1 - JUANA COMPLEX et al v.
FIL-ESTATE LAND INC On March 3, 1999, the RTC issued an Order [10] granting the WPI and required JCHA, et
GR No. 152272 March 5, 2012
Before the Court are two (2) consolidated petitions assailing the July 31, 2001
Decision[1] and February 21, 2002 Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No.
60543, which annulled and set aside the March 3, 1999 Order[3] of the Regional Trial Court,
Branch 25, Bian, Laguna (RTC), granting the application for the issuance of a writ of preliminary
injunction, and upheld the June 16, 2000 Omnibus Order[4] denying the motion to dismiss.
The Facts:
On January 20, 1999, Juana Complex I Homeowners Association, Inc. (JCHA), together
with individual residents of Juana Complex I and other neighboring subdivisions (collectively
referred as JCHA, et. al.), instituted a complaint[5] for damages, in its own behalf and as a class
suit representing the regular commuters and motorists of Juana Complex I and neighboring
subdivisions who were deprived of the use of La Paz Road, against Fil-Estate Land, Inc. (Fil-
Estate), Fil-estate Ecocentrum Corporation (FEEC), La Paz Housing & Development
Corporation (La Paz), and Warbird Security Agency and their respective officers (collectively
referred as Fil-Estate, et al.).
The complaint alleged that JCHA, et al. were regular commuters and motorists who
constantly travelled towards the direction of Manila and Calamba; that they used the entry and
exit toll gates of South Luzon Expressway (SLEX) by passing through right-of-way public road
known as La Paz Road; that they had been using La Paz Road for more than ten (10) years; that
in August 1998, Fil-estate excavated, broke and deliberately ruined La Paz Road that led to SLEX
so JCHA, et al. would not be able to pass through the said road; that La Paz Road was restored
by the residents to make it passable but Fil-estate excavated the road again; that JCHA reported
the matter to the Municipal Government and the Office of the Municipal Engineer but the latter
failed to repair the road to make it passable and safe to motorists and pedestrians; that the act
of Fil-estate in excavating La Paz Road caused damage, prejudice, inconvenience, annoyance,
and loss of precious hours to them, to the commuters and motorists because traffic was re-routed
to narrow streets that caused terrible traffic congestion and hazard; and that its permanent
closure would not only prejudice their right to free and unhampered use of the property but would
also cause great damage and irreparable injury.
Accordingly, JCHA, et al. also prayed for the immediate issuance of a Temporary
Restraining Order (TRO) or a writ of preliminary injunction (WPI) to enjoin Fil-Estate, et al. from
stopping and intimidating them in their use of La Paz Road.
On February 10, 1999, a TRO was issued ordering Fil-Estate, et al, for a period of twenty
(20) days, to stop preventing, coercing, intimidating or harassing the commuters and motorists
from using the La Paz Road. [6]
Subsequently, the RTC conducted several hearings to determine the propriety of the
issuance of a WPI.
On February 26, 1999, Fil-Estate, et al. filed a motion to dismiss[7] arguing that the
complaint failed to state a cause of action and that it was improperly filed as a class suit. On March
5, 1999, JCHA, et al. filed their comment[8] on the motion to dismiss to which respondents filed a
reply.[9]
al. to post a bond.
On March 19, 1999, Fil-Estate, et al. filed a motion for reconsideration[11] arguing, among
others, that JCHA, et al. failed to satisfy the requirements for the issuance of a WPI. On March
23, 1999, JCHA, et al. filed their opposition to the motion.[12]
The RTC then issued its June 16, 2000 Omnibus Order, denying both the motion to
dismiss and the motion for reconsideration filed by Fil-Estate, et al.
Not satisfied, Fil-Estate, et al. filed a petition for certiorari and prohibition before the CA
to annul (1) the Order dated March 3, 1999 and (2) the Omnibus Order dated June 16, 2000.
They contended that the complaint failed to state a cause of action and that it was improperly
filed as a class suit. With regard to the issuance of the WPI, the defendants averred that JCHA,
et al. failed to show that they had a clear and unmistakable right to the use of La Paz Road; and
further claimed that La Paz Road was a torrens registered private road and there was neither a
voluntary nor legal easement constituted over it.[13]
On July 31, 2001, the CA rendered the decision partially granting the petition, the
dispositive portion of which reads:
WHEREFORE, the petition is hereby partially GRANTED. The Order
dated March 3, 1999 granting the writ of preliminary injunction is hereby
ANNULLED and SET ASIDE but the portion of the Omnibus Order dated June 16,
2000 denying the motion to dismiss is upheld.
SO ORDERED.[14]
The CA ruled that the complaint sufficiently stated a cause of action when JCHA, et al.
alleged in their complaint that they had been using La Paz Road for more than ten (10) years and
that their right was violated when Fil-Estate closed and excavated the road. It sustained the RTC
ruling that the complaint was properly filed as a class suit as it was shown that the case was of
common interest and that the individuals sought to be represented were so numerous that it was
impractical to include all of them as parties. The CA, however, annulled the WPI for failure of
JCHA, et al. to prove their clear and present right over La Paz Road. The CA ordered the remand
of the case to the RTC for a full-blown trial on the merits.
Hence, these petitions for review.
In G.R. No. 152272, JCHA, et al. come to this Court, raising the following issues:
(A)
THE HONORABLE COURT OF APPEALS, IN HOLDING THAT A
FULL-BLOWN TRIAL ON THE MERITS IS REQUIRED TO DETERMINE THE
NATURE OF THE LA PAZ ROAD, HAD DEPARTED FROM THE ACCEPTED
AND USUAL COURSE OF JUDICIAL PROCEEDINGS AS TO CALL FOR AN
EXERCISE OF THE POWER OF SUPERVISION.
(B)
THE HONORABLE COURT OF APPEALS, IN HOLDING THAT THE
PETITIONERS FAILED TO SATISFY THE REQUIREMENTS FOR THE
ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION, HAD DECIDED
NOT IN ACCORD WITH LAW AND WITH THE APPLICABLE DECISIONS OF
THE SUPREME COURT.[15]
 In G.R. No. 152397, on the other hand, Fil-Estate, et al. anchor their petition on the following
issues:
I.
The Court of Appeals declaration that respondents Complaint states a
cause of action is contrary to existing law and jurisprudence.
II.
The Court of Appeals pronouncement that respondents complaint was
properly filed as a class suit is contrary to existing law and
jurisprudence.
III.
The Court of Appeals conclusion that full blown trial on the merits is
required to determine the nature of the La Paz Road is contrary to
existing laws and jurisprudence.[16]
JCHA, et al. concur with the CA that the complaint sufficiently stated a cause of action.
They, however, disagree with the CAs pronouncement that a full-blown trial on the merits was
necessary. They claim that during the hearing on the application of the writ of injunction, they
had sufficiently proven that La Paz Road was a public road and that commuters and motorists of
their neighboring villages had used this road as their means of access to the San Agustin Church,
Colegio De San Agustin and to SLEX in going to Metro Manila and to Southern Tagalog particularly
during the rush hours when traffic at Carmona Entry/Exit and Susana Heights Entry/Exit was at
its worst.
JCHA, et al. argue that La Paz Road has attained the status and character of a public road
or burdened by an apparent easement of public right of way. They point out that La Paz Road is
the widest road in the neighborhood used by motorists in going to Halang Road and in entering
the SLEX-Halang toll gate and that there is no other road as wide as La Paz Road existing in the
vicinity. For residents of San Pedro, Laguna, the shortest, convenient and safe route towards
SLEX Halang is along Rosario Avenue joining La Paz Road.
Finally, JCHA, et al. argue that the CA erred when it voided the WPI because the public
nature of La Paz Road had been sufficiently proven and, as residents of San Pedro and Bian,
Laguna, their right to use La Paz Road is undeniable.
In their Memorandum,[17] Fil-Estate, et al. explain that La Paz Road is included in the
parcels of land covered by Transfer Certificates of Title (TCT) Nos. T-120008, T-90321 and T-
90607, all registered in the name of La Paz. The purpose of constructing La Paz Road was to
provide a passageway for La Paz to its intended projects to the south, one of which was the Juana
Complex I. When Juana Complex I was completed, La Paz donated the open spaces, drainage,
canal, and lighting facilities inside the Juana Complex I to the Municipality of Bian. The streets
within the subdivisions were then converted to public roads and were opened for use of the
general public. The La Paz Road, not being part of the Juana Complex I, was excluded from the
donation. Subsequently, La Paz became a shareholder of FEEC, a consortium formed to develop
several real properties in Bian, Laguna, known as Ecocentrum Project. In exchange for shares of
stock, La Paz contributed some of its real properties to the Municipality of Bian, including the
properties constituting La Paz Road, to form part of the Ecocentrum Project.
Fil-Estate, et al. agree with the CA that the annulment of the WPI was proper since JCHA,
et al. failed to prove that they have a clear right over La Paz Road. Fil-Estate, et al. assert that
JCHA, et al. failed to prove the existence of a right of way or a right to pass over La Paz Road and
that the closure of the said road constituted an injury to such right. According to them, La Paz
Road is a torrens registered private road and there is neither a voluntary nor legal easement
constituted over it. They claim that La Paz Road is a private property registered under the name
of La Paz and the beneficial ownership thereof was transferred to FEEC when La Paz joined the
consortium for the Ecocentrum Project.
Fil-Estate, et al., however, insist that the complaint did not sufficiently contain the
ultimate facts to show a cause of action. They aver the bare allegation that one is entitled to
something is an allegation of a conclusion which adds nothing to the pleading.
They likewise argue that the complaint was improperly filed as a class suit for it failed to
show that JCHA, et al. and the commuters and motorists they are representing have a well-defined
community of interest over La Paz Road. They claim that the excavation of La Paz Road would not
necessarily give rise to a common right or cause of action for JCHA, et al. against them since each of them
has a separate and distinct purpose and each may be affected differently than the others.
The Courts Ruling
The issues for the Courts resolution are: (1) whether or not the complaint states a cause of action;
(2) whether the complaint has been properly filed as a class suit; and (2) whether or not a WPI
is warranted.
Section 2, Rule 2 of the Rules of Court defines a cause of action as an act or omission by
which a party violates the right of another. A complaint states a cause of action when it contains
three (3) essential elements of a cause of action, namely:
(1) the legal right of the plaintiff,
(2) the correlative obligation of the defendant, and
(3) the act or omission of the defendant in violation of said legal right.[18]
The question of whether the complaint states a cause of action is determined by its
averments regarding the acts committed by the defendant.[19] Thus, it must contain a concise
statement of the ultimate or essential facts constituting the plaintiffs cause of action.[20] To be
taken into account are only the material allegations in the complaint; extraneous facts and
circumstances or other matters aliunde are not considered.[21]
The test of sufficiency of facts alleged in the complaint as constituting a cause of action
is whether or not admitting the facts alleged, the court could render a valid verdict in accordance
with the prayer of said complaint.[22] Stated differently, if the allegations in the complaint furnish
sufficient basis by which the complaint can be maintained, the same should not be dismissed
regardless of the defense that may be asserted by the defendant.[23]
In the present case, the Court finds the allegations in the complaint sufficient to establish
a cause of action. First, JCHA, et al.s averments in the complaint show a demandable right over La
Paz Road. These are: (1) their right to use the road on the basis of their allegation that they had
been using the road for more than 10 years; and (2) an easement of a right of way has been
constituted over the said roads. There is no other road as wide as La Paz Road existing in the
vicinity and it is the shortest, convenient and safe route towards SLEX Halang that the commuters
and motorists may use. Second, there is an alleged violation of such right committed by Fil-
Estate, et al. when they excavated the road and prevented the commuters and motorists from
using the same. Third, JCHA, et al. consequently suffered injury and that a valid judgment could
have been rendered in accordance with the relief sought therein.
With respect to the issue that the case was improperly instituted as a class suit, the Court
finds the opposition without merit.
 Section 12, Rule 3 of the Rules of Court defines a class suit, as follows:
Sec. 12. Class suit. When the subject matter of the controversy is one
of common or general interest to many persons so numerous that it is
impracticable to join all as parties, a number of them which the court finds to
be sufficiently numerous and representative as to fully protect the interests of
all concerned may sue or defend for the benefit of all. Any party in interest shall
have the right to intervene to protect his individual interest.
The necessary elements for the maintenance of a class suit are: 1) the subject matter of
controversy is one of common or general interest to many persons; 2) the parties affected are so
numerous that it is impracticable to bring them all to court; and 3) the parties bringing the class
suit are sufficiently numerous or representative of the class and can fully protect the interests of
all concerned.[24]
In this case, the suit is clearly one that benefits all commuters and motorists who use La
Paz Road. As succinctly stated by the CA:
The subject matter of the instant case, i.e., the closure and excavation
of the La Paz Road, is initially shown to be of common or general interest to
many persons. The records reveal that numerous individuals have filed
manifestations with the lower court, conveying their intention to join private
respondents in the suit and claiming that they are similarly situated with private
respondents for they were also prejudiced by the acts of petitioners in closing
and excavating the La Paz Road. Moreover, the individuals sought to be
represented by private respondents in the suit are so numerous that it is
impracticable to join them all as parties and be named individually as plaintiffs
in the complaint. These individuals claim to be residents of various barangays in
Bian, Laguna and other barangays in San Pedro, Laguna.
Anent the issue on the propriety of the WPI, Section 3, Rule 58 of the Rules of Court lays
down the rules for the issuance thereof. Thus:
(a) That the applicant is entitled to the relief demanded, and the whole or part
of such relief consists in restraining the commission or continuance of the acts
complained of, or in the performance of an act or acts, either for a limited period or
perpetually;
(b) That the commission, continuance or non-performance of the act or acts
complained of during the litigation would probably work injustice to the applicant; or
(c) That a party, court, or agency or a person is doing, threatening, or
attempting to do, or is procuring or suffering to be done, some act or acts probably in
violation of the rights of the applicant respecting the subject of the action or proceeding,
and tending to render the judgment ineffectual.
A writ of preliminary injunction is available to prevent a threatened or continuous irremediable
injury to parties before their claims can be thoroughly studied and adjudicated.[25] The requisites for its
issuance are: (1) the existence of a clear and unmistakable right that must be protected; and (2) an urgent
and paramount necessity for the writ to prevent serious damage.[26]For the writ to issue, the right sought
to be protected must be a present right, a legal right which must be shown to be clear and positive.[27] This
means that the persons applying for the writ must show that they have an ostensible right to the
final relief prayed for in their complaint.[28]
In the case at bench, JCHA, et al. failed to establish a prima facie proof of violation of their right
to justify the issuance of a WPI. Their right to the use of La Paz Road is disputable since they have no clear
legal right therein. As correctly ruled by the CA:
Here, contrary to the ruling of respondent Judge, private respondents failed to
prove as yet that they have a clear and unmistakable right over the La Paz Road which
was sought to be protected by the injunctive writ. They merely anchor their purported
right over the La Paz Road on the bare allegation that they have been using the same as
public road right-of-way for more than ten years. A mere allegation does not meet the
standard of proof that would warrant the issuance of the injunctive writ. Failure to
establish the existence of a clear right which should be judicially protected through the
writ of injunction is a sufficient ground for denying the injunction.
Consequently, the case should be further heard by the RTC so that the parties can fully prove their
respective positions on the issues.
Due process considerations dictate that the assailed injunctive writ is not a judgment on
the merits but merely an order for the grant of a provisional and ancillary remedy to preserve the
status quo until the merits of the case can be heard. The hearing on the application for issuance
of a writ of preliminary injunction is separate and distinct from the trial on the merits of the main
case. [29] The evidence submitted during the hearing of the incident is not conclusive or complete
for only a "sampling" is needed to give the trial court an idea of the justification for the preliminary
injunction pending the decision of the case on the merits.[30] There are vital facts that have yet
to be presented during the trial which may not be obtained or presented during the hearing on
the application for the injunctive writ.[31] Moreover, the quantum of evidence required for one is
different from that for the other.[32]
WHEREFORE, the petitions are DENIED. Accordingly, the July 31, 2001 Decision
and February 21, 2002 Resolution of the Court of Appeals in CA-G.R. SP No. 60543
are AFFIRMED.
SO ORDERED.
2 - PAGLAUM MANAGEMENT AND DEVELOPMENT CORP. v. UNION BANK
GR No. 179018 JUNE 18, 2012
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
assailing the Decision dated 31 May 2007[1] and Resolution dated 24 July 2007[2] issued by the
Court of Appeals (CA).
Petitioner Paglaum Management and Development Corporation (PAGLAUM) is the
registered owner of three parcels of land located in the Province of Cebu[3] and covered by
Transfer Certificate of Title (TCT) Nos. 112488,[4] 112489,[5] and T-68516.[6] These lots are co-
owned by Benjamin B. Dy, the president of petitioner Health Marketing Technologies, Inc.
(HealthTech), and his mother and siblings.[7]
On 3 February 1994, respondent Union Bank of the Philippines (Union Bank) extended
HealthTech a credit line in the amount of ₱10,000,000.[8] To secure this obligation, PAGLAUM
executed three Real Estate Mortgages on behalf of HealthTech and in favor of Union Bank.[9] It
must be noted that the Real Estate Mortgage, on the provision regarding the venue of all suits
and actions arising out of or in connection therewith, originally stipulates:
Section 9. Venue. The venue of all suits and actions arising out of or in
connection with this Mortgage shall be in Makati, Metro Manila or in the place
where any of the Mortgaged Properties is located, at the absolute option of the
Mortgagee, the parties hereto waiving any other venue.[10] (Emphasis
supplied.)
However, under the two Real Estate Mortgages dated 11 February 1994, the
following version appears:
Section 9. Venue. The venue of all suits and actions arising out of or in
connection with this Mortgage shall be in Cebu City Metro Manila or in the place
where any of the Mortgaged Properties is located, at the absolute option of the
Mortgagee, the xxxxxxxxxxxxx any other venue.[11] (Emphasis supplied.)
