Baltazar, Gerard D.

Civil Procedure – Judge Moreno

2010019670 2AA

Municipality of Kananga vs. Madrona

GR No. 141375 | April 30, 2003 |

DOCTRINE OF THE CASE:

Regional trial court shall exercise exclusive original jurisdiction in all cases not within the
exclusive jurisdiction of any court, tribunal, person or body exercising judicial or quasi-judicial
functions.

FACTS:

There was a boundary dispute between the Municipality of Kananga and Ormoc City. Both
parties agreed to amicable settlement though a joint session of the Sangguniang Panlungsod of
Ormoc City and Sangguniang Bayan of Kananga.

Since no amicable settlement was reached, members of the joint session agreed to elevate the
case to the proper court for settlement which was reflected in the Resolution No. 97-01.

The City of Ormoc filed a case before the RTC of Ormoc City to settle the boundary dispute

Municipality of Kananga filed a Motion to Dismiss before the RTC based on the following
grounds: a) RTC has no jurisdiction over the subject matter of the claim, b) There is no cause of
action, c) That a condition precedent for filing the complaint has not been complied with and, d)
Ormoc is an independent chartered city.

RTC DENIED the motion of Municipality of Kananga. Sec. 118 of the Local Government Code
has been complied with when both parties decided to an amicable settlement through a joint
session. That being said, RTC has jurisdiction over the case under BP Blg. 129. Hence this
petition by the Municipality of Kananga

ISSUE:

Whether or not RTC of Ormoc City may exercise original jurisdiction over the settlement of a
boundary dispute between a municipality and an independent component city.

RULING: Yes

Under Sec. 118 of the 1991 Local Government Code,boundary disputes between and among
local government units shall, as much as possible, be settled amicably. This means that the
parties concerned shall refer the issue for settlement in the Sanggunians concerned and shall be
jointly referred for settlement to the respective Sanggunians of the local government units
involved.

Section 118 of the LGC applies to a situation in which a component city or a municipality seeks
to settle a boundary dispute with a highly urbanized city, not with an independent component
city. While Kananga is a municipality, Ormoc is an independent component city. Clearly then,
the procedure referred to in Section 118 does not apply to them.

The general rules governing jurisdiction, which is vested by law and cannot be conferred or
waived by the parties, as provided for by BP Blg. 129 or the Judiciary Reorganization Act of
1980 will be applied. Sec. 19 of BP Blg 129 states that RTC shall exercise exclusive original
jurisdiction in all cases not within the exclusive jurisdiction of any court, tribunal, person or
body exercising judicial or quasi-judicial functions.

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Since there is no law providing for the exclusive jurisdiction of any court or agency over the
settlement of boundary disputes between a municipality and an independent component city of
the same province, RTC committed no grave abuse of discretion in denying the municipality’s
Motion to Dismiss.

Regional Trial court have general jurisdiction to adjudicate all controversies except those
expressly withheld from their plenary powers. They have the power not only to take judicial
cognizance of a case instituted for judicial action for the first time, but also to do so to the
exclusion of all other courts at that stage.

Kananga is a municipality constituted under Republic Act No. 542. Further, Ormoc is an
independent component, city created under Republic Act No. 179

WHEREFORE, the Petition is DENIED and the challenged Order AFFIRMED.

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Amante Siapno, Cristina Lopez and Minda Gapuz, vs Manuel Manalo

G.R. No. 132260 | August 30, 2005 |

DOCTRINE OF THE CASE:

The amount of damages claimed must be alleged not only in the body of the complaint, petition
or answer but also in the prayer portion thereof. Any pleading that fails to comply with this
requirement shall not be accepted nor admitted, or shall otherwise be expunged from the record.

FACTS:

Amando Siapno, as then Administrator of the National Tobacco Administration (NTA), created a
negotiating panel with the responsibility of undertaking the disposal of NTAs real property at
Las Pias City, and accepting offers relative to the purchase thereof by interested party/parties. As
constituted, the panel was composed of Ricardo Briones, as chairman, and petitioners Cristina
Lopez and Minda Gapuz, as members.

Manuel Manalo offered to buy the real property in question, which offer was accepted and
approved by the NTA Board of Directors, of which respondent Manalo was duly informed by the
NTA Corporate Secretary.

Manalo signed the prepared Deed of Sale, with one NTA Board member acting as a witness.
However, the chairman of the negotiating deferred affixing his signature thereon unless and until
Manalo shall have paid twenty percent (20%) of the agreed purchase price, as down payment.

