action, or (2) without leave of court after an
answer to the complaint has been served. In the instant case, the taking of the
deposition may be availed of even without leave of court because petitioners have
already served their answers to the complaint.
139
Anchetavs.GuerseyDalaygon
WHEREFORE, all the foregoing considered, the instant petition is dismissed for
lack of merit.
SO ORDERED.
Panganiban (C.J., Chairperson), Austria-Martinezand Callejo, Sr., JJ.,
concur.
Ynares-Santiago, J., On Leave.
Petition dismissed.
Note.While appellants could not have been compelled to be witnesses
against themselves, they waived this right by voluntary taking the witness stand.
(People vs. Ventura,433 SCRA 389 [2004])
FinancialBuildingCorporationvs.ForbesParkAssociation,Inc.
G.R. No. 133119. August 17, 2000.*
FINANCIAL BUILDING CORPORATION, petitioner, vs.FORBES PARK
ASSOCIATION, INC., respondent.
Actions; Pleadings and Practice; Compulsory Counterclaims;A compulsory
counterclaim is one which arises out of or is necessarily connected with the
transaction or occurrence that is the subject matter of the opposing
______________
SECOND DIVISION.
347
*
partys claim.The instant case is barred due to Forbes Parks failure to set
it up as a compulsory counterclaim in Civil Case No. 16540, the prior injunction
suit initiated by Financial Building against Forbes Park. A compulsory
counterclaim is one which arises out of or is necessarily connected with the
347
transaction or occurrence that is the subject matter of the opposing partys claim.
If it is within the jurisdiction of the court and it does not require for its
adjudication the presence of third parties over whom the court cannot acquire
jurisdiction, such compulsory counterclaim is barred if it is not set up in the action
filed by the opposing party.
Same; Same; Same; Tests to Determine Whether a Counterclaim is
Compulsory.Thus, a compulsory counterclaim cannot be the subject of a separate
action but it should instead be asserted in the same suit involving the same
transaction or occurrence, which gave rise to it. To determine whether a
counterclaim is compulsory or not, we have devised the following tests: (1) Are the
issues of fact or law raised by the claim and the counterclaim largely the same? (2)
Would res judicata bar a subsequent suit on defendants claim absent the
compulsory counterclaim rule? (3) Will substantially the same evidence support or
refute plaintiffs claim as well as the defendants counterclaim? and (4) Is there
any logical relation between the claim and the counterclaim? Affirmative answers
to the above queries indicate the existence of a compulsory counterclaim.
Same; Same; Same; Motion to Dismiss; If the dismissal of the main action
results in the dismissal of the counterclaim already filed, it stands to reason that
the filing of a motion to dismiss the complaint is an implied waiver of the
compulsory counterclaim because the grant of the motion ultimately results in the
dismissal of the counterclaim.A compulsory counterclaim is auxiliary to the
proceeding in the original suit and derives its jurisdictional support therefrom. A
counterclaim presupposes the existence of a claim against the party filing the
counterclaim. Hence, where there is no claim against the counterclaimant, the
counterclaim is improper and it must dismissed, more so where the complaint is
dismissed at the instance of the counterclaimant. In other words, if the dismissal
of the main action results in the dismissal of the counterclaim already filed, it
stands to reason that the filing of a motion to dismiss the complaint is an implied
waiver of the compulsory counterclaim because the grant of the motion ultimately
results in the dismissal of the counterclaim.
Same; Same; Same; Same; Affirmative Defenses; The filing of a motion to
dismiss and the setting up of a compulsory counterclaim are incompatible remedies
the defending party must choose only one remedy; If the defendant opts to set up
his compulsory counterclaim, he may still plead
348
3
48
his ground for dismissal as an affirmative defense in his answer.Thus, the
filing of a motion to dismiss and the setting up of a compulsory counterclaim are
incompatible remedies. In the event that a defending party has a ground for
dismissal and a compulsory counterclaim at the same time, he must choose only
one remedy. If he decides to file a motion to dismiss, he will lose his compulsory
counterclaim. But if he opts to set up his compulsory counterclaim, he may still
plead his ground for dismissal as an affirmative defense in his answer. The latter
option is obviously more favorable to the defendant although such fact was lost on
Forbes Park.
Carpio, Villaraza & Cruz for petitioner.
Quasha, Ancheta, Pea & Nolasco for private respondent.
DE LEON, JR., J.:
Before us is petition for review on certiorari of the Decision 1dated March 20, 1998
of the Court of Appeals2 in CA-GR CV No. 48194 entitled Forbes Park Association,
Inc. vs. Financial Building Corporation, finding Financial Building Corporation
(hereafter, Financial Building) liable for damages in favor of Forbes Park
Association, Inc. (hereafter, Forbes Park), for violating the latters deed of
restrictions on the construction of buildings within the Forbes Park Village,
Makati.
The pertinent facts are as follows:
The then Union of Soviet Socialist Republic (hereafter, USSR) was the owner
of a 4,223 square meter residential lot located at No. 10, Narra Place, Forbes Park
Village in Makati City. On December 2, 1985, the USSR engaged the services of
Financial Building for the construction of a multi-level office and staff apartment
building
_______________
Penned by Associate Justice Fermin A. Martin, Jr. and concurred in by

Associate Justices Conrado M. Vasquez, Jr. and Artemio G. Tuquero, Rollo, pp. 7589.
2
Eleventh Division.
349
1
at the said lot, which would be used by the Trade Representative of the
USSR.3 Due to the USSRs representation that it would be building a residence for
its Trade Representative, Forbes Park authorized its construction and work began
shortly thereafter.
On June 30, 1986, Forbes Park reminded the USSR of existing
regulations4 authorizing only the construction of a single-family residential
building in each lot within the village. It also elicited a reassurance from the
USSR that such restriction has been complied with. 5 Promptly, the USSR gave its
assurance that it has been complying with all regulations of Forbes Park. 6 Despite
this, Financial Building submitted to the Makati City Government a second
building plan for the construction of a multi-level apartment building, which was
different from the first plan for the construction of a residential building submitted
to Forbes Park.
Forbes Park discovered the second plan and subsequent ocular inspection of
the USSRs subject lot confirmed the violation of the deed of restrictions. Thus, it
enjoined further construction work. On March 27, 1987, Forbes Park suspended all
permits of entry for the personnel and materials of Financial Building in the said
construction site. The parties attempted to meet to settle their differences but it
did not push through.
Instead, on April 9, 1987, Financial Building filed in the Regional Trial Court
of Makati, Metro Manila, a Complaint 7 for Injunction and Damages with a prayer
for Preliminary Injunction against Forbes Park docketed asCivil Case No. 16540.
The latter, in turn, filed a Motion to Dismiss on the ground that Financial
Building had no cause of action because it was not the real party-in-interest.
On April 28, 1987, the trial court issued a writ of preliminary injunction
against Forbes Park but the Court of Appeals nullified it and dismissed the
complaint in Civil Case No. 16540 altogether.
_______________
Rollo, p. 876.
Forbes Park Association, Inc. Rules and Regulations, 1984 edition, Rollo, pp.
299-320.
5
Rollo, pp. 896-897.
6
Rollo, p. 898.
7
Rollo, pp. 90-106.
350
3
4
349
350
We affirmed the said dismissal in our Resolution, 8promulgated on April 6, 1988,
in G.R. No. 79319 entitled Financial Building Corporation, et al. vs. Forbes Park
Association, et al.
After Financial Buildings case, G.R. No. 79319, was terminated with finality,
Forbes Park sought to vindicate its rights by filing on October 27, 1989 with the
Regional Trial Court of Makati a Com-plaint 9 for Damages, against Financial
Building, docketed as Civil Case No. 89-5522, arising from the violation of its rules
and regulations. The damages claimed are in the following amounts: (a)
P3,000,000.00 as actual damages; (b) P1,000,000.00 as moral damages; (c)
P1,000,000.00 as exemplary damages; and (d) P1,000,000.00 as attorneys
fees.10 On September 26, 1994, the trial court rendered its Decision11 in Civil Case
No. 89-5522 in favor of Forbes Park and against Financial Building, the dispositive
portion of which reads, to wit:
WHEREFORE, in view of the foregoing, the Court hereby renders judgment in
favor of the plaintiff and against the defendant:
1. (1)Ordering the defendant to remove/demolish the illegal structures
within three (3) months from the time this judgment becomes final and
executory, and in case of failure of the defendant to do so, the plaintiff
is authorized to demolish/remove the structures at the expense of the
defendant;
2. (2)Ordering the defendant to pay damages, to wit:
1. (a)P3,000,000.00 as actual damages by way of demolition expenses;
2. (b)P 1,000,000.00 as exemplary damages;
2. II.THE COURT OF APPEALS GRAVELY ERRED IN NOT

DISMISSING THE COMPLAINT FILED BY RESPONDENT FPA
AGAINST PETITIONER FBC SINCE RESPONDENT FPA HAS NO
CAUSE OF ACTION AGAINST PETITIONER FBC;
3. (c)P500,000.00 as attorneys fees;

4. (d)the costs of suit.
3. III.THE COURT OF APPEALS GRAVELY ERRED IN AWARDING

DAMAGES IN FAVOR OF RESPONDENT FPA DESPITE THE FACT
THAT ON THE BASIS OF THE EVIDENCE ON RECORD,
RESPONDENT FPA IS NOT ENTITLED THERETO AND
PETITIONER FBC IS NOT LIABLE THEREFOR;
SO ORDERED.
Financial Building appealed the said Decision of the trial court in Civil Case No.
89-5522 by way of a petition for review on certio_______________
4. IV.THE COURT OF APPEALS ERRED IN ORDERING THE

DEMOLITION OF THE ILLEGAL STRUCTURES LOCATED AT NO.
10 NARRA PLACE, FORBES PARK, MAKATI CITY, CONSIDERING
THAT THE SAME ARE LOCATED ON DIPLOMATIC PREMISES14
Rollo, pp. 956-958.

Rollo, pp. 959-974.
10
Rollo, p. 973.
11
Rollo, pp. 729-743.
351
8
9
rari12 entitled Financial Building Corporation vs. Forbes Park Association, Inc. to
the Court of Appeals and docketed therein as CA-CR CV No. 48194. However, the
Court of Appeals affirmed it in its Decision 13 dated March 20, 1998, the dispositive
portion of which reads:
WHEREFORE, the Decision dated September 26, 1994 of the Regional Trial
Court of Makati is AFFIRMED with the modification that the award of exemplary
damages, as well as attorneys fees, is reduced to fifty thousand pesos (P50,000.00)
each.
Hence, this petition, wherein Financial Building assigns the following errors:
1. I.THE COURT OF APPEALS GRAVELY ERRED IN NOT
DISMISSING THE COMPLAINT FILED BY RESPONDENT FPA
DESPITE THE FACT THAT ITS ALLEGED CLAIMS AND CAUSES
OF ACTION THEREIN ARE BARRED BY PRIOR JUDGMENT
AND/OR ARE DEEMED WAIVED FOR ITS FAILURE TO
INTERPOSE THE SAME AS COMPULSORY COUNTERCLAIMS
IN CIVIL CASE NO. 16540;
351
We grant the petition.

_______________
Rollo, pp. 9-74.
Rollo, pp. 75-89.
14
Petition, entitled Financial Building Corporation vs. Forbes
Association, Inc and docketed as CA-G.R. CV No. 48194, Rollo, pp. 9-74.
352
12
13
352
Park
First. The instant case is barred due to Forbes Parks failure to set it up as a
compulsory counterclaim in Civil Case No. 16540, the prior injunction suit
initiated by Financial Building against Forbes Park.
A compulsory counterclaim is one which arises out of or is necessarily
connected with the transaction or occurrence that is the subject matter of the
opposing partys claim.15 If it is within the jurisdiction of the court and it does not
require for its adjudication the presence of third parties over whom the court
cannot acquire jurisdiction, such compulsory counterclaim is barred if it is not set
up in the action filed by the opposing party.16
Thus, a compulsory counterclaim cannot be the subject of a separate action

but it should instead be asserted in the same suit involving the same transaction
or occurrence, which gave rise to it. 17 To determine whether a counterclaim is
compulsory or not, we have devised the following tests: (1) Are the issues of fact or
law raised by the claim and the counterclaim largely the same? (2) Wouldres
judicata bar a subsequent suit on defendants claim absent the compulsory
counterclaim rule? (3) Will substantially the same evidence support or refute
plaintiffs claim as well as the defendants counterclaim? and (4) Is there any
logical relation between the claim and the counterclaim? Affirmative answers to
the above queries indicate the existence of a compulsory counter-claim. 18
Undoubtedly, the prior Civil Case No. 16540 and the instant case arose from
the same occurrencethe construction work done by Financial Building on the
USSRs lot in Forbes Park Village. The issues of fact and law in both cases are
identical. The factual issue is whether the structures erected by Financial
Building violate Forbes Parks rules and regulations, whereas the legal issue is
whether Financial Building, as an independent contractor working
_______________
construction. Thus, the logical relation between the two cases is patent and it is
obvious that substantially the same evidence is involved in the said cases.
Moreover, the two cases involve the same parties. The aggregate amount of the
claims in the instant case is within the jurisdiction of the regional trial court, had
it been set up as a counterclaim in Civil Case No. 16540. Therefore, Forbes Parks
claims in the instant case should have been filed as a counterclaim in Civil Case
No. 16540.
Second. Since Forbes Park filed a motion to dismiss inCivil Case No. 16540, its
existing compulsory counterclaim at that time is now barred.
A compulsory counterclaim is auxiliary to the proceeding in the original suit
and derives its jurisdictional support therefrom. 19 A counterclaim presupposes the
existence of a claim against the party filing the counterclaim. Hence, where there
is no claim against the counterclaimant, the counterclaim is improper and it must
dismissed, more so where the complaint is dismissed at the instance of the
counterclaimant.20 In other words, if the dismissal of the main action results in the
dismissal of the counterclaim already filed, it stands to reason that the filing of a
motion to dismiss the
_______________
Sec. 3, Rule 6 of the 1964 Rules of Court, which were the rules in effect at
the time of the pendency of Civil Case No. 16540.
16
Sec. 4, Rule 9, id.
17
Yulienco v. Court of Appeals, G.R. No. 131692, June 10, 1999, 308 SCRA
206. Citing Valencia v. Court of Appeals, 263 SCRA 275, 288 (1996).
18
Sec. 4, Rule 9, id.
353
15
for the USSR, could be enjoined from continuing with the construction and be held
liable for damages if it is found to have violated Forbes Parks rules.
As a result of the controversy, Financial Building seized the initiative by filing
the prior injunction case, which was anchored on the contention that Forbes Parks
prohibition on the construction work in the subject premises was improper. The
instant case on the other hand was initiated by Forbes Park to compel Financial
Building to remove the same structures it has erected in the same premises
involved in the prior case and to claim damages for undertaking the said
Metals Engineering Resources Corp. v. Court of Appeals, 203 SCRA 273,

282 (1991); Santo Tomas University Hospital v. Surla, 294 SCRA 382, 392 (1998).
20
Ibid., p. 283; Intestate Estate of Amado B. Dalisay v. Marasigan, 257 SCRA
509; 513-514 (1996); International Container Terminal Services, Inc. v. Court of
Appeals, 214 SCRA 456, 462 (1992).
354
19
353
354
complaint is an implied waiver of the compulsory counterclaim because the grant
of the motion ultimately results in the dismissal of the counterclaim.
Thus, the filing of a motion to dismiss and the setting up of a compulsory
counterclaim are incompatible remedies. In the event that a defending party has a
ground for dismissal and a compulsory counterclaim at the same time, he must
choose only one remedy. If he decides to file a motion to dismiss, he will lose his
compulsory counterclaim. But if he opts to set up his compulsory coun-terclaim, he
may still plead his ground for dismissal as an affirmative defense in his
answer.21 The latter option is obviously more favorable to the defendant although
such fact was lost on Forbes Park.
The ground for dismissal invoked by Forbes Park inCivil Case No. 16540 was
lack of cause of action. There was no need to plead such ground in a motion to
dismiss or in the answer since the same was not deemed waived if it was not
pleaded.22 Nonetheless, Forbes Park still filed a motion to dismiss and thus
exercised bad judgment in its choice of remedies. Thus, it has no one to blame but
itself for the consequent loss of its counterclaim as a result of such choice.
Inasmuch as the action for damages filed by Forbes Park should be as it is
hereby dismissed for being barred by the prior judgment in G.R. No. 79319 (supra)
and/or deemed waived by Forbes Park to interpose the same under the rule on
compulsory counterclaims, there is no need to discuss the other issues raised by
the herein petitioner.
WHEREFORE, the instant petition is hereby GRANTED and the Decision
dated March 20, 1998 of the Court of Appeals in CA-G.R. CV No. 48194 is hereby
REVERSED and SET ASIDE.
Costs against respondent Forbes Park Association, Inc.
G.R. No. 166393.June 18, 2009.*
CRISTINA F. REILLO, LEONOR F. PUSO, ADELIA F. ROCAMORA, SOFRONIO
S.J. FERNANDO, EFREN S.J. FERNANDO, ZOSIMO S.J. FERNANDO, JR., and
MA. TERESA F. PION, petitioners, vs. GALICANO E.S. SAN JOSE, represented
by his Attorneys-in-Fact, ANNALISA S.J. RUIZ and RODELIO S. SAN JOSE,
VICTORIA S.J. REDONGO, CATALINA S.J. DEL ROSARIO and MARIBETH S.J.
CORTEZ, collectively known as the HEIRS OF QUITERIO SAN JOSE and
ANTONINA ESPIRITU SANTO, respondents.
Judgments; Pleadings and Practice; In a proper case for judgment on the
pleadings, there is no ostensible issue at all because of the failure of the defending
partys answer to raise an issue.Where a motion for judgment on the pleadings is
filed, the essential question is whether there are issues generated by the
pleadings. In a proper case for judgment on the pleadings, there is no ostensible
issue at all because of the failure of the defending partys answer to raise an issue.
The answer would fail to tender an issue, of course, if it does not deny the material
allegations in the complaint or admits said material allegations of the adverse
partys pleadings by confessing the truthfulness thereof and/or omitting to deal
with them at all.
filed by petitioners in their Answer to respondents complaint, they were asking for
the partition and accounting of the other 12 parcels of land of the deceased
spouses Quiterio and Antonina, which are entirely different from the subject
matter of the respondents action. Petitioners claim does not arise out of or is
necessarily connected with the action for the Annulment of the Deed of
Extrajudicial Settlement of the property covered by TCT No. 458396. Thus,
payment of docket fees is necessary before the RTC could acquire jurisdiction over
petitioners petition for partition.
Same; Same; The RTC cannot order the collation and partition of the other
properties which were not included in the partition that was the subject matter of
the respondents action for annulment.In petitioners Answer with CounterPetition for Partition, they enumerated 12 other parcels of land owned by the
deceased spouses Quiterio and Antonina. They alleged that some of these
properties had already been disposed of by respondents and some are still
460
Property; Partition; A deed of extrajudicial partition executed without