Meanwhile, the same provision in the Real Estate Mortgage dated 22 April
1998 contains the following:
Section 9. Venue. The venue of all suits and actions arising out of or in
connection with this Mortgage shall be in _________ or in the place where any
of the Mortgaged Properties is located, at the absolute option of the Mortgagee,
the parties hereto waiving any other venue.[12]
HealthTech and Union Bank agreed to subsequent renewals and increases in the credit
line,[13] with the total amount of debt reaching ₱36,500,000.[14] Unfortunately, according to
HealthTech, the 1997 Asian financial crisis adversely affected its business and caused it difficulty
in meeting its obligations with Union Bank.[15] Thus, on 11 December 1998, both parties entered
into a Restructuring Agreement,[16] which states that any action or proceeding arising out of or in
connection therewith shall be commenced in Makati City, with both parties waiving any other
venue.[17]
Despite the Restructuring Agreement, HealthTech failed to pay its obligation, prompting
Union Bank to send a demand letter dated 9 October 2000, stating that the latter would be
constrained to institute foreclosure proceedings, unless HealthTech settled its account in full.[18]
Since HealthTech defaulted on its payment, Union Bank extra-judicially foreclosed the
mortgaged properties.[19] The bank, as the sole bidder in the auction sale, was then issued a
Certificate of Sale dated 24 May 2001.[20] Thereafter, it filed a Petition for Consolidation of Title.[21]
Consequently, HealthTech filed a Complaint for Annulment of Sale and Titles with
Damages and Application for Temporary Restraining Order and Writ of Injunction dated 23
October 2001, praying for: (a) the issuance of a temporary restraining order, and later a writ of
preliminary injunction, directing Union Bank to refrain from exercising acts of ownership over the
foreclosed properties; (b) the annulment of the extra-judicial foreclosure of real properties; (c)
the cancellation of the registration of the Certificates of Sale and the resulting titles issued; (d)
the reinstatement of PAGLAUMs ownership over the subject properties; and (e) the payment of
damages.[22] The case was docketed as Civil Case No. 01-1567 and raffled to the Regional Trial
Court, National Capital Judicial Region, Makati City, Branch 134 (RTC Br. 134), which issued in
favor of PAGLAUM and HealthTech a Writ of Preliminary Injunction restraining Union Bank from
proceeding with the auction sale of the three mortgaged properties.[23]
On 23 November 2001, Union Bank filed a Motion to Dismiss on the following grounds:
(a) lack of jurisdiction over the issuance of the injunctive relief; (b) improper venue; and (c) lack
of authority of the person who signed the Complaint.[24] RTC Br. 134 granted this Motion in its
Order dated 11 March 2003, resulting in the dismissal of the case, as well as the dissolution of
the Writ of Preliminary Injunction.[25] It likewise denied the subsequent Motion for Reconsideration
filed by PAGLAUM and HealthTech.[26]
PAGLAUM and HealthTech elevated the case to the CA, which affirmed the Order dated
11 March 2003[27] and denied the Motion for Reconsideration.[28]
In the instant Petition, PAGLAUM and HealthTech argue that: (a) the Restructuring
Agreement governs the choice of venue between the parties, and (b) the agreement on the choice
of venue must be interpreted with the convenience of the parties in mind and the view that any
obscurity therein was caused by Union Bank.[29]
On the other hand, Union Bank contends that: (a) the Restructuring Agreement is
applicable only to the contract of loan, and not to the Real Estate Mortgage, and (b) the mortgage
contracts explicitly state that the choice of venue exclusively belongs to it.[30]
Meanwhile, intervenor J. King & Sons Company, Inc. adopts the position of Union Bank
and reiterates the position that Cebu City is the proper venue.[31]
The sole issue to be resolved is whether Makati City is the proper venue to assail the
foreclosure of the subject real estate mortgage. This Court rules in the affirmative.
Civil Case No. 01-1567, being an action for Annulment of Sale and Titles resulting from
the extrajudicial foreclosure by Union Bank of the mortgaged real properties, is classified as a
real action. In Fortune Motors v. Court of Appeals,[32] this Court held that a case seeking to annul
a foreclosure of a real estate mortgage is a real action, viz:
An action to annul a real estate mortgage foreclosure sale is no different
from an action to annul a private sale of real property. (Muoz v. Llamas, 87 Phil.
737, 1950).
While it is true that petitioner does not directly seek the recovery of title
or possession of the property in question, his action for annulment of sale and
his claim for damages are closely intertwined with the issue of ownership of the
 building which, under the law, is considered immovable property, the recovery
of which is petitioners primary objective. The prevalent doctrine is that an action
for the annulment or rescission of a sale of real property does not operate to
efface the fundamental and prime objective and nature of the case, which is to
recover said real property. It is a real action.[33]
Being a real action, the filing and trial of the Civil Case No. 01-1567 should be governed
by the following relevant provisions of the Rules of Court (the Rules):
Rule 4
VENUE OF ACTIONS
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.
Forcible entry and detainer actions shall be commenced and tried in the
municipal trial court of the municipality or city wherein the real property
involved, or a portion thereof, is situated.
Sec. 3. When Rule not applicable. This Rule shall not apply
(a) In those cases where a specific rule or law provides
otherwise; or
(b) Where the parties have validly agreed in writing
before the filing of the action on the exclusive venue thereof. (Emphasis
supplied.)
In Sps. Lantin v. Lantion,[34] this Court explained that a venue stipulation must contain
words that show exclusivity or restrictiveness, as follows:
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.
xxxxxxxxx
Clearly, the words exclusively and waiving for this purpose any
other venue are restrictive and used advisedly to meet the
requirements.[35] (Emphasis supplied.)
According to the Rules, real actions shall be commenced and tried in the court that has
jurisdiction over the area where the property is situated. In this case, all the mortgaged properties
are located in the Province of Cebu. Thus, following the general rule, PAGLAUM and HealthTech
should have filed their case in Cebu, and not in Makati.
However, the Rules provide an exception, in that real actions can be commenced and
tried in a court other than where the property is situated in instances where the parties have
previously and validly agreed in writing on the exclusive venue thereof. In the case at
bar, the parties claim that such an agreement exists. The only dispute is whether the venue that
should be followed is that contained in the Real Estate Mortgages, as contended by Union Bank,
or that in the Restructuring Agreement, as posited by PAGLAUM and HealthTech. This Court rules
that the venue stipulation in the Restructuring Agreement should be controlling.
The Real Estate Mortgages were executed by PAGLAUM in favor of Union Bank to secure
the credit line extended by the latter to HealthTech. All three mortgage contracts contain a
dragnet clause, which secures succeeding obligations, including renewals, extensions,
amendments or novations thereof, incurred by HealthTech from Union Bank, to wit:
Section 1. Secured Obligations. The obligations secured by this
Mortgage (the Secured Obligations) are the following:
a) All the obligations of the Borrower and/or the Mortgagor
under: (i) the Notes, the Agreement, and this Mortgage; (ii) any and all
instruments or documents issued upon the renewal, extension, amendment or
novation of the Notes, the Agreement and this Mortgage, irrespective of whether
such obligations as renewed, extended, amended or novated are in the nature
of new, separate or additional obligations; and (iii) any and all instruments or
documents issued pursuant to the Notes, the Agreement and this Mortgage;
b) All other obligations of the Borrower and/or the
Mortgagor in favor of the Mortgagee, whether presently owing or hereinafter
incurred and whether or not arising from or connected with the Agreement, the
Notes and/or this Mortgage; and
c) Any and all expenses which may be incurred in collecting
any and all of the above and in enforcing any and all rights, powers and remedies
of the Mortgagee under this Mortgage.[36]
On the other hand, the Restructuring Agreement was entered into by HealthTech and
Union Bank to modify the entire loan obligation. Section 7 thereof provides:
 Security. The principal, interests, penalties and other charges for which
the BORROWER may be bound to the BANK under the terms of this Restructuring
Agreement, including the renewal, extension, amendment or novation of this
Restructuring Agreement, irrespective of whether the obligations arising out of
or in connection with this Restructuring Agreement, as renewed, extended,
amended or novated, are in the nature of new, separate or additional obligations,
and all other instruments or documents covering the Indebtedness or otherwise
made pursuant to this Restructuring Agreement (the Secured Obligations), shall
continue to be secured by the following security arrangements (the
Collaterals):
a. Real Estate Mortgage dated February 11,
1994 executed by Paglaum Management and Development Corporation over a
474 square meter property covered by TCT No. 112489;
b. Real Estate Mortgage dated February 11,
1994 executed by Paglaum Management and Development Corporation over a
2,796 square meter property covered by TCT No. T-68516;
c. Real Estate Mortgage dated April 22, 1998 executed
by Paglaum Management and Development Corporation over a 3,711 square
meter property covered by TCT No. 112488;
d. Continuing Surety Agreement of Benjamin B. Dy;
Without need of any further act and deed, the existing Collaterals, shall
remain in full force and effect and continue to secure the payment and
performance of the obligations of the BORROWER arising from the Notes and this
Restructuring Agreement.[37] (Emphasis supplied.)
Meanwhile, Section 20 of the Restructuring Agreement as regards the venue of actions
state:
20. Venue Venue of any action or proceeding arising out of or connected
with this Restructuring Agreement, the Note, the Collateral and any and
all related documents shall be in Makati City, [HealthTech] and [Union Bank]
hereby waiving any other venue.[38] (Emphasis supplied.)
These quoted provisions of the Real Estate Mortgages and the later Restructuring
Agreement clearly reveal the intention of the parties to implement a restrictive venue stipulation,
which applies not only to the principal obligation, but also to the mortgages. The phrase waiving
any other venue plainly shows that the choice of Makati City as the venue for actions arising
out of or in connection with the Restructuring Agreement and the Collateral, with the Real Estate
Mortgages being explicitly defined as such, is exclusive.
Even if this Court were to consider the venue stipulations under the Real Estate
Mortgages, it must be underscored that those provisions did not contain words showing exclusivity
or restrictiveness. In fact, in the Real Estate Mortgages dated 11 February 1994, the phrase
parties hereto waiving from the entire phrase the parties hereto waiving any other venue was
stricken from the final executed contract. Following the ruling in Sps. Lantin as earlier quoted, in
the absence of qualifying or restrictive words, the venue stipulation should only be deemed as an
agreement on an additional forum, and not as a restriction on a specified place.
Considering that Makati City was agreed upon by the parties to be the venue for all
actions arising out of or in connection with the loan obligation incurred by HealthTech, as well as
the Real Estate Mortgages executed by PAGLAUM, the CA committed reversible error in affirming
the dismissal of Civil Case No. 01-1567 by RTC Br. 134 on the ground of improper venue.
WHEREFORE, the Petition for Review is GRANTED. The Decision dated 31 May 2007 and
Resolution dated 24 July 2007 in CA-G.R. CV No. 82053 of the Court of Appeals, as well as the
Orders dated 11 March 2003 and 19 September 2003 issued by the Regional Trial Court, Makati
City, Branch 134, are REVERSED and SET ASIDE.The Complaint in Civil Case No. 01-1567 is
hereby REINSTATED.
SO ORDERED.
4 - G.R. No. 139018 April 11, 2005
ESTHERLITA CRUZ-AGANA, Petitioner,
vs.
HON. JUDGE AURORA SANTIAGO-LAGMAN (In her capacity as Presiding Judge of
Regional Trial Court, Branch 77, Malolos, Bulacan) and B. SERRANO ENTERPRISES,
INC., Respondents.
The Case
This petition for certiorari1 seeks to reverse the Order of the Regional Trial Court, Branch 77,
Malolos, Bulacan ("trial court"), dated 4 June 1999, recalling its previous Order dated 25 May
1999 dismissing B. Serrano Enterprises, Inc.'s ("respondent") counterclaim upon a motion to
dismiss filed by petitioner Estherlita Cruz-Agana ("petitioner").
Antecedent Facts
On 18 March 1996, petitioner filed a Complaint for annulment of title with prayer for preliminary
mandatory injunction against respondent. Petitioner claims that as the sole heir of one
Teodorico Cruz, she is the sole owner of a lot covered by Transfer Certificate of Title No. T-
3907. Petitioner further claims that the lot was fraudulently sold to Eugenio Lopez, Jr. who later
on transferred the lot to respondent. The case was raffled to the Regional Trial Court, Branch
77, Malolos, Bulacan presided by Judge Aurora Santiago-Lagman and docketed as Civil Case No.
210-M-96.
Respondent seasonably filed its Answer with compulsory counterclaim. Petitioner moved to
dismiss respondent's counterclaim for lack of a certificate of non-forum shopping.
In an Order dated 11 March 1999, the trial court denied petitioner's motion to dismiss
respondent's counterclaim. The trial court reasoned that respondent's counterclaim is
compulsory and therefore excluded from the coverage of Section 5, Rule 7 of the Rules of
Court. Petitioner moved that the trial court reconsider its Order invoking the mandatory nature
of a certificate of non-forum shopping under Supreme Court Administrative Circular No. 04-
94.2 On 25 May 1999, the trial court reversed its 11 March 1999 Order and dismissed
respondent's counterclaim for lack of a certificate of non-forum shopping.
Respondent seasonably filed a motion for reconsideration arguing that Administrative Circular
No. 04-94 does not apply to compulsory counterclaims following the ruling in Santo Tomas
University Hospital v. Surla.3 On 4 June 1999, the trial court again reversed itself and
recalled its Order dismissing respondent's counterclaim.
Petitioner now comes before this Court through Rule 65 of the 1997 Rules of Civil Procedure.
The Trial Court's Ruling
The trial court found that respondent's counterclaim is compulsory in nature. The trial court
ruled that the filing of a compulsory counterclaim does not require a certificate of non-forum
shopping. On the effect of Santo Tomas on Administrative Circular No. 04-94, the trial court
explained:
It is settled rule that it is one of the inherent powers of the court to amend and control
its processes and orders so as to make them conformable to law and justice. This
power includes the right to reverse itself, specially when in its honest opinion, it has
committed an error or mistake in judgment, and that to adhere to its decision will
cause injustice to a party litigant.
The Issue
Petitioner raises the following issue:
WHETHER THE TRIAL COURT COMMITTED
GRAVE ABUSE OF DISCRETION IN REFUSING
TO DISMISS RESPONDENT'S COUNTERCLAIM.
The Ruling of the Court
The petition lacks merit.
The issue presented is not novel. This Court has squarely settled this issue in Santo Tomas
University Hospital v. Surla.3 Writing for the Court, Justice Jose C. Vitug began
his ponencia thus:
Can a compulsory counterclaim pleaded in an Answer be dismissed on the ground of a
failure to accompany it with a certificate of non-forum shopping? This question is the
core issue presented for resolution in the instant petition.
Santo Tomas clarified the scope of Administrative Circular No. 04-94 with respect to
counterclaims. The Court pointed out that this circular is intended primarily to cover "an
initiatory pleading or an incipient application of a party asserting a claim for
relief." The distinction between a compulsory and a permissive counterclaim is vital in the
application of the circular. The Court explained:
It should not be too difficult, the foregoing rationale of the circular aptly taken, to
sustain the view that the circular in question has not, in fact, been contemplated to
include a kind of claim which, by its very nature as being auxiliary to the proceedings in
the suit and as deriving its substantive and jurisdictional support therefrom, can only
be appropriately pleaded in the answer and not remain outstanding for independent
resolution except by the court where the main case pends. Prescinding from the
foregoing, the proviso in the second paragraph of Section 5, Rule 8 of the 1997 Rules of
Civil Procedure, i.e., that the violation of the anti-forum shopping rule "shall not be
curable by mere amendment xxx but shall be cause for the dismissal of the case
without prejudice," being predicated on the applicability of the need for a certification
against forum-shopping, obviously does not include a claim which cannot be
independently set up.
The Court reiterated this ruling in Ponciano v. Judge Parentela, Jr.4
Administrative Circular No. 04-94 does not apply to compulsory counterclaims. The circular
applies to initiatory and similar pleadings. A compulsory counterclaim set up in the answer is
not an "initiatory" or similar pleading. The initiatory pleading is the plaintiff's complaint. A
respondent has no choice but to raise a compulsory counterclaim the moment the plaintiff files
the complaint. Otherwise, respondent waives the compulsory counterclaim.5 In short, the
compulsory counterclaim is a reaction or response, mandatory upon pain of waiver, to an
initiatory pleading which is the complaint.
Petitioner argues, however, that the Court's rulings in Santo Tomas and Ponciano are
"contrary to the mandate of Administrative Circular No. 04-94" and other procedural laws.6
Petitioner is mistaken.
The Constitution expressly bestows on this Court the power to promulgate rules concerning the
pleading, practice and procedure in all courts.7 Procedural matters are within the sole
jurisdiction of this Court to prescribe. Administrative Circular No. 04-94 is an issuance of this
Court. It covers a matter of procedure. Administrative Circular No. 04-94 is not an enactment of
the Legislature. This Court has the exclusive jurisdiction to interpret, amend or revise the rules
it promulgates, as long as the rules do not diminish, increase, or modify substantive
rights. This is precisely the purpose of Santo Tomas as far as Administrative Circular No. 04-
94 is concerned.
Petitioner's counsel fails or simply refuses to accept the distinction between a permissive
counterclaim and a compulsory counterclaim. This distinction was the basis for the ruling
in Santo Tomas and Ponciano. The sole issue for resolution in the present case is whether
respondent's counterclaim is compulsory or permissive. If it is a permissive counterclaim, the
lack of a certificate of non-forum shopping is fatal. If it is a compulsory counterclaim, the lack
of a certificate of non-forum shopping is immaterial.
A compulsory counterclaim is any claim for money or other relief, which a defending party may
have against an opposing party, which at the time of suit arises out of, or is necessarily
connected with, the same transaction or occurrence that is the subject matter of plaintiff's
complaint.8 It is compulsory in the sense that it is within the jurisdiction of the court, does not
require for its adjudication the presence of third parties over whom the court cannot acquire
jurisdiction, and will be barred in the future if not set up in the answer to the complaint in the
same case. Any other counterclaim is permissive.
Respondent's counterclaim as set up in its answer states:
3. That because of the unwarranted, baseless, and unjustified acts of the plaintiff,
herein defendant has suffered and continue to suffer actual damages in the sum of at
least P400,000,000.00 which the law, equity, and justice require that to be paid by the
plaintiff and further to reimburse the attorney's fees of P2,000,000.00;9
It is clear that the counterclaim set up by respondent arises from the filing of plaintiff's
complaint. The counterclaim is so intertwined with the main case that it is incapable of
proceeding independently. The counterclaim will require a re-litigation of the same evidence if
the counterclaim is allowed to proceed in a separate action. Even petitioner recognizes that
respondent's counterclaim is compulsory.10 A compulsory counterclaim does not require a
certificate of non-forum shopping because a compulsory counterclaim is not an initiatory
pleading.
WHEREFORE, the instant petition is DENIED for lack of merit. We AFFIRM the Order of the
Regional Trial Court, Branch 77, Malolos Bulacan, dated 4 June 1999 recalling the Order dated
25 May 1999 which dismissed the compulsory counterclaim of respondent B. Serrano
Enterprises, Inc.
SO ORDERED.
5 - G.R. No. 101747 September 24, 1997
PERFECTA QUINTANILLA, petitioner,
vs.
COURT OF APPEALS ** and RIZAL COMMERCIAL BANKING CORPORATION, respondents.
The antecedents, as found by the trial court and affirmed by the Court of Appeals (CA), are as
follows:
Defendant, . . . (respondent RCBC) is a commercial banking institution, organized
under existing laws, doing business through its duly accredited offices in the City of
Cebu.
On 12 July 1983, plaintiff (petitioner) executed a Real Estate Mortgage on a parcel of
land, situated in the City of Cebu, under TCT No. 39409, in favor of defendant, RCBC,
to secure a credit line in the amount of P45,000.00. Plaintiff availed, from this
For failing to comply with the demands, RCBC sought to foreclose the real estate mortgage, not
collateralized credit line, the amount of P25,000.00 only, secured and evidenced by
only for the amount of P25,000.00 but also for the amount of P500,994.39 which represents
promissory note no. 84/615 in the said sum of P25,000.00, with interest at the rate of
38% per annum, on 23 October 1984.
Plaintiff, Perfecta Quintanilla, who is engaged in business, under the name and style,
Cebu Cane Products, exports rattan products abroad. In connection therewith, she
established with defendant, RCBC, advance credit line, for her export bills against
Letters of Credit from her customers abroad.