Manalo paid NTA the sum of P4,424,598.00 by way of down payment, and he sent a letter to
NTA attaching thereto the original of the domestic letter of credit he established in NTAs favor
for the balance. However, despite the above, petitioners refused to implement NTA Board
Resolutions, hence the sale to Manalo of the subject real property was never consummated.

Manalo filed against petitioners a petition for Mandamus with Damages in the Regional Trial
Court at Quezon City. Before the petitioners could have submitted their responsive pleading,
Manalo filed directly with the Branch Clerk an Amended Petition for Mandamus with
Revocation of Title and Damages, thereunder impleading Stanford East Realty Corporation
(Stanford), as additional respondent

Petitioners filed their Answer With Counter-claim and Crossclaim, thereunder raising the
defense, inter alia, that the suit filed by Manalo involves a conveyance of real property, hence the
docket fee therefor should be based on the value of the real asset involved in the suit but which is
not stated in Manalo’s amended petition. And since Manalo has not paid the proper amount of
docket fee for his amended petition, the trial court never acquired jurisdiction over the case.

The trial court deemed the question of inadequate filing fee as having become moot and
academic by reason of Manalos subsequent payment of the additional filing fee. The trial court
denied petitioners prayer for a preliminary hearing on their affirmative defense of lack of
jurisdiction, explaining that Manalo has already paid the additional docketing fee. In the same
order, the trial court set the case for pre-trial.

Therefrom, petitioners went to the Court of Appeals on a petition for certiorari and prohibition.
The appellate court denied petitioners recourse for lack of merit. Hence, petitioners present
petition for review on certiorari

ISSUE:

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WON respondents petition in the court of origin is a personal action, not a real action, thereby
sanctioning the cognizance by the court a quo of what is in essence a real action without the
payment of the prescribed and correct docket fees therefor, which is a condition sine qua non to
the courts acquisition and exercise of jurisdiction.

RULING:

The supreme court ruled in favor of the petitioners

Consistent with the ruling in Manchester, supra, that the amount of damages claimed must be
alleged not only in the body of the complaint, petition or answer but also in the prayer portion
thereof, the lower court should have outrightly dismissed respondents original petition for
mandamus with revocation of title and damages in its Civil Case No. Q-95-24791, or, if already
admitted, should have expunged the same from the records.

The irrelevant circumstance that respondent Manalo subsequently paid additional filing fees in
connection with his amended petition is of no moment. For, with the reality that his original
petition suffered from the defect in its prayer vis a vis the amount of damages claimed, and,
therefore, should not have been admitted, or, if already accepted, should have been ordered
expunged from the records, the amended petition could have served no valid purpose because in
law, there is, in the first place, no existing petition to be amended.

In his amended petition, respondent Manalo prayed that NTAs sale of the property in dispute to
Standford East Realty Corporation and the title issued to the latter on the basis thereof, be
declared null and void. In a very real sense, albeit the amended petition is styled as one for
Mandamus with Revocation of Title and Damages, it is, at bottom, a suit to recover from
Standford the realty in question and to vest in respondent the ownership and possession thereof.
In short, the amended petition is in reality an action in res or a real action.

WHEREFORE, the instant petition is GRANTED and the assailed decision of the Court of
Appeals REVERSED and SET ASIDE. Civil Case No. Q-95-24791 of the trial court is
accordingly DISMISSED.

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Gloria Santos Duñeas vs. Santos Subdivision Homeowners Association

|G.R. No. 149417 | June 4, 2004|

DOCTRINE OF THE CASE:

Under Section 1, Rule 3 of the Revised Rules of Court, only natural or juridical persons, or
entities authorized by law may be parties in a civil action.

FACTS:

Petitioner Dueñas is the daughter of the late Cecilio Santos who, during his lifetime, owned a
parcel of land with a total area of 2.2 hectares located at General T. De Leon, Valenzuela City ,
Metro Manila.

In 1966, Cecilio had the realty subdivided into smaller lots, the whole forming the Cecilio J.
Santos Subdivision. The Land Registration Commission approved the project and the National
Housing Authority issued the required Certificate of Registration and License to Sell.

At the time of Cecilio’s death in 1988, there were already several residents and homeowners in
Santos Subdivision. Sometime in 1997, the members of the SSHA submitted to the petitioner a
resolution asking her to provide within the subdivision an open space for recreational and other
community activities, in accordance with the provisions of P.D. No. 957, as amended by P.D.
No. 1216.