including some of the heirs, who has no knowledge and consent to the same, is
fraudulent and vicious.A deed of extrajudicial partition executed without
including some of the heirs, who had no knowledge of and consent to the same, is
fraudulent and vicious. The deed of settlement made by petitioners was invalid
because it excluded respondents who were entitled to equal shares in the subject
property. Under the rule, no extrajudicial settlement shall be binding upon any
person who has not participated therein or had no notice thereof. Thus, the RTC
correctly annulled the Deed of Extrajudicial Settlement of Estate Among Heirs
with Waiver of Rights dated January 23, 1998 and TCT No. M-94400 in the name
of Ma. Teresa S.J. Fernando issued pursuant to such deed.
_______________
* THIRD DIVISION.
459
VOL.589,JUNE18,2009
Reillovs.SanJose
Civil Procedure; Counterclaims; A counterclaim is compulsory when its
object arises out of or is necessarily connected with the transaction or occurrence
constituting the subject matter of the opposing partys claim and does not require
for its adjudication the presence of third parties of whom the court cannot acquire
jurisdiction.A counterclaim is any claim which a defending party may have
against an opposing party. It may either be permissive or compulsory. It is
permissive if it does not arise out of or is not necessarily connected with the
subject matter of the opposing partys claim. A permissive counterclaim is
essentially an independent claim that may be filed separately in another case. A
counterclaim is compulsory when its object arises out of or is necessarily connected
with the transaction or occurrence constituting the subject matter of the opposing
partys claim and does not require for its adjudication the presence of third parties
of whom the court cannot acquire jurisdiction. Unlike permissive counterclaims,
compulsory counterclaims should be set up in the same action; otherwise, they
would be barred forever.
Same; Partition; Payment of docket fees is necessary before the RTC could
acquire jurisdiction over petitioners petition for partition.Respondents action
was for the annulment of the Deed of Extrajudicial Settlement, title and partition
of the property subject of the Deed. On the other hand, in the Counter-Petition
459
60
Reillovs.SanJose
generating income under the control and administration of respondents,
and these properties should be collated back by respondents to be partitioned by
all the heirs of the deceased spouses. It bears stressing that the action filed by
respondents in the RTC was an ordinary civil action for annulment of title,
annulment of the deed of extrajudicial settlement and partition of a parcel of land
now covered by TCT No. M-94400; hence, the authority of the court is limited to
the property described in the pleading. The RTC cannot order the collation and
partition of the other properties which were not included in the partition that was
the subject matter of the respondents action for annulment. Thus, a separate
proceeding is indeed proper for the partition of the estate of the deceased spouses
Quiterio and Antonina.
Partition; It is a basic rule that any act which is intended to put an end to
indivision among co-heirs or co-owners is deemed to be a partition.Considering
that the subject document and the corresponding title were canceled, the logical
consequence is that the property in dispute, which was the subject of the
extrajudicial settlement, reverted back to the estate of its original owners, the
deceased spouses Quiterio and Antonina San Jose. Since, it was admitted that all
the parties to the instant suit are legal heirs of the deceased spouses, they owned
the subject property in common. It is a basic rule that any act which is intended to
put an end to indivision among co-heirs or co-owners is deemed to be a partition.
Therefore, there was no reversible error committed by the trial court in ordering
the partition of the subject property. We find nothing wrong with such ruling
considering that the trial court ordered the partition of the subject property in
accordance with the rules on intestate succession. The trial court found the
property to be originally owned by the deceased spouses Quiterio and Antonina
San Jose and, in the absence of a will left by the deceased spouses, it must be
partitioned in accordance with the rules on intestate succession.
Appeals.
Felix T. De Ramos for petitioners.
Lyn G. Bautista for respondents.
461
VOL.589,JUNE18,2009
Reillovs.SanJose
PERALTA,J.:
Assailed in this petition for review on certiorari is the Decision1 dated August
31, 2004 of the Court of Appeals (CA) in CA-G.R. CV No. 69261 which affirmed the
Order dated May 9, 2000 of the Regional Trial Court (RTC) of Morong, Rizal,
Branch 78, granting the motion for judgment on the pleadings and the motion to
dismiss counter petition for partition filed by respondents in Civil Case No. 991148-M. Also questioned is the CA Resolution 2dated December 14, 2004 denying
petitioners motion for reconsideration.
Spouses Quiterio San Jose (Quiterio) and Antonina Espiritu Santo (Antonina)
were the original registered owners of a parcel of land located in E. Rodriguez Sr.
Avenue, Teresa, Rizal covered by Transfer Certificate of Title (TCT) No. 458396 of
the Register of Deeds of Rizal. The said parcel of land is now registered in the
name of Ma. Teresa F. Pion (Teresa) under TCT No. M-94400.
Quiterio and Antonina had five children, namely, Virginia, Virgilio, Galicano,
Victoria and Catalina. Antonina died on July 1, 1970, while Quiterio died on
October 19, 1976. Virginia and Virgilio are also now deceased. Virginia was
survived by her husband Zosimo Fernando, Sr. (Zosimo Sr.) and their seven
children, while Virgilio was survived by his wife Julita Gonzales and children,
among whom is Maribeth S.J. Cortez (Maribeth).
On October 26, 1999, Galicano, represented by his children and attorneys-infact, Annalisa S.J. Ruiz and Rodegelio San Jose, Victoria, Catalina, and Maribeth
(respondents) filed with the RTC a Complaint3 for annulment of title, annulment
of deed of extrajudicial settlement, partition and damages
_______________
1 Penned by Associate Justice Perlita J. Tria Tirona, with Associate Justices
Ruben T. Reyes (Retired Justice of this Court) and Jose C. Reyes, Jr.,
concurring; Rollo, pp. 8-17
2 Id., at pp. 20-22.
3 Records, pp. 2-10.
462
462
461
Reillovs.SanJose
against Zosimo Sr. and his children Cristina F. Reillo, Leonor F. Puso, Adelia F.
Rocamora, Sofronio S.J. Fernando, Efren S.J. Fernando, Zosimo S.J. Fernando, Jr.
and Ma. Teresa (petitioners) and the Register of Deeds of Morong, Rizal. The
complaint alleged among other things:
6.Under date of January 23, 1998, defendants FERNANDO et al, without
the knowledge and consent of all the other surviving heirs of the deceased spouses
QUITERIO SAN JOSE and ANTONINA ESPIRITU SANTO, including herein
plaintiffs, executed a Deed of Extrajudicial Settlement of Estate Among Heirs with
Waiver of Rights making it appear therein that they are the legitimate
descendants and sole heirs of QUITERIO SAN JOSE and ANTONINA ESPIRITU
SANTO; and adjudicating among themselves, the subject parcel of land.
6.1In the same document, defendants ZOSIMO SR., CRISTINA, LEONOR,
ADELIA, SOFRONIO, EFREN and ZOSIMO JR., waived all their rights,
participation and interests over the subject parcel of land in favor of their codefendant MA. TERESA F. PION (a.k.a MA. TERESA S.J. FERNANDO).
xxxx
7. On the strength of the said falsified Deed of Extrajudicial Settlement of
Estate, defendant MA. TERESA PION (a.k.a MA. TERESA S.J. FERNANDO)
succeeded in causing the cancellation of TCT No. 458396 in the name of SPS.
QUITERIO SAN JOSE and ANTONINA ESPIRITU SANTO and the issuance of a
new Transfer Certificate of Title in her name only, to the extreme prejudice of all
the other heirs of the deceased SPS. QUITERIO SAN JOSE and ANTONINA
ESPIRITU SANTO, specifically, the herein plaintiffs who were deprived of their
lawful participation over the subject parcel of land.
7.1Thus, on July 6, 1999, Transfer Certificate of Title No. M-94400 was
issued in the name of defendant MA. TERESA S.J. FERNANDO.
xxxx
8.As a result, the herein plaintiffs and the other surviving heirs of the
deceased spouses QUITERIO SAN JOSE and ANTONINA ESPIRITU SANTO,
who are legally entitled to inherit from the latters respective estates, in
accordance with the laws of intestate
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VOL.589,JUNE18,2009
Reillovs.SanJose
succession, have been duly deprived of their respective rights, interests and
participation over the subject parcel of land.
8.1 Thus, there is sufficient ground to annul the subject Deed of
Extrajudicial Settlement of Estate Among Heirs with Waiver of Rights dated
January 23, 1998, and all other documents issued on the strength thereof,
particularly Transfer Certificate of Title No. M-94400. 4
It was also alleged that respondents filed a complaint before the Lupong
Tagapamayapa of their Barangay
which issued the required certification to file action for failure of the parties to
settle the matter amicably.
Petitioners filed their Answer with Counter-Petition and with Compulsory
Counterclaim5 denying that the Deed of Extrajudicial Settlement of Estate Among
Heirs with Waiver of Rights which was the basis of the issuance of TCT No. M94400, was falsified and that the settlement was made and implemented in
accordance with law. They admitted that the deceased spouses Quiterio and
Antonina had five children; that the subject property was not the only property of
spouses Quiterio and Antonina and submitted in their counter-petition for
partition the list of the other 12 parcels of land of the deceased spouses Quiterio
and Antonina that petitioners alleged are in respondents possession and control.
On January 18, 2000, respondents filed a Motion for Judgment on the
Pleadings6 alleging that: (1) the denials made by petitioners in their answer were
in the form of negative pregnant; (2) petitioners failed to state the basis that the
questioned document was not falsified; (3) they failed to specifically deny the
allegations in the complaint that petitioners committed misrepresentations by
stating that they are the sole heirs and legitimate descendants of Quiterio and
Antonina; and (4) by making reference to their allegations in their
_______________
4 Id., at pp. 4-6.
5 Id., at pp. 21-27.
6 Id., at pp. 40-44.
464
464
463
Reillovs.SanJose
counter-petition for partition to support their denials, petitioners impliedly
admitted that they are not the sole heirs of Quiterio and Antonina.
Respondents filed a Reply to Answer with Compulsory Counterclaim 7 with a
motion to dismiss the counter-petition for partition on the ground that petitioners
failed to pay the required docket fees for their counter-petition for partition.
Petitioners filed their Rejoinder8 without tackling the issue of non-payment of
docket fees.
On February 4, 2000, petitioners filed their Comment 9to respondents motion
for judgment on the pleading and prayed that the instant action be decided on the
basis of the pleadings with the exception of respondents unverified Reply.
Petitioners also filed an Opposition to the motion to dismiss the counter-petition
for partition.
On May 9, 2000, the RTC rendered its Order,10 the dispositive portion of which
reads:
1.The Extrajudicial Settlement of Estate Among Heirs with Waiver of
Rights, dated January 23, 1998 and Transfer Certificate of Title No. M-94400 in
the name of Ma. Teresa S.J. Fernando are declared null and void;
2.The Register of Deeds of Rizal, Morong Branch, is directed to cancel TCT
No. 94400; and
3.The Heirs of Quiterio San Jose and Antonina Espiritu Santo is ( sic)
directed to partition the subject parcel of land covered by TCT No. M-458396 in
accordance with the law of intestate succession.11
SO ORDERED.
_______________
7 Id., at 56-59.
8 Id. at 73-74
9 Id. at 81-82.
10 Penned by Judge Adelina Calderon-Bargas; id., at pp. 94-97.
11 Records, p. 97.
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VOL.589,JUNE18,2009
Reillovs.SanJose
The RTC found that, based on the allegations contained in the pleadings filed
by the parties, petitioners misrepresented themselves when they alleged in the
Deed of Extrajudicial Settlement of Estate Among Heirs with Waiver of Rights
that they are the sole heirs of the deceased spouses Quiterio and Antonina; that
petitioners prayed for a counter-petition for partition involving several parcels of
land left by the deceased spouses Quiterio and Antonina which bolstered
respondents claim that petitioners falsified the Extrajudicial Settlement which
became the basis for the issuance of TCT No. M-94400 in Ma. Teresas name; thus,
a ground to annul the Deed of Extrajudicial Settlement and the title. The RTC did
not consider as filed petitioners Counter-Petition for Partition since they did not
pay the corresponding docket fees.
Petitioners filed their Motion for Reconsideration, which the RTC denied in an
Order12 dated August 29, 2000.
Dissatisfied, petitioners filed an appeal with the CA. After the parties filed
their respective briefs, the case was submitted for decision.
On August 31, 2004, the CA rendered its assailed Decision affirming the May
9, 2000 Order of the RTC.
The CA found that, while the subject matter of respondents complaint was the
nullity of the Deed of Extrajudicial Settlement of Estate among Heirs with Waiver
of Rights that resulted in the issuance of TCT No. M-94400 in Ma. Teresas name,
petitioners included in their Answer a Counter-Petition for Partition involving 12
other parcels of land of spouses Quiterio and Antonina which was in the nature of
a permissive counterclaim; that petitioners, being the plaintiffs in the counterpetition for partition, must pay the docket fees otherwise the court will not acquire
jurisdiction over the case. The CA ruled that petitioners cannot pass the blame to
the RTC for their omission to pay the docket fees.
_______________
12 Id., at pp. 110-111.
466
466
465
Reillovs.SanJose
The CA affirmed the RTCs judgment on the pleadings since petitioners
admitted that the deceased spouses Quiterio and Antonina had five children which
included herein plaintiffs; thus, petitioners misrepresented themselves when they
stated in the Deed of Extrajudicial Settlement that they are the legitimate
descendants and sole heirs of the deceased spouses Quiterio and Antonina; that
the deed is null and void on such ground since respondents were deprived of their
rightful share in the subject property and petitioners cannot transfer the property
in favor of Ma. Teresa without respondents consent; that TCT No. M-94400 must
be cancelled for lack of basis. The CA affirmed the RTCs Order of partition of the
subject property in accordance with the rules on intestate succession in the
absence of a will.
Petitioners filed the instant petition for review oncertiorari raising the
following assignment of errors, to wit:
THE COURT OF APPEALS ERRED IN NOT GIVING DUE COURSE TO
THE APPEAL OF THE DEFENDANTS (HEREIN PETITIONERS) AND IN
EVENTUALLY UPHOLDING THE DECISION OF THE COURT OF ORIGIN,
CONSIDERING THAT SUCH RULING WILL RESULT TO MULTIPLICITY OF
SUITS BETWEEN THE SAME PARTIES AND IN VIOLATION OF THE
CONSTITUTIONAL GUARANTY OF DUE PROCESS OF LAW & PROPERTY
AND PROPERTY RIGHTS.
THE COURT OF APPEALS ERRED IN NOT VACATING THE ORDER OF
THE TRIAL COURT IN PARTITIONING THE ESTATE WITHOUT
PUBLICATION AS REQUIRED BY RULE 74 AND 76 OF THE 1997 RULES OF
CIVIL PROCEDURE.13
Petitioners contend that in their Comment to respondents motion for
judgment on the pleadings, they stated that they will not oppose the same
provided that their Answer with Counter-Petition for Partition and Rejoinder will
be taken into consideration in deciding the case; however, the RTC decided the
case on the basis alone of respondents complaint;
_______________
13 Rollo, p. 29.
467
VOL.589,JUNE18,2009
Reillovs.SanJose
that the Answer stated that the deed was not a falsified document and was made
and implemented in accordance with law, thus, it was sufficient enough to tender
an issue and was very far from admitting the material allegations of respondents
complaint.
Petitioners also fault the RTC for disregarding their claim for partition of the
other parcels of land owned by the deceased spouses Quiterio and Antonina for
their failure to pay the court docket fees when the RTC could have simply directed
petitioners to pay the same; and that this error if not corrected will result to
multiplicity of suits.
Petitioners argue that the RTC erred in ordering the partition of the subject
property as it violates the basic law on intestate succession that the heirs should
be named and qualified through a formal petition for intestate succession whereby
blood relationship should be established first by the claiming heirs before they
shall be entitled to receive from the estate of the deceased; that the order of
partition was rendered without jurisdiction for lack of publication as required
under Rules 74 and 76 of the Rules of Civil Procedure for testate or intestate
succession.
We find no merit in the petition.
The CA committed no reversible error in affirming the judgment on the
pleadings rendered by the RTC.
Section 1, Rule 34 of the Rules of Court, states:
SECTION1.Judgment on the pleadings.Where an answer fails to tender
an issue, or otherwise admits the material allegations of the adverse partys
pleading, the court may, on motion of that party, direct judgment on such pleading.
x x x.
Where a motion for judgment on the pleadings is filed, the essential question
is whether there are issues generated by the pleadings. In a proper case for
judgment on the pleadings, there is no ostensible issue at all because of the failure
of the
468
468
Reillovs.SanJose
467
defending partys answer to raise an issue. 14 The answer would fail to tender an
issue, of course, if it does not deny the material allegations in the complaint or
admits said material allegations of the adverse partys pleadings by confessing the
truthfulness thereof and/or omitting to deal with them at all. 15
In this case, respondents principal action was for the annulment of the Deed
of Extrajudicial Settlement of Estate Among Heirs with Waiver of Rights executed
by petitioners and annulment of title on the ground that petitioners stated in the
said Deed that they are the legitimate descendants and sole heirs of the spouses
Quiterio and Antonina. Although petitioners denied in their Answer that the Deed
was falsified, they, however, admitted respondents allegation that spouses
Quiterio and Antonina had 5 children, thus, supporting respondents claim that
petitioners are not the sole heirs of the deceased spouses. Petitioners
denial/admission in his Answer to the complaint should be considered in its
entirety and not truncated parts. Considering that petitioners already admitted
that respondents Galicano, Victoria, Catalina and Maribeth are the children and
grandchild, respectively, of the spouses Quiterio and Antonina, who were the
original registered owners of the subject property, and thus excluding respondents
from the deed of settlement of the subject property, there is no more genuine issue
between the parties generated by the pleadings, thus, the RTC committed no
reversible error in rendering the judgment on the pleadings.
A deed of extrajudicial partition executed without including some of the heirs,
who had no knowledge of and consent to the same, is fraudulent and vicious. 16 The
deed of settlement made by petitioners was invalid because it excluded respon_______________
14Tan v. De la Vega, G.R. No. 168809, March 10, 2006, 484 SCRA 538, 545,
citing Wood Technology Corporation v. Equitable Banking Corporation, 451 SCRA
724, 731 (2005).
15 Id.
16 Pedrosa v. Court of Appeals, G.R. No. 118680, March 5, 2001, 353 SCRA
620, citing Villaruz v. Neme, 1 SCRA 27, 30 (1963).
469
VOL.589,JUNE18,2009
Reillovs.SanJose
dents who were entitled to equal shares in the subject property. Under the rule, no
extrajudicial settlement shall be binding upon any person who has not
469
participated therein or had no notice thereof. 17 Thus, the RTC correctly annulled
the Deed of Extrajudicial Settlement of Estate Among Heirs with Waiver of Rights
dated January 23, 1998 and TCT No. M-94400 in the name of Ma. Teresa S.J.
Fernando issued pursuant to such deed.
Petitioners claim that had there been a trial, they could have presented
testamentary and documentary evidence that the subject land is the inheritance of
their deceased mother from her deceased parents, deserves scant consideration. A
perusal of petitioners Answer, as well as their Rejoinder, never raised such a
defense. In fact, nowhere in the Deed of Extrajudicial Settlement Among Heirs
with Waiver of Rights executed by petitioners was there a statement that the
subject property was inherited by petitioners mother Virginia from her deceased
parents Quiterio and Antonina. Notably, petitioners never opposed respondents
motion for judgment on the pleadings.
We also find no merit in petitioners contention that the Counter-Petition for
Partition in their Answer was in the nature of a compulsory counterclaim which
does not require the payment of docket fees.
A counterclaim is any claim which a defending party may have against an
opposing party.18 It may either be permissive or compulsory. It is permissive if it
does not arise out of or is not necessarily connected with the subject matter of the
opposing partys claim.19 A permissive counterclaim is essen_______________
19 Lafarge Cement Philippines, Inc. v. Continental Cement Corporation, G.R.
No. 155173, November 23, 2004, 443 SCRA 522, 533-534, citingLopez v. Gloria, 40
Phil. 26 (1919), per Torres, J.
470
470
Reillovs.SanJose
tially an independent claim that may be filed separately in another case.
A counterclaim is compulsory when its object arises out of or is necessarily
connected with the transaction or occurrence constituting the subject matter of the
opposing partys claim and does not require for its adjudication the presence of
third parties of whom the court cannot acquire jurisdiction. 20 Unlike permissive
counterclaims, compulsory counterclaims should be set up in the same action;

otherwise, they would be barred forever.
Respondents action was for the annulment of the Deed of Extrajudicial
Settlement, title and partition of the property subject of the Deed. On the other
hand, in the Counter-Petition filed by petitioners in their Answer to respondents
complaint, they were asking for the partition and accounting of the other 12
parcels of land of the deceased spouses Quiterio and Antonina, which are entirely
different from the subject matter of the respondents action. Petitioners claim does
not arise out of or is necessarily connected with the action for the Annulment of
the Deed of Extrajudicial Settlement of the property covered by TCT No. 458396.
Thus, payment of docket fees is necessary before the RTC could acquire
jurisdiction over petitioners petition for partition.
Petitioners, however, argue that the RTC could have simply issued a directive
ordering them to pay the docket fees, for its non-payment should not result in the
automatic dismissal of the case.
We find apropos the disquisition of the CA on this matter, thus:
The rule regarding the payment of docket fees upon the filing of the initiatory
pleading is not without exception. It has been held that if the filing of the
initiatory pleading is not accompanied by payment of docket fees, the court may
allow payment of the fee
_______________
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Reillovs.SanJose
within reasonable time but in no case beyond the applicable prescriptive or
reglementary period.
It is apparent from the arguments of the defendants-appellants that they are
blaming the trial court for their omission to pay the docket fees. It is, however, our
opinion that the defendants-appellants cannot pass on to the trial court the
performance of a positive duty imposed upon them by the law. It should be noted
that their omission to file the docket fees was raised as one of the grounds to
dismiss the counter petition for partition. The defendants-appellants opposed the
said motion without, however, offering an answer to the said ground raised by the
plaintiffs-appellees. In fact, during the period the motion was being heard by the
471
trial court, the defendants-appellants never paid the docket fees for their petition
so that it could have at least brought to the attention of the trial court their
payment of the docket fees although belatedly done. They did not even ask the trial
court for time within which to pay the docket fees for their petition. When the trial
court ruled to dismiss the petition of the defendants-appellants, the latter did not,
in their motion for reconsideration, ask the trial court to reconsider the dismissal
of their petition by paying the required docket fees, neither did they ask for time
within which to pay their docket fees. In other words, the trial court could have
issued an order allowing the defendants-appellants a period to pay the docket fees
for their petition if the defendants-appellants made such manifestation. What is
apparent from the factual circumstances of the case is that the defendantsappellants have been neglectful in complying with this positive duty imposed upon
them by law as plaintiffs of the counter petition for partition. Because of their
omission to comply with their duty, no grave error was committed by the trial
court in dismissing the defendants-appellants counter petition for partition. 21
Petitioners argue that with the dismissal of their Counter-Petition for
Partition, the partition of the other parcels of land owned by the deceased spouses
Quiterio and Antonina will result to multiplicity of suits.
We are not persuaded.
_______________
21 Rollo, pp. 14-15.
472
472
Reillovs.SanJose
Significantly, in petitioners Answer with Counter-Petition for Partition, they
enumerated 12 other parcels of land owned by the deceased spouses Quiterio and
Antonina. They alleged that some of these properties had already been disposed of
by respondents and some are still generating income under the control and
administration of respondents, and these properties should be collated back by
respondents to be partitioned by all the heirs of the deceased spouses. It bears
stressing that the action filed by respondents in the RTC was an ordinary civil
action for annulment of title, annulment of the deed of extrajudicial settlement
and partition of a parcel of land now covered by TCT No. M-94400; hence, the
authority of the court is limited to the property described in the pleading. The
RTC cannot order the collation and partition of the other properties which were
not included in the partition that was the subject matter of the respondents action
for annulment. Thus, a separate proceeding is indeed proper for the partition of
the estate of the deceased spouses Quiterio and Antonina.
Finally, petitioners contend that the RTC erred when it ordered the heirs of
Quiterio and Antonina to partition the subject parcel of land covered by TCT No.
458396 in accordance with the laws of intestate succession; that the RTC violated
the requirement of publication under Sections 1 and 2 of Rule 74 and Section 3 of
Rule 76 of the Rules of Court.
We do not agree.
We find the ruling of the CA on the matter of the RTCs order of partition of
land subject of the annulled deed of extrajudicial settlement worth quoting, thus:
Considering that the subject document and the corresponding title were
canceled, the logical consequence is that the property in dispute, which was the
subject of the extrajudicial settlement, reverted back to the estate of its original
owners, the deceased spouses Quiterio and Antonina San Jose. Since, it was
admitted that all the parties to the instant suit are legal heirs of the deceased
spouses, they owned the subject property in common. It is a basic rule that any act
which is intended to put an end to indivision among co-heirs
473
VOL.589,JUNE18,2009
Reillovs.SanJose
or co-owners is deemed to be a partition. Therefore, there was no reversible error
committed by the trial court in ordering the partition of the subject property. We
find nothing wrong with such ruling considering that the trial court ordered the
partition of the subject property in accordance with the rules on intestate
succession. The trial court found the property to be originally owned by the
deceased spouses Quiterio and Antonina San Jose and, in the absence of a will left
by the deceased spouses, it must be partitioned in accordance with the rules on
intestate succession.22
As the RTC nullified the Deed of Extrajudicial Settlement of Estate Among
Heirs with Waiver of Rights executed by petitioners and the title issued in
accordance therewith, the order of partition of the land subject of the settlement in
accordance with the laws on intestate succession is proper as respondents action
filed in the RTC and respondents prayer in their complaint asked for the partition
of the subject property in accordance with intestate succession. The applicable law
473
is Section 1, Rule 69 of the Rules of Court, which deals with action for partition, to
wit:
SECTION1.Complaint in action for partition of real estate.A person
having the right to compel the partition of real estate may do so as provided in this
Rule, setting forth in his complaint the nature and extent of his title and an
adequate description of the real estate of which partition is demanded and joining
as defendants all other persons interested in the property.
And, under this law, there is no requirement for publication.
WHEREFORE, the instant petition is DENIED. The Decision dated August
31, 2004 and the Resolution dated December 14, 2004, of the Court of Appeals in
CA-G.R. CV No. 69261, are AFFIRMED.
SO ORDERED.
Ynares-Santiago (Chairperson), Chico-Nazario, Velasco, Jr. and Nachura
JJ., concur.
166
BancodeOroUniversalBankvs.CourtofAppeals
G.R. No. 160354. August 25, 2005.*
BANCO DE ORO UNIVERSAL BANK, petitioner, vs. THE HON. COURT OF

APPEALS and SPS. GABRIEL G. LOCSIN and MA. GERALDINE R. LOCSIN,
respondents.
Actions; Counterclaims; Pleadings and Practice; The counter-claim must be
existing at the time of the filing of the answer, though not at the commencement of
the actiona premature counterclaim cannot be set in the answer; The party who
fails to interpose a counterclaim although arising out of or is necessarily connected
with the transaction or occurrence of the plaintiffs suit but which did not exist or
mature at the time said party files his answer is not thereby barred from
interposing such claim in a future litigation.It bears noting
_______________
permission of the court, be presented as a counterclaim . . . by supplemental

pleading before judgment. Thus a party who fails to interpose a counterclaim
although arising out of or is necessarily connected with the transaction or
occurrence of the plaintiffs suit but which did not exist or mature at the time said
party files his answer is not thereby barred from interposing such claim in a
future litigation. . .
Same; Same; Same; Setting up of an after-acquired counter-claim is merely
permissive, not compulsorily.While petitioner could have, after the Locsins filed
on March 26, 1999 a Supplemental Complaint in Civil Case No. Q-98-35337, set
up, in its Supplemental Answer, its claim subject of Civil Case No. MC-99-935,
again assuming arguendo that it is a Compulsory Counterclaim, the setting up of
such after-acquired counterclaim, is merely permissive, not compulsory.
168
THIRD DIVISION.
167
*
168
that when petitioner filed its Answer with Counterclaim to the Locsins
complaint on September 11, 1998, the Real Estate Mortgages covering the 1st TLA
and the CLA had not been extrajudicially foreclosed, the extrajudicial foreclosure
having taken place subsequent thereto or on September 23, 1998. It bears noting
too that until after the Locsins allegedly refused and failed to settle the alleged
deficiency amount of their outstanding obligation, despite petitioners February 5,
1999 letter of demand sent to the Locsins on February 9, 1999, petitioners cause
of action had not arisen. Petitioner could not, therefore, have set its claimsubject
of its complaint in Civil Case No. MC-99-935 as, assuming arguendo that it is, a
compulsory counterclaim when it filed on September 11, 1998 its Answer with
Compulsory Counterclaim to the Locsins complaint. The counterclaim must be
existing at the time of filing the answer, though not at the commencement of
the action for under Section 3 of the former Rule 10, the counterclaim or crossclaim which a party may aver in his answer must be one which he may have at
the time against the opposing party. That phrase can only have reference to the
time of the answer. Certainly a premature counterclaim cannot be set up in the
answer. This construction is not only explicit from the language of the aforecited
provisions but also serves to harmonize the aforecited sections of Rule 10, with
section 4 of the same rule which provides that a counterclaim . . . which either
matured or was acquired by a party after serving his pleading may, with the
167

Ishiwata, Gatmaytan & Associates for petitioner.
Gilbert S. Coronel for private respondent.
CARPIO-MORALES, J.:
Subject of the present Petition for Review is the Court of Appeals June 5, 2003
Decision1 annulling and setting aside the Orders2 of the Regional Trial Court
(RTC) of Mandaluyong denying respondents spouses Gabriel and Ma. Geraldine
Locsins Motion to Dismiss the complaint of petitioner, Banco de Oro Universal
Bank.
The following antecedent facts are not disputed:
On September 28, 1995, respondents Locsins entered into a Term Loan
Agreement (TLA) with petitioner under which they obtained a loan of P700,000.00
which was secured by a Real Estate Mortgage of their property covered by TCT
No. N-138739 (1st TLA).
On February 29, 1996, the Locsins obtained a 2nd TLA from petitioner in the
amount of P800,000.00, to secure which they executed a Real Estate Mortgage
over their property covered by TCT No. 67286. This 2nd TLA was eventually
settled on July 2, 1996, on account of which the mortgage was cancelled and the
title was released on July 8, 1996.
On November 6, 1996, the parties entered into a Credit Line Agreement
(CLA) under which the Locsins obtained a credit line of P2.5 Million, to secure
which their business partners, the spouses Juanito and Anita Evidente, executed a
Real Estate Mortgage of their (the Evidentes) properties
_______________
Preliminary Injunction, docketed as Civil Case No. Q-98-35337.3 The pertinent

allegations of the Locsins complaint are as follows:
xxx
15. Defendant bank, through its Assistant Vice-President-Combank II, Agnes
C. Tuason, told plaintiffs that the loan valuation of the two aforementioned
properties [of the spouses Evidente securing
_______________
CA Rollo at pp. 39-58.
170
3