Also, on an even date, 23 October 1984, plaintiff secured from defendant, RCBC, a loan
or P100,000.00, against her advance export credit line, secured by promissory note no.
84/614, on a maturing period, one month from thence.
Again on November 8, 1984, plaintiff secured another advance credit of P100,000.00
against her advance export credit line, which she again secured by another promissory
note no. 84/032, of even date.
On 20 November 1984, plaintiff shipped stocks of her Cane Products to her buyer in
Belgium, upon a Letter of Credit, under Export Bill No. 84/199, in the amount of US
$10,638.15. Defendant, RCBC, received the proceeds of this export shipment, in the
amount of P208,630.00, from Bank Brussels Lambert-New York.
The full amount of the proceeds, was therefore credited to plaintiff's Current Account
No. 218 with defendant bank. Defendant RCBC, then debited plaintiff's current account,
in the amount of P125,000.00 as payment for the latter's loan of P100,000.00 to
promissory note no. 84/614 and P25,000.00 to promissory note no. 84/615. The latter
amount was what plaintiff secured by the Real Estate Mortgage, Exhibit "A".
On November 27, 1984, plaintiff made another shipment from her Cebu Cane Products,
under Export Bill No. 84-205 for US $10,083.00. Consequently, RCBC sent the export
documents to the issuing bank for collection of this, latter export shipment.
However, on November 28, 1984, the issuing bank, Brussels Lambert-Belgium, refused
payment on Export Bill No. 84-199, and demanded reimbursement from defendant,
RCBC, the amount of US $20,721.70, invoking its right for immediate reimbursement,
under Art. 16 of the International Chamber of Commerce (ICC) Publication 400 through
telex, to which plaintiff was so notified by defendant, RCBC. The latter, subsequently
advised plaintiff to communicate and arrange matters with her buyers and customers in
Belgium. After persistent demand for reimbursement, from Bank Brussels Lambert-
Belgium, defendant, RCBC, returned and reimbursed the total sum of US $20,721.70 to
Bank Brussels Lambert-Belgium.
RCBC, then proceeded to revert the credit and debit entries on plaintiff's current
account, which it supposedly paid to promissory note nos. 84/614 and 84/615 and
demanded payments from the plaintiff, the whole amount, including the amount of
P25,000.00, it collaterized by the real estate mortgage, Exh. "A".1
petitioner's subsequent credit accommodations. RCBC alleged that the latter amount was
likewise secured under the mortgage contract.
Rejecting RCBC's claim, petitioner filed an action for specific performance, damages and
attorney's fees with prayer for a writ of preliminary injunction, alleging that the obligation for
which the mortgage was executed was only for the maximum amount of P45,000.00 and that
petitioner had already paid her other unsecured loans. RCBC filed an answer denying
petitioner's claim and set up a counterclaim for the payment of all her other outstanding loans
— totalling P500,694.39.
After trial, the RTC rendered judgment, the dispositive portion of which reads:
WHEREFORE, the writ or preliminary injunction, issued by this Court is hereby lifted.
The defendant, RCBC, and defendant's may proceed to foreclose the real estate
mortgage for the satisfaction of plaintiff's obligation of P25,000.00 plus stipulated
interests thereon in accordance with the terms thereof, but not to satisfy the other
obligation of the plaintiff in excess thereof, which the said mortgage did not secure,
therefor. No pronouncement as to costs.
SO ORDERED.2
RCBC appealed to the CA imputing error to the trial court in not granting its counterclaim and in
ruling that the foreclosure of the mortgage was limited to the P25,000.00 availed of by
petitioner. The CA affirmed the RTC ruling in so far as the foreclosure was limited to the amount
of P25,000.00 but modified the same by granting the counterclaim. The dispositive portion of
the CA decision provides:
Premises considered, We affirm the appealed decision with the modification consisting
of ordering the appellee to pay the appellant, on the latter's counter-claims, the sum of
P500,694.39 due as of May 22, 1987 plus interest on the principal sum of P298,097.47
at the rate of 18% per annum from May 23, 1987 and penalty charges of 12%, per
annum from the same date, until fully paid, and the sum of P8,000.00 as reasonable
attorney's fees plus the costs.
SO ORDERED.3
Aggrieved, petitioner moved for a partial reconsideration, arguing for the first time that
respondent RCBC's counterclaim is permissive in nature for which the trial court has not
acquired jurisdiction due to the non-payment of the docket fees. Petitioner's motion was denied
by the CA, though it amended its earlier decision by ordering respondent RCBC to pay docket
fees on the
counterclaim.4 Hence this petition.
The pivotal issue is whether respondent RCBC's counterclaim is compulsory or permissive in
nature, the resolution of which hinges on the interpretation of the following provision in the real
estate mortgage which reads:
That for and in consideration of certain loans overdrafts and other credit
accommodations obtained from the mortgagee by the same and those that hereafter be
obtained, the principal of all of which is hereby fixed at forty-five Thousand Pesos
(P45,000.00), Philippine Currency, as well as those that the mortgagee may extend to
the mortgagor including interest and expenses of any other obligation owing to the
mortgagee, whether direct or indirect, principal or secondary, as appears in the
accounts, books and records of the mortgagee, the mortgagor does hereby transfer and
convey by way of mortgage unto the mortgagee . . . (emphasis supplied).5
We disagree with the CA's ruling that RCBC's counterclaim is permissive. In Ajax Marketing &
Development Corporation vs. Court of Appeals,6 a substantially similar provision appears, to
wit:
That for and in consideration of credit accommodations obtained from the MORTGAGEE
(Metropolitan Bank and Trust Company), by the MORTGAGOR and/or AJAX MKTG. &
DEV. CORP./AJAX MARKETING COMPANY/YLANG-YLANG MERCHANDISING COMPANY
detailed as follows:
Nature Date Granted Due Amount or Line
Date
Loans and/or P600,000.00
Advances in 150,000.00
current account 250,000.00
and to secure the payment of the same and those that may hereafter be obtained
including the renewals or extension thereof.
xxx xxx xxx
the principal of all of which is hereby fixed at (P600,000.00/P150,000.00/P250,000.00).
. . as well as those that the MORTGAGEE may have previously extended or may later
extend to the MORTGAGOR, including interest and expenses or any other obligation
owing to the MORTGAGEE, whether direct or indirect, principal or secondary, as
appears in the accounts, books and records of the MORTGAGEE, the MORTGAGOR
hereby transfer and convey by way of mortgage unto the MORTGAGEE, . . . .
This Court in the "Ajax" case, in upholding the validity of the extra-judicial foreclosure of
mortgage which included the loans obtained in excess of the amount fixed in the mortgage
contract as expressed in said proviso, ruled that:
An action to foreclose a mortgage is usually limited to the amount mentioned in the
mortgage, but where on the four corners of the mortgage contracts, as in this case, the
intent of the contracting parties is manifest that the mortgage properly shall also
answer for future loans or advancements, then the same is not improper as it is valid
and binding between the parties.7 (Emphasis supplied).
The amount stated in the mortgage contract between petitioner and RCBC does not limit the
amount for which it may stand as security considering that under the terms of that contract, the
intent to secure future indebtedness is apparent. It would have been different if the mortgage
contract in the case at bar simply provides that it was intended only "to secure the payment of
the same and those that may hereafter be obtained the principal of all of which is hereby fixed
at P45,000.00. . ."8 Yet the parties to the mortgage contract further stipulated: ". . . as well as
those that the Mortgagee may extend to the Mortgagor".9 The latter phrase clearly means that
the mortgage is not limited to just the fixed amount but also covers other credit
accommodations in excess thereof. Thus, the general rule that mortgage must be limited to the
amount mentioned in the mortgage cannot be applied herein. Rather by specific provision and
agreement of the parties, the mortgage contract was designed to secure even future
advancements.10
Having determined that the mortgage contract extends even to petitioner's other advances in
excess of the P25,000.00, RCBC's counterclaim for such other advances cannot but be
considered as compulsory in nature. Such counterclaim necessarily arises out of the transaction
or occurrence that is the subject matter of petitioner's claim which is to enjoin the foreclosure of
the latter's other credit accommodations in excess of P25,000.00. It thus satisfies the
"compelling test of compulsoriness" which requires "a logical relationship between the claim and
counterclaim, that is, where conducting separate trials of the respective claims of the parties
would entail a substantial duplication of effort and time by the parties and the court."11 Both
claims are merely offshoots of the same basic controversy.12 Moreover, RCBC's counterclaim
does not require for its adjudication the presence of third parties upon whom the court cannot
acquire jurisdiction and the court has jurisdiction to entertain the
claim. 13
RCBC's counterclaim being compulsory in nature, there is no need to pay docket fees therefor.
Nevertheless, RCBC is still bound to pay the docket fees as ordered by the CA in its August 19,
1991 Resolution, having failed to appeal therefrom. The entrenched procedural rule in this
jurisdiction is that a party who has not himself appealed cannot obtain from the appellate court
any affirmative relief other than those granted in the decision of the lower court.14
Finally, even granting that RCBC's counterclaim is permissive where the trial court has
no/cannot exercise jurisdiction over said claim unless/until the corresponding docket fees
therefor have been paid, petitioner is however barred by estoppel from challenging the trial
court's jurisdiction. We quote with approval the CA's observation in this matter.
. . . The record clearly shows that never once, during the proceedings below, was the
question of docket fees and of jurisdiction raised by the appellee. Not only did appellee
not bother to answer counterclaim but she did [not] even hint at it in her
memorandum, notwithstanding that the Bank adduced the required evidence to prove
the counterclaim which was included in the Bank's former (sic) offer of evidence (EXG.
C, Record, pp. 114-117). Neither was the issue raised in appellee's brief, again
notwithstanding the fact that the counterclaim is the subject of the first and second
errors of the brief of the Bank, against which appellee did not raise a single argument.
The issue surfaced for the first time in the motion for partial reconsideration filed by the
appellee.
The objection should have been raised more seasonably, before the trial court or at the
very least in appellee's brief. In the circumstances appellee is barred by laches from
raising the question of jurisdiction at this very late stage (Vide Maersk vs. Court of
Appeals, 187 SCRA 646).15
In addition, it has been consistently held by this Court that while jurisdiction may be assailed at
any stage, a party's active participation in the proceedings before a court without jurisdiction
will estop such party from assailing such lack of it. It is an undesirable practice of a party
participating in the proceedings and submitting his case for decision and then accepting the
judgment, only if favorable, and attacking it for lack of jurisdiction, when adverse.16
WHEREFORE, save for the modification anent the nature of RCBC's counterclaim and its related
incidents, the decision of the Court of Appeals promulgated October 31, 1990 as amended by its
Resolution promulgated August 19, 1991 is hereby AFFIRMED in all other respects.
SO ORDERED.
6 - G.R. No. 172590 January 7, 2013
MARY LOUISE R. ANDERSON, Petitioner, vs. ENRIQUE HO, Respondent.
As her petition for review was dismissed by the Court of Appeals (CA) on a technical ground,
petitioner now invokes the liberal application of the rules of procedure.
Assailed in this Petition for Review on Certiorari1 is the July 14, 2005 Resolution2 of the CA in
CA-G.R. SP No. 89793 which dismissed the petition for review of petitioner Mary Louise R.
Anderson (Anderson) because the certification against forum shopping attached thereto was
signed by counsel on her behalf without the proper authority. Likewise assailed is the CA’s May
4, 2006 Resolution3 denying the motion for reconsideration thereof.
Factual Antecedents
On June 5, 2003, Anderson filed a Complaint4 for Ejectment against respondent Enrique Ho (Ho)
before the Metropolitan Trial Court (MeTC) of Quezon City.5 She alleged that through her mere
tolerance, Ho is in possession of her parcel of land at Roosevelt Avenue, Quezon City covered
by Transfer Certificate of Title No. N-1933686(Roosevelt property). As she was already in need
of the said property, Anderson served upon Ho a Demand Letter to Vacate but despite receipt
thereof, Ho refused. Because of this, Anderson prayed that the MeTC order Ho to vacate the
Roosevelt property and pay her damages and attorney’s fees.
In his Answer with Compulsory Counterclaim,7 Ho denied that his occupation of the Roosevelt
property is through Anderson’s mere tolerance. He claimed that since Anderson is an American
citizen, he managed her affairs in the Philippines and administered her properties in Quezon
City and Cebu. When Anderson sought his assistance in ejecting her relatives from the
Roosevelt property and in demolishing the St. Anthony de Padua Church built thereon, Ho (1)
secured the services of a lawyer to file an ejectment case against the occupants of the property;
(2) dutifully appeared in court on Anderson’s behalf who was then in the United States of
America (U.S.A.); and (3) was able to secure a judgment from the court in favor of Anderson.
For all these, Anderson did not pay Ho a single centavo and instead executed a written
document dated January 14, 19998 which states that as partial payment for Ho’s services,
Anderson is authorizing him "to make use of the Roosevelt property as his residence free of
charge provided he vacates [it] if there is a buyer for the lot" and "that the balance of Ho’s
compensation shall consist of 10% of the proceeds of the sale of any or all of her properties
located in Roosevelt Avenue, M.H. del Pilar Street and Ana Maria Street, all in Quezon City;
Cebu City; and Cebu province". In view of this, Ho averred that he possesses the property not
through mere tolerance but as part of his compensation for services rendered to Anderson.
Hence, he is entitled to the continued possession thereof until such time that the property is
sold and he is paid the 10% of the proceeds of its sale.
Ruling of the Metropolitan Trial Court
On June 25, 2004, the MeTC rendered a Decision9 dismissing the case for lack of cause of
action. It gave much weight to the written document executed by Anderson wherein she gave
her consent for Ho to occupy the Roosevelt property provided that the latter shall vacate the
same if there is already a buyer for the lot. There being no allegation that the said property
already has a buyer, she could not eject Ho therefrom.
Ruling of the Regional Trial Court
On appeal, the Regional Trial Court (RTC) in its Decision10 of January 21, 2005 ruled as follows:
The evidence of the parties thus stands upon an equipoise. With the equiponderance of
evidence, the Court is inclined to consider the dismissal of the complaint as without prejudice
depending on the outcome of the determination in the proper forum whether or not the written
document dated January 14, 1999 x x x was falsified.
WHEREFORE, the Court modifies the Decision dated June 25, 2004 of the Metropolitan Trial
Court of Quezon City in Civil Case No. 30840 by dismissing the complaint without prejudice.
SO ORDERED.11
Anderson moved for reconsideration,12 but the same was denied by the RTC in an Order13 dated
April 1, 2005, a copy of which was received by her counsel on May 5, 2005.14
Ruling of the Court of Appeals
Intending to file with the CA a Petition for Review under Rule 42 of the Rules of Court,
Anderson’s counsel, Atty. Rommel V. Oliva (Atty. Oliva), filed a Motion for Extension of Time of
15 days from May 20, 2005 or until June 4, 2005 within which to file a petition15 allegedly due
to the revisions required in the initial draft and on account of heavy pressure of work. This was
granted by the CA in a Minute Resolution16 dated May 31, 2005. Subsequently, said counsel
sought another extension of 15 days or until June 19, 2005,17 this time claiming that the
petition had already been finalized and sent to Anderson in Hawaii, U.S.A. for her to read as
well as sign the certification and verification portion thereof. However, as of the last day of the
extended period on June 4, 2005, the petition has not yet been sent back, hence, the additional
extension being sought. In the interest of justice, the CA once again granted the said motion for
extension.18 On June 20, 2005,19 Atty. Oliva was finally able to file the Petition for Review20 but
the certification against forum shopping attached thereto was signed by him on Anderson’s
behalf without any accompanying authority to do so. Hence, the CA issued a Resolution21 on
July 14, 2005, viz:
The Court resolves to DISMISS herein Petition for Review as the certification against forum
shopping was executed not by the petitioner herself but by her counsel without attaching
therewith any special authority to sign on her behalf.
SO ORDERED.22
Anderson filed a Motion for Reconsideration.23 During its pendency, she also filed a
Manifestation24 to which was attached an Affidavit25 and a Special Power of Attorney
(SPA)26 authorizing her counsel to cause the preparation and filing of the Petition for Review
and to sign and execute the verification and certification against forum shopping on her behalf.
She explained in the Affidavit that at the time the petition was filed, her health condition
hindered her from going to the proper authority to execute the necessary SPA so she just
verbally instructed her lawyer to draft the petition and cause the filing of the same.
Nevertheless, upon learning of the dismissal of her case, she returned to the Philippines even
against her doctor’s advice and executed an SPA in favor of her counsel. She thus prayed that
the subsequently submitted documents be considered in resolving her pending Motion for
Reconsideration.
The CA, however, remained unswayed and denied the Motion for Reconsideration in a
Resolution27 dated May 4, 2006.
Hence, this Petition for Review on Certiorari.
The Parties’ Arguments
Anderson prays for the relaxation of the rules on certification against forum shopping and cites
a number of jurisprudence wherein the Court considered the subsequent submission or
correction of a certificate of non-forum shopping as substantial compliance. One in particular is
Donato v. Court of Appeals28 which she claims to be on all fours with the present case.
Moreover, Anderson stresses that the merits of the case should at all times prevail over the
rigid application of technical rules. She then proceeds to discuss her arguments relating to the
substantial merits of her petition.
On the other hand, Ho points out that despite the extensions granted by the CA within which to
file the Petition for Review, Anderson still failed to sign the certification against forum shopping.
This, he avers, demonstrates Anderson’s brazen disregard of technical rules. Anent the
argument of substantial compliance, Ho cites Mendigorin v. Cabantog29 where the Court
reiterated its earlier pronouncement that substantial compliance will not suffice in a matter
involving strict observance of the rule regarding a certificate of non-forum shopping.30 At any
rate, Ho insists that Anderson has no sufficient cause of action for ejectment and damages
against him.
Our Ruling
The petition has no merit.
No justifiable reason exists in this case
as to relax the rule on certification
against forum shopping.
The need to abide by the Rules of Court and the procedural requirements it imposes has been
constantly underscored by this Court. One of these procedural requirements is the certificate of
non-forum shopping which, time and again, has been declared as basic, necessary and
mandatory for procedural orderliness.31
In Vda. De Formoso v. Philippine National Bank,32 the Court reiterated the guidelines respecting
non-compliance with or submission of a defective certificate of non-forum shopping, the
relevant portions of which are as follows:
4) As to certification against forum shopping, non-compliance therewith or a defect therein, x x
x, is generally not curable by its subsequent submission or correction thereof, unless there is a
need to relax the Rule on the ground of ‘substantial compliance’ or presence of ‘special
circumstances or compelling reasons’.
xxxx
6) Finally, the certification against forum shopping must be executed by the party-pleader, not
by his counsel. If, however, for reasonable or justifiable reasons, the party-pleader is unable to
sign, he must execute a Special Power of Attorney designating his counsel of record to sign on
his behalf.33 (Emphasis supplied)
The requirement that it is the petitioner, not her counsel, who should sign the certificate of non-
forum shopping is due to the fact that a "certification is a peculiar personal representation on
the part of the principal party, an assurance given to the court or other tribunal that there are
no other pending cases involving basically the same parties, issues and causes of
action."34 "Obviously, it is the petitioner, and not always the counsel whose professional
services have been retained for a particular case, who is in the best position to know whether
sheactually filed or caused the filing of a petition in that case."35 Per the above guidelines,
however, if a petitioner is unable to sign a certification for reasonable or justifiable reasons, she
must execute an SPA designating her counsel of record to sign on her behalf. "A certification
which had been signed by counsel without the proper authorization is defective and constitutes
a valid cause for the dismissal of the petition."36
In this light, the Court finds that the CA correctly dismissed Anderson’s Petition for Review on
the ground that the certificate of non-forum shopping attached thereto was signed by Atty.