Petitioner, however, rejected the request, thus, prompting the members of SSHA to seek redress
from the NHA. The Regional Director HLURB opined that the open space requirement of P.D.
No. 957 was not applicable to Santos Subdivision.

SSHA filed a motion for reconsideration, which averred among others that: P.D. No. 957 should
apply retroactively to Santos Subdivision. HLURB-NCR dismissed the complaint.

It ruled that while SSHA failed to present evidence showing that it is an association duly
organized under Philippine law with capacity to sue. SSHA then appealed to the HLURB Board
of Commissioners. The latter body, however, affirmed the action taken by the HLURB-NCR
office.

Respondent sought relief from the Court of Appeals which granted the petition and accordingly
ordered the case to be remanded to the HLURB. Petitioner moved for reconsideration which the
Court of Appeals denied.

ISSUE:

WON respondent Santos Subdivision Homeowners Association (SSHA), a non-registered

organization, lacked the legal personality to sue.

RULING: YES

Under Section 1, Rule 3 of the Revised Rules of Court, only natural or juridical persons, or
entities authorized by law may be parties in a civil action. Article 44 of the Civil Code
enumerates the various classes of juridical persons. Under said Article, an association is
considered a juridical person if the law grants it a personality separate and distinct from that of
its members.

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The records of the present case are bare of any showing by SSHA that it is an association duly
organized under Philippine law. It was thus an error for the HLURB-NCR Office to give due
course to the complaint in HLURB Case No. REM-070297-9821, given the SSHA’s lack of
capacity to sue in its own name. Nor was it proper for said agency to treat the complaint as a suit
by all the parties who signed and verified the complaint.

The members cannot represent their association in any suit without valid and legal authority.
Neither can their signatures confer on the association any legal capacity to sue. Nor will the fact
that SSHA belongs to the Federation of Valenzuela Homeowners Association, Inc., suffice to
endow SSHA with the personality and capacity to sue. Mere allegations of membership in a
federation are insufficient and inconsequential. The federation itself has a separate juridical
personality and was not impleaded as a party in HLURB Case No. REM-070297-9821 nor in this
case.

Neither was it shown that the federation was authorized to represent SSHA. Facts showing the
capacity of a party to sue or be sued or the authority of a party to sue or be sued in a
representative capacity or the legal existence of an organized association of persons that is made
a party, must be averred.[27] Hence, for failing to show that it is a juridical entity, endowed by
law with capacity to bring suits in its own name, SSHA is devoid of any legal capacity,
whatsoever, to institute any action.

WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the Court of
Appeals in CA-G.R. SP No. 51601 are REVERSED and SET ASIDE. The Decision of the
HLURB dated January 20, 1999 sustaining that of its Regional Office is AFFIRMED and
REINSTATED. No pronouncement as to costs.

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Antonio Chua vs. Total Office Products & Services (Topros) Inc

| G.R. No. 152808 | September 30, 2005 |

DOCTRINE OF THE CASE:

(Rules of Court) Rule 4. 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 non-resident defendant
where he may be found, at the election of the plaintiff.

FACTS:

Respondent Total Office Products and Services, Inc., (TOPROS) lodged a complaint for
annulment of contracts of loan and real estate mortgage against herein petitioner Antonio T.
Chua before the Regional Trial Court of Pasig City.

The said suit sought to annul a loan contract allegedly extended by petitioner to respondent
TOPROS in the amount of ten million four hundred thousand pesos (P10,400,000) and the
accessory real estate mortgage contract covering two parcels of land situated in Quezon City as
collateral, alleging that there was no authority granted to Chua (its president) by the corporation
to enter into a contract of loan. It was alleged that the contracts were fictitious.

Petitioner Chua filed a motion to dismiss on the ground of improper venue. He contended that
the action filed by TOPROS affects title to or possession of the parcels of land subject of the real
estate mortgage. Thus should have been filed in the Regional Trial Court of Quezon City where
the encumbered real properties are located, instead of Pasig City where the parties reside.

RTC Judge denied the motion to dismiss. She reasoned that the action to annul the loan and
mortgage contracts is a personal action and thus, the venue was properly laid in the RTC of Pasig
City where the parties reside.

Petitioner moved for a reconsideration of the said order, which Judge denied. Hence, petitioner
filed with the CA however CA dismissed said petition.