2
Order dated September 18, 2000 and Order dated March 21, 2001, CA Rollo
at pp. 35 & 36, respectively.
169
1
covered by TCT Nos. N-166336 and N-166637. Monthly amortization of the
obligation appears to have been religiously paid until October of 1997.
The Locsins having failed to comply with their obligation under the CLA,
petitioner filed before the Quezon City Regional Trial Court (RTC) Executive
Judge an application dated May 4, 1998 for the extrajudicial foreclosure of the
mortgage which encumbered the Evidente properties under the CLA, as well as
the mortgage of the Locsin property covering TCT N-67286 which secured
the 2ndTLA. The application was granted and public auction of these properties
was scheduled, and was actually carried out on July 23, 1998.
The public auction was later nullified, however, on petitioners move, the
Locsin property covered by TCT No. 67286 which secured the 2nd TLA having
been erroneously included. An amended application for extrajudicial
foreclosure was thus filed by petitioner, this time covering the same Evidente
properties and TCT No. 138739, the property of the Locsins which secured the 1st
TLA. Public auction of these properties was scheduled on August 26, 1998.
Two days before the scheduled public auction or onAugust 24, 1998, the
Locsins filed before the Quezon City Regional Trial Court (RTC) a complaint
against petitioner, the RTC Clerk of Court and Ex-Officio Sheriff of Quezon City,
and Sheriff VI Marino V. Cahero, for Specific Performance, Tort and Damages with
Prayer for the Issuance of a Temporary Restraining Order (TRO) and a Writ of
170
169
the CLA] is PHP2.5 Million, and this was in fact the amount received by
plaintiff from defendant bank . . .
16. The spouses Evidente, through plaintiffs, paid for the monthly
installments due on the [CLA] until October, 1997, as evidenced by OR No. 167588
dated October 31, 1997 issued by defendant bank. . . .
17. The spouses Evidente were unable to make subsequent payments and the
real estate mortgage over the Evidente properties was recommended for
foreclosure.
xxx
19. . . . [P]laintiffs advised defendant bank that they will besettling their 1st
TLA in full and shall be taking the property covered by TCT No. N-138739 out of
the mortgage.
20. However, to the shock of plaintiffs, defendant bank through its Account
Officer, Nelia Umbal, refused to release the said property because the Evidente
properties, the mortgage of which secures . . . the CLA dated November 6,
1996, will be insufficient to cover the balance of the said CLA.
21. Plaintiffs were surprised to learn that defendant bankcapriciously,
recklessly and oppressively gave a loan valuation of only PHP900,000.00
for each of [the] two Evidente properties, or a total of PHP1.8 Million. This
valuation is unfair and unreasonable considering that the fair market
value of these properties is around PHP5 Million. Furthermore, no reason
was given by defendant bank for the sudden and unjust change in the valuation,
which was originally pegged by defendant at PHP2.5 Million.
22. In effect, the mortgaged property covered by TCT No.N-138739,
36. Acting upon the said application, public defendants issued another notice
of Sheriff Sale dated July 28, 1998 whichscheduled the public auction of the
which secures the 1st TLA dated September 28, 1995, and which has a loan
aforementioned realproperties on August 26, 1998 . . .
valuation of PHP700,000.00, was alsomade a collateral for the CLA. Worse,
37. Plaintiffs property covered by TCT No. N-138739 is erroneously included

in the amended application and in the Notice of the Sheriffs Sale. The said
mortgaged property secures the 1st TLA dated September 28, 1995, for which
plaintiffs have faithfully and regularly paid for the monthly amortization due. On
the other hand, defendant bank is foreclosing the said property and the two
Evidente properties for alleged failure to pay the monthly installments due on the
CLA dated November 8, 1996.
xxx
172
the whole amount of the loan under the 1st TLA was declared due and
demandable, although plaintiffs faithfully and regularly paid for
the monthly amortization there[of].
23. Thus, to complete, rather suspiciously, the security for the CLA which is
for PHP2.5 Million, defendant bank furtherinformed plaintiffs that it would
cost them PHP1.4 Million to take the property covered by TCT No. N-138739
[which secured the first TLA] out of the mortgage, because the deficiency in
the
171
CLA secured by the Evidente properties must also be paid. This amount is
preposterous considering that at the time, the remaining balance of the 1st TLA
was only around PHP450,000,00. Moreover, plaintiffs were suffering from financial
difficulties because of the sharp decline of the pesos purchasing power.
xxx
26. Defendant bank filed with the Executive Judge of Quezon City, through
public defendants herein, an Application for Extra-Judicial foreclosure of Real
Estate Mortgage under Act No, 3135, as amended, dated May 4, 1998. The
application sought the sale in a public auction of the Evidente properties and
plaintiffs property covered by TCT No. 67286 [which secured the second TLA and
which TLA had been settled]. . . .
xxx
31. Yet, defendant bank and public defendants allowed the public auction to
proceed as scheduled [on July 23, 1998].
xxx
35. In the meantime, without making any effort to cancel the effects of the
public auction held on July 23, 1998, defendant bank filed with public defendants
an Amended Application for Extra-Judicial Foreclosure of Real Estate
Mortgage under Act No. 3135, as amended. The amended application sought
the sale in a public auction of the same Evidente properties and plaintiffs property
covered by TCT No. N-138739 [which secured the first TLA].
171
172
1. 38.Furthermore, defendant bank acted in bad faith and in willful
breach of its contractual obligations to plaintiffs in understating the
loan valuation of the two Evidente properties, andin effect
declaring the property covered by TCT No. N-133739 [which
secured the first TLA] as additional collateral for the said CLA.
(Emphasis and italics supplied).
The plaintiffs Locsins thus prayed that:

1. A.Upon filing of this complaint, a temporary restraining order (TRO) be
immediately issued ex-parte, enjoining defendants, their agents and/or
representatives from enforcing the Notice of Sheriffs Sale dated July
28, 1998, and from proceeding with the scheduled public auction of the
properties included therein, particularly plaintiffs real property
covered by TCT No. N-138739, on August 26, 1998, or on any date
thereafter, until further orders from the Honorable Court.
2. B.After appropriate proceedings, a writ of preliminary injunction be
issued, under the same tenor as above, and upon payment of such bond
as may be fixed by the Honorable Court.
3. C.After trial on the merits, judgment be rendered:
Other reliefs which are just and equitable are likewise prayed for. 4 (Emphasis and
underscoring in the original; italics supplied).
Branch 233 of the Quezon City RTC denied the Locsins prayer for the issuance of a
TRO, by Order of August 25, 1998.
In its September 8, 1998 ANSWER5 with Compulsory Counterclaim filed on
September 11, 1998, petitioner denied that its Asst. Vice President Agnes Tuason
had told the Locsins that the loan valuation of the Evidente properties was P2.5
million for it in fact told them that the P2.5 million loan was approved inspite of
the deficiency of the Evidente properties because of their [Locsins] good paying
record with [it]. And it denied (specifically) too the Locsins complaints-allegations
in paragraphs 19-25, alleging as follows:
8.2 All the promissory notes signed by [the Locsins] uniformly provide:
Upon the occurrence as to Maker or any Co-Maker of this Promissory Note of any
of the following events of default, the outstanding principal, accrued interest and
any other sum payable hereunder or under any related agreement shall become
1. 1.On the First Cause of Action, ordering defendant bank to faithfully

comply with its obligations under the 1st TLA and the CLA, revert the
loan valuation of the two Evidente properties covered by TCTs Nos. N166336 and 166337 to PHP2.5 Million, and allow plaintiffs to take its
property covered by TCT No. N-138739 out of the mortgage by paying
the balance thereon, minus interests and penalties accruing from
February 1998;
2. 2.On the First and Second Causes of Action, ordering defendant bank
to pay plaintiffs PHP500,000.00 in actual damages;
3. 3.On the Third Cause of Action, ordering defendant bank to pay
plaintiffs PHP1 Million in actual damages;
immediately due and payable without presentment, demand, protest or notice of

any kind (other than notice of the event and fact of default) all of which are hereby
expressly waived by the Maker and all of the Co-Makers, if any:
xxx
_______________
4. 4.On the Fourth Cause of Action, ordering defendant bank to pay

plaintiffs PHP500,000.00 in moral damages;
5. 5.On the Fifth Cause of Action, ordering defendant bank to pay
Id., at pp. 56-57.

Id., at pp. 59-68.
174
4
plaintiffs PHP300,000.00 in exemplary damages;
173
1. 6.On the Sixth Cause of Action, ordering defendant bank to [pay]
plaintiffs PHP200,[000].00 for attorneys fees and litigation expenses;
2. 7.Making the injunction issued against defendants permanent; and
3. 8.Ordering defendants to pay costs of suit.
173
174
3) Failure by the Maker or any Co-Maker to perform or the violation of any
provision of this Promissory Note or any related agreement;
xxx
6) The Maker or any Co-Maker fails to pay any money due under any other
agreement, standby letter of credit or document evidencing, securing, guaranteeing
or otherwise relating to indebtedness of the Maker or any Co-Maker to any other
creditor, or there occurs, any event of default or any event which, but for the
passage of time or the giving of notice, or both, would constitute under any such
agreement, stand by letter of credit or document (and which has not been
remedied within any applicable grace period):
xxx
8.3 The letter of approval of the P2.5 million loan of [the Locsins] has a crossdefault provision, which reads:
3.6 A default on any availment under this credit line facility shallautomatically
mean a default on [the Locsins] existing term loan under Promissory Note No. 2901-9080-95 [covering the first TLA] and vice versa(Emphasis and italics supplied),6
on which letter the Locsins affixed their conformity; that in light of the Locsins
default in the settlement of their monthly obligations under the CLA, it sent them
a January 7, 1998 demand letter advising them of the Past Due Status of their
promissory note covering the P2.5 million account to thereby automatically mean
that [said promissory note] and the other loan account under [the promissory note
covering the 1st TLA] with an outstanding balance of P460,652.95 are considered
Due and Demandable already; that after a follow up letter and a final letter of
demand, the Locsins requested, by letter of February 26, 1998, that the promissory
note under the 1st TLA and that under the CLA be treated separately and that
one of their titles be released upon payment of P1.8 million; that by letter of March
5, 1998, it advised the Locsins that
_______________
Thank you for your kind consideration.7 (Italics supplied);

that despite the grant of the Locsins request for extension of 30 days or up to
April 20, 1998 to pay P1.9 million as a condition for the release of the title, the
Locsins failed to come up therewith; and that the inclusion of the Locsins
mortgaged title covering the 1st TLA in the amended application for extra-judicial
foreclosure
was
not
erroneous
because
of
the cross-default
provisions and acceleration clauses in the loan documents which [the Locsins]
signed.
As Compulsory Counterclaim petitioner alleged that on account of the filing of
the baseless and malicious suit, it was constrained to engage the services of its
counsel at an agreed fee of P200,000.00. It thus prayed for the dismissal of the
Locsins complaint and the grant of its counterclaim.
En passant, it does not appear that the Locsins filed a Reply 8 to petitioners
Answer with Compulsory Counterclaim.
_______________
Id., at pp. 60-61.

175
6
their request in their February 26, 1998 letter regarding the release of one of the
[two Evidente titles] was approved, subject to the partial payment on Principal
plus all interests and charges amounting to P1,934,465.79 as of March 20, 1998;
that to its March 5, 1998 letter, the Locsins, by letter of March ___, (sic) 1998,
replied as follows:
We would like to request for a thirty day extension on the deadline given us today
for the payment of P1,900,000.00, or (sic) the release of one title under PN No. 1101-0586-96 [covering the CLA] as the person very much interested in purchasing it
has asked us for the same. At the same time we are also going to take out the
property under PN No. 29-01-9080-95 [covering the first TLA], so that only one
property under the fire (sic) account mentioned shall be left mortgaged to your
bank.
Id., at p. 65.
Rule 6, Sec. 10. Reply.A reply is a pleading, the office or function of which
is to deny, or allege facts in denial or avoidance of new matters alleged by way of
defense in the answer and thereby join or make issue as to such new matters. If a
party does not file
176
7
175
176
On March 26, 1999, the Locsins filed an Omnibus Motion 9(To Amend the
Designation of the Plaintiffs; and to Admit Supplemental Complaint), which
appears to have been granted by the Quezon City RTC. In their Supplemental
Complaint,10 they repleaded in toto the allegations in their August 24, 1998
Complaint and additionally alleged that petitioner proceeded with the public
auction of the properties covered by the mortgage in the 1st TLA and the mortgage
in the CLA on September 23, 1998, contrary to law.
The Locsins thus prayed in their Supplemental Complaint as follows:
1. 1.Ordering the cancellation of the public auctionof TCT Nos. N138739, N-166336 and N-166337on September 23, 1998;
2. 2.Declaring said auction of no legal force and effect; and
12. The total outstanding obligation of Defendants at the time of the

foreclosure was PESOS: FIVE MILLION TWENTY THREE THOUSAND FOUR
HUNDRED NINETY SIX & 64/100 (P5,023.496.64). However, the appraised value
of the properties was only P3,879,406.80 and plaintiff thus submitted a bid of
PESOS: THREE MILLION EIGHT HUNDRED SEVENTY NINE THOUSAND
FOUR HUNDRED SIX & 80/100 (P3,879.406.80);
13. After all expenses for the foreclosure and registration of the Certificate of
Sale have been deducted from the aforementioned bid, there still remains an
outstanding balance in the amount ofPESOS: ONE MILLION ONE HUNDRED
3. 3.Granting the following reliefs prayed for by plaintiffs in their [original]

Complaint, to wit:
x x x11 (Emphasis and italics supplied).
By Answer12 (To Supplemental Complaint) dated June 1, 1999, petitioner admitted
that the public auction (which was originally scheduled on August 26, 1998) did
take place on September 23, 1998. It denied, however, that it was contrary to law.
_______________
FORTY FOUR THOUSAND EIGHTY NINE & 84/100 (1,144,089.84),

EXCLUSIVE OF INTEREST AT THE RATE OF TWENTY FIVE AND A HALF
PERCENT (25.5%) per annum, which Plaintiff is entitled to recover from
Defendants;
14. On 09 February 1999, counsel for plaintiff sent a letter to defendants dated
05 February 1999, demanding from the latter the payment of said deficiency but
Defendants refused and failed and continue to refuse and fail to pay said
obligation . . .
_______________
such reply, all the new matters alleged in the answer are deemed controverted.
If the plaintiff wishes to interpose any claims arising out of the new matters so
alleged, such claims shall be set forth in an amended or supplemental complaint.
Rule 11, Sec. 6. Reply.A reply may be filed within ten (10) days from service
of the pleading respondent to.
9
10
Id., at pp. 73-75.
11
Id., at p. 74.
12
Id., at pp. 76-77.
177
More than eight months after the Locsins filed their Supplemental Complaint
reflecting their prayer for the nullification of the September 23, 1998 public
auction sale or on November 29, 1999, petitioner filed a complaint against the
Locsins before the RTC of Mandaluyong where it was docketed as Civil Case No.
MC-99-935,13 for Collection of Sum of Money, alleging as follows:
xxx
5. Defendants failed to satisfy their obligations under the . . . Promissory
Notes [covering the first TLA & the CLA] and Plaintiff deemed them in default;
xxx
11. The [amended] extrajudicial sale was conducted on 23 September 1998 and
Plaintiff was again declared the highest bidder . . .
Id., at pp. 79-83.

178
13
177
178
1. 15.Due to Defendants unreasonable refusal and failure to comply with
Plaintiffs just demands, Plaintiff was compelled to institute the present
action and to engage the services of counsel to whom it bound itself to
pay the sum of P130,000.00, plus appearance fee of P2,000.00 and
other legal costs and expenses. 14 (Emphasis in the original; italics
supplied).
Petitioner accordingly prayed in its complaint that the Locsins be ordered to pay it
jointly and severally
1. 1.the outstanding obligation in the sum of PESOS: ONE MILLION
It is noted, however, that the instant case is one for collection of alleged
deficiency amount as the proceeds of the foreclosure sale of defendants properties
are not sufficient to cover the entire indebtedness. In effect, such claim did not
arise as a consequence of [C]ivil Case No. 098-353337 but was already
existing (sic) even before the institution of that earlier case.
Without necessarily delving into the veracity of plaintiffs claim but merely
considering its origin and nature as alleged in the complaint, said claim is merely
permissive and not compulsory. Thus, such a claim can stand as an independent
action.19 (Italics supplied).
The Locsins Motion for Reconsideration having been denied by the Mandaluyong
RTC by Order of March 21, 2001, 20 they appealed to the Court of Appeals which, by
the present assailed decision of June 5, 2003,21 reversed the Orders of the
Mandaluyong RTC, it finding that petitioners complaint was a compulsory
counterclaim which should have been raised in its Answer to the Locsins
complaint, and having failed to do so, it is now barred; thatlitis pendentia and res
judicata apply to the case; and that petitioner violated the rule on forum shopping,
hence, the dismissal of its complaint is warranted. Explained the appellate court:
_______________
ONE HUNDRED FORTY FOUR THOUSAND EIGHTY NINE &

84/100 (1,144,089.84), plus interest thereon at the rate of twenty five
and a half percent (25.5%) per annumfrom 23 September 1998, the
date of the foreclosure sale, until the obligation has been fully paid;
2. 2.attorneys fees in the sum of P130,000.00, plus appearance fee of
P2,000.00; and
3. 3.costs of suit and expenses of litigation.
Other just and equitable reliefs under the premises are likewise prayed
for.15 (Emphasis in the original).
To petitioners complaint (for sum of money), the Locsins filed a Motion to
Dismiss16 on the ground that it should have been raised as compulsory
counterclaim in their (the Locsins) complaint (for specific performance, damages
and nullification of the public auction), and by failing to raise it as such, it is now
barred by the rules. To the Motion, petitioner filed its Opposition which merited
the Locsins filing of a Reply to Opposition.17
_______________
Vide note 2.
Ibid.
20
Ibid.
21
Vide note 1.
180
18
19
Id., at p. 81.
Id., at p. 82.
16
Id., at pp. 84-89.
17
Id., at pp. 90-93.
179
14
15
180
Branch 213 of the Mandaluyong RTC denied the Locsins Motion to Dismiss
petitioners Complaint, by Order of September 18, 2000,18 in this wise:
The motion to dismiss is premised on the ground that plaintiffs claim in the
instant case should have been raised in the previous case, [C]ivil [C]ase No. Q9835337, wherein plaintiff herein was the defendant, said claim being a compulsory
counterclaim and for failure to raise the same, it is now barred by the rules.
179
[The Locsins] complaint in Civil Case No. Q-98-35337, pending before Branch 223
of the Regional; Trial Court of Quezon City asks specific performance by private
respondent Banco de Oro of its obligations under the very same loan agreements
covered by Real Estate Mortgages mentioned in private respondents Complaint
in Civil Case No. MC-99-935 before the Mandaluyong City Trial Court. In both
cases, the real properties involved are those covered by TCT Nos. N-138739, [N166336] and N-166337. The basis of the parties respective complaints arose from
the very same transactions, the Term Loan Agreement, dated September 28, 1995
and the Credit Line Agreement, dated November 6, 1996. Clearly, there is a logical
connection between both claims which arose from the same transaction and are
the same parties for the same cause of action, either simultaneously or
successively, for the purpose of obtaining a favorable judgment. Forum shopping
exists where the elements of litis pendentia are present, and where the final
judgment in one case will amount tores judicata in the other. (Heirs of Victorina
Motus Penaverde v. Heirs of Mariano Penaverde, 344 SCRA 69 [2000]). Thus, there
is forum shopping when there exist: a) identity of parties, or at least such parties
as represent the same interest in both actions, b) identity of rights asserted and
relief prayed for, the relief being founded on the same facts, and c) the identity of
the two preceding particulars is such that any judgment rendered in the other
action, will amount to res judicata in the action under consideration. (Prubankers
Association vs. Prudential Bank and Trust Company, 302 SCRA 83 [1999]). As
discussed earlier, the elements of litis pendentia being present and that res
judicata will eventually result, a decision by the Quezon City Trial Court would
bar the institution of the Civil Case in the Mandaluyong City Trial Court for the
collection of deficiency claim in the foreclosure sale of the petitioners
properties. Private respondent violated the rule on forum shopping and therefore,
the summary dismissal of their action is warranted.22 (Italics in the original;
underscoring supplied).
Hence, the present Petition for Review on Certiorari, 23petitioner raising the
following assignment of errors:
_______________
necessarily connected and it does not require the presence of third parties for its
adjudication. A counterclaim is logically related to the opposing partys claim
where separate trials of each of their respective claims would involve substantial
duplication of effort and time by the parties and the courts.
Moreover, Sec. 2, Rule 9 of the Rules of Court provides:
Sec. 2. Compulsory counterclaim, or cross-claim, not set up barred.A compulsory
counterclaim or a cross claim, not set up shall be barred.
Private respondent should have raised its complaint as compulsory
counterclaim in the Regional Trial Court of Quezon City. Failing to do so, it is now
barred. The reason for the rule relating to counter-claims is to avoid multiplicity of
suits and to enable the Courts to dispose of the whole matter in controversy in one
action, and adjustment of defendants demand by counterclaim rather than by
independent suit. (Reyes vs. Court of Appeals, 38 SCRA 138).
[The Locsins] second argument is that private respondents complaint in Civil
Case No. MC-99-935 constitutes litis pendentia, and therefore should have been
dismissed by the trial court. Forlitis pendentia to be a ground for dismissal of an
action, three elements must concur: (a) identity of parties, or at least such parties
who represent the same interest in both actions; (b) identity of rights asserted and
relief prayed for being founded on the same facts; and (c) the identity, with respect
to the two preceding particulars in the two cases, is such that any judgment that
may be rendered in the pending case, regardless of which party is successful,
would amount to res judicata in the other.
181
Applying this test, the principle of litis pendentia and resjudicata will certainly
apply to the instant case, all three requisites are present. The parties are the same
and what is involved in both Civil Case No. Q-98-35337 pending before the Quezon
City Trial Court and Civil Case No. MC-99-935 before the Mandaluyong City Trial
Court are the same subject matter and set of circumstances, which would entail
presentation of the same evidence. Judgment in favor of one of the parties in Civil
Case No. Q-9835337 would bar the institution of the case filed before the
Mandaluyong City Trial Court.
Finally, [the Locsins] assert that Civil Case MC-99-935 should be dismissed
since private respondent is guilty of willful and deliberate forum shopping.
Jurisprudence has defined forum-shopping as the filing of multiple suits involving
Id., at pp. 132, 134-135.