Oliva on her behalf sans any authority to do so. While the Court notes that Anderson tried to
correct this error by later submitting an SPA and by explaining her failure to execute one prior
to the filing of the petition, this does not automatically denote substantial compliance. It must
be remembered that a defective certification is generally not curable by its subsequent
correction. And while it is true that in some cases the Court considered such a belated
submission as substantial compliance, it "did so only on sufficient and justifiable grounds that
compelled a liberal approach while avoiding the effective negation of the intent of the rule on
non-forum shopping."37
Unlike in Donato38 and the other cases cited by Anderson, no sufficient and justifiable grounds
exist in this case as to relax the rules on certification against forum shopping.
In Donato, the CA dismissed therein petitioner’s Petition for Review on the ground, among
others, that the certification against forum shopping was signed by his counsel. In filing a
motion for reconsideration, petitioner submitted a certification duly signed by himself. However,
the CA ruled that his subsequent compliance did not cure the defect of the instant petition and
denied his Motion for Reconsideration. When the case reached this Court, it was held, viz:
The petition for review filed before the CA contains a certification against forum shopping but
said certification was signed by petitioner’s counsel. In submitting the certification of non-forum
shopping duly signed by himself in his motion for reconsideration, petitioner has aptly drawn
the Court’s attention to the physical impossibility of filing the petition for review within the 15-
day reglementary period to appeal considering that he is a resident of 1125 South Jefferson
Street, Roanoke, Virginia, U.S.A. where he needs to personally accomplish and sign the
verification.
We fully agree with petitioner that it was physically impossible for the petition to have been
prepared and sent to the petitioner in the United States, for him to travel from Virginia, U.S.A.
to the nearest Philippine Consulate in Washington, D.C., U.S.A. in order to sign the certification
before the Philippine Consul, and for him to send back the petition to the Philippines within the
15-day reglementary period. Thus, we find that petitioner has adequately explained his failure
to personally sign the certification which justifies relaxation of the rule.
We have stressed that the rules on forum shopping, which were precisely designed to promote
and facilitate the orderly administration of justice, should not be interpreted with such absolute
literalness as to subvert its own ultimate and legitimate objective which is simply to prohibit and
penalize the evils of forum-shopping. The subsequent filing of the certification duly signed by
the petitioner himself should thus be deemed substantial compliance, pro hac vice.39
While at first blush Donato appears to be similar with the case at bench, a deeper and
meticulous comparison of the two cases reveals essential differences. In Donato, the Court held
that it was impossible for the petition to have been prepared and sent to the therein petitioner
in the USA; for him to travel from Virginia to the nearest Philippine Consulate in Washington
D.C.; and for the petition to be sent back to the Philippines within the 15-day reglementary
period. The same could not, however, be said in this case. It must be remembered that on top
of the 15-day reglementary period to file the petition, Atty. Oliva sought and was granted a
total extension of 30 days to file the same. Hence, Anderson had a total of 45 days to comply
with the requirements of a Petition for Review as against the 15 days afforded to the petitioner
in Donato. To this Court, the said period is more than enough time for Anderson to execute an
SPA before the nearest Philippine Consulate, which again unlike in Donato, was located in the
same state where Anderson was (Hawaii), and thereafter to send it to the Philippines. Anent her
allegation that her health condition at that time hindered her from going to the proper
authorities to execute an SPA, the same deserves scant consideration as no medical certificate
was submitted to support this. "Indeed, the age-old but familiar rule is that he who alleges
must prove his allegations."40
Moreover, simultaneous with the filing of a Motion for Reconsideration, the proper certificate of
non-forum shopping was submitted by the petitioner in Donato. Notably in this case, the SPA
was submitted two months after the filing of Anderson’s Motion for Reconsideration. It took that
long because instead of executing an SPA before the proper authorities in Hawaii and sending
the same to the Philippines, Anderson still waited until she came back to the country and only
then did she execute one. It thus puzzles the Court why Anderson opted not to immediately
submit the SPA despite her awareness that the same should have been submitted
simultaneously with the Petition for Review. Hence, it cannot help but conclude that the delay in
the submission of the SPA is nothing but a product of Anderson’s sheer laxity and indifference in
complying with the rules. It is well to stress that "rules are laid down for the benefit of all and
should not be made dependent upon a suitor’s sweet time and own bidding."41 They should be
faithfully complied with42 and may not simply be ignored to suit the convenience of a
party.43 Although they are liberally construed in some situations, there must, however, be a
showing of justifiable reasons and at least a reasonable attempt at compliance
therewith,44 which unfortunately are not obtaining in this case.
In view of the foregoing, this Court affirms the CA’s dismissal of Anderson’s Petition for
Review.1âwphi1
As a final note, the Court reiterates that:
x x x procedural rules are designed to facilitate the adjudication of cases. Courts and litigants
alike are enjoined to abide strictly by the rules. While in certain instances, we allow a relaxation
in the application of the rules, we never intend to forge a weapon for erring litigants to violate
the rules with impunity. The liberal interpretation and application of rules apply only in proper
cases of demonstrable merit 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 ensure an orderly and speedy
administration of justice. Party litigants and their counsels are well advised to abide by rather
than flaunt, procedural rules for these rules illumine the path of the law and rationalize the
pursuit of justice.45
WHEREFORE, the Petition for Review on Certiorari is DENIED. The assailed Resolution dated July
14, 2005 and May 4, 2006 of the Court of Appeals in CA-G.R. SP No. 89793 are AFFIRMED.
SO ORDERED.
7 - G.R. No. 72566 April 12, 1988
DELBROS HOTEL CORPORATION, petitioner, vs. THE INTERMEDIATE APPELLATE COURT
(IAC) [FIRST SPECIAL CASES DIVISION], ET. AL, respondents.
This is a petition for certiorari with urgent prayer for the issuance of a temporary restraining
order and/or writ of preliminary injunction to nullify and resolutions dated September 5, 11 and
24, 1985, issued by the then Intermediate Appellate court, now Court of Appeals, in AC-G.R.
No. SP-07020, entitled "Hilton Hotels International, Inc, [Hilton International Co.] et al. vs. Hon
Abelardo M. Dayrit, et al."
The antecedent facts are as follows:
On February 27,1985, petitioner Delbros Hotel Corporation [DELBROS, for short] filed before
the Regional Trial Court of Manila a complaint for termination of agreement and damages, with
prayer for the issuance of a restraining order and/or writ of preliminary mandatory injunction
against private respondents Hilton Hotels International [now known as Hilton International
Company] and Richard Chapman, in his capacity as General Manager of Manila Hilton. In said
complaint, docketed as Civil Case No. 85-29489 and raffled off to Branch XXIX presided over by
Judge Abelardo M. Dayrit, it was alleged that pursuant to the Agreement and Lease entered into
by and between DELBROS and Hilton Hotels International, Inc. [HILTON] on June 2,1964, later
amended into a Management Agreement on June 9, 1966, and its Supplemental Amendments of
March 23, 1973 and November 22, 1976, DELBROS financed, built, furnished and equipped a
first-class hotel of approximately 400 rooms, now known as the "Manila Hilton," the operation
and management of which was granted to HILTON; that for their respective undertakings,
DELBROS was to receive a share in the gross operating profit [GOP] of the hotel, as defined in
Article V of the basic agreements, while HILTON was entitled to a management fee equivalent
to five percent [5%] of the gross revenues and an incentive fee equivalent to ten percent
[10%] of the GOP of the hotel; that in violation of the terms of the agreement, HILTON a]
refused, despite repeated demands, to remit to DELBROS its share in the GOP which as of
December 31, 1984 amounted to P2,591,165.00 as well as the excess of the normal working
capital; b] transferred, without DELBROS' prior approval, a portion of the reserve funds to its
operating funds; and, c] used said operating funds for capital expenditures without the consent
of DELBROS; that in addition, HILTON grossly mismanaged the hotel and breached the trust
and confidence reposed upon it by DELBROS; thereby causing DELBROS to default in its
amortizations to the GSIS. 1
In their Answer with Compulsory counterclaim, therein defendants HILTON and Chapman
specifically denied the allegations of DELBROS and set forth the following as affirmative
defenses: that DELBROS had no valid and sufficient cause of action for failure to give a five-day
notice of termination of the Management Agreement as required under Article XI thereof;
DELBROS' cause or causes of action, if any, were barred by estoppel or laches; DELBROS'
claims or demands had been waived or abandoned; and that the alleged violations of the
Management Agreement were too trivial or insignificant to warrant the grave penalty of
termination of the Management Agreement after it had been in force for 17 years. By way of
compulsory counterclaim, HILTON and Chapman prayed for an award of moral damages in the
amount of P1,000,000.00 each and the same amount each as exemplary damages plus
attorney's fees. 2
On March 21, 1985, Judge Dayrit issued a writ of preliminary injunction, enjoining HILTON and
Chapman from:
a] Disposing, removing, tampering, destroying, or otherwise concealing
corporate records, books of accounts, statement of accounts receivables,
ledgers, vouchers, invoices, receipts, purchase orders, job orders, bank
statements, returned checks, gate passes, incident reports, debit/credit memos
and/or any other document of similar nature, pertaining to the operation,
management and administration of the business and affairs of the hotel known
as the 'Manila Hilton' located at the United Nations Avenue, Ermita, Manila;
b] Disposing, removing, destroying, dissipating, or otherwise concealing hotel
stocks [consisting of food, beverage, supplies and items of similar nature],
furniture, furnishings, specialized hotel equipment [which term shall mean all
 equipment required for the operation of kitchen, laundries, dry cleaning
facilities, restaurants, bars, special lighting and other equipment of similar
nature] operating equipment [which term shall include chinaware, linens,
silverware, kitchenwares and other similar items], operating and guest supplies
[which term shall include soaps, cleaning materials, matches, paper supplies,
stationery and other similar items] and such other furnishings equipment and
other personal properties or assets as are normally required for the efficient
and continuing operation of the Manila Hilton;
c] Disbursing, expending and/or dissipating testimonies funds, time deposits,
revenues, and income under the account of Hilton International Company
and/or Manila Hilton without prior approval from this Court, except only as may
be necessary to prevent total or partial disruption of the hotels services;
d] Disbursing funds in payment to Hilton International Company or transferring
funds to Hilton's local bank accounts or offsetting hotel receivables in favor of
Hilton International Company and/or its affiliated companies;
e] Remitting funds from their local bank accounts to their foreign offices. 3
A clarificatory order on this writ was issued on March 28, 1985.
From these orders, HILTON and Chapman went to the Intermediate Appellate Court on a
petition for certiorari docketed as AC-G.R. No. SP-06474. On July 3, 1985, the Third Special
Cases Division of the IAC, to which the petition was assigned, issued a temporary restraining
order enjoining the implementation of the orders of Judge Dayrit. The temporary restraining
order was replaced on August 21, 1985 with a writ of preliminary injunction. 4
Meanwhile, on April 12,1985, DELBROS filed in Civil Case No. 85-29489 a motion to admit
Supplemental Complaint. The Supplemental Complaint impleaded as an additional defendant
Flaviano Mosquera, Jr., in his capacity as Comptroller of the Manila Hilton and sought the
confirmation by the trial court of the termination of the Management Contract effected by
DELBROS through the service upon HILTON of the five-day notice of termination provided
thereunder, as well as the payment of DELBROS' share in the GOP of the hotel for the months
of January and February 1985 and other damages.
Over the opposition of HILTON and Chapman, the lower court issued an Order on June 14,
1985, admitting the Supplemental Complaint, directing summons and copy of the supplemental
complaint to be served on the additional defendant and requiting HILTON and Chapman to
answer the supplemental complaint within five [5] days from notice. Copies of the June 14,
1985 Order were received by the parties' counsels on June 21, 1985.
On July 6, 1986, an ex-parte motion for an extension of twelve [12] days to answer the
supplemental complaint was filed in behalf of all the three defendants, HILTON, Chapman and
Mosquera. Said motion, sent by registered mail, was not reserved by the trial court until July
16, 1985.
However, earlier, or on July 9, 1985, DELBROS had filed a motion to declare defendants HILTON
and Chapman in default with respect to the supplemental complaint. This was granted on even
date and DELBROS allowed to present its evidence ex-parte in support of its supplemental
complaint.
On July 15, 1986, the lower court rendered a judgment by default, confirming as legal and valid
the termination as of March 31, 1985 of the Management Agreement between the parties and
ordering, among others, the defendants to immediately quit and surrender the Manila Hilton
International Hotel to DELBROS' President as well as to pay DELBROS its share in the GOP of
the hotel for the months of January to March, 1985, plus legal interest thereon from the date of
the filing of the Supplemental Complaint until full payment thereof. 5 Copies of the default
judgment were served on the parties' counsels in the morning of July 18, 1985. In the
afternoon of the same day, HILTON, et al. filed their Answer to the Supplemental Complaint,
and on July 24, 1985, filed a notice of appeal from the judgment by default.
Meanwhile, on July 19, 1985, DELBROS moved for the execution of the judgment pending
appeal. Although opposed by HILTON, et al., the motion was granted in a Special Order dated
September 3, 1985. A writ of execution was issued and served upon defendants on the same
day. The Partial Sheriff s Return reads as follows:
That on September 3, 1985, copies of the Writ of Execution dated September
3, 1985 together with the Judgment by Default dated July 15, 1985 and the
Special Order dated September 3, 1985, all issued in the above-entitled case,
were served and tendered upon the following:
1. Defendant Hilton International, Inc. [now known as Hilton International
Company] through Achim Ihlenfeld General Manager of Manila Hilton
International Hotel; and,
2. Defendant Flaviano Mosquera, Jr. at their given addresses, as evidenced by
their signatures acknowledging receipt of the aforementioned documents,
hereto attached,
The aforesaid individuals, after carefully reading the documents served and
after consuIting with their counsel by telephone voluntarily vacated and
surrendered their respective offices at the Manila Hilton International.
Thereupon, Delbros Hotel Corporation took over possession and control over
the management and operation of the Hotel as evidenced by notices of take
over of the hotel signed by the President of Delbros Hotel Corporation and
addressed to all officers and employees, posted in strategic places in the hotel,
a copy hereto attached.
The Notices of Garnishment were likewise served on the following banks:
1. Pilipinas Bank, Manila Hilton Branch
2. PNB, Ermita Branch
3. Bank of America, Paseo de Roxas Branch
 as evidenced by the rubber stamp mark and signatures appearing on the
duplicate original copies thereof, hereto attached.
The undersigned posted guard in the respective offices of Messrs. Ihlenfeld and
Mosquera.
Manila, Philippines, September 3, 1985.
For the Sheriff of Manila
[Sgd.] Miguelito S. Navarro
Deputy Sheriff
Branch XXIX, RTC of Manila. 6
On the following day, September 4, 1985, HILTON, et al. instituted before the then
Intermediate Appellate Court a petition for certiorari with prayer for a restraining
order/preliminary injunction, docketed as AC-G.R. No. SP-07020, to assail the Special Order of
September 3, 1985 for allegedly having been issued with grave abuse of discretion amounting
to lack of jurisdiction. 7 As prayed for, the First Special Cases Division of the IAC, to which the
petition was assigned, issued on September 5, 1985 a temporary restraining order enjoining the
implementation and/or enforcement of the Special Order of September 3, 1985.
On September 9, 1985, HILTON, et al. filed in AC-G.R. No. SP-07020 an urgent ex-parte motion
to deputize Manila police authorities to enforce/implement the restraining order of September 5,
1985. 8 This was opposed by DELBROS.
On September 11, 1985, the First Special Cases Division of the IAC issued a resolution
reiterating 'the continuing efficacy of its restraining order dated September 5, 1985, enjoining
the parties to conform to the restraint against the execution/implementation of the Special
Order dated September 3, 1985 ..." 9 and on September 24,1985 granted HILTON's motion to
deputize Manila police authorities to enforce the restraining order of September 5, 1985. 10
DELBROS forthwith filed on September 25, 1985 an urgent motion for reconsideration of the
resolution dated September 24, 1985. When more than a month had elapsed without the IAC
acting on its motion for reconsideration, petitioner filed the instant petition assailing as null and
void the three orders issued in AC-G.R. No. SP-07020, and raising the following questions of
law:
[1] Can a temporary restraining order,or a writ of preliminary injunction, for
that matter, prohibit an act already performed and accomplished?
[2] Can a party in legal and actual possession and control be deprived of the
same by means of a temporary restraining order?
[3] Can a temporary restraining order continue to be enforced beyond twenty
(20) days from its issuance, contrary to paragraph 8 of the Interim or
Transitional Rules and Guidelines relative to the implementation of the
Judiciary Reorganization Act of 1981. (B.P. Blg. 129)? 11
In their comment, private respondents HILTON, Achim Ihlenfeld [successor of Chapman] and
Flaviano Mosquera, Jr. assailed the veracity of the Partial Sheriffs Return, contending that no
take-over of the hotel's management was ever effected as no advice to surrender their offices
was given to either Ihlenfeld and Mosquera, Jr., and that it is HILTON which continues to run
and manage the hotel and which is recognized by the employees as manager thereof; that the
twenty-day lifespan of a temporary restraining order provided under B.P. 224 does not apply to
the Court of Appeals; and that, at any rate, the Special Order of September 3, 1985 which
granted petitioner's motion for execution pending appeal is null and void, having as its basis an
invalid judgment by default.
As aforesaid, the instant petition is focused primarily on the interlocutory orders dated
September 5, 11 and 24, 1985 issued in AC-G.R. No. SP-07020. These orders, however, are so
inextricably connected with the default order of July 9, 1985, the default judgment of July 15,
1985 as well as the Special Order dated September 3, 1985, that to simply limit ourselves to
said orders would afford the parties neither complete relief nor substantial justice, Thus, it
becomes imperative that We should delve further back into the proceedings taken in the trial
court and in the process, preempt the jurisdiction of the appellate court before which the
question of legality and propriety of the Special Order of September 3, 1985 had been brought
as well as the appeal filed by private respondents HILTON and Ihlenfeld [as successor to
Chapman] from the judgment by default.
Private respondents HILTON and Chapman were declared in default for failure to file an answer
to the Supplemental Complaint. This is reversible error.
Fundamentally, default orders are taken on the legal presumption that in failing to file an
answer, the defendant does not oppose the allegations and relief demanded in the complaint. In
the case at bar, however, no such presumption can arise vis-a-vis the Answer filed by HILTON
and Chapman to the original complaint; their institution of the certiorari proceedings in AC-G.R.
No. SP-06474 in opposition to petitioner's attempt to interfere with and/or take over the control
and management of the hotel pendente lite; and their vigorous opposition to the admission of
the supplemental complaint under consideration. These factors, of which the trial judge had full
knowledge and notice, should have cautioned him from precipitately rendering the default order
as well as the default judgment.