CA applied Hernandez v. Rural Bank of Lucena, Inc. and ruled that an action for the cancellation
of a real estate mortgage is a personal action if the mortgagee has not foreclosed the mortgage
and the mortgagor is in possession of the premises, as neither the mortgagor’s title to nor
possession of the property is disputed.

Undeterred, petitioner elevated before SC a petition for review raising the following issue:

ISSUE:

WON an action to annul a loan and mortgage contract duly alleged as fictitious with absolutely
no consideration is a personal action or real action.

RULING: PERSONAL ACTION

In affirming the CA, the SC ruled that it is a personal Action.

Well settled is the rule that an action to annul a contract of loan and its accessory real estate
mortgage is a personal action. In personal action the plaintiff seeks the recovery of personal
property, the enforcement of a contract or the recovery of damages. In contrast, in a real action,
the plaintiff seeks the recovery of real property, or, as indicated in Section 2(a), Rule 4 of the

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then Rules of Court, a real action is an action affecting title to real property or for the recovery of
possession, or for partition or condemnation of, or foreclosure of mortgage on real property.

In this case, ownership of the parcels of land subject of the questioned real estate mortgage was
never transferred to petitioner, but remained with TOPROS. Thus, no real action for the recovery
of real property is involved. This being the case, TOPROS’ action for annulment of the contracts
of loan and real estate mortgage remains a personal action.

Thus it falls under the catch-all provision on personal actions under paragraph (b) of the above-
cited section, to wit:

SEC. 2 (b) Personal actions. – All other 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.

In the same vein, the action for annulment of a real estate mortgage in the present case must fall
under Section 2 of Rule 4, to wit:

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 non-resident defendant where he may be found, at the
election of the plaintiff.

Thus, Pasig City, where the parties reside, is the proper venue of the action to nullify the
subject loan and real estate mortgage contracts. The Court of Appeals committed no reversible
error in upholding the orders of the Regional Trial Court denying petitioner’s motion to dismiss
the case on the ground of improper venue.

WHEREFORE, the petition is DENIED. The assailed decision dated November 28, 2001 and
resolution dated April 1, 2002 of the Court of Appeals upholding the Orders of Judge Lorifel
Lacap Pahimna are AFFIRMED.

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Philtranco Service Enterprises, Inc. vs Felix Paras and Inland Trailways, Inc., and Hon.
Court of Appeals

| G.R. No. 161909 | April 25, 2012 |

DOCTRINE OF THE CASE:

The impleader of new parties under Rule 6, Section 12 of the Rules of Court, is proper only when
a right to relief exists under the applicable substantive law. This rule is merely a procedural
mechanism, and cannot be utilized unless there is some substantive basis under applicable law.

FACTS:

Felix Paras is engaged in the buy and sell of fish products. Sometime on his way home to Manila
from Bicol Region, he boarded a bus owned and operated by Inland Trailways, Inc. and driven
by its driver Calvin Coner

While the said bus was travelling, it was bumped at the rear by another bus owned and operated
by Philtranco Service Enterprises, Inc. As a result of the strong and violent impact, the Inland
bus was pushed forward and smashed into a cargo truck parked along the outer right portion of
the highway and the shoulder. Consequently, the said accident bought considerable damage to
the vehicles involved and caused physical injuries to the passengers and crew of the two buses,
including the death of Coner. Paras were not spared from the effects of the accident. He was
taken for an emergency treatment in the nearby hospital and thereafter taken to the National
Orthopedic Hospital in which underwent several operations.

In view of financial constraints, Paras filed a complaint for damages based on breach of contract
of carriage against Inland to which it denied responsibility, by alleging, among others, that its
driver Coner had observed an utmost and extraordinary care and diligence to ensure the safety of
its passengers. In support of it, Inland invoked the Police Investigation Report which established
the fact that the Philtranco bus driver, Apolinar Miralles was the one which violently bumped the
rear portion of the Inland bus, and therefore, the direct and proximate cause of Paras’ injuries.

Upon leave of court, Inland filed a third-party complaint against Philtranco and Apolinar
Miralles (Third Party defendants). In this third-party complaint, Inland, sought for exoneration of
its liabilities to Paras, asserting that the latters cause of action should be directed against
Philtranco considering that the accident was caused by Miralles lack of care, negligence and
reckless imprudence.

The RTC ruled in favor of Paras and held that Philtranco and Apolinar Miralles jointly and
severally liable for actual and moral damages including attorney’s fees.

On appeal to the CA, it affirmed the RTC’s ruling that no trace of negligence at the time of the
accident was attributable to Inland’s driver, rendering Inland not guilty of breach of contract of
carriage.