Rollo at pp. 25-47 exclusive of annexes.
182
22
23
181
182
1. I.THE COURT OF APPEALS ERRED IN HOLDING THAT
PETITIONER BANKS COMPLAINT FOR COLLECTION OF SUM
OF MONEY BASED ON DEFICIENCY CLAIM UNDER CIVIL CASE
No. MC-99-935 IS A COMPULSORY COUNTERCLAIM AND
SHOULD HAVE BEEN SET UP BY PETITIONER BANK IN
PRIVATE
RESPONDENTS
COMPLAINT
FOR
SPECIFIC
PERFORMANCE, TORT AND DAMAGES, AND ANNULMENT OF
FORECLOSURE IN CIVIL CASE NO. Q-98-35337.
2. II.THE COURT OF APPEALS ERRED IN HOLDING THAT THERE

IS LITIS PENDENTIA AND THUS,CIVIL CASE No. MC-99935 SHOULD BE DISMISSED.
claim as there is no identity of subject matter, cause of action and reliefs prayed
for.
Finally, petitioner cites Bangko Silangan Development Bank v. Court of
Appeals,28 wherein this Court held that:
The test to determine identity of the causes of action is to ascertain whether the
same evidence necessary to sustain the second cause of action is sufficient to
authorize a recovery in the first, even if the form or nature of the two (2) actions are
different from each other. If the same facts or evidence would sustain both, the two
(2) actions are considered the same within the rule that the judgment in the
former is a bar to the subsequent action; otherwise, it is not. This method has been
considered the most accurate test as to whether a former judgment is a bar in
3. III.THE COURT OF APPEALS ERRED IN HOLDING THAT THE

PETITIONER BANK IS GUILTY OF FORUM SHOPPING.24
Petitioner argues that the Locsins complaint is one based on tort, whereas its
complaint before the Mandaluyong RTC is based on contract and law, hence, the
two causes of action are separate and distinct; that under the test for the
determination of whether the counterclaim is compulsory or permissive, its suit
before the RTC of Mandaluyong for collection of deficiency judgment is not a
compulsory, but permissive counter-claim and may, therefore, proceed
independently of the Locsins complaint.
Petitioner adds that its claim arises from the loan agreement, whereas the
Locsins claim arises from the annulment of the foreclosure sale; that litis
pendentia andres judicata do not apply as grounds for dismissal of its complaint as
a perusal of both complaints reveals different causes of action, and the rights
asserted and the reliefs prayed for are different, and the rule on lis pendens is
applicable only when the judgment to be rendered in the action first instituted will
be such that regardless of which party is successful, it will
_______________
subsequent proceedings between the same parties. It has even been

designated as infallible.
While it is true that the two (2) cases are founded in practically the same set
of facts, as correctly observed by the Court of Appeals, it cannot be said that
exactly the same evidence are needed to prove the causes of action in both cases.
Thus, in Civil Case No, 91-56185 of the RTC of Manila, the evidence needed to
prove that petitioner sustained damage to its reputation and goodwill is not the
same evidence needed in Civil Case No. 221 of the RTC of Batangas to prove the
_______________
Id., at p. 34.
183
24
amount to res judicata as to the second action, it citingHongkong & Shanghai
Bank v. Aldecon & Co.25
Citing Enriquez, et al. v. Ramos, et al.,26 petitioner further argues that an
action for collection of a mortgage loan does not bar another for rescission of the
mortgage if such is based on the non-compliance by the mortgagor of the mortgage
contract.
Petitioner further cites Roa v. PH Credit Corporation,27wherein this Court
ruled that the pendency of a replevin suit does not bar a proceeding for deficiency
30 Phil. 255 (1915) cited in FRANCISCO, REVISED RULES OF COURT,

Vol. I, p. 924.
26
7 SCRA 265 (1963).
27
223 SCRA 371 (1993).
28
360 SCRA 322 (2001).
184
25
183
184
allegation that a substantial amount of respondent Bausas bank deposit in
petitioners bank was illegally withdrawn without her consent or authority. The
RTC of Batangas and the Court of Appeals, therefore, did not abuse their
discretion in denying petitioners motion to dismiss which was based on the ground
oflitis pendentia.29 (Emphasis and italics supplied).
By their Comment,30 the Locsins maintain that petitioners claim in Civil Case No.
MC-99-935 is logically related to their claim in Civil Case No. Q-98-35337, as
they involve the same parties, rely on the same facts, subject matter and series of
transactions and, therefore, would entail presentation of the same evidence; that
petitioner having failed to set up its claim as a compulsory counterclaim 31 inCivil
Case No. Q-98-35337, it is now barred from setting it up in Civil Case No. MC-99935; and that litis pendentiaand res judicata proscribe the filing of a separate
complaint by petitioner which is guilty of willful and deliberate forum shopping.
The petition is impressed with merit.
It bears noting that when petitioner filed its Answer with Counterclaim to the
Locsins complaint on September 11, 1998, the Real Estate Mortgages covering the
1st TLA and the CLA had not been extrajudicially foreclosed, the extra-judicial
foreclosure having taken place subsequent thereto or on September 23, 1998.
_______________
counterclaim or cross-claim which a party may aver in his answer must be one
which he may have at the time against the opposing party. That phrase can only
have reference to the time of the answer. Certainly a premature counterclaim
cannot be set up in the answer. This construction is not only explicit from the
language of the aforecited provisions but also serves to harmonize the aforecited
sections of Rule 10, with section 4 of the same rule which provides that a
counterclaim . . . which either matured or was acquired by a party after serving
his pleading may, with the permission of the court, be presented as a counterclaim . . . by supplemental pleading before judgment.
Thus a party who fails to interpose a counterclaim although arising out of or
is necessarily connected with the transaction or occurrence of the plaintiffs suit
but which did not exist or mature at the time said party files his answer is not
thereby barred from interposing such claim in a future litigation. . . 33 (Emphasis
and italics supplied).
While petitioner could have, after the Locsins filed on March 26, 1999 a
Supplemental Complaint in Civil Case No.
_______________
Rollo at p. 41.
Id., at pp. 205-214.
31
Rule 6, Sec. 7. Compulsory counterclaim.A compulsory counterclaim is one
which, being cognizable by the regular courts of justice, arises out of or is
connected with the transaction or occurrence constituting the subject matter of the
opposing partys claim and does not require for its adjudication the presence of
third parties of whom the court cannot acquire jurisdiction. Such a counterclaim
must be within the jurisdiction of the court both as to the amount and the nature
thereof, except that in an original action before the Regional Trial Court, the
counterclaim may be considered compulsory regardless of the amount.
185
29
30
It bears noting too that until after the Locsins allegedly refused and failed to settle
the alleged deficiency amount of their outstanding obligation, despite petitioners
February 5, 1999 letter of demand sent to the Locsins on February 9, 1999,
petitioners cause of action had not arisen.
Petitioner could not, therefore, have set its claimsubject of its complaint
in Civil Case No. MC-99-935 as, assuming arguendo that it is, a compulsory
counterclaim when it filed on September 11, 1998 its Answer with Compulsory
Counter-claim to the Locsins complaint.32
The counterclaim must be existing at the time of filing theanswer, though not at
the commencement of the action for under Section 3 of the former Rule 10, the
Rule 11, Sec. 8. Existing counterclaim or cross-claim.A compulsory

counterclaim or a cross-claim that a defending party has at the time he files his
answer shall be contained therein.
33
National Marketing Corporation v. Federation of United Namarco
Distributors, Inc., 49 SCRA 238, 268-269 (1973).
186
32
185
186
Q-98-35337, set up, in its Supplemental Answer, its claim subject of Civil Case No.
MC-99-935, again assumingarguendo that it is a Compulsory Counterclaim, the
setting up of such after-acquired counterclaim, is merely permissive, not
compulsory.34
At all events, even if the claim of petitionersubject of its complaint in Civil
Case No. MC-99-935 is a compulsory counterclaim which should have been set up
in its Answer to the Locsins Supplemental Complaint, technicality should give
way to justice and equity to enable petitioner to pursue its after-acquired claim
against the Locsins.
As for the issue of whether petitioners complaint is dismissible on the

grounds of litis pendentia or auter action pen_______________
Let the case be REMANDED to the court of origin, Branch 213 of the Regional
Trial Court of Mandaluyong, which is hereby DIRECTED to continue with
dispatch the proceedings in Civil Case No. MC-99-935.
No costs.
SO ORDERED.
Panganiban (Chairman), Sandoval-Gutierrez,Corona and Garcia,
JJ.,
concur.
Petition granted, assailed decision set aside. Case remanded to court of origin.
Notes.A party may file a counterclaim only if the court has jurisdiction to
Rule 11, Sec. 9. Counterclaim or cross-claim arising after answer.A

counterclaim or a cross-claim which either matured or was acquired by a party
34
after serving his pleading may, with the permission of the court, be presented as a
counterclaim or cross-claim by supplemental pleading before judgment. (Emphasis
supplied); National Marketing Corporation v. Federation of United Namarco
Distributors, Inc., supra note 33 at p. 265 citing Wright & Miller, Federal Practice
and Procedure, Civil Section 1411, pp. 54-55, citing: Stahl v. Ohio River Co., C.A.
3d. 1970, 424 F. 2d 52. Esquire, Inc. v. Varga Enterprises, Inc., C.A. 7th, 1950, 185
F. 2d 14;Denys Fisher (Spirograph) Ltd. v. Louis Marx & Co., D.C. W. Va. 1969, 306
F. Supp. 956; Goldlawr, Inc. v. Shurbert, D.C. Pa. 1967, 268 F. Supp. 965; Marcus
v. Marcoux, D.C.R.I. 1967, 41 F.R.D. 332; Local Union 499 of Intl. Bhd. of Elec.
Workers, AFL-CIO v. Iowa Power & Light Co., D.C. Iowa 1964, 224 F. Supp. 731,
738; Slavics v. Wood, D.C. Pa. 1964, 36 F.R. D. 47; Allstate Ins. Co. v. Valdez, D.C.
Mich. 1962, 29 F.R. 479; Miner v. Commerce Oil Ref. Corp., D.C.R. 1961, 198 F.
Supp 887, vacated on other grounds C.A. 1st, 1962, 303 F. 2d 125; Hartford Acc. &
Indem. Co. v. Levitt & Sons, Inc., D.C. Pa. 1959, 24 F.R.D. 230; Cyclotherm Corp. v.
Miller, D.C. Pa. 1950, 11 F.R.D. 88; Goodyear Tire & Rubber Co. v. Marbon Corp.,
D.C. Del. 1940, 32 F. Supp. 279, 280; Cold Metal Process Co. v. United Engineering
& Foundry Co., C.A. 3d, 1951, 190 F. 2d 217; Magna Pictures Corp. v. Paramount
Pictures Corp., D.C. Cal. 1967, 265 F. Supp. 144; RFC v. First Nat. Bank of Cody,
D.C. Wyo, 1955, 17 F.R.D. 397.
187
dant, and forum shopping, the above-quoted and recited allegations of the
pleadings of the parties do not reflect identity of rights asserted and reliefs sought,
as well as basis thereof, to a degree sufficient to give rise to the abatement of
petitioners complaint on any of these grounds.
WHEREFORE, the petition is hereby GRANTED.
The assailed decision of the Court of Appeals is SET ASIDE.
entertain the claim. (Francel Realty Corporation vs. Court of Appeals, 252 SCRA
127[1996])
If the civil case is dismissed, so also is the counterclaim filed therein.
(Intestate Estate of Amado B. Dalisay vs. Marasigan, 257 SCRA 509 [1996])
VOL.49,JANUARY17,1973
Torresvs.CourtofAppeals
187
No. L-25889. January 17, 1973.

HON.GUILLERMO E. TORRES, as Presiding Judge of the Court of First Instance
of Rizal, Branch VIII, THE PROVINCIAL SHERIFF OF THE PROVINCE OF
RIZAL, JAIME E. LAICO and LUZ LOS BANOS-LAICO, petitionersappellants, vs. HON.COURT OF APPEALS,JOSE CHIVI and ANGELINA CHIVI,
as representative of the deceased MARTAB. CHIVI, respondents-appellees.
Pleading and practice; Cross-claim; Definition of.A cross-claim, as
defined in section 7 of Rule 6, is any claim by one party against a co-party arising
out of the transaction or occurrence that is the subject matter either of the original
action or of a counterclaim therein.
67
Same; Same; Where cross-claim defensive in nature, same cannot stand after
complaint in same action dismissed with prejudice.A crossbill, strictly speaking
is one brought by a defendant in an equity suit against other defendants in the
same suit, touching the matters in question in the original bill. It is considered as
an auxiliary suit dependent upon the original bill, and can be sustained only on
matters growing out of the original bill. There is a well-defined distinction between
a cross-bill merely defensive in character, and one seeking affirmative relief. The
dismissal of the original bill carries with it a purely defensive cross-bill but not one
seeking affirmative relief.
68
68
APPEAL by certiorari to review a decision of the Court of Appeals.
Ernesto J. Seva for petitioners-appellants.
Ordoez, Cervo & Sanchez for respondents-appellees.
MAKALINTAL, J.:
Appeal by certiorari to review the decision of the Court of Appeals in CA-G.R. No.
35677-R, dated 31 August 1965.
The facts as found by the Court of Appeals are as follows:
On 1 January 1955 the spouses Isidro Sierra and Antonia Magtaas sold a
parcel of land to Marta B. Chivi, representing to her that the land was not
registered either under the Land Registration Act or under the Spanish Mortgage
Law and assuring her that although the land was covered by a pre-war free patent
application, the application had not been approved and no patent had been issued.
The Sierras made that assurance because Chivi was not willing to buy the land if
it was covered by a patent, since it would then be subject to repurchase. They
agreed that the purchase price of P10,800.00 was not to be fully paid until the
vendors could have the land registered under Act 496.
At the instance of the Sierras, Chivi filed an application for registration of the
land in the Court of First Instance of Rizal. While the application was pending
Chivi, on 24 May 1958, sold her rights and interests in the land to the herein
petitioners-spouses Jaime Laico and Luz Los Baos for P25,647.00, with the
stipulation that should Chivi fail to secure and transfer title to the Laicos she
would return to them twice the amount of the aforesaid purchase price. To induce
the Laicos to buy Chivis rights and interests, the Sierras showed them a petition
withdrawing their free patent application. The Laicos thereupon continued with
the registration proceeding in substitution of Chivi, who signed a deed of transfer
of her rights.
69
In December, 1959 the Laicos discovered, and in January, 1960 Chivi learned, that
a free patent title had been previously issued to Isidro Sierra as early as 26
February 1932. The Laicos went to see the Sierras, who agreed to execute, as they
did execute on January 17, 1960, an. other deed of sale in favor of the Laicos. The
Laicos then withdrew their application for registration and filed instead a petition
for the reconstitution of the title issued to Isidro Sierra.
On 14 June 1960, however, the Sierras filed a complaint against Marta B.
Chivi, assisted by her husband, and the Laicos in the Court of First Instance of
Rizal, docketed asCivil Case No. 6184, praying that they (plaintiffs) be allowed to
repurchase the land under the provisions of the Public Land Act. The Chivis and
the Laicos filed their answers to the complaint and counter-claimed for damages
by reason of the alleged bad faith, misrepresentation and fraudulent acts of the
Sierras, as hereinbefore recounted. The Laicos filed a cross-claim against the
Chivis for collection of twice the amount of the price paid under their sales
contract for the latters failure to deliver title to the Laicos, alleging that the
defendants Chivi are/or will be liable on these warranties and conditions should
the plaintiffs finally obtain favorable judgment in their favor (sic).
On 12 March 1964 the Sierras and the Laicos entered into a compromise to
amicably settle Civil Case No. 6184 as between themselves, stipulating therein,
among other things, that the Laicos were now the absolute owners of the land and
that the Sierras would withdraw their objection to the reconstitution of the patent
title and that said title would be transferred in the name of the Laicos, who would
pay P10,000.00 to the Sierras; that the Sierras would ask for the dismissal of Civil
Case No. 6184 insofar as the Laicos were concerned and would convert their action
in the case from one for repurchase to one for collection of the balance of the sales
price and of damages against the Chivis; that the Laicos would pursue their crossclaim against the Chivis and in the event they obtained a favorable judgment
thereon they would pay to
69
the therein respondents from proceedings with the execution and with the sale at
public auction set for 14 April 1965, until further order.
On 31 August 1965 the Court of Appeals rendered a decision declaring null
and void all the proceedings on the cross-claim of the spouses Laico against Chivi,
as well as the orders, decisions, writs and processes issued in connection
therewith, and restraining the therein respondents Judge and sheriff of the Court
of First Instance of Rizal from further proceeding in Civil Case No. 6184. The
Laicos moved for reconsideration. Pending resolution of the motion for
reconsideration, Marta B. Chivi died and was substituted by Angelina Chivi. In an
order dated 16 March 1966, the motion for reconsideration was denied. Hence, the
instant appeal by certiorari brought by the Laicos.
The principal issue in this case is: Could the cross-claim in this particular
action stand after the complaint in the same action was dismissed with prejudice?
In the resolution of this issue the following consider actions are pertinent:
(1) A cross-claim, as defined in Section 7 of Rule 6, is any claim by one party
against a co-party arising out of the transaction or occurrence that is the subject
matter either of the original action or of a counterclaim therein.
(2) The cross-claim of the Laicos against the Chivis was for the recovery of the
sum of P51,294.00, upon the allegations that according to the contract of sale
between them, should the defendants Chivi fail to transfer the title to the land in
question to the VENDEE (defendant Laico) then the former shall return to the
latter (the aforesaid sum) which is double the amount of the purchase price
received by the defendants Chivi; and that the defendants Chivi are/or will be
liable on these warranties and conditions should the plaintiffs (Sierras) finally
obtain favorable judgment in their favor (sic).
(3) When Marta B. Chivi sold her rights and interests to the land in question
to the Laicos on 24 May
72
70
70
the Sierras one-half (1/2) of any amount awarded to them in excess of the purchase
price of P25,647.00.
The compromise, which was executed without the knowledge of or notice to the
Chivis, was approved by the trial court on 12 March 1964. On the same date the
court, on joint motion of the Sierras and the Laicos, dismissed with prejudice the
complaint in Civil Case No. 6184 insofar as the Laicos were concerned as well as
the counterclaim of the Laicos against the Sierras. Chivi was not notified of the
dismissal.
The court set the case for pre-trial on 14 July 1964. Despite notice to the
Sierras and the Chivis, only cross-claimant Jaime Laico and his counsel appeared,
whereupon the court declared the Chivis in default and allowed Laico to present
evidence on the cross-claim before the deputy clerk of court. Counsel for the Chivis
filed an urgent motion for reconsideration, explaining why he failed to appear at
the pre-trial, but the motion was denied. On 5 February 1965 the court rendered
judgment for the Laicos, sentencing the cross-defendants to pay them a total
amount of P15,000.00, plus costs, and on 1 April 1965 issued a writ of execution.
Pursuant to the writ the sheriff levied upon the properties of the Chivis and issued
a notice that the properties would be sold at public auction on 14 April 1965.
In due time the Chivis filed with the Court of Appeals a petition for certiorari
and prohibition with preliminary injunction to annul; (1) the order of the trial
court authorizing the Laicos to adduce evidence ex parte on their cross-claim
against Marta B. Chivi; (2) the decision rendered on said cross-claim; and (3) the
order directing the issuance of a writ of execution, the levy on execution, and the
notice of execution sale of the properties of Chivi. Chivi prayed further that the
therein respondents be prohibited from conducting any further proceedings in said
Civil Case No. 6184 on the ground that the trial court was without jurisdiction in
the premises.
Upon giving due course to the petition the Court of Appeals issued a writ of
preliminary injunction, restraining
71
72
71
1958 the latter knew that Chivi had yet no registered title, and in fact substituted
her in the registration proceeding which she had initiated.
(4) In their counterclaim for damages against the Sierras in Civil Case No.
6184, the Laicos alleged that the plaintiffs, in fraudulently misrepresenting to the
defendants Chivi, as well as to the defendants Laico, that the land in question is
unregistered and is not covered by a patent, thereby inducing the latter to
purchase the land in question, which they would not have done had they known
that the land is covered by a patent, should be adjudged to pay . . .
(5) The warranty undertaken by Marta B. Chivi, judging by its terms and by
the surrounding circumstances, was in respect of the transfer of ownership not
of the registered title to the Laicos. The action filed by the Sierras was not for
recovery of such ownership but for the exercise of their alleged right of repurchase
under the Public Land Act on the ground that the land they had sold was covered
by a patent title. In other words, the filing of the action did not militate against the
warranty to transfer title, for the very fact that the plaintiffs wished to enforce
their alleged right of repurchase was predicated on the assumption that the title,
that is, ownership, had been effectively transferred first to Chivi and subsequently
by the latter to the Laicos.
(6) In any event, even viewing the situation in the light most favorable to the
Laicos, their cross-claim on Chivis warranty to deliver title to them was so
inextricably linked with and so utterly dependent upon the success of the
complaint of the Sierras for the repurchase of the land that when the complaint
was dismissed the cross-claim could not possibly survive. For as the cross-claimants themselves alleged, the cross-defendants would be liable on the warranty
should the plaintiffs finally obtain favorable judgment in their favor (sic). The
warranty becamefunctus oficio after the Sierras, who turned out after all to have a
free patent title to the land issued way back in 1932, agreed to transfer and did
transfer said title to the Laicos first by the deed of sale executed direct73
ly in their favor by the Sierras on January 17, 1960, again in the amicable
settlement of the case between them. The fact that the Laicos paid P10,000.00 to
the Sierras in that amicable settlement created no liability on the part of the
Chivis: first, because the latter neither knew nor consented to such settlement;
second, because the Laicos had already acquired the land directly, from the Sierras
by virtue of the aforesaid sale of January 17, 1960; and third because the said sum
of P10,000.00 was not the subject of the cross-claim against them.
Apropos is the following statement of the legal principle:
A cross-bill strictly speaking is one brought by a defendant in an equity suit
against x x x other defendants in the same suit, touching the matters in question
in the original bill. It is considered as an auxiliary suit dependent upon the
original bill, and can be sustained only on matters growing out of the original bill.
There is a well-defined distinction between a crossbill merely defensive in
character, and one seeking affirmative relief. The dismissal of the original bill
carries with it a purely defensive cross-bill but not one seeking affirmative relief.1
The cross-claim in this case was purely defensive in nature. It arose entirely out of
the complaint and could prosper only if the plaintiffs succeeded. Hence, under the
principle above enunciated, it could not be the subject of independent adjudication
once it lost the nexus upon which its life depended.
Under the circumstances above set forth the dismissal of the cross-claim
should have followed the dismissal of the complaint as a matter of course, without
further proceeding; and in setting the said cross-claim for pre-trial and receiving
evidence thereon and then rendering judgment against the cross-defendants the
court committed such a grave abuse of discretion amounting to lack of jurisdiction
correctible by certiorari.
Concerning the argument that the respondents here were guilty of laches
because they filed their petition for cer_______________
Osius vs. Barton, 88 A.L.R. 394, 402.
74
1
74
73
tiorari after the lapse of over 9 months from the time the judgment of the Court of
First Instance was rendered, respondent Court of Appeals ruled in our opinion
correctly as follows:
x x x
xxx
xxx
xxx
To the contention that the petitioners action is barred by laches, we are
bound to disagree. The judgment by default was rendered on February 5, 1965. It
is not known when the petitioners received copy of this judgment, but the fact is
that on April 13, or after the lapse of only 2 months and 7 days from the rendition
of the judgment, the petition for certiorari was filed with this Court. Principally,
the petition assails the decision and the writ of execution thereof which was issued
on April 1. Assuming that the decision complained of was actually received by the
petitioners on the date it was rendered, the intervening period to the filing of the
petition is only 2 months and 7 days, which is shorter than the shortest period of 2
months and 26 days cited in the respondents ex-parte motion for reconsileration
in support of their theory of laches. And a mere 12 days intervened between the
issuance of the writ of execution and the filing of the petition for certiorari.
x x x
xxx
xxx
x x x.
Parenthetically, this Court would like to state that Judge Guillermo Torres should
not have been made to appear as active party-petitioner in this case, his
participation having become functus oficio after the rendered judgment, and
therefore his role being purely nominal in this petition.
In view of the foregoing considerations, the judgment of the Court of Appeals
is affirmed, without pronouncement as to costs.
Concepcion,
C.J., Zaldivar, Castro, Fernando,Teehankee, Barredo, Makasiar, Antonio and Esgu
erra, JJ.,concur.
Decision affirmed.
Note.Limitations on cross-claims.A cross-claim may not be filed by a
party declared in default. (Tan vs. Dimayuga, L-15241, July 31, 1962). A crossclaim is not proper when not shown to have arisen out of the saint transaction
75
the substantial rights of any litigant.The purpose of Section 11, Rule 6 of the
Rules of Court is to permit a defendant to assert an independent claim against a
third-party which he, otherwise, would assert in another action, thus preventing
multiplicity of suits. All the rights of the parties concerned would then be
adjudicated in one proceeding. This is a rule of procedure and does not create a
substantial right. Neither does it abridge, enlarge, or nullify the substantial rights
of any litigant. This right to file a third-party complaint against a third-party rests
in the discretion of the trial court. The third-party complaint is actually
independent of, separate and distinct from the plaintiffs complaint, such that were
it not for the rule, it would have to be filed separately from the original complaint.
Same; Same; Same; Tests for Propriety of Third-Party Complaints; A
prerequisite to the exercise of the right to file a third-party complaint is that some
substantive basis for a third-party claim be found to exist, whether the basis be one
of indemnity, subrogation, contribution or other substantive rightthere must be a
causal connection between the claim of the plaintiff in his complaint and a claim
for contribution, indemnity or other relief of the defendant against the third-party
defendant.A prerequisite to the exercise of such right is that some substantive
basis for a third-party claim be found to exist, whether the basis be one of
indemnity, subrogation, contribution or other substantive right. The bringing of a
third-party defendant is proper if he would be liable to the plaintiff or to the
defendant or both for all or part of the plaintiffs claim against the
_______________
SECOND DIVISION.
751
*
AsianConstructionandDevelopmentCorporationvs.CourtofAppeals
G.R. No. 160242. May 17, 2005.*
ASIAN
CONSTRUCTION
AND
DEVELOPMENT
CORPORATION,
petitioner, vs. COURT
OF
APPEALS
and
MONARK
EQUIPMENT
CORPORATION, respondents.
Actions; Pleadings and Practice; Third-Party Complaints; The purpose of
Section 11, Rule 6 of the Rules of Court is to permit a defendant to assert an
independent claim against a third party which he, otherwise, would assert in
another action, thus preventing multiplicity of suits; This is a rule of procedure and
does not create a substantial right, and neither does it abridge, enlarge or nullify
VOL.458,MAY17,2005
original defendant, although the third-party defendants liability arises out
of another transaction. The defendant may implead another as third-party
defendant (a) on an allegation of liability of the latter to the defendant for
contribution, indemnity, subrogation or any other relief; (b) on the ground of direct
liability of the third-party defendant to the plaintiff; or (c) the liability of the thirdparty defendant to both the plaintiff and the defendant. There must be a causal
connection between the claim of the plaintiff in his complaint and a claim for
contribution, indemnity or other relief of the defendant against the third-party
defendant. In Capayas v. Court of First Instance, the Court made out the following
751
tests: (1) whether it arises out of the same transaction on which the plaintiffs
claim is based; or whether the third-party claim, although arising out of another or
different contract or transaction, is connected with the plaintiffs claim; (2)
whether the third-party defendant would be liable to the plaintiff or to the
defendant for all or part of the plaintiffs claim against the original defendant,
although the third-party defendants liability arises out of another transaction;
and (3) whether the third-party defendant may assert any defenses which the
third-party plaintiff has or may have to the plaintiffs claim.
Same; Same; Same; The third-party complaint does not have to show with
certainty that there will be recovery against the third-party defendantit is
sufficient that pleadings show possibility of recovery.The third-party complaint
does not have to show with certainty that there will be recovery against the thirdparty defendant, and it is sufficient that pleadings show possibility of recovery. In
determining the sufficiency of the third-party complaint, the allegations in the
original complaint and the third-party complaint must be examined. A third-party
complaint must allege facts which prima facie show that the defendant is entitled
to contribution, indemnity, subrogation or other relief from the third-party
defendant.
Same; Same; Same; Words and Phrases; Common liability is the very
essence for contribution; Contribution is payment made by each, or by any of
several having a common liability of his share in the damage suffered or in the
money necessarily paid by one of the parties in behalf of the other or others.It
bears stressing that common liability is the very essence for contribution.
Contribution is a payment made by each, or by any of several having a common
liability of his share in the damage suffered or in the money necessarily
752
7
52
paid by one of the parties in behalf of the other or others. The rule on
common liability is fundamental in the action for contribution. The test to
determine whether the claim for indemnity in a third-party complaint is, whether
it arises out of the same transaction on which the plaintiffs claim is based, or the
third-party plaintiffs claim, although arising out of another or different contract
or transaction, is connected with the plaintiffs claim.
Same; Same; Same; The barefaced fact that the lessee used the equipment it
leased from the lessor in connection with its project with another entity does not
provide a substantive basis for the filing of a third-party complaint against the
latter.In this case, the claims of the respondent, as plaintiff in the RTC, against
the petitioner as defendant therein, arose out of the contracts of lease and sale;
such transactions are different and separate from those between Becthel and the
petitioner as third-party plaintiff for the construction of the latters project in
Mauban, Quezon, where the equipment leased from the respondent was used by
the petitioner. The controversy between the respondent and the petitioner, on one
hand, and that between the petitioner and Becthel, on the other, are thus entirely
distinct from each other. There is no showing in the proposed third-party
complaint that the respondent knew or approved the use of the leased equipment
by the petitioner for the said project in Quezon. Becthel cannot invoke any defense
the petitioner had or may have against the claims of the respondent in its
complaint, because the petitioner admitted its liabilities to the respondent for the
amount of P5,075,335.86. The barefaced fact that the petitioner used the
equipment it leased from the respondent in connection with its project with
Becthel does not provide a substantive basis for the filing of a third-party
complaint against the latter. There is no causal connection between the claim of
the respondent for the rental and the balance of the purchase price of the
equipment and parts sold and leased to the petitioner, and the failure of Becthel to
pay the balance of its account to the petitioner after the completion of the project
in Quezon.
Alex M. Ganitano for petitioner.
753
VOL.458,MAY17,2005
Pastelero Law Office for respondent.
CALLEJO, SR., J.:
753
On March 13, 2001, Monark Equipment Corporation (MEC) filed a Complaint 1 for
a sum of money with damages against the Asian Construction and Development
Corporation (ACDC) with the Regional Trial Court (RTC) of Quezon City. The
complaint alleged the following: ACDC leased Caterpillar generator sets and
Amida mobile floodlighting systems from MEC during the period of March 13 to
July 15, 1998 but failed, despite demands, to pay the rentals therefor in the total
amount of P4,313,935.00; from July 14 to August 25, 1998, various equipments
from MEC were, likewise, leased by ACDC for the latters power plant in Mauban,
Quezon, and that there was still a balance of P456,666.67; and ACDC also
purchased and took custody of various equipment parts from MEC for the agreed
price of P237,336.20 which, despite demands, ACDC failed to pay.
MEC prayed that judgment be rendered in its favor, thus:
1. 1.Ordering defendant to pay the plaintiff the total amount of FIVE
MILLION SEVENTY-ONE THOUSAND THREE HUNDRED
THIRTY-FIVE [PESOS] & 86/100 (P5,071,335.86);
2. 2.Ordering defendant to pay the plaintiff legal interest of 12% per
annum on the principal obligations in the total amount of FIVE
MILLION SEVENTY-ONE THOUSAND THREE HUNDRED
THIRTY-FIVE [PESOS] & 86/100 (P5,071,335.86) computed from the
date the obligations became due until fully paid;
3. 3.Ordering defendant to pay attorneys fees in the amount equivalent to
15% of the amount of claim;
4. 4.Ordering defendant to pay all costs of litigation.
Plaintiff prays for such other reliefs as may be just and equitable under the
premises.2
_______________
Rollo, pp. 26-30.
Rollo, p. 29.
754
1
2
754
1. ACDC filed a motion to file and admit answer with third-party complaint
against Becthel Overseas Corporation (Becthel). In its answer, ACDC
admitted its indebtedness to MEC in the amount of P5,071,335.86 but
alleged the following special and affirmative defenses:
2. 5.Defendant has incurred an obligation with plaintiff, in the amount of
P5,071,335.86. But third-party defendant fails and refuses to pay its
overdue obligation in connection with the leased equipment used by
defendant to comply with its contracted services;
3. 6.The equipment covered by the lease were all used in the construction
project of Becthel in Mauban, Quezon, and Expo in Pampanga and
defendant was not yet paid of its services that resulted to the nonpayment of rentals on the leased equipment.3
And by way of third-party complaint against Becthel as third-party defendant,