"A supplemental pleading is not like an amended pleading — substitute for the original one. It
does not supersede the original, but assumes that the original pleading is to stand, and the
issues joined under the original pleading remain as issues to be tried in the action." 12 While it is
conceded that there is authority in support of a default judgment being predicated upon
defendant's failure to answer a supplemental complaint, 13 the same cannot apply here. The
reason is that although in the supplemental complaint, the relief prayed for was altered from
termination of the management contract to judicial confirmation of its termination, the basic
and principal issue of whether or not petitioner was entitled to terminate the management
contract, remained. As this basic issue had been previously traversed and joined by the Answer
filed by HILTON and Chapman, there was no necessity for requiring them to plead further to the
Supplemental Complaint. Consequently, the trial judge did not have a legal ground for declaring
them in default for such failure to plead.
Another factor which the trial judge should have considered is that the supplemental complaint
brought in an additional defendant, Flaviano Mosquera, Jr. On this score, it would have been
more prudent under the liberal construction rule provided in Section 2, Rule 1 of the Rules of
Court, for the trial court to have treated the supplemental complaint as an amended complaint,
and the original answer thereto as sufficient; 14 or otherwise to have waited for the answer of
the newly-impleaded defendant before acting on the motion to declare the original defendants
in default and rendering the default judgment, considering that a common cause of action has
been asserted against the three defendants, so that the answer of Mosquera, Jr. could inure to
the benefit of the original defendants. 15 As it turned out, the Answer filed on July 18, 1985 was
for and in behalf of all the defendants. Hence, under Sec. 4 of Rule 18, the court shall try the
case against all upon the answer filed and render judgment upon the evidence presented.
Indeed, no prejudice wouId result to petitioner had the trial judge taken a more prudent and
judicious course of action as above suggested. Acting as the trial judge did, grave, irreparable
and serious damage caused to private respondents. Such prejudice is compounded by the
issuance of the Special Order of September 3, 1985 decreeing the execution pending appeal of
the default judgment at a time when defendant Mosquera was not yet declared in default.
Consequently, any defense set up by him for himself and for the benefit of his co-defendants
was rendered practically inutile by the execution of the default judgment.
Time ang again, this Court has expressed disfavor toward default judgments 16
for the reason
that:
A default judgment does not pretend to be based on the merits of the
controversy. Its existence is justified by expediency. It may, however, amount
to a positive and considerable injustice to the defendant. The possibility of such
serious consequences necessarily requires a careful examination of the
circumstances under which a default order was issued. And when no real injury
would result to the interests of the plaintiff by the reopening of the case, the
only objection to such action would, therefore, be solely on a technicality. On
such an infirm foundation, it would be a grevious error to sacrifice the
substantial rights of a litigant. 17
Upon these considerations, the order of default dated July 9, 1985, the default judgment of July
15, 1985 as well as the Special Order dated September 3, 1985, should be, as they are hereby
set aside.
With this conclusion, We could very wen write finish to this opinion, were it not for an important
legal issue raised herein that has long awaited resolution by this Court; namely, whether or not
paragraph 8 of the Interim Rules and Guidelines promulgated by this Court relative to the
implementation of the Judiciary Reorganization Act of 1981 applies to the Court of Appeals.
The provision in the Interim Rules and Guidelines adverted to reads in full thus-.
8. Preliminary injunction not granted without notice; issuance of restraining
order. — No preliminary injunction shall be granted without notice to the
defendant. if it shall appear from the facts shown by affidavits or by verified
complaint, that great or irreparable injury would result to the applicant before
the matter can be heard on notice, the Court to which the application for
preliminary injunction was made, may issue a restraining order to be effective
only for a period of twenty days from date of its issuance, Within said twenty
day period, the court must cause an order to be served on the defendant,
requiring him to show cause, at a specified time and place, why the injunction
should not be granted, and determine within the same period whether or not
the preliminary injunction shall be granted, and shall accordingly issue the
corresponding order. In the event that the application for preliminary injunction
is denied, the restraining order is deemed automatically vacated.
The applicability of the above-quoted provision to the then Intermediate Appellate Court, now
the Court of Appeals, can hardly be doubted. The Interim Rules and Guidelines were
promulgated to implement the Judiciary Reorganization Act of 1981 18 which included the
Intermediate Appellate Court among the courts reorganized thereunder. This is emphasized in
the preamble of the Interim Rules which states that the same shall apply to "all inferior courts
according to the Constitution.' The term 'inferior courts' as used therein refers to all courts
except the Supreme Court, the Sandiganbayan and the Court of Tax Appeals. Thus, paragraphs
14 and 15 of the Interim Rules expressedly provide for "Procedure in the Intermediate Appellate
Court. "
Indeed, if paragraph 8 of the Interim Rules were not intended to apply to temporary restraining
orders issued by the respondent Court, there would have been absolutely no reason for the
inclusion of said paragraph in the Interim Rules. The limited life-span of temporary restraining
orders issued by the regional trial courts and municipal trial courts is already provided for in
B.P. Blg. 224. It was precisely to include the Intermediate Appellate Court within the same
limitation as to the effectivity of its temporary restraining orders that B.P. Blg. 224 was
incorporated in the Interim Rules, with the significant change of the word "judge" to "court", so
as to make it clear and unequivocal that the temporary restraining orders contemplated therein
are those issued not only by trial judges but also by justices of the appellate court.
Private respondents argue that it is impractical to apply paragraph 8 of the Interim Rules to the
respondent court because the latter's processes are enforceable throughout the country and
there could be instances when the twenty-day period of the effectivity of a temporary
restraining order would lapse before it is served on the parties concerned. This allegation
appears to be more illusory and imaginary than real. Private respondents have not cited any
single, actual instance when such eventuality had occurred. Its possibility is deemed remote
and unlikely considering the present state of fast and efficient modes of communication as well
as the presumed eagerness of a party-litigant who has secured a temporary restraining order to
have the same immediately served on the parties concerned with the least waste of time.
WHEREFORE, the instant petition is hereby DISMISSED. The default order of July 9, 1985, the
default judgment dated July 15, 1985 and the Special Order of September 3, 1985 issued in
Civil Case No. 85-29489 of the Regional Trial Court of Manila are hereby annulled and set aside.
The Answer dated July 18, 1985 filed by herein private respondents in Id case is ordered
admitted and the case is remanded for trial on the merits. No pronouncement as to costs.
SO ORDERED.
8 - G.R. No. 183035 January 9, 2013
OPTIMA REALTY CORPORATION, Petitioner, vs. HERTZ PHIL. EXCLUSIVE CARS,
INC., Respondent.
Before us is a Rule 45 Petition assailing the Decision1 and Resolution2 of the Court of Appeals
(CA) in CA-GR SP No. 99890, which reversed the Decision3 and Resolution4 of the Regional Trial
Court (RTC), Branch 13 7, Makati City in Civil Case No. 06-672. The RTC had affirmed in toto
the 22 May 2006 Decision5 of the Metropolitan Trial Court (MeTC), Branch 64, Makati City in
Civil Case No. 90842 evicting respondent Hertz Phil.
Exclusive Cars, Inc. (Hertz) and ordering it to pay back rentals and other arrearages to
petitioner Optima Realty Corporation (Optima).
Optima is engaged in the business of leasing and renting out commercial spaces and buildings
to its tenants. On 12 December 2002, it entered into a Contract of Lease with respondent over a
131-square-meter office unit and a parking slot in the Optima Building for a period of three
years commencing on 1 March 2003 and ending on 28 February 2006.6 On 9 March 2004, the
parties amended their lease agreement by shortening the lease period to two years and five
months, commencing on 1 October 2003 and ending on 28 February 2006.7
Renovations in the Optima Building commenced in January and ended in November 2005.8 As a
result, Hertz alleged that it experienced a 50% drop in monthly sales and a significant decrease
in its personnel’s productivity. It then requested a 50% discount on its rent for the months of
May, June, July and August 2005.9
On 8 December 2005, Optima granted the request of Hertz.10 However, the latter still failed to
pay its rentals for the months of August to December of 2005 and January to February
2006,11 or a total of seven months. In addition, Hertz likewise failed to pay its utility bills for the
months of November and December of 2005 and January and February of 2006,12 or a total of
four months.
On 8 December 2005, Optima wrote another letter to Hertz, reminding the latter that the
13
Contract of Lease could be renewed only by a new negotiation between the parties and upon
written notice by the lessee to the lessor at least 90 days prior to the termination of the lease
period.14 As no letter was received from Hertz regarding its intention to seek negotiation and
extension of the lease contract within the 90-day period, Optima informed it that the lease
would expire on 28 February 2006 and would not be renewed.15
On 21 December 2005, Hertz wrote a letter belatedly advising Optima of the former’s desire to
negotiate and extend the lease.16 However, as the Contract of Lease provided that the notice to
negotiate its renewal must be given by the lessee at least 90 days prior to the expiration of the
contract, petitioner no longer entertained respondent’s notice.
On 30 January 2006, Hertz filed a Complaint for Specific Performance, Injunction and Damages
and/or Sum of Money with prayer for the issuance of a Temporary Restraining Order (TRO) and
Writ of Preliminary Injunction (Complaint for Specific Performance) against Optima. In that
Complaint, Hertz prayed for the issuance of a TRO to enjoin petitioner from committing acts
that would tend to disrupt respondent’s peaceful use and possession of the leased premises; for
a Writ of Preliminary Injunction ordering petitioner to reconnect its utilities; for petitioner to be
ordered to renegotiate a renewal of the Contract of Lease; and for actual, moral and exemplary
damages, as well as attorney’s fees and costs.
On 1 March 2006, Optima, through counsel, wrote Hertz a letter requiring the latter to
surrender and vacate the leased premises in view of the expiration of the Contract of Lease on
28 February 2006.17 It likewise demanded payment of the sum of ₱420,967.28 in rental
arrearages, unpaid utility bills and other charges.18 Hertz, however, refused to vacate the leased
premises.19 As a result, Optima was constrained to file before the MeTC a Complaint for
Unlawful Detainer and Damages with Prayer for the Issuance of a TRO and/or Preliminary
Mandatory Injunction (Unlawful Detainer Complaint) against Hertz.20
On 14 March 2006, Summons for the Unlawful Detainer Complaint was served on Henry Bobiles,
quality control supervisor of Hertz, who complied with the telephone instruction of manager
Rudy Tirador to receive the Summons.21
On 28 March 2006, or 14 days after service of the Summons, Hertz filed a Motion for Leave of
Court to file Answer with Counterclaim and to Admit Answer with Counterclaim (Motion for
Leave to File Answer).22 In that Motion, Hertz stated that, "in spite of the defective service of
summons, it opted to file the instant Answer with Counterclaim with Leave of Court."23 In the
same Motion, it likewise prayed that, in the interest of substantial justice, the Answer with
Counterclaim attached to the Motion for Leave to File Answer should be admitted regardless of
its belated filing, since the service of summons was defective.24
On 22 May 2006, the MeTC rendered a Decision,25 ruling that petitioner Optima had established
its right to evict Hertz from the subject premises due to nonpayment of rentals and the
expiration of the period of lease.26 The dispositive portion of the Decision reads:
WHEREFORE, premises considered, the Court hereby renders judgment for the plaintiff and
against the defendant, ordering:
1. the defendant corporation and all persons claiming rights from it to immediately
vacate the leased premises and to surrender possession thereof to the plaintiff;
2. the defendant corporation to pay the plaintiff the amount of Four Hundred Twenty
Thousand Nine Hundred Sixty Seven Pesos and 28/100 (P420,967.28) representing its
rentals arrearages and utility charges for the period of August 2005 to February 2006,
deducting therefrom defendant’s security deposit;
3. the defendant corporation to pay the amount of Fifty Four Thousand Two Hundred
Pesos (P54,200.00) as a reasonable monthly compensation for the use and occupancy
of the premises starting from March 2006 until possession thereof is restored to the
plaintiff; and
4. the defendant corporation to pay the amount of Thirty Thousand Pesos (P30,000.00)
as and for attorney’s fees; and
5. the cost of suit.
SO ORDERED.27
Hertz appealed the MeTC’s Decision to the RTC.28
Finding no compelling reason to warrant the reversal of the MeTC’s Decision, the RTC affirmed it
by dismissing the appeal in a Decision29 dated 16 March 2007.
On 18 June 2007, the RTC denied respondent’s Motion for Reconsideration of its assailed
Decision.30
Hertz thereafter filed a verified Rule 42 Petition for Review on Certiorari with the CA.31
On appeal, the CA ruled that, due to the improper service of summons, the MeTC failed to
acquire jurisdiction over the person of respondent Hertz. The appellate court thereafter reversed
the RTC and remanded the case to the MeTC to ensure the proper service of summons.
Accordingly, the CA issued its 17 March 2008 Decision, the fallo of which reads:
WHEREFORE, premises considered, the May 22, 2006 Decision of the Metropolitan Trial Court of
Makati City, Branch 64, in Civil Case No. 90842, and both the March 16, 2007 Decision, as well
as the June 18, 2007 Resolution, of the Regional Trial Court of Makati City, Branch 137, in Civil
Case No. 06-672, are hereby REVERSED, ANNULLED and SET ASIDE – due to lack of jurisdiction
over the person of the defendant corporation HERTZ. This case is hereby REMANDED to the
Metropolitan Trial Court of Makati City, Branch 64, in Civil Case No. 90842, which is DIRECTED
to ensure that its Sheriff properly serve summons to only those persons listed in Sec. 11, Rule
14 of the Rules of Civil Procedure in order that the MTC could acquire jurisdiction over the
person of the defendant corporation HERTZ.
SO ORDERED.32
Petitioner’s Motion for Reconsideration of the CA’s Decision was denied in a Resolution dated 20
May 2008.33
Aggrieved by the ruling of the appellate court, petitioner then filed the instant Rule 45 Petition
for Review on Certiorari with this Court.34
THE ISSUES
As culled from the records, the following issues are submitted for resolution by this Court:
1. Whether the MeTC properly acquired jurisdiction over the person of respondent
Hertz;
2. Whether the unlawful detainer case is barred by litis pendentia; and
3. Whether the ejectment of Hertz and the award of damages, attorneys fees and costs
are proper.
THE COURT’S RULING
We grant the Petition and reverse the assailed Decision and Resolution of the appellate court.
I
The MeTC acquired jurisdiction over the person of respondent Hertz.
In civil cases, jurisdiction over the person of the defendant may be acquired either by service of
summons or by the defendant’s voluntary appearance in court and submission to its authority.35
In this case, the MeTC acquired jurisdiction over the person of respondent Hertz by reason of
the latter’s voluntary appearance in court.
In Philippine Commercial International Bank v. Spouses Dy,36 we had occasion to state:
Preliminarily, jurisdiction over the defendant in a civil case is acquired either by the coercive
power of legal processes exerted over his person, or his voluntary appearance in court. As a
general proposition, one who seeks an affirmative relief is deemed to have submitted to the
jurisdiction of the court. It is by reason of this rule that we have had occasion to declare that
the filing of motions to admit answer, for additional time to file answer, for reconsideration of a
default judgment, and to lift order of default with motion for reconsideration, is considered
voluntary submission to the court's jurisdiction. This, however, is tempered by the concept of
conditional appearance, such that a party who makes a special appearance to challenge, among
others, the court's jurisdiction over his person cannot be considered to have submitted to its
authority.
Prescinding from the foregoing, it is thus clear that:
(1) Special appearance operates as an exception to the general rule on voluntary
appearance;
(2) Accordingly, objections to the jurisdiction of the court over the person of the
defendant must be explicitly made, i.e., set forth in an unequivocal manner; and
(3) Failure to do so constitutes voluntary submission to the jurisdiction of the court,
especially in instances where a pleading or motion seeking affirmative relief is filed and
submitted to the court for resolution. (Emphases supplied)
In this case, the records show that the following statement appeared in respondent’s Motion for
Leave to File Answer:
In spite of the defective service of summons, the defendant opted to file the instant Answer
with Counterclaim with Leave of Court, upon inquiring from the office of the clerk of court of
this Honorable Court and due to its notice of hearing on March 29, 2005 application for
TRO/Preliminary Mandatory Injunction was received on March 26, 2006. (Emphasis supplied)37
Furthermore, the Answer with Counterclaim filed by Hertz never raised the defense of improper
service of summons. The defenses that it pleaded were limited to litis pendentia, pari delicto,
performance of its obligations and lack of cause of action.38 Finally, it even asserted its own
counterclaim against Optima.39
Measured against the standards in Philippine Commercial International Bank, these actions lead
to no other conclusion than that Hertz voluntarily appeared before the court a quo. We
therefore rule that, by virtue of the voluntary appearance of respondent Hertz before the MeTC,
the trial court acquired jurisdiction over respondent’s.
II
The instant ejectment case is not barred by litis pendentia. Hertz contends that the instant case
is barred by litis pendentia because of the pendency of its Complaint for Specific Performance
against Optima before the RTC.
We disagree.
Litis pendentia requires the concurrence of the following elements:
(1) Identity of parties, or at least their representation of the same interests in both
actions;
(2) Identity of rights asserted and reliefs prayed for, the relief being founded on the
same facts; and
(3) Identity with respect to the two preceding particulars in the two cases, 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 case.40
Here, while there is identity of parties in both cases, we find that the rights asserted and the
reliefs prayed for under the Complaint for Specific Performance and those under the present
Unlawful Detainer Complaint are different. As aptly found by the trial court:
The Complaint for Specific Performance] seeks to compel plaintiff-appellee Optima to: (1)
renegotiate the contract of lease; (2) reconnect the utilities at the leased premises; and (3) pay
damages. On the other hand, the unlawful detainer case sought the ejectment of defendant-
appellant Hertz from the leased premises and to collect arrears in rentals and utility bills.41
As the rights asserted and the reliefs sought in the two cases are different, we find that the
pendency of the Complaint for Specific Performance is not a bar to the institution of the present
case for ejectment.
III
The eviction of respondent and the award of damages,
attorney’s fees and costs were proper.
We find that the RTC’s ruling upholding the ejectment of Hertz from the building premises was
proper. First, respondent failed to pay rental arrearages and utility bills to Optima; and, second,
the Contract of Lease expired without any request from Hertz for a renegotiation thereof at
least 90 days prior to its expiration.
On the first ground, the records show that Hertz failed to pay rental arrearages and utility bills
to Optima. Failure to pay timely rentals and utility charges is an event of default under the
Contract of Lease,42 entitling the lessor to terminate the lease.
Moreover, the failure of Hertz to pay timely rentals and utility charges entitles the lessor to
judicially eject it under the provisions of the Civil Code.43
On the second ground, the records likewise show that the lease had already expired on 28
February 2006 because of Hertz’s failure to request a renegotiation at least 90 days prior to the
termination of the lease period.