ISSUE:

WON Impleading Philtranco and its driver is properly instituted by Inland

RULING: YES

The apparent objective of Inland was not to merely subrogate the third-party defendants for
itself, as Philtranco appears to suggest,but, rather, to obtain a different relief whereby the third-
party defendants would be held directly, fully and solely liable to Paras and Inland for whatever

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damages each had suffered from the negligence committed by Philtranco and its driver. In other
words, Philtranco and its driver were charged here as joint tortfeasors who would be jointly and
severally be liable to Paras and Inland.

Impleading Philtranco and its driver through the third-party complaint was correct. The device of
the third-party action, also known as impleader, was in accord with Section 12, Rule 6 of
the Revised Rules of Court, the rule then applicable, viz:

Section 12. Third-party complaint. 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.

Accordingly, the requisites for a third-party action are, firstly, that the party to be impleaded
must not yet be a party to the action; secondly, that the claim against the third-party defendant
must belong to the original defendant; thirdly, the claim of the original defendant against the
third-party defendant must be based upon the plaintiffs claim against the original defendant; and,
fourthly, the defendant is attempting to transfer to the third-party defendant the liability asserted
against him by the original plaintiff.

As the foregoing indicates, the claim that the third-party complaint asserts against the third-party
defendant must be predicated on substantive law. Here, the substantive law on which the right of
Inland to seek such other relief through its third-party complaint rested were Article 2176 and
Article 2180 of the Civil Code.

Paras cause of action against Inland (breach of contract of carriage) did not need to be the same
as the cause of action of Inland against Philtranco and its driver (tort or quasi-delict) in the
impleader. It is settled that a defendant in a contract action may join as third-party defendants
those who may be liable to him in tort for the plaintiffs claim against him, or even directly to the
plaintiff.

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Huerta Alba Resort, Inc. vs. Court of Appeals and Syndicated Management Group, Inc.

|G.R. No. 128567 | September 1, 2000 |

DOCTRINE OF THE CASE:

Counterclaim is an offensive as well as a defensive plea and is not necessarily confined to the
justice of the plaintiffs claim. It represents the right of the defendant to have the claims of the
parties counterbalanced in whole or in part, and judgment to be entered in excess, if any. A
counterclaim stands on the same footing, and is to be tested by the same rules, as if it were an
independent action

FACTS:

SMGI (“Respondents”) filed a complaint for judicial foreclosure of mortgage on Oct 19, 1989.
They sought to foreclose 4 parcels of land mortgaged by Huerta (“petitioner”) to Intercon Fund
Resource Inc (Intercon)

Respondent instituted this as mortgagee-assignee (Intercon assigned their rights at some point.).
The loan was P8.5M, secured by the subject parcels of land. In its answer, petitioner questioned:
Assignment of Intercon of the mortgage right (they said it was ultra vires) and the correctness of
charges.

Petitioner lost and was ordered to pay the loan, plus interest and charges, within 150 days from
receipt of the order, else the properties would be sold to satisfy the debt. Petitioner appealed to
the CA, which dismissed the case for late payment of docket fees.

Petitioner then went to the SC, which also dismissed their complaint. After these rulings,
respondent filed with the original RTC a motion of execution, which was granted. Thus, a notice
of levy and execution was issued by the Sheriff. He issued a notice of Sheriff’s sale for the
auction of subject properties.

Petitioner then filed a motion to quash and set aside the writ of execution, saying that the trial
court acted with GAD. It argued that the record of the case was still with the CA, and thus the
writ was premature and that the 150 days period had not yet lapsed and there was no default
because respondent had not yet demanded for payment.

RTC denied this, saying that the judgment had become final and executory then the petitioner
appealed to the CA. While the appeal was pending, the auction sale proceeded and Respondent
won the bidding and the certificate of sale was issued to it, and registered with the RoD. After
this, petitioner presented a “motion for clarification,” asking the trial court if the 12 month period
for redemption would apply.

RTC ruled that the period of redemption would have to follow the rule on judicially foreclosed
property under Rule 68 of the rules of court. The sale shall operate to divest the rights in the
property of all the parties to the action and to vest their rights in the purchaser, subject to such
rights of redemption as may be allowed by law. Thus, petitioner filed a motion to set aside this
order, saying that it altered the earlier decision; First decision declared that satisfaction of
judgment would be governed by the sale of real estate under execution (not Rule 68).