ACDC alleged that:
1. 7.Third-party plaintiff repleads the foregoing allegations in the
preceding paragraphs as may be material and pertinent hereto;
2. 8.Third-party BECTHEL OVERSEAS CORPORATION (herein called
Becthel) is a corporation duly organized and existing under the laws
of the United States of America but may be served with summons at
Barangay Cagsiay I, Mauban, Quezon 4330, Philippines;
3. 9.Third-party defendant Becthel contracted the services of third-party
plaintiff to do construction work at its Mauban, Quezon project using
the leased equipment of plaintiff Monark;
4. 10.With the contracted work, third-party plaintiff rented the equipment

of the plaintiff Monark;
ACDC, on the one hand, and between ACDC and Becthel, on the other, were
independent transactions. Furthermore, the allowance of the third-party
complaint would result in undue delays in the disposition of the case. 6
MEC then filed a motion for summary judgment, alleging therein that there
was no genuine issue as to the obligation of ACDC to MEC in the total amount of
P5,071,335.86, the only issue for the trial courts resolution being the amount of
attorneys fees and costs of litigation.7
ACDC opposed the motion for summary judgment, alleging that there was a
genuine issue with respect to the amount of P5,071,335.86 being claimed by MEC,
and that it had a third_______________
5. 11.Third-party plaintiff rendered and complied with its contracted works

with third-party defendant using plaintiffs (Monark) rented
equipment. But, third-party defendant BECTHEL did not pay for the
services of third-party plaintiff ASIAKONSTRUKT that resulted to the
non-payment of plaintiff Monarks claim;
6. 12.Despite repeated demands, third-party defendant failed and refused
to pay its overdue obligation to third-party plaintiff
Rollo, p. 45.
Ibid.
6
Records, pp. 39-40.
7
Id., at p. 34.
756
4
_______________
Id., at p. 44.
755
3
VOL.458,MAY17,2005
1. ASIAKONSTRUKT, and third-party defendant needs to be impleaded in
this case for contribution, indemnity, subrogation or other reliefs to offset or to pay the amount of money claim of plaintiff Monark on the
leased equipment used in the Mauban, Quezon project in the total
amount of P456,666.67;
2. 13.By reason thereof, third-party plaintiff was compelled to prosecute its
claim against third-party defendant and hired the services of
undersigned counsel for an attorneys fees of P500,000.00. 4
ACDC prayed that judgment be rendered in its favor dismissing the complaint and
ordering the third-party defendant (Becthel) to pay P456,666.67 plus interest
thereon and attorneys fees.5
MEC opposed the motion of ACDC to file a third-party complaint against
Becthel on the ground that the defendant had already admitted its principal
obligation to MEC in the amount of P5,071,335.86; the transaction between it and
755
756
party complaint against Becthel in connection with the reliefs sought against it
which had to be litigated.8
In its reply, MEC alleged that the demand of ACDC in its special and
affirmative defenses partook of the nature of a negative pregnant, and that there
was a need for a hearing on its claim for damages.
On August 2, 2001, the trial court issued a Resolution denying the motion of
ACDC for leave to file a third-party complaint and granting the motion of MEC,
which the trial court considered as a motion for a judgment on the pleadings.
The fallo of the resolution reads:
ACCORDINGLY, this Court finds defendant Asian Construction and Development
Corporation liable to pay plaintiff Monark Equipment Corporation and is hereby
ordered to pay plaintiff the amount of FIVE MILLION SEVENTY-ONE
THOUSAND AND THREE HUNDRED THIRTY-FIVE & 86/100 PESOS
(P5,071,335.86) plus 12% interest from the filing of the complaint until fully paid.
SO ORDERED.9
ACDC appealed the resolution to the Court of Appeals (CA), alleging that
1. I.THE LOWER COURT ERRED IN DENYING THE MOTION TO FILE

AND ADMIT ANSWER WITH THIRD-PARTY COMPLAINT;
petitioner maintains that it raised genuine issues in its answer; hence, it was
improper for the trial court to render judgment on the pleadings:
With due respect, the judgment on the pleadings affirmed by the Court of Appeals
is not, likewise, proper considering that the Answer with Third-Party Complaint,
although it admitted the obligation to respondent, tendered an issue of whether
the respondents claim is connected with the third-party claim.
_______________
2. II.THE LOWER COURT ERRED IN GRANTING THE MOTION FOR

SUMMARY JUDGMENT;
3. III.THE LOWER COURT ERRED WHEN IT DENIED THE THIRDPARTY COMPLAINT AND ORDERED DEFENDANT TO PAY THE
AMOUNT OF P5,071,335.86 PLUS INTEREST OF 12% PER
ANNUM.10
Rollo, p. 12.
G.R. No. 85868, 13 October 1989, 178 SCRA 526.
13
G.R. No. 121824, 29 January 1998, 285 SCRA 450.
758
11
12
757
VOL.458,MAY17,2005
On July 18, 2001, the CA rendered judgment dismissing the appeal and affirming
the assailed decision. The appellate court ruled that since MEC had prayed for
judgment on the pleadings, it thereby waived its claim for damages other than the
amount of P5,071,335.86; hence, there was no longer a genuine issue to be resolved
by the court which necessitated trial. The appellate court sustained the
disallowance of the third-party complaint of ACDC against Becthel on the ground
that the transaction between the said parties did not arise out of the same
transaction on which MECs claim was based. Its motion for reconsideration of the
decision having been denied, ACDC, now the petitioner, filed the present petition
for review on certiorari, and raises the following issues:
1. I.WHETHER OR NOT A THIRD-PARTY COMPLAINT IS PROPER;
AND
2. II.WHETHER OR NOT JUDGMENT ON THE PLEADINGS IS
PROPER.11
Citing the rulings of this Court in Allied Banking Corporation v. Court of
Appeals12 and British Airways v. Court of Appeals,13 the petitioner avers that the
CA erred in ruling that in denying its motion for leave to file a third-party
complaint, the RTC acted in accordance with the Rules of Court and case law. The
757
758
As alleged in the Answer with Third-Party Complaint, it is admitted then by
respondent, for purposes of judgment on the pleadings, that failure to pay
respondent was in connection of Becthel Overseas Corporations failure to pay its
obligation to petitioner and that the equipment leased was used in connection with
the Becthel Overseas Corporation project.
This tendered issue could not just be disregarded in the light of the thirdparty complaint filed by herein petitioner and third-party plaintiff which, as
argued in the first discussion/argument, is proper and should have been given due
course.14
The petition is denied for lack of merit.
Section 11, Rule 6 of the Rules of Court provides:
Sec. 11. Third (fourth, etc.)-party complaint.A third (fourth, etc.)-party
complaint is a claim that a defending party may, with leave of court, file against a
person not a party to the action, called the third (fourth, etc.)-party defendant, for
contribution, indemnity, subrogation or any other relief, in respect of his
opponents claim.
Furthermore, Section 1, Rule 34 of the Rules of Court provides that the Court may
render judgment on the pleadings, as follows:
Section 1. Judgment on the pleadings.Where an answer fails to tender an issue,
or, otherwise, admits the material allegations of the adverse partys pleading, the
court may, on motion of that party, direct judgment on such pleading. However, in
actions for declaration of nullity or annulment of marriage or for legal separation,

the material facts alleged in the complaint shall always be proved.
The purpose of Section 11, Rule 6 of the Rules of Court is to permit a defendant to
assert an independent claim against a third-party which he, otherwise, would
assert in another action, thus preventing multiplicity of suits. All the rights of
VOL.458,MAY17,2005
the parties concerned would then be adjudicated in one proceeding. This is a rule
of procedure and does not create a substantial right. Neither does it abridge,
enlarge, or nullify the substantial rights of any litigant. 15 This right to file a thirdparty complaint against a third-party rests in the discretion of the trial court. The
third-party complaint is actually independent of, separate and distinct from the
plaintiffs complaint, such that were it not for the rule, it would have to be filed
separately from the original complaint.16
A prerequisite to the exercise of such right is that some substantive basis for a
third-party claim be found to exist, whether the basis be one of indemnity,
subrogation, contribution or other substantive right. 17 The bringing of a thirdparty defendant is proper if he would be liable to the plaintiff or to the defendant
or both for all or part of the plaintiffs claim against the original defendant,
although the third-party defendants liability arises out of another
transaction.18 The defendant may implead another as third-party defendant (a) on
an allegation of liability of the latter to the defendant for contribution, indemnity,
subrogation or any other relief; (b) on the ground of direct liability of the thirdparty defendant to the plaintiff; or (c) the liability of the third-party defendant to
both the plaintiff and the defendant.19 There must be a causal connection between
the claim of the plaintiff in his complaint and a claim for contribution, indemnity
or other relief of the defendant against the third-party defendant. In Capayas v.
Court of First Instance of Albay,20 the Court made out the following tests: (1)
whether it arises out of the same transac760
760
tion on which the plaintiffs claim is based; or whether the third-party claim,
although arising out of another or different contract or transaction, is connected
759
with the plaintiffs claim; (2) whether the third-party defendant would be liable to
the plaintiff or to the defendant for all or part of the plaintiffs claim against the
original defendant, although the third-party defendants liability arises out of
another transaction; and (3) whether the third-party defendant may assert any
defenses which the third-party plaintiff has or may have to the plaintiffs claim.
The third-party complaint does not have to show with certainty that there will
be recovery against the third-party defendant, and it is sufficient that pleadings
show possibility of recovery.21 In determining the sufficiency of the third-party
complaint, the allegations in the original complaint and the third-party complaint
must be examined.22 A third-party complaint must allege facts which prima
facie show that the defendant is entitled to contribution, indemnity, subrogation or
other relief from the third-party defendant.23
It bears stressing that common liability is the very essence for contribution.
Contribution is a payment made by each, or by any of several having a common
liability of his share in the damage suffered or in the money necessarily paid by
one of the parties in behalf of the other or others. 24 The rule on common liability is
fundamental in the action for contribution. 25 The test to determine whether the
claim for indemnity in a third-party complaint is, whether it arises out of the same
transaction on which the plaintiffs claim is based, or the third-party plaintiffs
claim, although arising out of an_______________
Blaszak v. Union Tank Car. Co., 184 N.E.2d 808 (1962).
Goswami v. H & D Construction Company, 355 N.Y.S.2d 922 (1974).
23
Capayas v. Court of First Instance of Albay, supra.
24
Koenigs v. Travis, supra.
25
United States v. Consolidated Elevator Company, 141 F.2d 791 (1944).
761
21
22
VOL.458,MAY17,2005
other or different contract or transaction, is connected with the plaintiffs claim. 26
In this case, the claims of the respondent, as plaintiff in the RTC, against the
petitioner as defendant therein, arose out of the contracts of lease and sale; such
transactions are different and separate from those between Becthel and the
petitioner as third-party plaintiff for the construction of the latters project in
Mauban, Quezon, where the equipment leased from the respondent was used by
761
the petitioner. The controversy between the respondent and the petitioner, on one
hand, and that between the petitioner and Becthel, on the other, are thus entirely
distinct from each other. There is no showing in the proposed third-party
complaint that the respondent knew or approved the use of the leased equipment
by the petitioner for the said project in Quezon. Becthel cannot invoke any defense
the petitioner had or may have against the claims of the respondent in its
complaint, because the petitioner admitted its liabilities to the respondent for the
amount of P5,075,335.86. The barefaced fact that the petitioner used the
equipment it leased from the respondent in connection with its project with
Becthel does not provide a substantive basis for the filing of a third-party
complaint against the latter. There is no causal connection between the claim of
the respondent for the rental and the balance of the purchase price of the
equipment and parts sold and leased to the petitioner, and the failure of Becthel to
pay the balance of its account to the petitioner after the completion of the project
in Quezon.27
We note that in its third-party complaint, the petitioner alleged that Becthel
should be ordered to pay the balance of its account of P456,666.67, so that the
petitioner could pay the same to the respondent. However, contrary to its earlier
plea for the admission of its third-party complaint against Becthel, the petitioner
also sought the dismissal of the respondents
_______________
Capayas v. Court of First Instance of Albay, supra.
See Bourree v. A. K. Roy, Inc., 94 So.2d 13 (1957).
762
26
27
762
complaint. The amount of P456,666.67 it sought to collect from Becthel would not
be remitted to the respondent after all.
The rulings of this Court in Allied Banking Corporationand British
Airways are not applicable in this case since the factual backdrops in the said
cases are different.
In Allied Banking Corporation, Joselito Yujuico obtained a loan from General
Bank and Trust Company. The Central Bank of the Philippines ordered the
liquidation of the Bank. In a Memorandum Agreement between the liquidation of
the Bank and Allied Banking Corporation, the latter acquired the receivables from
Yujuico. Allied Banking Corporation then sued Yujuico for the collection of his
loan, and the latter filed a third-party complaint against the Central Bank,
alleging that by reason of its tortious interference with the affairs of the General
Bank and Trust Company, he was prevented from performing his obligation under
the loan. This Court allowed the third-party complaint based on the claim of the
defendant therein, thus:
. . . In the words of private respondent, he [s]eeks to transfer liability for the
default imputed against him by the petitioner to the proposed third-party
defendants because of their tortious acts which prevented him from performing his
obligations. Thus, if at the outset the issue appeared to be a simple makers
liability on a promissory note, it became complex by the rendition of the
aforestated decision.28
In British Airways, the Court allowed the third-party complaint of British Airways
against its agent, the Philippine Airlines, on the plaintiffs complaint regarding his
luggage, considering that a contract of carriage was involved. The Court ruled,
thus:
Undeniably, for the loss of his luggage, Mahtani is entitled to damages from BA, in
view of their contract of carriage. Yet, BA
_______________
Allied Banking Corporation v. Court of Appeals, supra.
763
28
VOL.458,MAY17,2005
adamantly disclaimed its liability and instead imputed it to PAL which the latter
naturally denies. In other words, BA and PAL are blaming each other for the
incident.
In resolving this issue, it is worth observing that the contract of air
transportation was exclusively between Mahtani and BA, the latter merely
endorsing the Manila to Hongkong leg of the formers journey to PAL, as its
subcontractor or agent. In fact, the fourth paragraph of the Conditions of
Contracts of the ticket issued by BA to Mahtani confirms that the contract was
one of continuous air transportation from Manila to Bombay.
4. x x x carriage to be performed hereunder by several successive carriers is
regarded as a single operation.
763
Prescinding from the above discussion, it is undisputed that PAL, in

transporting Mahtani from Manila to Hongkong acted as the agent of BA.
Parenthetically, the Court of Appeals should have been cognizant of the wellsettled rule that an agent is also responsible for any negligence in the performance
of its function and is liable for damages which the principal may suffer by reason
of its negligent act. Hence, the Court of Appeals erred when it opined that BA,
being the principal, had no cause of action against PAL, its agent or subcontractor.
Also, it is worth mentioning that both BA and PAL are members of the
International Air Transport Association (IATA), wherein member airlines are
regarded as agents of each other in the issuance of the tickets and other matters
pertaining to their relationship. Therefore, in the instant case, the contractual
relationship between BA and PAL is one of agency, the former being the principal,
since it was the one which issued the confirmed ticket, and the latter the agent. 29
It goes without saying that the denial of the petitioners motion with leave to file a
third-party complaint against Becthel is without prejudice to its right to file a
separate complaint against the latter.
_______________
British Airways v. Court of Appeals, supra.
764
29
764
Considering that the petitioner admitted its liability for the principal claim of the respondent
in its Answer with Third-Party Complaint, the trial court did not err in rendering judgment on
the pleadings against it.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. Costs
against the petitioner.
SO ORDERED.
Puno (Chairman), Austria-Martinez, Tinga andChico-Nazario, JJ., concur.
Petition denied.
Notes.Pre-trial may proceed even in the absence of an answer to the third-party
complaint where circumstances show that no such answer was forthcoming. (Philippine Pryce
Assurance Corporation vs. Court of Appeals, 230 SCRA 164 [1994])
The third-party complaint is a procedural device whereby a third party who is neither a
party nor privy to the act or deed complained of by the plaintiff, may be brought into the case
with leave of court, by the defendant, who acts as third-party plaintiff to enforce against such
third-party defendant a right for contribution, indemnity, subrogation or any other relief, in
respect of the plaintiffs claim. (British Airways vs. Court of Appeals, 285 SCRA 450[1998])
Sy Tiong Shiou v Sy Chim