The pertinent provision of the Contract of Lease reads:
x x x. The lease can be renewed only by a new negotiation between the parties upon written
notice by the LESSEE to be given to the LESSOR at least 90 days prior to termination of the
above lease period.44
As the lease was set to expire on 28 February 2006, Hertz had until 30 November 2005 within
which to express its interest in negotiating an extension of the lease with Optima. However,
Hertz failed to communicate its intention to negotiate for an extension of the lease within the
time agreed upon by the parties. Thus, by its own provisions, the Contract of Lease expired on
28 February 2006.1âwphi1
Under the Civil Code, the expiry of the period agreed upon by the parties is likewise a ground
for judicial ejectment.45
As to the award of monthly compensation, we find that Hertz should pay adequate
compensation to Optima, since the former continued to occupy the leased premises even after
the expiration of the lease contract. As the lease price during the effectivity of the lease
contract was P54,200 per month, we find it to be a reasonable award.
Finally, we uphold the award of attorney's fees in the amount of P30,000 and judicial costs in
the light of Hertz's unjustifiable and unlawful retention of the leased premises, thus forcing
Optima to file the instant case in order to protect its rights and interest.
From the foregoing, we find that the MeTC committed no reversible error in its 22 May 2006
Decision, and that the RTC committed no reversible error either in affirming the MeTC's
Decision.
WHEREFORE, in view of the foregoing, the instant Rule 45 Petition for Review is GRANTED. The
assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 99890 are hereby
REVERSED and SET ASIDE. The Decision of the Regional Trial Court, Branch 13 7, Makati City in
Civil Case No. 06-672 affirming in toto the Decision of the Metropolitan Trial Court, Branch 64,
Makati City in Civil Case No. 90842 is hereby REINSTATED and AFFIRMED.
SO ORDERED.
10 - BERNABE NAVIDA et al v HON. TEODORO DIZON Jr.
GR No. 125078 May 30, 2011
Before the Court are consolidated Petitions for Review on Certiorari under Rule 45 of
the Rules of Court, which arose out of two civil cases that were filed in different courts but
whose factual background and issues are closely intertwined.
The petitions in G.R. Nos. 125078[1] and 125598[2] both assail the Order[3] dated May
20, 1996 of the Regional Trial Court (RTC) of General Santos City, Branch 37, in Civil Case No.
5617. The said Order decreed the dismissal of the case in view of the perceived lack of jurisdiction
of the RTC over the subject matter of the complaint. The petition in G.R. No. 125598 also
challenges the Orders dated June 4, 1996[4] and July 9, 1996,[5] which held that the RTC of
General Santos City no longer had jurisdiction to proceed with Civil Case No. 5617.
On the other hand, the petitions in G.R. Nos.
126654,[6] 127856,[7] and 128398[8] seek the reversal of the Order[9] dated October 1, 1996 of
the RTC of Davao City, Branch 16, in Civil Case No. 24,251-96, which also dismissed the case on
the ground of lack of jurisdiction.
G.R. Nos. 125078, 125598, 126654, 127856, and 128398 were consolidated in the
Resolutions dated February 10, 1997,[10] April 28, 1997[11] and March 10, 1999.[12]
The factual antecedents of the petitions are as follows:
Proceedings before the Texas Courts
Beginning 1993, a number of personal injury suits were filed in different Texas state courts by
citizens of twelve foreign countries, including the Philippines. The thousands of plaintiffs sought
damages for injuries they allegedly sustained from their exposure
to dibromochloropropane (DBCP), a chemical used to kill nematodes (worms), while working on
farms in 23 foreign countries. The cases were eventually transferred to, and consolidated in,
the Federal District Court for the Southern District of Texas, Houston Division.The cases therein
that involved plaintiffs from the Philippines were Jorge Colindres Carcamo, et al. v. Shell Oil Co.,
et al., which was docketed as Civil Action No. H-94-1359, and Juan Ramon Valdez, et al. v. Shell
Oil Co., et al., which was docketed as Civil Action No. H-95-1356. The defendants in the
consolidated cases prayed for the dismissal of all the actions under the doctrine of forum non
conveniens.
In a Memorandum and Order dated July 11, 1995, the Federal District Court conditionally
granted the defendants motion to dismiss. Pertinently, the court ordered that:
Delgado, Jorge Carcamo, Valdez and Isae Carcamo will be dismissed 90
days after the entry of this Memorandum and Order provided that defendants
and third- and fourth-party defendants have:
(1) participated in expedited discovery in the United States xxx;
(2) either waived or accepted service of process and waived any other
jurisdictional defense within 40 days after the entry of this
Memorandum and Order in any action commenced by a plaintiff in
these actions in his home country or the country in which his injury
occurred. Any plaintiff desiring to bring such an action will do so
within 30 days after the entry of this Memorandum and Order;
(3) waived within 40 days after the entry of this Memorandum and
Order any limitations-based defense that has matured since the
commencement of these actions in the courts of Texas;
(4) stipulated within 40 days after the entry of this Memorandum and
Order that any discovery conducted during the pendency of these
actions may be used in any foreign proceeding to the same extent
as if it had been conducted in proceedings initiated there; and
(5) submitted within 40 days after the entry of this Memorandum and
Order an agreement binding them to satisfy any final judgment
rendered in favor of plaintiffs by a foreign court.
xxxx
Notwithstanding the dismissals that may result from this Memorandum
and Order, in the event that the highest court of any foreign country finally
affirms the dismissal for lack of jurisdiction of an action commenced by a plaintiff
in these actions in his home country or the country in which he was injured, that
plaintiff may return to this court and, upon proper motion, the court will resume
jurisdiction over the action as if the case had never been dismissed for [forum
non conveniens].[13]
Civil Case No. 5617 before the RTC of General Santos City and G.R. Nos.
125078 and 125598
In accordance with the above Memorandum and Order, a total of 336 plaintiffs from General
Santos City (the petitioners in G.R. No. 125078, hereinafter referred to as NAVIDA, et al.) filed
a Joint Complaint[14] in the RTC of General Santos City on August 10, 1995. The case was
docketed as Civil Case No. 5617. Named as defendants therein were: Shell Oil Co. (SHELL); Dow
Chemical Co. (DOW); Occidental Chemical Corp. (OCCIDENTAL); Dole Food Co., Inc., Dole Fresh
Fruit Co., Standard Fruit Co., Standard Fruit and Steamship Co. (hereinafter collectively referred
to as DOLE); Chiquita Brands, Inc. and Chiquita Brands International, Inc. (CHIQUITA); Del Monte
Fresh Produce N.A. and Del Monte Tropical Fruit Co. (hereinafter collectively referred to as DEL
MONTE); Dead Sea Bromine Co., Ltd.; Ameribrom, Inc.; Bromine Compounds, Ltd.; and Amvac
Chemical Corp. (The aforementioned defendants are hereinafter collectively referred to as
defendant companies.)
NAVIDA, et al., prayed for the payment of damages in view of the illnesses and injuries
to the reproductive systems which they allegedly suffered because of their exposure to
DBCP. They claimed, among others, that they were exposed to this chemical during the early
1970s up to the early 1980s when they used the same in the banana plantations where they
worked at; and/or when they resided within the agricultural area where such chemical was
used. NAVIDA, et al., claimed that their illnesses and injuries were due to the fault or negligence
of each of the defendant companies in that they produced, sold and/or otherwise put into the
stream of commerce DBCP-containing products.According to NAVIDA, et al., they were allowed
to be exposed to the said products, which the defendant companies knew, or ought to have
known, were highly injurious to the formers health and well-being.
Instead of answering the complaint, most of the defendant companies respectively filed
their Motions for Bill of Particulars.[15] During the pendency of the motions, on March 13, 1996,
NAVIDA, et al., filed an Amended Joint Complaint,[16] excluding Dead Sea Bromine Co., Ltd.,
Ameribrom, Inc., Bromine Compounds, Ltd. and Amvac Chemical Corp. as party defendants.
Again, the remaining defendant companies filed their various Motions for Bill of
Particulars.[17] On May 15, 1996, DOW filed an Answer with Counterclaim.[18]
On May 20, 1996, without resolving the motions filed by the parties, the RTC of General
Santos City issued an Order dismissing the complaint. First, the trial court determined that it did
not have jurisdiction to hear the case, to wit:
THE COMPLAINT FOR DAMAGES FILED WITH THE REGIONAL TRIAL COURT SHOULD
BE DISMISSED FOR LACK OF JURISDICTION
xxxx
The substance of the cause of action as stated in the complaint against the
defendant foreign companies cites activity on their part which took place abroad
and had occurred outside and beyond the territorial domain of
the Philippines. These acts of defendants cited in the complaint included the
manufacture of pesticides, their packaging in containers, their distribution
through sale or other disposition, resulting in their becoming part of the stream
of commerce.
Accordingly, the subject matter stated in the complaint and which is uniquely
particular to the present case, consisted of activity or course of conduct engaged
in by foreign defendants outside Philippine territory, hence, outside and beyond
the jurisdiction of Philippine Courts, including the present Regional Trial
Court.[19]
Second, the RTC of General Santos City declared that the tort alleged by NAVIDA, et al.,
in their complaint is a tort category that is not recognized in Philippine laws. Said the trial court:
THE TORT ASSERTED IN THE PRESENT COMPLAINT AGAINST DEFENDANT
FOREIGN COMPANIES IS NOT WITHIN THE SUBJECT MATTER JURISDICTION OF
THE REGIONAL TRIAL COURT, BECAUSE IT IS NOT A TORT CATEGORY WITHIN
THE PURVIEW OF THE PHILIPPINE LAW
The specific tort asserted against defendant foreign companies in the present
complaint is product liability tort. When the averments in the present complaint
are examined in terms of the particular categories of tort recognized in the
Philippine Civil Code, it becomes stark clear that such averments describe and
identify the category of specific tort known as product liability tort.This is
necessarily so, because it is the product manufactured by defendant foreign
companies, which is asserted to be the proximate cause of the damages
sustained by the plaintiff workers, and the liability of the defendant foreign
companies, is premised on being the manufacturer of the pesticides.
It is clear, therefore, that the Regional Trial Court has jurisdiction over the
present case, if and only if the Civil Code of the Philippines, or a suppletory
special law prescribes a product liability tort, inclusive of and comprehending the
specific tort described in the complaint of the plaintiff workers.[20]
Third, the RTC of General Santos City adjudged that NAVIDA, et al., were coerced into
submitting their case to the Philippine courts, viz:
FILING OF CASES IN THE PHILIPPINES - COERCED AND ANOMALOUS
The Court views that the plaintiffs did not freely choose to file the instant action,
but rather were coerced to do so, merely to comply with the U.S. District Courts
Order dated July 11, 1995, and in order to keep open to the plaintiffs the
opportunity to return to the U.S. District Court.[21]
Fourth, the trial court ascribed little significance to the voluntary appearance of the
defendant companies therein, thus:
THE DEFENDANTS SUBMISSION TO JURISDICTION IS CONDITIONAL AS IT IS
ILLUSORY
Defendants have appointed their agents authorized to accept service of
summons/processes in the Philippines pursuant to the agreement in
the U.S. court that defendants will voluntarily submit to the jurisdiction of this
court. While it is true that this court acquires jurisdiction over persons of the
defendants through their voluntary appearance, it appears that such voluntary
appearance of the defendants in this case is conditional. Thus in the Defendants
Amended Agreement Regarding Conditions of Dismissal for Forum Non
Conveniens (Annex to the Complaint) filed with the U.S. District Court,
defendants declared that (t)he authority of each designated representative to
accept service of process will become effective upon final dismissal of these
actions by the Court. The decision of the U.S. District Court dismissing the case
is not yet final and executory since both the plaintiffs and defendants appealed
therefrom (par. 3(h), 3(i), Amended Complaint). Consequently, since the
authority of the agent of the defendants in the Philippines is conditioned on the
final adjudication of the case pending with the U.S. courts, the acquisition of
jurisdiction by this court over the persons of the defendants is also conditional. x
x x.
The appointment of agents by the defendants, being subject to a
suspensive condition, thus produces no legal effect and is ineffective at the
moment.[22]
Fifth, the RTC of General Santos City ruled that the act of NAVIDA, et al., of filing the
case in the Philippine courts violated the rules on forum shopping and litis pendencia. The trial
court expounded:
THE JURISDICTION FROWNS UPON AND PROHIBITS FORUM SHOPPING
This court frowns upon the fact that the parties herein are both vigorously
pursuing their appeal of the decision of the U.S. District court dismissing the
case filed thereat. To allow the parties to litigate in this court when they are
actively pursuing the same cases in another forum, violates the rule on forum
shopping so abhorred in this jurisdiction. x x x.
 THE FILING OF THE CASE IN U.S. DIVESTED THIS COURT OF ITS OWN
JURISDICTION
Moreover, the filing of the case in the U.S. courts divested this court of its own
jurisdiction. This court takes note that the U.S. District Court did not decline
jurisdiction over the cause of action.The case was dismissed on the ground
of forum non conveniens, which is really a matter of venue. By taking cognizance
of the case, the U.S. District Court has, in essence, concurrent jurisdiction with
this court over the subject matter of this case. It is settled that initial acquisition
of jurisdiction divests another of its own jurisdiction. x x x.
THIS CASE IS BARRED BY THE RULE OF LITIS PENDENCIA
Furthermore, the case filed in the U.S. court involves the same parties, same
rights and interests, as in this case. There exists litis pendencia since there are
two cases involving the same parties and interests. The court would like to
emphasize that in accordance with the rule on litis pendencia x x x; the
subsequent case must be dismissed. Applying the foregoing [precept] to the
case-at-bar, this court concludes that since the case between the parties in
the U.S. is still pending, then this case is barred by the rule on litis pendencia.[23]
In fine, the trial court held that:
It behooves this Court, then to dismiss this case. For to continue with
these proceedings, would be violative of the constitutional provision on the Bill
of Rights guaranteeing speedy disposition of cases (Ref. Sec. 16, Article III,
Constitution). The court has no other choice. To insist on further proceedings
with this case, as it is now presented, might accord this court a charming
appearance. But the same insistence would actually thwart the very ends of
justice which it seeks to achieve.
This evaluation and action is made not on account of but rather with due
consideration to the fact that the dismissal of this case does not necessarily
deprive the parties especially the plaintiffs of their possible remedies. The court
is cognizant that the Federal Court may resume proceedings of that earlier case
between the herein parties involving the same acts or omissions as in this case.
WHEREFORE, in view of the foregoing considerations, this case is now
considered DISMISSED.[24]
On June 4, 1996, the RTC of General Santos City likewise issued an Order,[25] dismissing
DOWs Answer with Counterclaim.
CHIQUITA, DEL MONTE and SHELL each filed a motion for reconsideration[26] of the RTC
Order dated May 20, 1996, while DOW filed a motion for reconsideration[27] of the RTC Order
dated June 4, 1996. Subsequently, DOW and OCCIDENTAL also filed a Joint Motion for
Reconsideration[28] of the RTC Order dated May 20, 1996.
In an Order[29] dated July 9, 1996, the RTC of General Santos City declared that it had
already lost its jurisdiction over the case as it took into consideration the Manifestation of the
counsel of NAVIDA, et al., which stated that the latter had already filed a petition for review
on certiorari before this Court.
CHIQUITA and SHELL filed their motions for reconsideration[30] of the above order.
On July 11, 1996, NAVIDA, et al., filed a Petition for Review on Certiorari in order to
assail the RTC Order dated May 20, 1996, which was docketed as G.R. No. 125078.
The RTC of General Santos City then issued an Order[31] dated August 14, 1996, which
merely noted the incidents still pending in Civil Case No. 5617 and reiterated that it no longer
had any jurisdiction over the case.
On August 30, 1996, DOW and OCCIDENTAL filed their Petition for Review
on Certiorari,[32] challenging the orders of the RTC of General Santos City dated May 20, 1996,
June 4, 1996 and July 9, 1996. Their petition was docketed as G.R. No. 125598.
In their petition, DOW and OCCIDENTAL aver that the RTC of General Santos City erred
in ruling that it has no jurisdiction over the subject matter of the case as well as the persons of
the defendant companies.
In a Resolution[33] dated October 7, 1996, this Court resolved to consolidate G.R. No.
125598 with G.R. No. 125078.
CHIQUITA filed a Petition for Review on Certiorari,[34] which sought the reversal of the
RTC Orders dated May 20, 1996, July 9, 1996 and August 14, 1996. The petition was docketed
as G.R. No. 126018. In a Resolution[35] dated November 13, 1996, the Court dismissed the
aforesaid petition for failure of CHIQUITA to show that the RTC committed grave abuse of
discretion. CHIQUITA filed a Motion for Reconsideration,[36] but the same was denied through a
Resolution[37] dated January 27, 1997.
Civil Case No. 24,251-96 before the RTC of Davao City and G.R. Nos. 126654,
127856, and 128398
Another joint complaint for damages against SHELL, DOW, OCCIDENTAL, DOLE, DEL MONTE, and
CHIQUITA was filed before Branch 16 of the RTC of Davao City by 155 plaintiffs from Davao
City. This case was docketed as Civil Case No. 24,251-96. These plaintiffs (the petitioners in G.R.
No. 126654, hereinafter referred to as ABELLA, et al.) amended their Joint-Complaint on May 21,
1996.[38]
Similar to the complaint of NAVIDA, et al., ABELLA, et al., alleged that, as workers in the
banana plantation and/or as residents near the said plantation, they were made to use and/or
were exposed to nematocides, which contained the chemical DBCP. According to ABELLA, et al.,
such exposure resulted in serious and permanent injuries to their health, including, but not limited
to, sterility and severe injuries to their reproductive capacities.[39] ABELLA, et al., claimed that
the defendant companies manufactured, produced, sold, distributed, used, and/or made available
in commerce, DBCP without warning the users of its hazardous effects on health, and without
providing instructions on its proper use and application, which the defendant companies knew or
ought to have known, had they exercised ordinary care and prudence.
Except for DOW, the other defendant companies filed their respective motions for bill of particulars
to which ABELLA, et al., filed their opposition. DOW and DEL MONTE filed their respective Answers
dated May 17, 1996 and June 24, 1996.
The RTC of Davao City, however, junked Civil Case No. 24,251-96 in its Order dated October 1,
1996, which, in its entirety, reads:

Upon a thorough review of the Complaint and Amended Complaint For:
Damages filed by the plaintiffs against the defendants Shell Oil Company, DOW
Chemicals Company, Occidental Chemical Corporation, Standard Fruit Company,
Standard Fruit and Steamship, DOLE Food Company, DOLE Fresh Fruit Company,
Chiquita Brands, Inc., Chiquita Brands International, Del Monte Fresh Produce,
N.A. and Del Monte Tropical Fruits Co., all foreign corporations with Philippine
Representatives, the Court, as correctly pointed out by one of the defendants, is
convinced that plaintiffs would have this Honorable Court dismiss the case to
pave the way for their getting an affirmance by the Supreme Court (#10 of
Defendants Del Monte Fresh Produce, N.A. and Del Monte Tropical Fruit Co.,
Reply to Opposition dated July 22, 1996). Consider these:
1) In the original Joint Complaint, plaintiffs state
that: defendants have no properties in the Philippines; they
have no agents as well (par. 18); plaintiffs are suing the
defendants for tortuous acts committed by these foreign
corporations on their respective countries, as plaintiffs, after
having elected to sue in the place of defendants residence, are
now compelled by a decision of a Texas District Court to file
cases under torts in this jurisdiction for causes of actions which
occurred abroad (par. 19); a petition was filed by same
plaintiffs against same defendants in the Courts of Texas, USA,
plaintiffs seeking for payment of damages based on negligence,
strict liability, conspiracy and international tort theories (par.