SMGI then filed a petition for writ of possession and it was here that Huerta first claimed the
right to redeem under the General Banking Act. RTC denied the petition for writ of possession –
they agreed (for the first time EVER) with Huerta, saying that they had until Oct 21, 1995 to

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redeem said parcels of land. SMGI challenged the order, and the CA overturned it. Hence, this
petition.

ISSUE:

Whether or not Huerta Alba has the one year right of redemption of subject properties under
Section 78 of RA 337

RULING: YES, however, this was not seasonably filed.

The claim that petitioner is entitled to the beneficial provisions of Section 78 of R.A. No. 337,
since private respondents predecessor-in-interest is a credit institution, is in the nature of a
compulsory counterclaim which should have been averred in petitioners answer to the compliant
for judicial foreclosure.

The very purpose of a counterclaim would have been served had petitioner alleged in its answer
its purported right under Section 78 of R.A. No. 337:

The rules of counterclaim are designed to enable the disposition of a whole controversy of
interested parties conflicting claims, at one time and in one action, provided all parties be
brought before the court and the matter decided without prejudicing the rights of any party.

The failure of petitioner to seasonably assert its alleged right under Section 78 of R.A. No. 337
precludes it from so doing at this late stage of the case. Estoppel may be successfully invoked if
the party fails to raise the question in the early stages of the proceedings. Thus, a party to a case
who failed to invoked his claim in the main case, while having the opportunity to do so, will be
precluded, subsequently, from invoking his claim, even if it were true, after the decision has
become final, otherwise the judgment may be reduced to a mockery and the administration of
justice may be placed in disrepute.

Verily, the petitioner has only itself to blame for not alleging at the outset that the predecessor-
in-interest of the private respondent is a credit institution. Thus, when the trial court, and the
Court of Appeals repeatedly passed upon the issue of whether or not petitioner had the right of
redemption or equity of redemption over subject properties in the decisions, resolutions and
orders. It was unmistakable that the petitioner was adjudged to just have the equity of redemption
without any qualification whatsoever, that is, without any right of redemption allowed by law.

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Bank of the Philippine Islands vs. Sps. Ireneo M. Santiago and Liwanag P. Santiago,
Centrogen, Inc., reprsented by Edwin Santiago,

| G.R. No. 169116 | March 26, 2007 |

DOCTRINE OF THE CASE:

It is not pertinent whether the summons is designated as an original or an alias summons as long
as it has adequately served its purpose. What is essential is that the summons complies with the
requirements under the Rules of Court and it has been duly served on the defendant together
with the prevailing complaint.

FACTS:

Centrogen, a domestic corporation engaged in pharmaceutical business obtained several loans

from Far East Bank and Trust Company (FEBTC), which was secured by a real estate mortgage
over a parcel of land by Irene Santiago. Subsequently, FEBTC merged with BPI. Due to failure
of Centrogen to pay its loans,

BPI filed a case for Extra-Judicial Foreclosure of Real Estate Mortgage over the subject property
before the RTC of Sta. Cruz, Laguna. Thereafter, a Notice of Sale was issued by the Provincial
Sheriff on 21 January 2003. On the same day, the Spouses Santiago were served with the copy of
the Notice of Sale. Upon receipt the spouses and Centrogen filed a Complaint seeking the
issuance of a TRO and Preliminary and Final Injunction and in the alternative, for the annulment
of the Real Estate Mortgage with BPI.

The complaint alleged that the initial loan obligation in the amount of P490,000.00, including
interest thereon has been fully paid. Such payment notwithstanding, the amount was still
included in the amount of computation of the arrears as shown by the document of Extra-Judicial
Foreclosure of Real Estate Mortgage filed by the latter. Moreover, the Spouses Santiago and
Centrogen contended that the original loan agreement was for the amount of 5 Million but only 2
Million was released by petitioner and as a result, the squalene project failed and the company
groped for funds to pay its loan obligations.

On 27 February 2003, BPI was summoned to file and serve its Answer and on the same day,
summons was served on the Branch Manager of BPI . Instead of filing an Answer, BPI filed a
Motion to Dismiss on the ground of lack of jurisdiction over the person of the defendant and
other procedural infirmities attendant to the filing of the complaint. BPI claimed that the Branch
Manager of its Sta. Cruz, Laguna Branch, was not one of those authorized by Section 11, Rule
14 of the Revised Rules of Court to receive summons on behalf of the corporation. The summons
served upon its Branch Manager, therefore, did not bind the corporation. Also alleged lack of
authority of the person who signed. RTC denied the MD and issued new summons.