These consolidated petitions involving the same parties. although related, dwell on different
issues.
G.R. No. 174168.
This is a petition for review[1] assailing the decision and resolution of the Court of
Appeals dated 31 May 2006 and 8 August 2006, respectively, in CA-G.R. SP No. 91416.[2]
On 30 May 2003, four criminal complaints were filed by Sy Chim and Felicidad Chan Sy
(Spouses Sy) against Sy Tiong Shiou, Juanita Tan Sy, Jolie Ross Tan, Romer Tan, Charlie Tan
and Jessie James Tan (Sy Tiong Shiou, et al.) before the City Prosecutors Office of Manila. The
cases were later consolidated. Two of the complaints, I.S. Nos. 03E-15285 and 03E-15286,
[3]
were for alleged violation of Section 74 in relation to Section 144 of the Corporation
Code. In these complaints, the SpousesSy averred that they are stockholders and directors of Sy
Siy Ho & Sons, Inc. (the corporation) who asked Sy Tiong Shiou, et al., officers of the
corporation, to allow them to inspect the books and records of the business on three occasions
to no avail. In a letter[4] dated 21 May 2003, Sy Tiong Shiou, et al. denied the request, citing
civil and intra-corporate cases pending in court.[5]
In the two other complaints, I.S. No. 03E-15287 and 03E-15288, [6] Sy Tiong Shiou
was charged with falsification under Article 172, in relation to Article 171 of the Revised Penal
Code (RPC), and perjury under Article 183 of the RPC. According to the Spouses Sy, Sy Tiong
Shiou executed under oath the 2003 General Information Sheet (GIS) wherein he falsely stated
that the shareholdings of the Spouses Sy had decreased despite the fact that they had not
executed any conveyance of their shares.[7]
Sy Tiong Shiou, et al. argued before the prosecutor that the issues involved in the civil case for
accounting and damages pending before the RTC of Manila were intimately related to the two
criminal complaints filed by the Spouses Sy against them, and thus constituted a prejudicial
question that should require the suspension of the criminal complaints. They also argued that
the Spouses Sys request for inspection was premature as the latters concern may be properly
addressed once an answer is filed in the civil case. Sy Tiong Shiou, on the other hand, denied
the accusations against him, alleging that before the 2003 GIS was submitted to the Securities
and Exchange Commission (SEC), the same was shown to respondents, who at that time were
the President/Chairman of the Board and Assistant Treasurer of the corporation, and that they
did not object to the entries in the GIS. Sy Tiong Shiou also argued that the issues raised in the
pending civil case for accounting presented a prejudicial question that necessitated the
suspension of criminal proceedings.
On 29 December 2003, the investigating prosecutor issued a resolution recommending the
suspension of the criminal complaints for violation of the Corporation Code and the dismissal
of the criminal complaints for falsification and perjury against Sy Tiong Shiou. [8] The
reviewing prosecutor approved the resolution. The SpousesSy moved for the reconsideration of
the resolution, but their motion was denied on 14 June 2004.[9] The Spouses Sy thereupon filed
a petition for review with the Department of Justice (DOJ), which the latter denied in a
resolution issued on 02 September 2004.[10] Their subsequent motion for reconsideration was
likewise denied in the resolution of 20 July 2005.[11]
The Spouses Sy elevated the DOJs resolutions to the Court of Appeals through a petition for
certiorari, imputing grave abuse of discretion on the part of the DOJ. The appellate court
granted the petition[12] and directed the City Prosecutors Office to file the appropriate
informations against Sy Tiong Shiou, et al. for violation of Section 74, in relation to Section
144 of the Corporation Code and of Articles 172 and 183 of the RPC. The appellate court ruled
that the civil case for accounting and damages cannot be deemed prejudicial to the maintenance
or prosecution of a criminal action for violation of Section 74 in relation to Section 144 of the
Corporation Code since a finding in the civil case that respondents mishandled or
misappropriated the funds would not be determinative of their guilt or innocence in the
criminal complaint. In the same manner, the criminal complaints for falsification and/or perjury
should not have been dismissed on the ground of prejudicial question because the accounting
case is unrelated and not necessarily determinative of the success or failure of the falsification
or perjury charges. Furthermore, the Court of Appeals held that there was probable cause that
Sy Tiong Shiou had committed falsification and that the City of Manila where the 2003 GIS
was executed is the proper venue for the institution of the perjury charges. Sy Tiong Shiou, et
al. sought reconsideration of the Court of Appeals decision but their motion was denied.[13]
On 2 April 2008, the Court ordered the consolidation of G.R. No. 179438 with G.R. No.
174168.[14]
Sy Tiong Shiou, et al. argue that findings of the DOJ in affirming, modifying or reversing the
recommendations of the public prosecutor cannot be the subject of certiorari or review of the
Court of Appeals because the DOJ is not a quasi-judicial body within the purview of Section 1,
Rule 65 of the Rules of Court. Petitioners rely on the separate opinion of former Chief Justice
Andres R. Narvasa in Roberts, Jr. v. Court of Appeals,[15] wherein he wrote that this Court
should not be called upon to determine the existence of probable cause, as there is no provision
of law authorizing an aggrieved party to petition for such a determination. [16] In any event, they
argue, assuming without admitting that the findings of the DOJ may be subject to judicial
review under Section 1, Rule 65 of the Rules of Court, the DOJ has not committed any grave
abuse of discretion in affirming the findings of the City Prosecutor of Manila. They claim that
the Spouses Sys request for inspection was not made in good faith and that their motives were
tainted with the intention to harass and to intimidate Sy Tiong Shiou, et al. from pursuing the
criminal and civil casespending before the prosecutors office and the Regional Trial Court
(RTC) of Manila, Branch 46. Thus, to accede to the Spouses Sys request would pose serious
threats to the existence of the corporation. [17] Sy Tiong Shiou, et al. aver that the RTC had
already denied the motion for production and inspection and instead ordered petitioners to
make the corporate records available to the appointed independent auditor. Hence, the DOJ did
not commit any grave abuse of discretion in affirming the recommendation of the City
Prosecutor of Manila.[18] They further argue that adherence to the Court of Appeals ruling that
the accounting case is unrelated to, and not necessarily determinative of the success of, the
criminal complaint for falsification and/or perjury would unnecessarily indict petitioner Sy
Tiong Shiou for the said offenses he may not have committed but only because of an outcome
unfavorable to him in the civil action.[19]
Indeed, a preliminary proceeding is not a quasi-judicial function and that the DOJ is not a
quasi-judicial agency exercising a quasi-judicial function when it reviews the findings of a
public prosecutor regarding the presence of probable cause. [20] Moreover, it is settled that the
preliminary investigation proper, i.e., the determination of whether there is reasonable ground
to believe that the accused is guilty of the offense charged and should be subjected to the
expense, rigors and embarrassment of trial, is the function of the prosecution. [21] This Court has
adopted a policy of non-interference in the conduct of preliminary investigations and leaves to
the investigating prosecutor sufficient latitude of discretion in the determination of what
constitutes sufficient evidence as will establish probable cause for the filing of information
against the supposed offender.[22]
As in every rule, however, there are settled exceptions. Hence, the principle of noninterference does not apply when there is grave abuse of discretion which would authorize the
aggrieved person to file a petition for certiorari and prohibition under Rule 65, 1997 Rules of
Civil Procedure.[23]
As correctly found by the Court of Appeals, the DOJ gravely abused its discretion when it
suspended the hearing of the charges for violation of the Corporation Code on the ground of
prejudicial question and when it dismissed the criminal complaints.
A prejudicial question comes into play generally in a situation where a civil action and a
criminal action are both pending and there exists in the former an issue which must be
preemptively resolved before the criminal action may proceed since howsoever the issue raised
in the civil action is resolved would be determinative juris et de jure of the guilt or innocence
of the accused in the criminal case. The reason behind the principle of prejudicial question is to
avoid two conflicting decisions. It has two essential elements: (a) the civil action involves an
issue similar or intimately related to the issue raised in the criminal action; and (b) the
resolution of such issue determines whether or not the criminal action may proceed.[24]
The civil action and the criminal cases do not involve any prejudicial question.
The civil action for accounting and damages, Civil Case No. 03-106456 pending before the
RTC Manila, Branch 46, seeks the issuance of an order compelling the Spouses Sy to render a
full, complete and true accounting of all the amounts, proceeds and fund paid to, received and
earned by the corporation since 1993 and to restitute it such amounts, proceeds and funds
which the Spouses Sy have misappropriated. The criminal cases, on the other hand, charge that
the Spouses Sy were illegally prevented from getting inside company premises and from
inspecting company records, and that Sy Tiong Shiou falsified the entries in the GIS,
specifically the Spouses Sys shares in the corporation. Surely, the civil case presents no
prejudicial question to the criminal cases since a finding that the Spouses Sy mishandledthe
funds will have no effect on the determination of guilt in the complaint for violation of Section
74 in relation to Section 144 of the Corporation Code; the civil caseconcerns the validity of Sy
Tiong Shious refusal to allow inspection of the records, while in the falsification and perjury
cases, what is material is the veracity of the entries made by Sy Tiong Shiou in the sworn GIS.
Anent the issue of probable cause, the Court also finds that there is enough probable
cause to warrant the institution of the criminal cases.
Any officer or agent of the corporation who shall refuse to

allow any director, trustee, stockholder or member of the corporation to
examine and copy excerpts from its records or minutes, in accordance
with the provisions of this Code, shall be liable to such director, trustee,
stockholder or member for damages, and in addition, shall be guilty of
an offense which shall be punishable under Section 144 of this
Code: Provided, That if such refusal is made pursuant to a resolution or
order of the Board of Directors or Trustees, the liability under this
section for such action shall be imposed upon the directors or trustees
who voted for such refusal: and Provided, further, That it shall be a
defense to any action under this section that the person demanding to
examine and copy excerpts from the corporation's records and minutes
has improperly used any information secured through any prior
examination of the records or minutes of such corporation or of any
other corporation, or was not acting in good faith or for a legitimate
purpose in making his demand.
Meanwhile, Section 144 of the same Code provides:
The term probable cause does not mean actual and positive cause nor does it import
absolute certainty. It is merely based on opinion and reasonable belief. Thus a finding of
probable cause does not require an inquiry into whether there is sufficient evidence to procure a
conviction. It is enough that it is believed that the act or omission complained of constitutes
the offense charged. Precisely, there is a trial for the reception of evidence of the prosecution
in support of the charge.[25]
In order that probable cause to file a criminal case may be arrived at, or in order to
engender the well-founded belief that a crime has been committed, the elements of the crime
charged should be present. This is based on the principle that every crime is defined by its
elements, without which there should beat the mostno criminal offense.[26]
Section 74 of the Corporation Code reads in part:
xxx
The records of all business transactions of the corporation
and the minutes of any meeting shall be open to inspection by any
director, trustee, stockholder or member of the corporation at reasonable
hours on business days and he may demand, in writing, for a copy of
excerpts from said records or minutes, at his expense.
Sec. 144. Violations of the Code.Violations of any of the

provisions of this Code or its amendments not otherwise specifically
penalized therein shall be punished by a fine of not less than one
thousand (P1,000.00) pesos but not more than ten thousand (P10,000.00)
pesos or by imprisonment for not less than thirty (30) days but not more
than five (5) years, or both, in the discretion of the court. If the violation
is committed by a corporation, the same may, after notice and hearing,
be dissolved in appropriate proceedings before the Securities and
Exchange Commission: Provided, That such dissolution shall not
preclude the institution of appropriate action against the director, trustee
or officer of the corporation responsible for said violation: Provided,
further, That nothing in this section shall be construed to repeal the other
causes for dissolution of a corporation provided in this Code.
In the recent case of Ang-Abaya, et al. v. Ang, et al.,[27] the Court had the occasion to enumerate
the requisites before the penal provision under Section 144 of the Corporation Code may be
applied in a case of violation of a stockholder or members right to inspect the corporate
books/records as provided for under Section 74 of the Corporation Code. The elements of the
offense, as laid down in the case, are:
First. A director, trustee, stockholder or member has made a
prior demand in writing for a copy of excerpts from the corporations
records or minutes;
Second. Any officer or agent of the concerned corporation

shall refuse to allow the said director, trustee, stockholder or member of
the corporation to examine and copy said excerpts;
Third. If such refusal is made pursuant to a resolution or
order of the board of directors or trustees, the liability under this section
for such action shall be imposed upon the directors or trustees who voted
for such refusal; and,
Fourth. Where the officer or agent of the corporation sets up
the defense that the person demanding to examine and copy excerpts
from the corporations records and minutes has improperly used any
information secured through any prior examination of the records or
minutes of such corporation or of any other corporation, or was not
acting in good faith or for a legitimate purpose in making his demand,
the contrary must be shown or proved.[28]
Thus, in a criminal complaint for violation of Section 74 of the Corporation Code,
the defense of improper use or motive is in the nature of a justifying circumstance that would
exonerate those who raise and are able to prove the same. Accordingly, where the corporation
denies inspection on the ground of improper motive or purpose, the burden of proof is taken
from the shareholder and placed on the corporation. [29] However, where no such improper
motive or purpose is alleged, and even though so alleged, it is not proved by the corporation,
then there is no valid reason to deny the requested inspection.
In the instant case, however, the Court finds that the denial of inspection was
predicated on the pending civil case against the Spouses Sy. This is evident from the 21 May
2003 letter of Sy Tiong Shiou, et al.s counsel[30] to the Spouses Sy,[31] which reads:
Gentlemen:
We write in behalf of our clients, SY SIY HO, INC. ( Guan
Yiac Hardware); SY TIONG SHIOU, JUANITA TAN SY; JOLIE ROSS
TAN; CHARLIE TAN; ROMER TAN; and JESSE JAMES
TAN, relative to your letter dated 16 May 2003. Please be informed that
a case for Accounting and Damages had already been filed against your
clients, Sy Chim and Felicidad Chan Sy before the Regional Trial Court
of Manila, Branch 46, denominated as Civil Case No. 03-106456.
We fully understand your desire for our clients to respond to your
demands, however, under the prevailing circumstance this would not be
advisable. The concerns that you raised in your letter can later on be
addressed after your clients shall have filed their responsive pleading in
the abovesaid case.
We trust that this response will at the moment be enough. [32]

Even in their Joint Counter-Affidavit dated 23 September 2003, [33] Sy Tiong Shiou,
et al. did not make any allegation that the person demanding to examine and copy excerpts
from the corporations records and minutes has improperly used any information secured
through any prior examination of the records or minutes of such corporation or of any other
corporation, or was not acting in good faith or for a legitimate purpose in making his demand.
Instead, they merely reiterated the pendency of the civil case. There being no allegation of
improper motive, and it being undisputed that Sy Tiong Shiou, et al. denied Sy Chim and
Felicidad Chan Sys request for inspection, the Court rules and so holds that the DOJ erred in
dismissing the criminal charge for violation of Section 74 in relation to Section 144 of the
Corporation Code.
Now on the existence of probable cause for the falsification and/or perjury charges.
The Spouses Sy charge Sy Tiong Shiou with the offense of falsification of public
documents under Article 171, paragraph 4; and/or perjury under Article 183 of the Revised
Penal Code (RPC). The elements of falsification of public documents through an untruthful
narration of facts are: (a) the offender makes in a document untruthful statements in a narration
of facts; (b) the offender has a legal obligation to disclose the truth of the facts narrated; [34] (c)
the facts narrated by the offender are absolutely false; and (d) the perversion of truth in the
narration of facts was made with the wrongful intent to injure a third person. [35] On the other
hand, theelements of perjury are: (a) that the accused made a statement under oath or executed
an affidavit upon a material matter; (b) that the statement or affidavit was made before a
competent officer, authorized to receive and administer oath; (c) that in that statement or
affidavit, the accused made a willful and deliberate assertion of a falsehood; and, (d) that the
sworn statement or affidavit containing the falsity is required by law or made for a legal
purpose.
A General Information Sheet (GIS) is required to be filed within thirty (30) days
following the date of the annual or a special meeting, and must be certified and sworn to by the
corporate secretary, or by the president, or any duly authorized officer of the corporation.
[36]
From the records, the 2003 GIS submitted to the SEC on8 April 2003 was executed under
oath by Sy Tiong Shiou in Manila, in his capacity as Vice President and General Manager.
[37]
By executing the document under oath, he, in effect, attested to the veracity[38] of its
contents. The Spouses Sy claim that the entries in the GIS pertaining to them do not reflect the
true number of shares that they own in the company. They attached to their complaint the 2002
GIS of the company, also executed by Sy Tiong Shiou, and compared the entries therein vis-avis the ones in the 2003 GIS. The Spouses Sy noted the marked decrease in their shareholdings,
averring that at no time after the execution of the 2002 GIS, up to the time of the filing of their
criminal complaints did they execute or authorize the execution of any document or deed
transferring, conveying or disposing their shares or any portion thereof; and thus there is
absolutely no basis for the figures reflected in the 2003 GIS. [39] The Spouses Sy claim that the
false statements were made by Sy Tiong Shiou with the wrongful intent of injuring them. All
the elements of both offenses are sufficiently averred in the complaint-affidavits.
The Court agrees with the Court of Appeals holding, citing the case of Fabia v.
Court of Appeals, that the doctrine of primary jurisdiction no longer precludes the simultaneous
filing of the criminal case with the corporate/civil case. [40] Moreover, the Court finds that the
City of Manila is the proper venue for the perjury charges, the GIS having been subscribed and
sworn to in the said place. Under Section 10(a), Rule 110 of the Revised Rules of Court, the
criminal action shall be instituted and tried in the court of the municipality or territory where
the offense was committed or where any of its essential ingredients occurred. [41] In Villanueva
v. Secretary of Justice,[42] the Court held that the felony is consummated when the false
statement is made.[43] Thus in this case, it was alleged that the perjury was committed when Sy
Tiong Shiou subscribed and sworn to the GIS in the City of Manila, thus, following Section
10(a), Rule 110 of the Revised Rules of Court, the City of Manila is the proper venue for the
offense.
G. R. No. 179438.
This petition assails the decision [44] and resolution[45] of the Court of Appeals dated 26 May
2004 and 29 August 2007, respectively, in CA-G.R. SP No. 81897.
On 3 February 2003, Juanita Tan, corporate treasurer of Sy Siy Ho & Sons, Inc. (the
corporation), a family corporation doing business under the name and style Guan Yiac
Hardware, submitted a letter[46] to the corporations Board of Directors (Board) stating that the
control, supervision and administration of all corporate funds were exercised by Sy Chim and
Felicidad Chan Sy (Spouses Sy), corporate president and assistant treasurer, respectively. In the
same letter, Juanita Tan disclosed that Felicidad Chan Sy did not make cash deposits to any of
the corporations banks from 1 November 2001 to 31 January 2003, thus the total bank
remittances for the past years were less than reflected in the corporate financial statements,
accounting books and records. Finally, Juanita Tan sought to be free from any responsibility
over all corporate funds. The Board granted Juanita Tans request and authorized the
employment of an external auditor to render a complete
audit of all the corporate accounting books and records. [47] Consequently, the Board hired the
accounting firm Banaria, Banaria & Company. In its Report[48] dated5 April 2003, the
accounting firm attributed to the Spouses Sy P67,117,230.30 as unaccounted receipts and
disbursements from 1994 to 2002.[49]
A demand letter[50] was subsequently served on the Spouses Sy on 15 April 2003. On the same
date, the children of the Spouses Sy allegedly stole from the corporation cash, postdated checks
and other important documents. After the incident, the Spouses Sy allegedly transferred
residence and ceased reporting to the corporation. Thereupon, the corporation filed a criminal
complaint for robbery against the Spouses Sy before the City Prosecutors Office of Manila.
[51]
A search warrant was subsequently issued by the Regional Trial Court.[52]
On 26 April 2003, Sy Tiong Shiou, corporate Vice President and General Manager, called a
special meeting to be held on 6 May 2003 to fill up the positions vacated by the Spouses Sy. Sy
Tiong Shiou was subsequently elected as the new president and his wife, Juanita Tan, the new
Vice President.[53] Despite these developments,Sy Chim still caused the issuance of a Notice of
Stockholders meeting dated 11 June 2003 in his capacity as the alleged corporate president.[54]
Meanwhile, on 1 July 2003, the corporation, through Romer S. Tan, filed its Amended
Complaint for Accounting and Damages[55] against the Spouses Sy before the RTC Manila,
praying for a complete and true accounting of all the amounts paid to, received and earned by
the company since 1993 and for the restitution of the said amount. [56] The complaint also
prayed for a temporary restraining order (TRO) and or preliminary injunction to restrain Sy
Chim from calling a stockholders meeting on the ground of lack of authority.
By way of Answer,[57] the Spouses Sy averred that Sy Chim was a mere figurehead and
Felicidad Chan Sy merely performed clerical functions, as it was Sy Tiong Shiou and his
spouse, Juanita Tan, who have been authorized by the corporations by-laws to supervise,
control and administer corporate funds, and as such were the ones responsible for the
unaccounted funds. They assailed the meetings called by Sy Tiong Shiou on the grounds that
the same were held without notice to them and without their participation, in violation of the
by-laws. The Spouses Sy also pursued their counter-claim for moral and exemplary damages
and attorneys fees.
On 9 September 2003, the Spouses Sy filed their Motion for Leave to File Third-Party
Complaint,[58] praying that their attached Third Party Complaint[59] be allowed and admitted
against Sy Tiong Shiou and his spouse. In the said third-party complaint, the Spouses Sy
accused Sy Tiong Shiou and Juanita Tan as directly liable for the corporations claim for
misappropriating corporate funds.
On 8 October 2003, the trial court granted the motion for leave to file the third-party complaint,
and forthwith directed the issuance of summons against Sy Tiong Shiou and Juanita Tan. [60] On
16 January 2004, their counsel allegedly discovered that Sy Tiong Shiou and Juanita Tan were
not furnished with the copies of several pleadings, as well as a court order, which resulted in
their having been declared in default for failure to file their answer to the third-party complaint;
thus, they opted not to file a motion for reconsideration anymore and instead filed a petition for
certiorari before the Court of Appeals.
In its Decision dated 26 May 2004, the Court of Appeals granted the petition of Sy
Tiong Shiou and Juanita Tan.[61] The appellate court declared that a third-party complaint is not
allowed under the Interim Rules of Procedure Governing Intra-Corporate Controversies Under
R.A. No. 8799 (Interim Rules), it not being included in the exclusive enumeration of allowed
pleadings under Section 2, Rule 2 thereof. Moreover, even if such a pleading were allowed, the
admission of the third-party complaint against Sy Tiong Shiou and Juanita Tan still would have
no basis from the facts or the law and jurisprudence. [62] The Court of Appeals alsoruled that the
respondent judge committed a manifest error amounting to lack of jurisdiction in admitting the
third-party complaint and in summarily declaring Sy Tiong Shiou and Juanita Tan in default for
failure to file their answer within the purported reglementary period. The Court of Appeals set
aside the trial courts 8 October 2003 Order admitting the third-party complaint, as well as
the 19 December 2003 Order, declaring Sy Tiong Shiou and Juanita Tan in default for failure to
file their answer. The trial court was further ordered to dismiss the third-party complaint
without prejudice to any action that the corporation may separately file against Sy Tiong Shiou
and Juanita Tan.[63]
The Spouses Sy filed a motion for reconsideration, but their motion was denied on 29 August
2007.[64]
Sy Chim and Felicidad Chan Sy argue before this Court that a third-party complaint is not
excluded or prohibited by the Interim Rules, and that the Court of Appeals erred in ruling that
their third- party complaint is not actionable because their action is not in respect of the
corporations claims. They add that the disallowance of the third-party complaint will result in
multiplicity of suits.
The third-party complaint should be allowed.
The conflicting provisions of the Interim Rules of Procedure for Inter-Corporate Controversies
read:
Rule 1, Sec. 8. Prohibited pleadings.The following pleadings are
prohibited:
(1) Motion to dismiss;
(2) Motion for a bill of particulars;
(3) Motion for new trial, or for reconsideration of judgment or
order, or for re-opening of trial;
(4) Motion for extension of time to file pleadings, affidavits or any
other paper, except those filed due to clearly compelling reasons.
Such motion must be verified and under oath; and
(5) Motion for postponement and other motions of similar intent,
except those filed due to clearly compelling reasons. Such motion
must be verified and under oath.
Rule 2, Sec.2. Pleadings allowed.The only pleadings allowed to be filed
under these Rules are the complaint, answer, compulsory counterclaims
or cross-claims pleaded in the answer, and the answer to the
counterclaims or cross-claims.[65]
There is a conflict, for while a third-party complaint is not included in the allowed
pleadings, neither is it among the prohibited ones. Nevertheless, this conflict may be resolved
by following the well-entrenched rule in statutory construction, that every part of the statute
must be interpreted with reference to the context, i.e., that every part of the statute must be
considered together with the other parts, and kept subservient to the general intent of the whole
enactment.[66] Statutes, including rules, should be construed in the light of the object to be
achieved and the evil or mischief to be suppressed and they should be given such construction
as will advance the object, suppress the mischief and secure the benefits intended. A statute
should therefore be read with reference to its leading idea, and its general purpose and intention
should be gathered from the whole act, and this predominant purpose will prevail over the
literal import of particular terms or clauses, if plainly apparent, operating as a limitation upon
some and as a reason for expanding the signification of others, so that the interpretation may
accord with the spirit of the entire act, and so that the policy and object of the statute as a
whole may be made effectual and operative to the widest possible extent. [67] Otherwise stated,
the spirit, rather than the letter of a law determines its construction; hence, a statute, as in the
rules in this case, must be read according to its spirit and intent.[68]
This spirit and intent can be gleaned from Sec. 3, Rule 1 of the Interim Rules, which
reads:
Sec. 3. Construction.These Rules shall be liberally construed in order to
promote their objective of securing a just, summary, speedy and
inexpensive determination of every action or proceeding.[69]
Now, a third-party complaint is a claim that a defending party may, with leave of
court, file against a person not a party to the action, called the third-party defendant, for
contribution, indemnity, subrogation or any other relief, in respect of his opponents claim. It is
actually a complaint independent of, and separate and distinct from the plaintiffs complaint. In
fact, were it not for Rule 6, Section 11 of the Rules of Court, such third-party complaint would
have to be filed independently and separately from the original complaint by the defendant
against the third-party defendant. Jurisprudence is consistent in declaring that the purpose of a
third-party complaint is to avoid circuitry of action and unnecessary proliferation of law suits
and of disposing expeditiously in one litigation all the matters arising from one particular set of
facts.[70]
It thus appears that the summary nature of the proceedings governed by the Interim
Rules, and the allowance of the filing of third-party complaints is premised on one objectivethe
expeditious disposition of cases. Moreover, following the rule of liberal interpretation found in
the Interim Rules, and taking into consideration thesuppletory application of the Rules of Court
under
Rule 1, Sec. 2[71] of the Interim Rules, the Court finds that a third-party complaint is not, and
should not be prohibited in controversies governed by the Interim Rules. The logic and justness
of this conclusion are rendered beyond question when it is considered that Sy Tiong Shiou and
Juanita Tan are not complete strangers to the litigation as in fact they are the moving
spirit behind the filing of the principal complaint for accounting and damages against the
Spouses Sy.
The Court also rules that the third-party complaint of the Spouses Sy should be admitted.
A prerequisite to the exercise of such right is that some substantive basis for a third-party claim
be found to exist, whether the basis be one of indemnity, subrogation, contribution or other
substantive right. The bringing of a third-party defendant is proper if he would be liable to the
plaintiff or to the defendant or both for all or part of the plaintiffs claim against the original
defendant, although the third-party defendants liability arises out of another transaction. The
defendant may implead another as third-party defendant: (a) on an allegation of liability of the
latter to the defendant for contribution, indemnity, subrogation or any other relief; (b) on the
ground of direct
liability of the third-party defendant to the plaintiff; or (c) the liability of the third-party
defendant to both the plaintiff and the defendant.[72]
In determining the sufficiency of the third-party complaint, the allegations in the original
complaint and the third-party complaint must be examined. A third-party complaint must allege
facts which prima facie show that the defendant is entitled to contribution, indemnity,
subrogation or other relief from the third-party defendant.[73]
The complaint alleges that the Spouses Sy, as officers of the corporation, have acted illegally in
raiding its corporate funds, hence they are duty bound to render a full, complete and true
accounting of all the amounts, proceeds and funds paid to, received and earned by the
corporation since 1993 and to restitute to the corporation all such amounts, proceeds, and funds
which they took and misappropriated for their own use and benefit, to the damage and
prejudice of the plaintiff and its stockholders.[74] On the other hand, in the third-party
complaint, the Spouses Sy claim that it is Sy Tiong Shiou and Juanita Tan who had full and
complete control of the day-to day operations and complete control and custody of the funds of
the corporation, and hence they are the ones liable for any shortfall or unaccounted
difference of the corporations cash account. Thus, Sy Tiong Shiou and Juanita Tan should
render a full, complete and true accounting of all the amounts, proceeds, funds paid to,
received and earned by the corporation since 1993, including the amount attributed to the
Spouses Sy in the complaint for accounting and damages. In their prayer, the Spouses Sy
moved that Sy Tiong Shiou and Juanita Tan be declared as directly and solely liable in respect
of the corporations claim for accounting and damages, and that in the event that they, the
Spouses Sy, are adjudged liable to the corporation, Sy Tiong Shiou and Juanita Tan be ordered
to pay all amounts necessary to discharge their liability to the corporation by way of indemnity
or reimbursement.
The allegations in the third-party complaint impute direct liability on the part of Sy
Tiong Shiou and Juanita Tan to the corporation for the very same claims which the corporation
interposed against the Spouses Sy. It is clear therefore that the Spouses Sys third-party
complaint is in respect of the plaintiff corporations claims, [75] and thus the allowance of the
third-party complaint is warranted.
WHEREFORE, these cases are resolved as follows:
G.R. No. 174168