27); upon defendants Motion to Dismiss on Forum non
[conveniens], said petition was provisionally dismissed on
condition that these cases be filed in the Philippines or before
11 August 1995 (Philippine date; Should the Philippine Courts
refuse or deny jurisdiction, the U. S. Courts will reassume
jurisdiction.)
11. In the Amended Joint Complaint, plaintiffs aver that: on 11 July 1995,
the Federal District Court issued a Memorandum and Order conditionally
dismissing several of the consolidated actions including those filed by the Filipino
complainants. One of the conditions imposed was for the plaintiffs to file actions
in their home countries or the countries in which they were injured x x
x.Notwithstanding, the Memorandum and [O]rder further provided that should
the highest court of any foreign country affirm the dismissal for lack of
jurisdictions over these actions filed by the plaintiffs in their home countries [or]
the countries where they were injured, the said plaintiffs may return to that court
and, upon proper motion, the Court will resume jurisdiction as if the case had
never been dismissed for forum non conveniens.
The Court however is constrained to dismiss the case at bar not solely
on the basis of the above but because it shares the opinion of legal experts given
in the interview made by the Inquirer in its Special report Pesticide Cause Mass
Sterility, to wit:
1. Former Justice Secretary Demetrio Demetria in a May 1995 opinion
said: The Philippines should be an inconvenient forum to file this kind of
damage suit against foreign companies since the causes of action
alleged in the petition do not exist under Philippine laws. There has been
no decided case in Philippine Jurisprudence awarding to those adversely
affected by DBCP. This means there is no available evidence which will
prove and disprove the relation between sterility and DBCP.
2. Retired Supreme Court Justice Abraham Sarmiento opined that while
a class suit is allowed in the Philippines the device has been employed
strictly. Mass sterility will not qualify as a class suit injury within the
contemplation of Philippine statute.
3. Retired High Court Justice Rodolfo Nocom stated that there is simply
an absence of doctrine here that permits these causes to be heard. No
product liability ever filed or tried here.
Case ordered dismissed.[40]
Docketed as G.R. No. 126654, the petition for review, filed on November 12, 1996 by ABELLA, et
al., assails before this Court the above-quoted order of the RTC of Davao City.
ABELLA, et al., claim that the RTC of Davao City erred in dismissing Civil Case No. 24,251-96 on
the ground of lack of jurisdiction.
According to ABELLA, et al., the RTC of Davao City has jurisdiction over the subject
matter of the case since Articles 2176 and 2187 of the Civil Code are broad enough to cover the
acts complained of and to support their claims for damages.
ABELLA, et al., further aver that the dismissal of the case, based on the opinions of legal
luminaries reported in a newspaper, by the RTC of Davao City is bereft of basis.According to them,
their cause of action is based on quasi-delict under Article 2176 of the Civil Code. They also
maintain that the absence of jurisprudence regarding the award of damages in favor of those
adversely affected by the DBCP does not preclude them from presenting evidence to prove their
allegations that their exposure to DBCP caused their sterility and/or infertility.
SHELL, DOW, and CHIQUITA each filed their respective motions for reconsideration of
the Order dated October 1, 1996 of the RTC of Davao City. DEL MONTE also filed its motion for
reconsideration, which contained an additional motion for the inhibition of the presiding judge.
The presiding judge of Branch 16 then issued an Order[41] dated December 2, 1996,
voluntarily inhibiting himself from trying the case. Thus, the case was re-raffled to Branch 13 of
the RTC of Davao City.
In an Order[42] dated December 16, 1996, the RTC of Davao City affirmed the Order
dated October 1, 1996, and denied the respective motions for reconsideration filed by defendant
companies.
Thereafter, CHIQUITA filed a Petition for Review dated March 5, 1997, questioning the
Orders dated October 1, 1996 and December 16, 1996 of the RTC of Davao City.This case was
docketed as G.R. No. 128398.
In its petition, CHIQUITA argues that the RTC of Davao City erred in dismissing the
case motu proprio as it acquired jurisdiction over the subject matter of the case as well as over
the persons of the defendant companies which voluntarily appeared before it. CHIQUITA also
claims that the RTC of Davao City cannot dismiss the case simply on the basis of opinions of
alleged legal experts appearing in a newspaper article.
Initially, this Court in its Resolution[43] dated July 28, 1997, dismissed the petition filed
by CHIQUITA for submitting a defective certificate against forum shopping.CHIQUITA, however,
filed a motion for reconsideration, which was granted by this Court in the Resolution[44] dated
October 8, 1997.
The Motion to Withdraw Petition for Review in G.R. No. 125598
On July 13, 2004, DOW and OCCIDENTAL filed a Motion to Withdraw Petition for Review
in G.R. No. 125598, [53] explaining that the said petition is already moot and academic and no
longer presents a justiciable controversy since they have already entered into an amicable
settlement with NAVIDA, et al. DOW and OCCIDENTAL added that they have fully complied with
their obligations set forth in the 1997 Compromise Agreements.

On March 7, 1997, DEL MONTE also filed its petition for review on certiorari before this
Court assailing the above-mentioned orders of the RTC of Davao City. Its petition was docketed
as G.R. No. 127856.
DEL MONTE claims that the RTC of Davao City has jurisdiction over Civil Case No. 24,251-
96, as defined under the law and that the said court already obtained jurisdiction over its person
by its voluntary appearance and the filing of a motion for bill of particulars and, later, an answer
to the complaint. According to DEL MONTE, the RTC of Davao City, therefore, acted beyond its
authority when it dismissed the case motu proprio or without any motion to dismiss from any of
the parties to the case.
DOLE filed its Manifestation dated September 6, 2004,[54] interposing no objection to the
withdrawal of the petition, and further stating that they maintain their position that DOW and
OCCIDENTAL, as well as other settling defendant companies, should be retained as defendants
for purposes of prosecuting the cross-claims of DOLE, in the event that the complaint below is
reinstated.
NAVIDA, et al., also filed their Comment dated September 14, 2004,[55] stating that they
agree with the view of DOW and OCCIDENTAL that the petition in G.R. No. 125598 has become
moot and academic because Civil Case No. 5617 had already been amicably settled by the parties
in 1997.

In the Resolutions dated February 10, 1997, April 28, 1997, and March 10, 1999, this
Court consolidated G.R. Nos. 125078, 125598, 126654, 127856, and 128398.
The Consolidated Motion to Drop DOW, OCCIDENTAL, and SHELL as Party-
Respondents filed by NAVIDA, et al. and ABELLA, et al.
On September 26, 1997, NAVIDA, et al., and ABELLA, et al., filed before this Court a
Consolidated Motion (to Drop Party-Respondents).[45] The plaintiff claimants alleged that they had
amicably settled their cases with DOW, OCCIDENTAL, and SHELL sometime in July 1997. This
settlement agreement was evidenced by facsimiles of the Compromise Settlement, Indemnity,
and Hold Harmless Agreement, which were attached to the said motion. Pursuant to said
agreement, the plaintiff claimants sought to withdraw their petitions as against DOW,
OCCIDENTAL, and SHELL.
On September 27, 2004, DEL MONTE filed its Comment on Motion to Withdraw Petition
for Review Filed by Petitioners in G.R. No. 125598,[56] stating that it has no objections to the
withdrawal of the petition filed by DOW and OCCIDENTAL in G.R. No. 125598.
In a Resolution[57] dated October 11, 2004, this Court granted, among others, the motion
to withdraw petition for review filed by DOW and OCCIDENTAL.
THE ISSUES
In their Consolidated Memorandum, NAVIDA, et al., and ABELLA, et al., presented the following
issues for our consideration:
IN REFUTATION

DOLE, DEL MONTE and CHIQUITA, however, opposed the motion, as well as the I. THE COURT DISMISSED THE CASE DUE TO LACK OF
settlement entered into between the plaintiff claimants and DOW, OCCIDENTAL, and SHELL. JURISDICTION.

The Memoranda of the Parties a) The court did not simply dismiss the case because it was filed in bad
faith with petitioners intending to have the same dismissed and returned
Considering the allegations, issues, and arguments adduced by the parties, this Court, in to the Texas court.
a Resolution dated June 22, 1998,[46] required all the parties to submit their respective
memoranda. b) The court dismissed the case because it was convinced that it did not
have jurisdiction.
CHIQUITA filed its Memorandum on August 28, 1998;[47] SHELL asked to be excused from
the filing of a memorandum alleging that it had already executed a compromise agreement with IN SUPPORT OF THE PETITION
the plaintiff claimants.[48] DOLE filed its Memorandum on October 12, 1998[49] while DEL MONTE
filed on October 13, 1998.[50] NAVIDA, et al., and ABELLA, et al., filed their Consolidated II. THE TRIAL COURT HAS JURISDICTION OVER THE SUBJECT
Memorandum on February 3, 1999;[51] and DOW and OCCIDENTAL jointly filed a Memorandum MATTER OF THE CASE.
on December 23, 1999.[52]
a. The acts complained of occurred within Philippine territory.
 b. Art. 2176 of the Civil Code of the Philippines is broad enough to cover
the acts complained of.
c. Assumption of jurisdiction by the U.S. District Court over petitioner[s]
claims did not divest Philippine [c]ourts of jurisdiction over the same.
d. The Compromise Agreement and the subsequent Consolidated Motion
to Drop Party Respondents Dow, Occidental and Shell does not
unjustifiably prejudice remaining respondents Dole, Del Monte and
Chiquita.[58]
DISCUSSION
On the issue of jurisdiction
Essentially, the crux of the controversy in the petitions at bar is whether the RTC of
General Santos City and the RTC of Davao City erred in dismissing Civil Case Nos. 5617 and
24,251-96, respectively, for lack of jurisdiction.
Remarkably, none of the parties to this case claims that the courts a quo are bereft of
jurisdiction to determine and resolve the above-stated cases. All parties contend that the RTC of
General Santos City and the RTC of Davao City have jurisdiction over the action for damages,
specifically for approximately P2.7 million for each of the plaintiff claimants.
NAVIDA, et al., and ABELLA, et al., argue that the allegedly tortious acts and/or
omissions of defendant companies occurred within Philippine territory. Specifically, the use of and
exposure to DBCP that was manufactured, distributed or otherwise put into the stream of
commerce by defendant companies happened in the Philippines. Said fact allegedly constitutes
reasonable basis for our courts to assume jurisdiction over the case. Furthermore, NAVIDA, et
al., and ABELLA, et al., assert that the provisions of Chapter 2 of the Preliminary Title of the Civil
Code, as well as Article 2176 thereof, are broad enough to cover their claim for damages. Thus,
NAVIDA, et al., and ABELLA, et al., pray that the respective rulings of the RTC of General Santos
City and the RTC of Davao City in Civil Case Nos. 5617 and 24,251-96 be reversed and that the
said cases be remanded to the courts a quo for further proceedings.
DOLE similarly maintains that the acts attributed to defendant companies constitute a
quasi-delict, which falls under Article 2176 of the Civil Code. In addition, DOLE states that if there
were no actionable wrongs committed under Philippine law, the courts a quo should have
dismissed the civil cases on the ground that the Amended Joint-Complaints of NAVIDA, et al., and
ABELLA, et al., stated no cause of action against the defendant companies. DOLE also argues that
if indeed there is no positive law defining the alleged acts of defendant companies as actionable
wrong, Article 9 of the Civil Code dictates that a judge may not refuse to render a decision on the
ground of insufficiency of the law. The court may still resolve the case, applying the customs of
the place and, in the absence thereof, the general principles of law. DOLE posits that the
Philippines is the situs of the tortious acts allegedly committed by defendant companies as
NAVIDA, et al., and ABELLA, et al., point to their alleged exposure to DBCP which occurred in the
Philippines, as the cause of the sterility and other reproductive system problems that they
allegedly suffered. Finally, DOLE adds that the RTC of Davao City gravely erred in relying upon
newspaper reports in dismissing Civil Case No. 24,251-96 given that newspaper articles are
hearsay and without any evidentiary value. Likewise, the alleged legal opinions cited in the
newspaper reports were taken judicial notice of, without any notice to the parties. DOLE, however,
opines that the dismissal of Civil Case Nos. 5617 and 24,251-96 was proper, given that plaintiff
claimants merely prosecuted the cases with the sole intent of securing a dismissal of the actions
for the purpose of convincing the U.S. Federal District Court to re-assume jurisdiction over the
cases.
In a similar vein, CHIQUITA argues that the courts a quo had jurisdiction over the subject
matter of the cases filed before them. The Amended Joint-Complaints sought approximately P2.7
million in damages for each plaintiff claimant, which amount falls within the jurisdiction of the
RTC. CHIQUITA avers that the pertinent matter is the place of the alleged exposure to DBCP, not
the place of manufacture, packaging, distribution, sale, etc., of the said chemical. This is in
consonance with the lex loci delicti commisitheory in determining the situs of a tort, which states
that the law of the place where the alleged wrong was committed will govern the
action. CHIQUITA and the other defendant companies also submitted themselves to the
jurisdiction of the RTC by making voluntary appearances and seeking for affirmative reliefs during
the course of the proceedings.None of the defendant companies ever objected to the exercise of
jurisdiction by the courts a quo over their persons. CHIQUITA, thus, prays for the remand of Civil
Case Nos. 5617 and 24,251-96 to the RTC of General Santos City and the RTC of Davao City,
respectively.
The RTC of General Santos City and the RTC of Davao City have jurisdiction over Civil
Case Nos. 5617 and 24,251-96, respectively
The rule is settled that jurisdiction over the subject matter of a case is conferred by law
and is determined by the allegations in the complaint and the character of the relief sought,
irrespective of whether the plaintiffs are entitled to all or some of the claims asserted
therein.[59] Once vested by law, on a particular court or body, the jurisdiction over the subject
matter or nature of the action cannot be dislodged by anybody other than by the legislature
through the enactment of a law.
At the time of the filing of the complaints, the jurisdiction of the RTC in civil cases under
Batas Pambansa Blg. 129, as amended by Republic Act No. 7691, was:
SEC. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise
exclusive original jurisdiction:
xxxx
(8) In all other cases in which the demand, exclusive of interest, damages
of whatever kind, attorneys fees, litigation expenses, and costs or the value of
the property in controversy exceeds One hundred thousand pesos (P100,000.00)
or, in such other cases in Metro Manila, where the demand, exclusive of the
abovementioned items exceeds Two hundred thousand pesos (P200,000.00).[60]
Corollary thereto, Supreme Court Administrative Circular No. 09-94, states:
2. The exclusion of the term damages of whatever kind in determining the
jurisdictional amount under Section 19 (8) and Section 33 (1) of B.P. Blg. 129,
as amended by R.A. No. 7691, applies to cases where the damages are merely
incidental to or a consequence of the main cause of action. However, in cases
where the claim for damages is the main cause of action, or one of the causes
of action, the amount of such claim shall be considered in determining the
jurisdiction of the court.
Here, NAVIDA, et al., and ABELLA, et al., sought in their similarly-worded Amended Joint-
Complaints filed before the courts a quo, the following prayer:
 PRAYER
WHEREFORE, premises considered, it is most respectfully prayed that
after hearing, judgment be rendered in favor of the plaintiffs ordering the
defendants:
a) TO PAY EACH PLAINTIFF moral damages in the amount
of One Million Five Hundred Thousand Pesos (P1,500,00.00);
b) TO PAY EACH PLAINTIFF nominal damages in the amount
of Four Hundred Thousand Pesos (P400,000.00) each;
c) TO PAY EACH PLAINTIFF exemplary damages in the
amount of Six Hundred Thousand Pesos (P600,000.00);
d) TO PAY EACH PLAINTIFF attorneys fees of Two Hundred
Thousand Pesos (P200,000.00); and
e) TO PAY THE COSTS of the suit.[61]
From the foregoing, it is clear that the claim for damages is the main cause of action and
that the total amount sought in the complaints is approximately P2.7 million for each of the
plaintiff claimants. The RTCs unmistakably have jurisdiction over the cases filed in General Santos
City and Davao City, as both claims by NAVIDA, et al., and ABELLA, et al., fall within the purview
of the definition of the jurisdiction of the RTC under Batas Pambansa Blg. 129.
Moreover, the allegations in both Amended Joint-Complaints narrate that:
THE CAUSES OF ACTION
4. The Defendants manufactured, sold, distributed, used, AND/OR
MADE AVAILABLE IN COMMERCE nematocides containing the chemical
dibromochloropropane, commonly known as DBCP. THE CHEMICAL WAS USED
AGAINST the parasite known as the nematode, which plagued banana
plantations, INCLUDING THOSE in the Philippines. AS IT TURNED OUT, DBCP not
only destroyed nematodes. IT ALSO CAUSED ILL-EFFECTS ON THE HEALTH OF
PERSONS EXPOSED TO IT AFFECTING the human reproductive system as well.
5. The plaintiffs were exposed to DBCP in the 1970s up to the
early 1980s WHILE (a) they used this product in the banana plantations
WHERE they were employed, and/or (b) they resided within the
agricultural area WHERE IT WAS USED. As a result of such exposure, the
plaintiffs suffered serious and permanent injuries TO THEIR HEALTH, including,
but not limited to, STERILITY and severe injuries to their reproductive capacities.
6. THE DEFENDANTS WERE AT FAULT OR WERE NEGLIGENT IN
THAT THEY MANUFACTURED, produced, sold, and/or USED DBCP and/or
otherwise, PUT THE SAME into the stream of commerce, WITHOUT
INFORMING THE USERS OF ITS HAZARDOUS EFFECTS ON HEALTH
AND/OR WITHOUT INSTRUCTIONS ON ITS PROPER USE AND
APPLICATION. THEY allowed Plaintiffs to be exposed to, DBCP-containing
materials which THEY knew, or in the exercise of ordinary care and prudence
ought to have known, were highly harmful and injurious to the Plaintiffs health
and well-being.
7. The Defendants WHO MANUFACTURED, PRODUCED, SOLD,
DISTRIBUTED, MADE AVAILABLE OR PUT DBCP INTO THE STREAM OF
COMMERCE were negligent OR AT FAULT in that they, AMONG OTHERS:
a. Failed to adequately warn Plaintiffs of the dangerous
characteristics of DBCP, or to cause their subsidiaries or
affiliates to so warn plaintiffs;
b. Failed to provide plaintiffs with information as to what
should be reasonably safe and sufficient clothing and proper
protective equipment and appliances, if any, to protect plaintiffs
from the harmful effects of exposure to DBCP, or to cause their
subsidiaries or affiliates to do so;
c. Failed to place adequate warnings, in a language
understandable to the worker, on containers of DBCP-
containing materials to warn of the dangers to health of coming
into contact with DBCP, or to cause their subsidiaries or
affiliates to do so;
d. Failed to take reasonable precaution or to exercise
reasonable care to publish, adopt and enforce a safety plan and
a safe method of handling and applying DBCP, or to cause their
subsidiaries or affiliates to do so;
e. Failed to test DBCP prior to releasing these products for
sale, or to cause their subsidiaries or affiliates to do so; and
f. Failed to reveal the results of tests conducted on DBCP to
each plaintiff, governmental agencies and the public, or to
cause their subsidiaries or affiliate to do so.