The RTC granted the TRO to prevent foreclosure sale. BPI file MR but was denied hence this
petition with BPI alleging that the court a quo did not acquire jurisdiction over its person and
consequently, the Order issued by the RTC, permanently enjoining the foreclosure sale, was
therefore void and does not bind BPI.

ISSUE:

Whether or not the court acquired jurisdiction over BPI

RULING: YES

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The Court acquired jurisdiction over BPI. The defect of the service of the original summons was
cured by the issuance of the new summons which was not questioned by BPI.

There was substantial compliance. Although it may be true that the service of summons was
made on a person not authorized to receive the same in behalf of the petitioner. Since it appears
that the summons and complaint were in fact received by the corporation through its said clerk,
the Court finds that there was substantial compliance with the rule on service of summons.

The ultimate test on the validity and sufficiency on service of summons is whether the same and
the attachments thereto where ultimately received by the corporation under such circumstances
that no undue prejudice is sustained by it from the procedural lapse and it was afforded full
opportunity to present its responsive pleadings. This is but in accord with the entrenched rule that
the ends of substantial justice should not be subordinated to technicalities and, for which
purpose, each case should be examined within the factual milieu peculiar to it.

The Court also emphasized that there is no hard and fast rule pertaining to the manner of service
of summons. Rather, substantial justice demands that every case should be viewed in light of the
peculiar circumstances attendant to each.

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2010019670 2AA

Philippine National Bank vs The Sps. Angelito Perez and Jocelyn Perez

|G.R. No. 187640 | June 15, 2011 |

DOCTRINE OF THE CASE:

Section 3, Rule 18 of the 1997 Rules on Civil Procedure unequivocally requires that the notice of pre-trial
shall be served on counsel, or on the party who has no counsel. It is elementary in statutory construction
that the word shall denote the mandatory character of the rule. Thus, it is without question that the
language of the rule undoubtedly requires the trial court to send a notice of pre-trial to the parties.

FACTS:

Spouses Perez obtained a revolving credit line from Philippine National Banks (PNBs). The
credit line was secured by several chattel mortgages over palay stocks inventory and real estate
mortgages over real properties. Spouses Perez defaulted on their financial obligations, prompting
PNB to institute extra-judicial foreclosure proceedings over the aforementioned securities. The
sheriff instituted a Notice of Extra-Judicial Sale for the mortgaged properties by public auction.

Spouses Perez filed an Amended Complaint for Release or Discharge of Mortgaged Properties,
with a Prayer for the Issuance of a Preliminary Mandatory Injunctive Writ and a Temporary
Restraining Order. At the hearing of the application for the issuance of a writ of preliminary
mandatory injunction, Spouses Perez and their counsel failed to appear. As a result, the prayer
for injunctive relief was denied.

Similarly, at the pre-trial conference, Spouses Perez and their counsel again failed to appear.
Spouses Perez alleged that they previously filed a Motion for Postponement. The trial court
issued an Order denying the Motion for Postponement and, dismissed the case Spouses Perez
then filed a Motion for Reconsideration which was subsequently denied.

Spouses Perez filed a Notice of Appeal which was also denied by the trial court for being filed
out of time. Spouses Perez then filed a Motion for Reconsideration seeking the reconsideration
of the Order dismissing the appeal.

The Motion for Reconsideration was o set for hearing however, Spouses Perez filed five (5)
motions to postpone the hearing. The trial court granted the first four (4) motions but denied the
fifth one.

Consequently, Spouses Perez appealed the denial of their Motion for Reconsideration to the CA
by which the CA denied.. Spouses Perez filed a Motion for Reconsideration. Surprisingly, the
CA issued an Amended Decision grants the Motion for Reconsideration citing that the higher
interest of substantial justice should prevail and not mere technicality. Accordingly, the case was
remanded to the trial court. The trial court issued an Order setting the case for hearing on March
8, 2006.

PNB, however, failed to receive a copy of the aforementioned order and was, thus, unable to
attend the hearing on March 8, 2006. Questionably, on said date, the trial court issued an Order
allowing Spouses Perez to adduce evidence and considered the hearing as a pre-trial conference.

PNB filed a Motion for Reconsideration of the said Order but denied PNBs Motion for
Reconsideration. PNB again filed a Motion for Reconsideration but due to certain reasons, the
counsel for PNB failed to send a copy of the said motion to the trial court and as result, the trial
court denied the Motion for Reconsideration for having been filed outside the reglementary

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Baltazar, Gerard D. Civil Procedure – Judge Moreno
2010019670 2AA

period and concluded that the Decision already became final and executory by operation of law.
Accordingly, the trial court issued an Order of Execution.