The petition for review is DENIED. The Decision and Resolution of the Court of Appeals
dated 31 May 2006 and 8 August 2006, respectively, in CA-G.R. SP No. 91416 are
AFFIRMED.
Costs against the petitioners.
G.R. No. 179438
The petition is GRANTED. The decision and resolution of the Court of Appeals dated 26 May
2004 and 29 August 2007, respectively, in CA-G.R. SP No. 81897 areSET ASIDE and the
Orders of the Regional Trial Court of Manila Branch 46 dated 8 October 2003 and 19
December 2003 are REINSTATED.
G.R. No. 167181.December 23, 2008.*

SPS.
CARLOS
MUNSALUD
and
WINNIE
MUNSALUD,
petitioners, vs. NATIONAL HOUSING AUTHORITY, respondent.
Actions; Pleadings and Practice; Sufficiency in Form; Requisites; Words and
Phrases; Form is the methodology used to express rules of practice and procedure,
the order or method of legal proceedings, relating to technical detailsit is
ordinarily the antithesis of substance.Petitioners action designated
asmandamus was dismissed by the trial court on the ground that it is insufficient
in form and substance. This begs the question: when is an action sufficient in form
and when is it sufficient in substance? To begin with, form is the methodology
used to express rules of practice and procedure. It is the order or method of legal
proceedings. It relates to technical details. It is ordinarily the antithesis of
substance. It is an established method of expression or practice. It is a fixed or
formal way of proceeding. A pleading is sufficient in form when it contains the
following: 1. ACaption, setting forth the name of the court, the title of the action
indicating the names of the parties, and the docket number which is usually left in
blank, as the Clerk of Court has to assign yet a docket number; 2. The Body,
reflecting the designation, the allegations of the partys claims or defenses, the
relief prayed for, and the date of the pleading; 3. The Signature and Address of the
party or counsel; 4. Verification. This is required to secure an assurance that the
allegations have been made in good faith, or are true and correct and not merely
speculative; 5. A Certificate of Non-forum Shopping, which although not
jurisdictional, the same is obligatory; 6. An Explanation in case the pleading is not
filed personally to the Court. Likewise, for pleading subsequent to the complaint, if
the same is not served personally to the parties affected, there must also be an
explanation why service was not done personally.
Same; Same.In case a party is represented by counsel de parte, additional
requirements that go into the form of the pleading should be incorporated, viz.: 1.
The Roll of Attorneys Number; 2. The Current Professional Tax Receipt Number;
and 3. The IBP Official
_______________
* THIRD DIVISION.
145
VOL.575,DECEMBER23,2008
Munsaludvs.NationalHousingAuthority
Receipt No. or IBP Lifetime Membership Number. 4. MCLE Compliance or
Exemption Certificate Number and Date of Issue (effective January 1, 2009).
Same; Same; Sufficiency in Substance; Words and Phrases; Substance is
that which is essential and is used in opposition to formit is the most important
element in any existence, the characteristic and essential components of anything,
the main part, the essential import, and the purport.Substance is that which is
essential and is used in opposition to form. It is the most important element in any
existence, the characteristic and essential components of anything, the main part,
the essential import, and the purport. It means not merely subject of act, but an
intelligible abstract or synopsis of its material and substantial elements, though it
may be stated without recital of any details. It goes into matters which do not
sufficiently appear or prejudicially affect the substantial rights of parties who may
be interested therein and not to mere informalities. As used in reference to
substance of common-law actions, substance comprehends all of the essential or
material elements necessary to sufficiently state a good cause of action
invulnerable to attack by general demurrer. Substance is one which relates to the
material allegations in the pleading. It is determinative of whether or not a cause
of action exists. It is the central piece, the core, and the heart constituting the
controversy addressed to the court for its consideration. It is the embodiment of
the essential facts necessary to confer jurisdiction upon the court.
Same; Same; What determines the nature of the action and which court has
jurisdiction over it are the allegations in the complaint and the character of the
relief sought, not the designation given to it by the partiesthe designation or
caption is not controlling more than the allegations in the complaint.Instead of
focusing on what an action for mandamus should contain, the court a quoshould
have proceeded to examine the essential facts alleged in petitioners complaint. For
what determines the nature of the action and which court has jurisdiction over it
are the allegations in the complaint and the character of the relief sought. The
cause of action in a complaint is not determined by the designation given to it by
the parties. The allegations in the body of the complaint define or describe it. The
designation or caption is not controlling more than the allegations in the
complaint. It is not even an indispensable part of the complaint.146
1
145
46
There is no need to make reference to any law which respondent by reason
of its office is enjoined as a duty to perform. Respondents duty arose from its
contractual obligation under the Land for the Landless Program.
Mauricio Law Office for petitioners.
The Legal Department for respondent.
REYES, R.T.,J.:
INSUFFICIENCY in form and substance, as a ground for dismissal of the
complaint, should not be based on the title or caption, especially when the
allegations of the pleading support an action.
In pursuit of a reversal of the Decision 1 of the Court of Appeals (CA) affirming
the order of dismissal 2 of the Regional Trial Court (RTC) in a complaint
for mandamus,3petitioners-Spouses Carlos Munsalud and Winnie Munsalud
lodged before this Court a petition for review oncertiorari.
The Facts
Laid bare from the records are the following facts:
Petitioner Winnie Munsalud is the daughter and one of the compulsory heirs
of the late Lourdes Bulado (Bulado) who died on December 8, 1985. During the
lifetime of Bulado, respondent National Housing Authority (NHA) awarded her a
_______________
1 Rollo, pp. 19-30. Dated August 23, 2004.
2 Records, p. 19. Dated April 22, 2003. Penned by Judge Rogelio M. Pizarro,
RTC, Br. 222, Quezon City.
3 Id., at pp. 2-6. Docketed as Civil Case No. Q03-49278, entitled Sps. Carlos
& Winnie Munsalud, for herself and on behalf of the other Heirs of the Deceased
Lourdes Bulado.
147
147
lot located at 942 R. Higgins St., CAA Compound, Bgy. 185, Pasay City. The award
was made pursuant to the Land for the Landless program of respondent. She
resided at the said property until her death.
When Bulado died, petitioner Winnie assumed the obligation to pay the
monthly amortizations. Respondent NHA recognized petitioner spouses
assumption of obligations as their names were reflected in the receipts. They were
allowed to occupy the lot up to the present. To prove their occupancy over the lot,
petitioners offered as evidence the following documents, viz.:
1.Tag Card No. 77-02830-03 issued by then Pasay City Mayor Pablo Cuneta
and then NHA General Manager Gaudencio Tobias;
2.Application and Contract for Water Services No. 295319 in the name of
Bulado but the same was signed by petitioner Winnie;
3.Tax Declaration No. B-007-27566 over the land issued by the Assessors
Office of Pasay City in the name of defendant recognizing its beneficial use in favor
of petitioners;
4.Tax Declaration No. B-007-27667 over the residential structure erected on
the land and issued by the Assessors Office of Pasay City in the names of
petitioners;
5.Pagpapatunay dated September 5, 1989 signed by neighbors and
acquaintances of petitioners attesting to their long time residence in the property;
6.Deposit Receipt No. 286444 dated September 27, 1989 issued by the
Manila Electric Company attesting to the installation of electric service in the
name of petitioner Winnie on the property.4
On September 14, 1989, petitioners completed the payments of the
amortizations due on the property. Reflected on the left side portion of the official
receipt evidencing full payment is the annotation full payment. Consequently,
petitioners demanded that respondent NHA issue in their favor a
_______________
4 Rollo, p. 5.
On January 28, 2003, petitioners, by counsel, sent respondent a letter to issue

a deed of sale and title. Despite receipt, respondent did not issue the requested
documents. On March 6, 2003, respondent wrote petitioners informing them that
petitioner Winnies name does not appear as beneficiary. Petitioners replied that
Winnie was representing her mother, the late Lourdes Bulado. Respondent did not
respond to the reply.
Left with no recourse, petitioners instituted a complaint for mandamus before
the court a quo.
RTC Order
On April 22, 2003, the RTC dismissed the complaint formandamus, disposing
thus:
Considering that the petition is insufficient in form and substance, there
being no reference to any law which the respondent by reason of its office, trust or
station is especially enjoined as a duty to perform or any allegation that
respondent is unlawfully excluding petitioners from using or enjoying any right or
office which said petitioners are entitled to, the above-entitled petition is hereby
DISMISSED, pursuant to Section 3 Rule 65 of the 1997 Rules of Civil Procedure.
SO ORDERED.5
Petitioners moved for reconsideration but they did not succeed. Thus,
petitioners seasonably appealed to the CA.
CA Disposition
On August 23, 2004,
the mandamus petition.
_______________
CA
affirmed
the
RTC
dismissal
of
5 Id., at p. 39.
149
148
148
the
deed of sale and a title over the property. Respondent, however, refused.
WHEREFORE, the instant appeal is hereby DISMISSED. Accordingly, the
assailed Order of Dismissal is AFFIRMED.
SO ORDERED.6
149
In agreeing with the court a quo, the appellate court rationalized as follows:
It is essential to the issuance of the writ of mandamus that the petitioner
should have a clear legal right to the thing demanded and it must be the
imperative duty of the respondent to perform the act required. It is a command to
exercise a power already possessed and to perform a duty already imposed.
It well-settled that the legal right of petitioner to the performance of the
particular act which is sought to be compelled must be clear and complete. A clear
legal right within the meaning of the rule means a right which is clearly founded
in, or granted by law; a right which is inferable as a matter of law.
Likewise, mandamus refers only to acts enjoined by law to be done. The duties to
be enforced must be such as are clearly peremptorily enjoined by law or by reason
of official station. However, appellants failed to point out in their petition the
specific law by which defendant is duty bound to perform the act sought to be
performed, as well as the law which would grant them the clear legal right to the
issuance of the writ ofmandamus.
Foregoing discussed, we find no error on the part of the court a quo in
dismissing the petition for mandamus filed by plaintiffs-appellants.
On September 20, 2004, petitioners moved for reconsideration but it was
denied by the CA on February 22, 2005. Hence, the present recourse.
Issues
I.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
AFFIRMING THE ORDERS OF THE HONORABLE
_______________
6 Id., at pp. 29-30.
150
150
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
DENYING PETITIONERS MOTION FOR RECONSIDERATION OF ITS
DECISION DATED AUGUST 23, 2004.7 (Underscoring supplied)
Poring over the arguments presented, the focal issue is whether in giving due
course to an action, the court is fenced within the parameters of the title given by
plaintiff to the case without regard to the averments of the pleading.
Elsewise stated, does the trial court have absolute discretion to dismiss an
action on the ground that it is insufficient in form and substance based alone on
its designation when, from the body and the relief prayed for, it could stand as an
action sufficient in form and substance?
Our Ruling
Petitioners action designated as mandamus was dismissed by the trial court
on the ground that it is insufficient in form and substance. This begs the question:
when is an action sufficient in form and when is it sufficient in substance?
To begin with, form is the methodology used to express rules of practice and
procedure.8 It is the order or method of
_______________
7 Id., at p. 8.
8Words and Phrases, Vol. 17, permanent ed., p. 546, citing Juneau Spruce
Corporation v. International Longshoremens and Warehousemens Union, D.C.
Hawaii, 131 F. Supp. 866, 869.
151
REGIONAL TRIAL COURT OF QUEZON CITY DATED APRIL 22, 2003 AND
SEPTEMBER 25, 2003 WHERE THE LATTER COURTRELYING UPON THE
APPELLATION AND/OR LABEL THAT PETITIONERS GAVE THEIR
COMPLAINT (I.E. MANDAMUS) IN CIVIL CASE NO. Q-03-492DISMISSED
THE COMPLAINT THEREIN PURPORTEDLY BECAUSE THE SAID
COMPLAINT FAILED TO COMPLY WITH SECTION 3, RULE 65 OF THE 1997
RULES OF CIVIL PROCEDURE.
legal proceedings.9 It relates to technical details. 10 It is ordinarily the antithesis of
substance.11 It is an established method of expression or practice. It is a fixed or
formal way of proceeding.12
A pleading is sufficient in form when it contains the following:
1.A Caption, setting forth the name of the court, the title of the action
indicating the names of the parties, and the docket number which is usually left in
blank, as the Clerk of Court has to assign yet a docket number;
151
2.The Body, reflecting the designation, the allegations of the partys claims
or defenses, the relief prayed for, and the date of the pleading;
3.The Signature and Address of the party or counsel;13
4.Verification. This is required to secure an assurance that the allegations
have been made in good faith, or are true and correct and not merely speculative;14
5.A Certificate of Non-forum Shopping, which although not jurisdictional,
the same is obligatory;15
_______________
9 Id., at p. 548, citing The Princess Sophia, D.C. Wash., 36 F. 2d 591, 593.
10 Id., at p. 549, citing J.D. Loizeaux Lumber Co. v. Davis, 124 A. 2d 593, 41
N.J. Super. 231.
11 Id., citing Wilson v. Wagner, Tex. Civ. App., 211 SW 2d 241, 244.
12Websters Third New International Dictionary (1993), unabridged.
13 See Rules of Civil Procedure (1997), Rule 7, Secs. 1-3.
14 Clavecilla v. Quitain, G.R. No. 147989, February 20, 2006, 482 SCRA
623;Mamaril v. Civil Service Commission, G.R. No. 164929, April 10, 2006, 487
SCRA 65; Torres v. Specialized Packaging Development Corporation, G.R. No.
149634, July 6, 2004, 433 SCRA 455.
15 See Torres v. Specialized Packaging Development Corporation, supra.
152
152
6.An Explanation in case the pleading is not filed personally to the Court.
Likewise, for pleading subsequent to the complaint, if the same is not served
personally to the parties affected, there must also be an explanation why service
was not done personally.16
Likewise, for all other pleadings, not initiatory in nature, there must be:
A Proof of Service, which consists in the written admission of the party
served, or the official return of the server, or the affidavit of the party serving,
containing a full statement of the date, place and manner of service. If the service
is by ordinary mail, proof thereof shall consist of an affidavit of the person mailing.
If service is by registered mail, proof shall be made by such affidavit and the
registry receipt issued by the mailing office.17
In case a party is represented by counsel de parte, additional requirements
that go into the form of the pleading should be incorporated, viz.:
1.The Roll of Attorneys Number;

2.The Current Professional Tax Receipt Number; and
3.The IBP Official Receipt No. or IBP Lifetime Membership Number.18
4.MCLE Compliance or Exemption Certificate Number and Date of Issue
(effective January 1, 2009).19
In the case at bench, a naked perusal of the complaint docketed as Civil Case
No. Q03-49278 designated by petitioners as mandamus reveals that it is sufficient
in form. It has the caption with the name of the court, the name of the parties, and
the docket number. The complaint contains allegations of petitioners claims. It
has a prayer and the date when it was prepared. The signature page shows the
signature and
_______________
16 See Rules of Civil Procedure (1997), Rule 13, Secs. 4 & 11.
17 Id., Sec. 13.
18 See OCA Circular No. 58-2003, May 29, 2003.
19 Bar Matter No. 1922, as amended.
153
name of petitioners counsel, the counsels IBP, PTR and Roll of Attorneys
Numbers. The complaint was also verified and accompanied by a certificate of nonforum shopping and signed by petitioners as plaintiffs. It was filed personally with
the office of the clerk of court.
Now, is the petition insufficient in substance?
Substance is that which is essential and is used in opposition to form. 20 It is
the most important element in any existence, the characteristic and essential
components of anything, the main part, the essential import, and the purport. 21 It
means not merely subject of act, but an intelligible abstract or synopsis of its
material and substantial elements, though it may be stated without recital of any
details.22 It goes into matters which do not sufficiently appear or prejudicially
affect the substantial rights of parties who may be interested therein and not to
mere informalities.23
As used in reference to substance of common-law actions, substance
comprehends all of the essential or material elements necessary to sufficiently
state a good cause of action invulnerable to attack by general demurrer.24
153
Substance is one which relates to the material allegations in the pleading. It is

determinative of whether or not a cause of action exists. It is the central piece, the
core, and the heart constituting the controversy addressed to the court for its
consideration. It is the embodiment of the essential facts necessary to confer
jurisdiction upon the court.
_______________
20Words and Phrases, Vol. 40, permanent ed., p. 754, citing United States v.
Johnston, D.C. Wash., 292 F. 491, 495; State v. Burgdoerfer, 17 SW 646, 649, 107
Mo. 1, 14 L.R.A. 846.
21 Id., at p. 752, citing State v. Lowe, 224 P. 991, 992, 27 Okl. Cr. 104.
22 Id., at p. 752, citing State on Inf. of Murphy v. Brooks, 1 So. 2d 370, 371,
241 Ala. 55.
23 Id., at p. 754, citing Rose v. Osborne, Me., 1 A. 2d 225, 226.
24 Id., citing Hogan v. Aluminum Lock Shingle Corp., 329 P. 2d 271, 273, 214
Or. 218.
154
154
The court a quo anchored the dismissal of petitioners complaint on the basis
of Rule 65, Section 325 of the 1997 Rules of Civil Procedure. It found that there was
no reference to any law which respondent NHA, by reason of its office, trust or
station, is specifically enjoined as a duty to perform. It declared that there was no
allegation in the petition below that respondent is unlawfully excluding petitioners
from using or enjoying any right or office which said petitioners are entitled to.
Although the complaint was captioned as Mandamus, petitioners averments,
as well as the relief sought, called for an action for specific performance. Pertinent
portions of the complaint for mandamus provide:
3.Plaintiff Winnie Munsalud is the daughter of the late Lourdes Bulado,
and as such is one of Bulados compulsory heirs. x x x;
4.During the lifetime of Bulado, she was awarded a parcel of land at a land
for the landless program of the defendant;
xxxx
_______________
25 Rules of Civil Procedure (1997), Rule 65.
Sec.3.Petition for mandamus.When any tribunal, corporation,

board, officer, or person unlawfully neglects the performance of an act
which the law specifically enjoins as a duty resulting from an office, trust,
or station, or unlawfully excludes another from the use and enjoyment of a
right or office to which such other is entitled, and there is no other plain,
speedy and adequate remedy in the ordinary course of law, the person
aggrieved thereby may file a verified petition in the proper court, alleging
the facts with certainty and praying that judgment be rendered
commanding the respondent, immediately or at some other time to be
specified by the court, to do the act required to be done to protect the right
of the petitioner, and to pay the damages sustained by the petitioner by
reason of the wrongful acts of the respondent.
155
155
6.When Bulado died in 1985, Plaintiffs assumed her obligations over the
aforesaid property, particularly the payment of the amortizations therein;
7.Defendant recognized this assumption of Bulados obligations by
the Plaintiffs considering that in the receipts covering the amortizations,
the names of the Plaintiffs as the ones paying the Defendant were
indicated therein;
8.In fact, Defendant also allowed Plaintiffs to move into, and occupy,
as they continue to occupy up to now, the above described premises;
xxxx
10.On September 14, 1989, Plaintiffs completed the payment of the
amortizations due over the property in question, and this is evidenced by
an official receipt, numbered 19492, which Defendants cashier, Yasmin D.
Aquino, issued to the Plaintiffs themselves, although the official name of
the payor indicated therein was still that of the deceased Lourdes Bulado;
xxxx
12.
Significantly,
that receipt
contained
the
annotation
appearing on the left side thereof, that the amount paid thereon
constituted full payment;
13.Since then, Plaintiffs have been demanding from the Defendant
the issuance of the deed of sale and the title over the property in question,
but, inexplicably,
and
without
any
legal
justification
whatsoever,
Defendant has refused to issue that deed of sale and title;

14.On January 28, 2003, Plaintiffs, through counsel, sent a letter to
the Defendant seeking the issuance of that deed of sale and title but,
despite receipt thereof, Defendant again refused and failed [to] act
favorably thereon;
xxxx
20. At this point that the lot in question had already been fully paid for
letter, respondent was informed that petitioner Winnie is representing her

deceased mother, Lourdes Bulado, viz.:
In view of the contents of that letter, we would like to notify you that Ms.
Munsalud is actually representing her deceased mother, Lourdes Bulado, who,
on September 14, 1989 completed her payment for Lot 12, Block 79 of the
Maricaban Estate. A copy of
_______________
26 Records, pp. 2-4.
27 Id., at p. 17.
28 Id., at p. 18.
by the Plaintiffs, there is now a need to compel the Defendant to comply

with its duty to issue a deed of sale in favor of the heirs of the deceased
Lourdes Bulado, particularly Plaintiffs Carlos and Winnie Munsalud, as
well156
156
157
to issue a title over the same property in favor of the same heirs.
WHEREFORE, it is most respectfully prayed that judgment be rendered
commanding the Defendant, after due notice and hearing, to issue a deed of sale
and/or a title, in favor of the heirs of the deceased Lourdes Bulado, particularly
Plaintiffs Carlos and Winnie Munsalud, over the property subject of this
action.26(Underscoring supplied)
A plain reading of the allegations of the complaint reveals that petitioner
Winnie Munsalud assumed the obligations of her deceased mother, the original
awardee of respondents Land for the Landless Program. One of the obligations
of an awardee is to pay the monthly amortizations. Petitioners complied with said
obligation and religiously paid the amortizations until these were fully paid.
Indeed, petitioners have complied with what is incumbent upon them under
the program. Hence, it is now the turn of respondent to comply with what is
incumbent upon it.
In a letter dated February 21, 2003,27 respondent informed petitioners counsel
that per its records, the name of petitioner Winnie Munsalud does not appear as a
beneficiary. For the guidance of respondent, Winnie Munsalud is not actually a
beneficiary. The beneficiary of its program is Lourdes Bulado, her deceased
mother. This fact was made known to respondent when another letter dated March
6, 200328 was sent by the counsel of the heirs of Lourdes Bulado. In the same
the receipt evidencing that completed is attached hereto asAnnex B for your
easy reference.
In view thereof, may we reiterate our request for the issuance of the title over
the aforesaid property in the name of Lourdes Bulado.29 (Underscoring supplied)
The letter was received by respondent on March 12, 2003. On account of this
second letter, respondent could have easily verified if the name of Lourdes Bulado
appears as a beneficiary and awardee of its Land for the Landless Program.
However, respondent never responded to the second letter. This left petitioners
with no recourse but to bring the action to the trial court.
Evidently, the action commenced by petitioners before the trial court, although
designated as mandamus, is in reality an action to perform a specific act. The
averments of the complaint are clear. The essential facts are sufficiently alleged as
to apprise the court of the nature of the case. The relief sought to be obtained aims
to compel respondent to issue a deed of sale and the corresponding title over the
property awarded to Bulado. Thus, the Court finds the complaint sufficient in
substance.
The designation or caption is not controlling, more than the
allegations in the complaint, for it is not even an indispensable part of the
complaint.
Instead of focusing on what an action for mandamusshould contain, the
court a quo should have proceeded to examine the essential facts alleged in
petitioners complaint. For what determines the nature of the action and which
157
court has jurisdiction over it are the allegations in the complaint and the character
of the relief sought.30
_______________
WHEREFORE, the appealed Decision is REVERSED AND SET ASIDE. The case is
REMANDED to the Regional Trial Court which is ORDERED to reinstate the case and to
conduct trial on the merits with dispatch.
No costs.
SO ORDERED.
Ynares-Santiago (Chairperson),
Austria-Martinez,
Chico-Nazario and Nachura,
JJ., concur.
Judgment reversed and set aside, case remanded to Regional Trial Court.
Notes.While there are exceptional cases where the Court set aside procedural defects
29 Id.
30 Villena v. Payoyo, G.R. No. 163021, April 27, 2007, 522 SCRA 592,
citing Huguete v. Embudo, G.R. No. 149554, July 1, 2003, 405 SCRA 273, citing in
turn Caiza v. Court of Appeals, G.R. No. 110427, February 24, 1997, 268 SCRA
640, 647-648.
158
158
to correct a patent injustice, there should be an effort on the part of the party invoking
liberality to at least explain its failure to comply with the rules. ( Cirineo Bowling Plaza, Inc.
vs. Sensing, 448 SCRA 175 [2005])
It is a basic rule of remedial law that a motion for extension of time must be filed before
the expiration of the period sought to be extended. (Vda. de Victoria vs. Court of Appeals, 449
SCRA 319 [2005])
The cause of action in a complaint is not determined by the designation given to it by the
parties. The allegations in the body of the complaint define or describe it. The designation or
caption is not controlling more than the allegations in the complaint. It is not even an
indispensable part of the complaint.31
There is no need to make reference to any law which respondent by reason of its office is
enjoined as a duty to perform. Respondents duty arose from its contractual obligation under
the Land for the Landless Program.
The trial court is reminded that the caption of the complaint is not determinative of the
nature of the action.32The caption of the pleading should not be the governing factor, but
rather the allegations in it should determine the nature of the action, because even without
the prayer for a specific remedy, the courts may nevertheless grant the proper relief as may be
warranted by the facts alleged in the complaint and the evidence introduced. 33
All told, whether or not petitioner Winnie, in her capacity as a compulsory heir of the
awardee, becomes a beneficiary of the program is a question best ventilated during trial on the
merits. The conditions, terms, and provisions of the program in case an awardee dies are
evidentiary and should be presented for determination of the court. Even the effect and the
consequence of the assumption of obligation of the awardee as well as the presence of other
compulsory heirs are issues that
_______________
220
Republicvs.KenrickDevelopmentCorporation
G.R. No. 149576. August 8, 2006.*