PNB filed a Petition for Relief from Judgment/Order of Execution with a prayer for the issuance
of a writ of preliminary injunction, alleging that the failure to file the Motion for Reconsideration
was due to mistake and/or excusable negligence. The trial court denied the prayer for preliminary
injunction.

Also, the trial court issued an Order annulling the certificates of title issued to PNB covering the
properties subject of the case and directed the Register of Deeds of Isabela to issue new
certificates of title in the names of Spouses Perez.

PNB filed a Petition for Certiorari. Similarly, PNB filed a Supplement to the Petition for
Certiorari with Urgent Prayer for the Issuance of an Ex-Parte Temporary Restraining Order/Writ
of Preliminary Injunction. The CA issued a Resolution, which was received by PNB granting the
prayer for a temporary restraining order (TRO) and, likewise, issued a Temporary Restraining
Order.

Despite the issuance of the TRO, Spouses Perez were able to garnish Php 2,676,140.70 from
PNBs account with Equitable PCI Bank (EPCIB) on the same date the TRO was issued,

In view of this development, PNB filed a Supplemental Petition for Certiorari seeking additional
reliefs for the return or reinstatement of the garnished amount and/or the appointment of a
receiver over the said funds to administer and preserve the same pending the final disposition of
the case.

The CA issued the assailed granting the petition of PNB. It ruled that the sending of a notice of
pre-trial is mandatory and that the Order dated March 8, 2006 issued by the trial court cannot be
considered as such. Therefore, the CA held that all orders issued subsequent to the said order are,
likewise, null and void.

ISSUE:

WON a pre-trial notice is mandatory and, as a consequence, whether the lack of notice of pre-trial voids
a subsequently issued decision.

RULING:

Pre-trial Notice is Mandatory

Section 3, Rule 18 of the 1997 Rules on Civil Procedure unequivocally requires that the notice of
pre-trial shall be served on counsel, or on the party who has no counsel. It is elementary in
statutory construction that the word shall denotes the mandatory character of the rule. Thus, it is
without question that the language of the rule undoubtedly requires the trial court to send a notice
of pre-trial to the parties.

More importantly, the notice of pre-trial seeks to notify the parties of the date, time and place of
the pre-trial and to require them to file their respective pre-trial briefs within the time prescribed
by the rules. Its absence, therefore, renders the pre-trial and all subsequent proceedings null and
void. n the case at bar, the order issued by the trial court merely spoke of a hearing on March 8,
2006 and required PNB to prepare and complete, a statement of account. The said order does not
mention anything about a pre-trial to be conducted by the trial court.

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Baltazar, Gerard D. Civil Procedure – Judge Moreno
2010019670 2AA

As such, the CA aptly held that the Order dated March 8, 2006, which declared the hearing to be
a pre-trial and allowed Spouses Perez to adduce evidence ex parte, is void. Similarly, its ruling
that the Decision and all subsequent orders issued pursuant to the said judgment are also null and
void is proper.

In Padre v. Badillo, it was held that a void judgment is no judgment at all. It cannot be the source
of any right nor the creator of any obligation. All acts performed pursuant to it and all claims
emanating from it have no legal effect. Necessarily, it follows that the nullity of the Writ of
Execution carries with it the nullity of all acts done which implemented the writ. This includes
the garnishment of Php 2,676,140.70 from PNBs account. Its return to PNBs account is but a
necessary consequence of the void writ.

The argument that the subject properties were sold to certain innocent purchasers for value
cannot stand. First of all, such allegation is a question of fact, not a question of law. Time and
again, this Court has pronounced that the issues that can be raised in a petition for review on
certiorari under Rule 45 are limited only to questions of law. The test of whether the question is
one of law or of fact is whether the appellate court can determine the issue raised without
reviewing or evaluating the evidence, in which case, it is a question of law; otherwise, it is a
question of fact.

Furthermore, it is settled that matters not raised in the trial court or lower courts cannot be raised
for the first time on appeal. They must be raised seasonably in the proceedings before the lower
courts. Questions raised on appeal must be within the issues framed by the parties; consequently,
issues not raised before the trial court cannot be raised for the first time on appeal. Spouses Perez
never raised this issue before the CA. Hence, they cannot raise it before this Court now.

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