REPUBLIC OF THE PHILIPPINES, represented by the Land Registration
Authority,
petitioner, vs. KENRICK
DEVELOPMENT
CORPORATION,
respondent.
Evidence; Adoptive Admissions; Words and Phrases; A party may, by his
words or conduct, voluntarily adopt or ratify anothers statement.A party may, by
his words or conduct, voluntarily adopt or ratify anothers statement. Where it
appears that a party clearly and unambiguously assented to or adopted the
statements of another, evidence of those statements is admissible against him.
This is the essence of the principle of adoptive admission.
_______________
SECOND DIVISION.
221
*
should be addressed for the courts evaluation on the basis of the evidence to be laid down
before its eyes.
159
Same; Adoptive admission occur when a party: (a) expressly agrees to or
concurs in an oral statement made by another; (b) hears a statement and later on
221
essentially repeats it; (c) utters an acceptance or builds upon the assertion of
another; (d) replies by way of rebuttal to some specific points raised by another but
ignores further points which he or she has heard the other make; or (e) reads and
signs a written statement made by another.An adoptive admission is a partys
reaction to a statement or action by another person when it is reasonable to treat
the partys reaction as an admission of something stated or implied by the other
person. By adoptive admission, a third persons statement becomes the admission
of the party embracing or espousing it. Adoptive admission may occur when a
party: (a) expressly agrees to or concurs in an oral statement made by another; (b)
hears a statement and later on essentially repeats it; (c) utters an acceptance or
builds upon the assertion of another; (d) replies by way of rebuttal to some specific
points raised by another but ignores further points which he or she has heard the
other make; or (e) reads and signs a written statement made by another.
Pleadings and Practice; Section 3, Rule 7 requires that a pleading must be
signed by the party or counsel representing him.Contrary to respondents
position, a signed pleading is one that is signed either by the party himself or his
counsel. Section 3, Rule 7 is clear on this matter. It requires that a pleading must
besigned by the party or counsel representing him.
Same; Only the signature of either the party himself or his counsel operates
to validly convert a pleading from one that is unsigned to one that is signed.Only
the signature of either the party himself or his counsel operates to validly convert
a pleading from one that is unsigned to one that is signed.
Same; Counsels authority and duty to sign a pleading are personal to him;
He may not delegate it to just any person.Counsels authority and duty to sign a
pleading are personal to him. He may not delegate it to just any person.
Same; The signature of counsel constitutes an assurance by him that he has
read the pleading; that, to the best of his knowledge, information and belief, there is
good ground to support it; and that it was not interposed for delay.The signature
of counsel constitutes
222
2
22
an assurance by him that he has read the pleading; that, to the best of his
knowledge, information and belief, there is a good ground to support it; and that it
is not interposed for delay. Under the Rules of Court, it is counsel alone, by affixing
his signature, who can certify to these matters.
Same; The preparation and signing of a pleading constitute legal work
involving practice of law which is reserved exclusively for the members of the legal
profession.The preparation and signing of a pleading constitute legal work
involving practice of law which is reserved exclusively for the members of the legal
profession. Counsel may delegate the signing of a pleading to another lawyer but
cannot do so in favor of one who is not. The Code of Professional Responsibility
provides: Rule 9.01A lawyer shall not delegate to any unqualified person the
performance of any task which by law may only be performed by a member of the
Bar in good standing.
Same; A signature by agents of a lawyer amounts to signing by unqualified
persons, something the law strongly proscribes.Moreover, a signature by agents of
a lawyer amounts to signing by unqualified persons, something the law strongly
proscribes.
Same; The trial court correctly ruled that respondents answer was invalid
and of no legal effect as it was an unsigned pleading.No doubt, Atty. Garlitos
could not have validly given blanket authority for just anyone to sign the answer.
The trial court correctly ruled that respondents answer was invalid and of no legal
effect as it was an unsigned pleading. Respondent was properly declared in default
and the Republic was rightly allowed to present evidence ex parte.
Remedial Law; Procedural requirements which have often been
disparagingly labeled as mere technicalities have their own valid raison dtre in
the orderly administration of justice; To summarily brush them aside may result in
arbitrariness and injustice.Procedural requirements which have often been
disparagingly labeled as mere technicalities have their own validdtre in the
orderly administration of justice. To summarily brush them aside may result in
arbitrariness and injustice.
223
Same; While the Court, in some instances, allows a relaxation in the
application of the rules, this, we stress, was never intended to forge a bastion for
erring litigants to violate the rules with impunity.The Courts pronouncement
in Garbo v. Court of Appeals, 258 SCRA 159 (1996) is relevant: Procedural rules
are [tools] designed to facilitate the adjudication of cases. Courts and litigants
223
alike are thus [enjoined] to abide strictly by the rules. And while the Court, in
some instances, allows a relaxation in the application of the rules, this, we stress,
was never intended to forge a bastion for erring litigants to violate the rules with
impunity. The liberality in the interpretation and application of the rules applies
only in proper cases and under justifiable causes and circumstances. While it is
true that litigation is not a game of technicalities, it is equally true that every case
must be prosecuted in accordance with the prescribed procedure to insure an
orderly and speedy administration of justice.
Pleadings and Practice; Like all rules, procedural rules should be followed
except only when, for the most persuasive of reasons, they may be relaxed to relieve a
litigant of an injustice commensurate with the degree of his thoughtlessness in not
complying with the prescribed procedure.Like all rules, procedural rules should
be followed except only when, for the most persuasive of reasons, they may be
relaxed to relieve a litigant of an injustice not commensurate with the degree of
his thoughtlessness in not complying with the prescribed procedure. In this case,
respondent failed to show any persuasive reason why it should be exempted from
strictly abiding by the rules.
Appeals.
The Solicitor General for petitioner.
Rolando P. Quimbo for respondent.
224
224
CORONA, J.:
The Republic of the Philippines assails the May 31, 2001 decision 1 and August 20,
2001 resolution of the Court of Appeals in CA-G.R. SP No. 52948 in this petition
for review under Rule 45 of the Rules of Court.
This case stemmed from the construction by respondent Kenrick Development
Corporation of a concrete perimeter fence around some parcels of land located
behind the Civil Aviation Training Center of the Air Transportation Office (ATO)
in 1996. As a result, the ATO was dispossessed of some 30,228 square meters of
prime land. Respondent justified its action with a claim of ownership over the
property. It presented Transfer Certificate of Title (TCT) Nos. 135604, 135605 and
135606 issued in its name and which allegedly originated from TCT No. 17508
registered in the name of one Alfonso Concepcion.
ATO verified the authenticity of respondents titles with the Land Registration
Authority (LRA). On May 17, 1996, Atty. Jose Loriega, head of the Land Title
Verification Task Force of the LRA, submitted his report. The Registrar of Deeds
of Pasay City had no record of TCT No. 17508 and its ascendant title, TCT No.
5450. The land allegedly covered by respondents titles was also found to be within
Villamor Air Base (headquarters of the Philippine Air Force) in Pasay City.
By virtue of the report, the Office of the Solicitor General (OSG), on
September 3, 1996, filed a complaint for revocation, annulment and cancellation of
certificates of title in behalf of the Republic of the Philippines (as represented by
the LRA) against respondent and Alfonso Concepcion. It was raffled to Branch 114
of the Regional Trial Court of Pasay City where it was docketed as Civil Case No.
96-1144.
_______________
Penned by Associate Justice Bennie A. Adefuin-De la Cruz (now retired) and
concurred in by Associate Justices Andres B. Reyes, Jr. and Josefina GuevaraSalonga of the Fifteenth Division of the Court of Appeals; Rollo, pp. 35-43.
225
1
On December 5, 1996, respondent filed its answer which was purportedly signed
by Atty. Onofre Garlitos, Jr. as counsel for respondent.
Since Alfonso Concepcion could not be located and served with summons, the
trial court ordered the issuance of an alias summons by publication against him
on February 19, 1997.
The case was thereafter punctuated by various incidents relative to modes of
discovery, pre-trial, postponements or continuances, motions to dismiss, motions to
declare defendants in default and other procedural matters.
During the pendency of the case, the Senate Blue Ribbon Committee and
Committee on Justice and Human Rights conducted a hearing in aid of legislation
on the matter of land registration and titling. In particular, the legislative
investigation looked into the issuance of fake titles and focused on how respondent
was able to acquire TCT Nos. 135604, 135605 and 135606.
225
During the congressional hearing held on November 26, 1998, one of those
summoned was Atty. Garlitos, respondents former counsel. He testified that he
prepared respondents answer and transmitted an unsigned draft to respondents
president, Mr. Victor Ong. The signature appearing above his name was not his.
He authorized no one to sign in his behalf either. And he did not know who finally
signed it.
With Atty. Garlitos revelation, the Republic promptly filed an urgent motion
on December 3, 1998 to declare respondent in default, 2 predicated on its failure to
file a valid answer. The Republic argued that, since the person who signed the
answer was neither authorized by Atty. Garlitos nor even known to him, the
answer was effectively an unsigned pleading. Pursu_______________
Id., pp. 62-64.
226
2
226
ant to Section 3, Rule 7 of the Rules of Court, 3 it was a mere scrap of paper and
produced no legal effect.
On February 19, 1999, the trial court issued a resolution granting the
Republics motion.4 It found respondents answer to be sham and false and
intended to defeat the purpose of the rules. The trial court ordered the answer
stricken from the records, declared respondent in default and allowed the Republic
to present its evidence ex parte.
The Republic presented its evidence ex parte, after which it rested its case and
formally offered its evidence.
Meanwhile, respondent sought reconsideration of the February 19, 1999
resolution but the trial court denied it.
Aggrieved, respondent elevated the matter to the Court of Appeals via a
petition for certiorari5 seeking to set aside the February 19, 1999 resolution of the
trial court. Respondent contended that the trial court erred in declaring it in
default for failure to file a valid and timely answer.
_______________
SEC. 3. Signature and address.Every pleading must be signed by
the party or counsel representing him, stating in either case his new address
which should not be a post office box.
The signature of counsel constitutes a certificate by him that he has read the
pleading; that to the best of his knowledge, information and belief there is a good
ground to support it; and that it is not interposed for delay.
An unsigned pleading produces no legal effect. However, the court may,
in its discretion, allow such deficiency to be remedied if it shall appear that the
same was due to mere inadvertence and not intended to delay. Counsel who
deliberately files an unsigned pleading, or signs a pleading in violation of this
Rule, or alleges scandalous or indecent matter therein, or fails to promptly report
to the court a change of his address, shall be subject to appropriate disciplinary
action.
4
Resolution dated February 19, 1999 in Civil Case No. 96-1144; Rollo, pp. 6569.
5
Docketed as CA-G.R. SP No. 52948.
227
On May 31, 2001, the Court of Appeals rendered the assailed decision. It found
Atty. Garlitos statements in the legislative hearing to be unreliable since they
were not subjected to cross-examination. The appellate court also scrutinized Atty.
Garlitos acts after the filing of the answer 6 and concluded that he assented to the
signing of the answer by somebody in his stead. This supposedly cured whatever
defect the answer may have had. Hence, the appellate court granted respondents
petition for certiorari. It directed the lifting of the order of default against
respondent and ordered the trial court to proceed to trial with dispatch. The
Republic moved for reconsideration but it was denied. Thus, this petition.
Did the Court of Appeals err in reversing the trial courts order which declared
respondent in default for its failure to file a valid answer? Yes, it did.
A party may, by his words or conduct, voluntarily adopt or ratify anothers
statement.7 Where it appears that a party clearly and unambiguously assented to
or adopted the statements of another, evidence of those statements is admissible
against him.8 This is the essence of the principle of adoptive admission.
227
An adoptive admission is a partys reaction to a statement or action by

another person when it is reasonable to treat the partys reaction as an admission
of something stated or implied by the other person.9 By adoptive admission, a third
_______________
These circumstances included Atty. Garlitos knowledge that somebody
signed the answer for him yet allowed its filing in court; he did not protest the
signing of the answer by another person; he admitted that he was the one who
drafted the answer and he did not disown its contents; after the filing of the
answer, he continued to represent respondent in Civil Case No. 96-1144.
7
Herrera, REMEDIAL LAW, Vol. V, 1999 edition, Rex Bookstore, p. 371.
8
Id.
9
Estrada v. Desierto, G.R. Nos. 146710-15, 03 April 2001, 356 SCRA 108.
228
1. 1.While Atty. Garlitos denied signing the answer, the fact was that the
answer was signed. Hence, the pleading could not be considered invalid
for being an unsigned pleading. The fact that the person who signed it
was neither known to Atty. Garlitos nor specifically authorized by him
was immaterial. The important thing was that the answer bore a
signature.
228
persons statement becomes the admission of the party embracing or espousing it.
Adoptive admission may occur when a party:
1. (a)expressly agrees to or concurs in an oral statement made by another; 10
2. (b)hears a statement and later on essentially repeats it; 11
3. (c)utters an acceptance or builds upon the assertion of another;12
4. (d)replies by way of rebuttal to some specific points raised by another but
ignores further points which he or she has heard the other make;13 or
5. (e)reads and signs a written statement made by another.14
Here, respondent accepted the pronouncements of Atty. Garlitos and built its case
on them. At no instance did it ever deny or contradict its former counsels
statements. It went to great lengths to explain Atty. Garlitos testimony as well as
its implications, as follows:
_______________
Section 797 on Evidence, 29A AmJur 2d 174 citing United States v.
Costanzo, (CA2 NY) 581 F2d 28.
11
Id., citing United States v. Weaver, (CA8 Ark) 565 F2d 129.
12
Id., citing United States v. Di Giovanni, (CA2 NY) 544 F2d 642.
13
Id., citing United States v. King, (CA2 NY) 56 F2d 122.
14
Id., citing United States v. Johnson, (CA8 Mo) 529 F2d 581.
229
10
1. 2.While the Rules of Court requires that a pleading must be signed by
the party or his counsel, it does not prohibit a counsel from giving a
general authority for any person to sign the answer for him which was
what Atty. Garlitos did. The person who actually signed the pleading
was of no moment as long as counsel knew that it would be signed by
another. This was similar to addressing an authorization letter to
whom it may concern such that any person could act on it even if he or
she was not known beforehand.
2. 3.Atty. Garlitos testified that he prepared the answer; he never disowned
its contents and he resumed acting as counsel for respondent
subsequent to its filing. These circumstances show that Atty. Garlitos
conformed to or ratified the signing of the answer by another.
Respondent repeated these statements of Atty. Garlitos in its motion for
reconsideration of the trial courts February 19, 1999 resolution. And again in the
229
petition it filed in the Court of Appeals as well as in the comment 15 and

memorandum it submitted to this Court.
Evidently, respondent completely adopted Atty. Garlitos statements as its
own. Respondents adoptive admission constituted a judicial admission which was
conclusive on it.
Contrary to respondents position, a signed pleading is one that is signed
either by the party himself or his counsel. Section 3, Rule 7 is clear on this matter.
It requires that a pleading must be signed by the party or counsel representing
him.
Therefore, only the signature of either the party himself or his counsel
operates to validly convert a pleading from one that is unsigned to one that is
signed.
Counsels authority and duty to sign a pleading are personal to him. He may
not delegate it to just any person.
_______________
A transcript of the proceedings of the November 26, 1998 Senate hearing
was even attached to the comment as an annex.
230
15
230
The signature of counsel constitutes an assurance by him that he has read the
pleading; that, to the best of his knowledge, information and belief, there is a good
ground to support it; and that it is not interposed for delay. 16Under the Rules of
Court, it is counsel alone, by affixing his signature, who can certify to these
matters.
The preparation and signing of a pleading constitute legal work involving
practice of law which is reserved exclusively for the members of the legal
profession. Counsel may delegate the signing of a pleading to another lawyer 17but
cannot do so in favor of one who is not. The Code of Professional Responsibility
provides:
Rule 9.01A lawyer shall not delegate to any unqualified person the performance
of any task which by law may only be performed by a member of the Bar in good
standing.
Moreover, a signature by agents of a lawyer amounts to signing by unqualified
persons,18 something the law strongly proscribes.
Therefore, the blanket authority respondent claims Atty. Garlitos entrusted to

just anyone was void. Any act taken pursuant to that authority was likewise void.
There was no way it could have been cured or ratified by Atty. Garlitos subsequent
acts.
Moreover, the transcript of the November 26, 1998 Senate hearing shows that
Atty. Garlitos consented to the signing of the answer by another as long as it
conformed to his draft. We give no value whatsoever to such self-serving
statement.
No doubt, Atty. Garlitos could not have validly given blanket authority for just
anyone to sign the answer. The trial court correctly ruled that respondents answer
was invalid
_______________
See note 3 supra.
Ruben E. Agpalo, LEGAL ETHICS, 6th edition (1997), pp. 236-237.
18
U.S v. Ney, 8 Phil. 146 (1907).
231
16
17
and of no legal effect as it was an unsigned pleading. Respondent was properly
declared in default and the Republic was rightly allowed to present evidence ex
parte.
Respondent insists on the liberal application of the rules. It maintains that
even if it were true that its answer was supposedly an unsigned pleading, the
defect was a mere technicality that could be set aside.
Procedural requirements which have often been disparagingly labeled as mere
technicalities have their own valid dtre in the orderly administration of justice.
To summarily brush them aside may result in arbitrariness and injustice.19
The Courts pronouncement in Garbo v. Court of Appeals20 is relevant:
Procedural rules are [tools] designed to facilitate the adjudication of cases. Courts
and litigants alike are thus [enjoined] to abide strictly by the rules. And while the
Court, in some instances, allows a relaxation in the application of the rules, this,
we stress, was never intended to forge a bastion for erring litigants to violate the
rules with impunity. The liberality in the interpretation and application of the
rules applies only in proper cases and under justifiable causes and circumstances.
While it is true that litigation is not a game of technicalities, it is equally true that
231
every case must be prosecuted in accordance with the prescribed procedure to

insure an orderly and speedy administration of justice.
Like all rules, procedural rules should be followed except only when, for the most
persuasive of reasons, they may be relaxed to relieve a litigant of an injustice not
commensurate with the degree of his thoughtlessness in not complying with the
prescribed procedure.21 In this case, respondent failed to
_______________
Trimica, Inc. v. Polaris Marketing Corporation, G.R. No. L-29887, 28
October 1974, 60 SCRA 321.
20
327 Phil. 780; 258 SCRA 159 (1996).
21
Social Security System v. Chaves, G.R. No. 151259, 13 October 2004,440
SCRA 269.
232
19
232
show any persuasive reason why it should be exempted from strictly abiding by the
rules.
As a final note, the Court cannot close its eyes to the acts committed by Atty.
Garlitos in violation of the ethics of the legal profession. Thus, he should be made
to account for his possible misconduct.
WHEREFORE, the petition is hereby GRANTED. The May 31, 2001 decision
and August 20, 2001 resolution of the Court of Appeals in CA-G.R. SP No. 52948
are REVERSED and SET ASIDE and the February 19, 1999 resolution of the
Regional Trial Court of Pasay City, Branch 114 declaring respondent in default is
hereby REINSTATED.
Let a copy of this decision be furnished the Commission on Bar Discipline of
the Integrated Bar of the Philippines for the commencement of disbarment
proceedings against Atty. Onofre Garlitos, Jr. for his possible unprofessional
conduct not befitting his position as an officer of the court.
SO ORDERED.
Puno (Chairperson), Sandoval-Gutierrez, Azcunaand Garcia, JJ., concur.
Petition granted, judgment and resolution reversed and set aside.
Notes.An act or declaration made in the presence and within the hearing or
observation of the party who does or says nothing when the act or declaration is
such as naturally to call for action or comment if not true, and when proper and
possible for him to do so, may be given in evidence against him. (People vs. Garcia,
Jr., 400 SCRA 229 [2003])
View that evidentiary rule on admission governs the act, declaration or
omission of a party as to a relevant fact and should not be applied to arguments of
parties. (People vs. Lacson, 400 SCRA 267 [2003])

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titled in the name of respondents through the use of fraud.

G.R. No. 160280.March 13, 2009.*

SUPREME COURT REPORTS ANNOTATED

Salndanan vs. Mendez

SUPREME COURT REPORTS ANNOTATED

On August 9, 2002 the MeTC rendered its decision in favor of

SUPREME COURT REPORTS ANNOTATED

Salndanan vs. Mendez

stay the immediate execution pending appeal. 10 In a Resolution dated April

SO ORDERED.12 (Emphasis supplied)

and petitioners motion for clarification and intervention, for lack of

11 CA Rollo, pp. 269-270.

SUPREME COURT REPORTS ANNOTATED

Salndanan vs. Mendez

13 Id., at pp. 288-301.

16 Annex A of the Petition, Rollo, p. 47.

Salndanan vs. Mendez

3.THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION

SUPREME COURT REPORTS ANNOTATED

Salndanan vs. Mendez

23 G.R. No. 143331, October 5, 2007, 535 SCRA 28.

Salndanan vs. Mendez

SUPREME COURT REPORTS ANNOTATED

Salndanan vs. Mendez

A judgment directing a party to deliver possession of a property to another

WHEREFORE, the petition for review on certiorari is DENIED. The

G.R. No. 175573.September 11, 2008.*

lawmakers to bestow on the Office of the Ombudsman fulladministrative

SUPREME COURT REPORTS ANNOTATED

Intervention is not an absolute right as it can be secured only in accordance

Court assailing the resolutions 2 of the Court of Appeals (CA) dated

SUPREME COURT REPORTS ANNOTATED

2 Penned by Associate Justice Romulo V. Borja and concurred in by

SUPREME COURT REPORTS ANNOTATED

Office of the Ombudsman vs. Samaniego

captioned Joel Samaniego versus Commission on Audit, Provincial Auditors

corporations, and shall, in appropriate cases, notify the complainants of the

7 Joint Decision dated April 11, 2005. Rollo, p. 223.

SUPREME COURT REPORTS ANNOTATED

Office of the Ombudsman vs. Samaniego

15 Section21.Officials Subject to Disciplinary Authority; Exceptions.

SUPREME COURT REPORTS ANNOTATED

Office of the Ombudsman vs. Samaniego

proceeding.24 Its purpose is to settle in one action and by a single judgment

SUPREME COURT REPORTS ANNOTATED

Office of the Ombudsman vs. Samaniego

In the instant case, the Ombudsmans intervention is not proper

SUPREME COURT REPORTS ANNOTATED

Office of the Ombudsman vs. Samaniego

40 Office of the Ombudsman v. Masing, G.R. Nos. 165416, 165584 and

SUPREME COURT REPORTS ANNOTATED

Office of the Ombudsman vs. Samaniego

SUPREME COURT REPORTS ANNOTATED

G.R. No. 175989. February 4, 2008.*

Office of the Ombudsman vs. Samaniego

Before us is a petition for review on certiorari seeking to reverse the

VOL. 543, FEBRUARY 4, 2008

SUPREME COURT REPORTS ANNOTATED

Government Service Insurance System vs. Nocom

On appeal, docketed as CA-G.R. CV No. 09361, the Court of Appeals

Meanwhile, on December 16, 1998, the trial court issued an Order

SUPREME COURT REPORTS ANNOTATED

Government Service Insurance System vs. Nocom

SUPREME COURT REPORTS ANNOTATED