8. The illnesses and injuries of each plaintiff are also due to the FAULT
or negligence of defendants Standard Fruit Company, Dole Fresh Fruit Company,
Dole Food Company, Inc., Chiquita Brands, Inc. and Chiquita Brands
International, Inc. in that they failed to exercise reasonable care to prevent each
plaintiffs harmful exposure to DBCP-containing products which defendants knew
or should have known were hazardous to each plaintiff in that they, AMONG
OTHERS:
a. Failed to adequately supervise and instruct Plaintiffs in
the safe and proper application of DBCP-containing products;
b. Failed to implement proper methods and techniques of
application of said products, or to cause such to be
implemented;
c. Failed to warn Plaintiffs of the hazards of exposure to said
products or to cause them to be so warned;
 d. Failed to test said products for adverse health effects, or
to cause said products to be tested;
e. Concealed from Plaintiffs information concerning the
observed effects of said products on Plaintiffs;
f. Failed to monitor the health of plaintiffs exposed to said
products;
g. Failed to place adequate labels on containers of said
products to warn them of the damages of said products; and
h. Failed to use substitute nematocides for said products or
to cause such substitutes to [be] used.[62] (Emphasis supplied
and words in brackets ours.)
Quite evidently, the allegations in the Amended Joint-Complaints of NAVIDA, et al., and
ABELLA, et al., attribute to defendant companies certain acts and/or omissions which led to their
exposure to nematocides containing the chemical DBCP. According to NAVIDA, et al., and
ABELLA, et al., such exposure to the said chemical caused ill effects, injuries and illnesses,
specifically to their reproductive system.
Thus, these allegations in the complaints constitute the cause of action of plaintiff
claimants a quasi-delict, which under the Civil Code is defined as an act, or omission which causes
damage to another, there being fault or negligence. To be precise, Article 2176 of the Civil Code
provides:
Article 2176. Whoever by act or omission causes damage to another,
there being fault or negligence, is obliged to pay for the damage done. Such fault
or negligence, if there is no pre-existing contractual relation between the parties,
is called a quasi-delict and is governed by the provisions of this Chapter.
As specifically enumerated in the amended complaints, NAVIDA, et al., and ABELLA, et
al., point to the acts and/or omissions of the defendant companies in manufacturing, producing,
selling, using, and/or otherwise putting into the stream of commerce, nematocides which contain
DBCP, without informing the users of its hazardous effects on health and/or without instructions
on its proper use and application. [63]
Verily, in Citibank, N.A. v. Court of Appeals,[64] this Court has always reminded that
jurisdiction of the court over the subject matter of the action is determined by the allegations of
the complaint, irrespective of whether or not the plaintiffs are entitled to recover upon all or some
of the claims asserted therein. The jurisdiction of the court cannot be made to depend upon the
defenses set up in the answer or upon the motion to dismiss, for otherwise, the question of
jurisdiction would almost entirely depend upon the defendants. What determines the jurisdiction
of the court is the nature of the action pleaded as appearing from the allegations in the
complaint. The averments therein and the character of the relief sought are the ones to be
consulted.
Clearly then, the acts and/or omissions attributed to the defendant companies constitute
a quasi-delict which is the basis for the claim for damages filed by NAVIDA, et al., and ABELLA, et
al., with individual claims of approximately P2.7 million for each plaintiff claimant, which obviously
falls within the purview of the civil action jurisdiction of the RTCs.
Moreover, the injuries and illnesses, which NAVIDA, et al., and ABELLA, et al., allegedly
suffered resulted from their exposure to DBCP while they were employed in the banana
plantations located in the Philippines or while they were residing within the agricultural areas also
located in the Philippines. The factual allegations in the Amended Joint-Complaints all point to
their cause of action, which undeniably occurred in the Philippines. The RTC of General Santos
City and the RTC of Davao City obviously have reasonable basis to assume jurisdiction over the
cases.
It is, therefore, error on the part of the courts a quo when they dismissed the cases on
the ground of lack of jurisdiction on the mistaken assumption that the cause of action narrated
by NAVIDA, et al., and ABELLA, et al., took place abroad and had occurred outside and beyond the
territorial boundaries of the Philippines, i.e., the manufacture of the pesticides, their packaging
in containers, their distribution through sale or other disposition, resulting in their becoming part
of the stream of commerce,[65] and, hence, outside the jurisdiction of the RTCs.
Certainly, the cases below are not criminal cases where territoriality, or the situs of the
act complained of, would be determinative of jurisdiction and venue for trial of
cases. In personal civil actions, such as claims for payment of damages, the Rules of Court allow
the action to be commenced and tried in the appropriate court, where any of the plaintiffs or
defendants resides, or in the case of a non-resident defendant, where he may be found, at the
election of the plaintiff.[66]
In a very real sense, most of the evidence required to prove the claims of NAVIDA, et
al., and ABELLA, et al., are available only in the Philippines. First, plaintiff claimants are all
residents of the Philippines, either in General Santos City or in Davao City. Second, the specific
areas where they were allegedly exposed to the chemical DBCP are within the territorial
jurisdiction of the courts a quo wherein NAVIDA, et al., and ABELLA, et al., initially filed their
claims for damages. Third, the testimonial and documentary evidence from important witnesses,
such as doctors, co-workers, family members and other members of the community, would be
easier to gather in the Philippines.Considering the great number of plaintiff claimants involved in
this case, it is not far-fetched to assume that voluminous records are involved in the presentation
of evidence to support the claim of plaintiff claimants. Thus, these additional factors, coupled with
the fact that the alleged cause of action of NAVIDA, et al., and ABELLA, et al., against the
defendant companies for damages occurred in the Philippines, demonstrate that, apart from
the RTC of General Santos City and the RTC of Davao City having jurisdiction over the subject
matter in the instant civil cases, they are, indeed, the convenient fora for trying these cases.[67]
The RTC of General Santos City and the RTC of Davao City validly acquired
jurisdiction over the persons of all the defendant companies
It is well to stress again that none of the parties claims that the courts a quo lack jurisdiction over
the cases filed before them. All parties are one in asserting that the RTC of General Santos City
and the RTC of Davao City have validly acquired jurisdiction over the persons of the defendant
companies in the action below. All parties voluntarily, unconditionally and knowingly appeared
and submitted themselves to the jurisdiction of the courts a quo.
Rule 14, Section 20 of the 1997 Rules of Civil Procedure provides that [t]he defendants voluntary
appearance in the action shall be equivalent to service of summons. In this connection, all the
defendant companies designated and authorized representatives to receive summons and to
represent them in the proceedings before the courts a quo. All the defendant companies
submitted themselves to the jurisdiction of the courts a quo by making several voluntary
appearances, by praying for various affirmative reliefs, and by actively participating during the
course of the proceedings below.
In line herewith, this Court, in Meat Packing Corporation of the Philippines v.
Sandiganbayan,[68] held that jurisdiction over the person of the defendant in civil cases is acquired
either by his voluntary appearance in court and his submission to its authority or by service of
summons. Furthermore, the active participation of a party in the proceedings is tantamount to
an invocation of the courts jurisdiction and a willingness to abide by the resolution of the case,
and will bar said party from later on impugning the court or bodys jurisdiction.[69]
Thus, the RTC of General Santos City and the RTC of Davao City have validly acquired
jurisdiction over the persons of the defendant companies, as well as over the subject matter of
the instant case. What is more, this jurisdiction, which has been acquired and has been vested
on the courts a quo, continues until the termination of the proceedings.
It may also be pertinently stressed that jurisdiction is different from the exercise of jurisdiction.
Jurisdiction refers to the authority to decide a case, not the orders or the decision rendered
therein. Accordingly, where a court has jurisdiction over the persons of the defendants and the
subject matter, as in the case of the courts a quo, the decision on all questions arising therefrom
is but an exercise of such jurisdiction. Any error that the court may commit in the exercise of its
jurisdiction is merely an error of judgment, which does not affect its authority to decide the case,
much less divest the court of the jurisdiction over the case.[70]
Plaintiffs purported bad faith in filing the subject civil cases in Philippine courts
Anent the insinuation by DOLE that the plaintiff claimants filed their cases in bad faith
merely to procure a dismissal of the same and to allow them to return to the forum of their choice,
this Court finds such argument much too speculative to deserve any merit.
It must be remembered that this Court does not rule on allegations that are unsupported
by evidence on record. This Court does not rule on allegations which are manifestly conjectural,
as these may not exist at all. This Court deals with facts, not fancies; on realities, not
appearances. When this Court acts on appearances instead of realities, justice and law will be
short-lived.[71] This is especially true with respect to allegations of bad faith, in line with the basic
rule that good faith is always presumed and bad faith must be proved.[72]
In sum, considering the fact that the RTC of General Santos City and the RTC of Davao
City have jurisdiction over the subject matter of the amended complaints filed by NAVIDA, et al.,
and ABELLA, et al., and that the courts a quo have also acquired jurisdiction over the persons of
all the defendant companies, it therefore, behooves this Court to order the remand of Civil Case
Nos. 5617 and 24,251-96 to the RTC of General Santos City and the RTC of Davao City,
respectively.
On the issue of the dropping of DOW, OCCIDENTAL and SHELL as respondents
in view of their amicable settlement with NAVIDA, et al., and ABELLA, et al.
NAVIDA, et al., and ABELLA, et al., are further praying that DOW, OCCIDENTAL and SHELL be
dropped as respondents in G.R. Nos. 125078 and 126654, as well as in Civil Case Nos. 5617 and
24,251-96. The non-settling defendants allegedly manifested that they intended to file their
cross-claims against their co-defendants who entered into compromise agreements. NAVIDA, et
al., and ABELLA, et al., argue that the non-settling defendants did not aver any cross-claim in
their answers to the complaint and that they subsequently sought to amend their answers to
plead their cross-claims only after the settlement between the plaintiff claimants and DOW,
OCCIDENTAL, and SHELL were executed. NAVIDA, et al., and ABELLA, et al., therefore, assert
that the cross-claims are already barred.
In their Memoranda, CHIQUITA and DOLE are opposing the above motion of NAVIDA, et
al., and ABELLA, et al., since the latters Amended Complaints cited several instances of tortious
conduct that were allegedly committed jointly and severally by the defendant companies. This
solidary obligation on the part of all the defendants allegedly gives any co-defendant the statutory
right to proceed against the other co-defendants for the payment of their respective
shares. Should the subject motion of NAVIDA, et al., and ABELLA, et al., be granted, and the
Court subsequently orders the remand of the action to the trial court for continuance, CHIQUITA
and DOLE would allegedly be deprived of their right to prosecute their cross-claims against their
other co-defendants. Moreover, a third party complaint or a separate trial, according to
CHIQUITA, would only unduly delay and complicate the proceedings. CHIQUITA and DOLE
similarly insist that the motion of NAVIDA, et al., and ABELLA, et al., to drop DOW, SHELL and
OCCIDENTAL as respondents in G.R. Nos. 125078 and 126654, as well as in Civil Case Nos. 5617
and 24,251-96, be denied.
Incidentally, on April 2, 2007, after the parties have submitted their respective
memoranda, DEL MONTE filed a Manifestation and Motion[73] before the Court, stating that similar
settlement agreements were allegedly executed by the plaintiff claimants with DEL MONTE and
CHIQUITA sometime in 1999. Purportedly included in the agreements were Civil Case Nos. 5617
and 24,251-96. Attached to the said manifestation were copies of the Compromise Settlement,
Indemnity, and Hold Harmless Agreement between DEL MONTE and the settling plaintiffs, as well
as the Release in Full executed by the latter.[74] DEL MONTE specified therein that there were only
four (4) plaintiffs in Civil Case No. 5617 who are claiming against the Del Monte parties[75] and
that the latter have executed amicable settlements which completely satisfied any claims against
DEL MONTE. In accordance with the alleged compromise agreements with the four plaintiffs in
Civil Case No. 5617, DEL MONTE sought the dismissal of the Amended Joint-Complaint in the said
civil case. Furthermore, in view of the above settlement agreements with ABELLA, et al., in Civil
Case No. 24,251-96, DEL MONTE stated that it no longer wished to pursue its petition in G.R. No.
127856 and accordingly prayed that it be allowed to withdraw the same.
Having adjudged that Civil Case Nos. 5617 and 24,251-96 should be remanded to the RTC of
General Santos City and the RTC of Davao City, respectively, the Court deems that the
Consolidated Motions (to Drop Party-Respondents) filed by NAVIDA, et al., and ABELLA, et al.,
should likewise be referred to the said trial courts for appropriate disposition.
Under Article 2028 of the Civil Code, [a] compromise is a contract whereby the parties, by making
reciprocal concessions, avoid a litigation or put an end to one already commenced. Like any other
contract, an extrajudicial compromise agreement is not excepted from rules and principles of a
contract. It is a consensual 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.[76] Judicial approval is not required for its perfection.[77] A compromise has upon the
parties the effect and authority of res judicata[78] and this holds true even if the agreement has
not been judicially approved.[79] In addition, as a binding contract, a compromise agreement
determines the rights and obligations of only the parties to it.[80]
In light of the foregoing legal precepts, the RTC of General Santos City and the RTC of Davao City
should first receive in evidence and examine all of the alleged compromise settlements involved
in the cases at bar to determine the propriety of dropping any party as a defendant therefrom.

The Court notes that the Consolidated Motions (to Drop Party-Respondents) that was
filed by NAVIDA, et al., and ABELLA, et al., only pertained to DOW, OCCIDENTAL and SHELL in
view of the latter companies alleged compromise agreements with the plaintiff
claimants. However, in subsequent developments, DEL MONTE and CHIQUITA supposedly
reached their own amicable settlements with the plaintiff claimants, but DEL MONTE qualified that
it entered into a settlement agreement with only four of the plaintiff claimants in Civil Case No.
5617. These four plaintiff claimants were allegedly the only ones who were asserting claims
against DEL MONTE. However, the said allegation of DEL MONTE was simply stipulated in their
Compromise Settlement, Indemnity, and Hold Harmless Agreement and its truth could not be
verified with certainty based on the records elevated to this Court. Significantly, the 336 plaintiff
claimants in Civil Case No. 5617 jointly filed a complaint without individually specifying their
claims against DEL MONTE or any of the other defendant companies. Furthermore, not one
plaintiff claimant filed a motion for the removal of either DEL MONTE or CHIQUITA as defendants
in Civil Case Nos. 5617 and 24,251-96.
There is, thus, a primary need to establish who the specific parties to the alleged
compromise agreements are, as well as their corresponding rights and obligations therein.For this
purpose, the courts a quo may require the presentation of additional evidence from the
parties. Thereafter, on the basis of the records of the cases at bar and the additional evidence
submitted by the parties, if any, the trial courts can then determine who among the defendants
may be dropped from the said cases.
It is true that, under Article 2194 of the Civil Code, the responsibility of two or more
persons who are liable for the same quasi-delict is solidary. A solidary obligation is one in which
each of the debtors is liable for the entire obligation, and each of the creditors is entitled to
demand the satisfaction of the whole obligation from any or all of the debtors.[81]
In solidary obligations, the paying debtors right of reimbursement is provided for under
Article 1217 of the Civil Code, to wit:
Art. 1217. Payment made by one of the solidary debtors extinguishes
the obligation. If two or more solidary debtors offer to pay, the creditor may
choose which offer to accept.
He who made the payment may claim from his co-debtors only the share
which corresponds to each, with the interest for the payment already made. If
the payment is made before the debt is due, no interest for the intervening
period may be demanded.
When one of the solidary debtors cannot, because of his insolvency,
reimburse his share to the debtor paying the obligation, such share shall be
borne by all his co-debtors, in proportion to the debt of each.
The above right of reimbursement of a paying debtor, and the corresponding liability of
the co-debtors to reimburse, will only arise, however, if a solidary debtor who is made to answer
for an obligation actually delivers payment to the creditor. As succinctly held in Lapanday
Agricultural Development Corporation v. Court of Appeals,[82][p]ayment, which means not only
the delivery of money but also the performance, in any other manner, of the obligation, is the
operative fact which will entitle either of the solidary debtors to seek reimbursement for the share
which corresponds to each of the [other] debtors.[83]
In the cases at bar, there is no right of reimbursement to speak of as yet. A trial
on the merits must necessarily be conducted first in order to establish whether or not
defendant companies are liable for the claims for damages filed by the plaintiff
claimants, which would necessarily give rise to an obligation to pay on the part of the
defendants.
At the point in time where the proceedings below were prematurely halted, no cross-
claims have been interposed by any defendant against another defendant. If and when such a
cross-claim is made by a non-settling defendant against a settling defendant, it is within the
discretion of the trial court to determine the propriety of allowing such a cross-claim and if the
settling defendant must remain a party to the case purely in relation to the cross claim.
In Armed Forces of the Philippines Mutual Benefit Association, Inc. v. Court of
Appeals,[84] the Court had the occasion to state that where there are, along with the parties to
the compromise, other persons involved in the litigation who have not taken part in concluding
the compromise agreement but are adversely affected or feel prejudiced thereby, should not be
precluded from invoking in the same proceedings an adequate relief therefor.[85]
Relevantly, in Philippine International Surety Co., Inc. v. Gonzales,[86] the Court upheld
the ruling of the trial court that, in a joint and solidary obligation, the paying debtor may file a
third-party complaint and/or a cross-claim to enforce his right to seek contribution from his co-
debtors.
Hence, the right of the remaining defendant(s) to seek reimbursement in the above
situation, if proper, is not affected by the compromise agreements allegedly entered into by
NAVIDA, et al., and ABELLA, et al., with some of the defendant companies.
WHEREFORE, the Court hereby GRANTS the petitions for review on certiorari in G.R.
Nos. 125078, 126654, and 128398. We REVERSE and SET ASIDE the Order dated May 20, 1996
of the Regional Trial Court of General Santos City, Branch 37, in Civil Case No. 5617, and the
Order dated October 1, 1996 of the Regional Trial Court of Davao City, Branch 16, and its
subsequent Order dated December 16, 1996 denying reconsideration in Civil Case No. 24,251-
96, and REMAND the records of this case to the respective Regional Trial Courts of origin for
further and appropriate proceedings in line with the ruling herein that said courts have
jurisdiction over the subject matter of the amended complaints in Civil Case Nos. 5617 and
24,251-96.
The Court likewise GRANTS the motion filed by Del Monte to withdraw its petition in G.R.
No. 127856. In view of the previous grant of the motion to withdraw the petition in G.R. No.
125598, both G.R. Nos. 127856 and 125598 are considered CLOSED AND TERMINATED.
No pronouncement as to costs.
SO ORDERED.
11 - G.R. No. 167321 JULY 31, 2006
EPIFANIO SAN JUAN, JR., v. JUDGE RAMON A. CRUZ,
Before the Court is a Petition for Review on Certiorari of the Resolution[1] of the Court of Appeals
(CA) in CA-G.R. SP No. 87458 dismissing the Petition for Certiorari with Prayer for Issuance of a
Temporary Restraining Order and/or Writ of Preliminary Injunction of petitioner Epifanio San Juan,
Jr., as well as its Resolution[2] denying the motion for reconsideration thereof.
 The Antecedents
Loreto Samia San Juan executed a Last Will and Testament naming Oscar Casa as one of the
devisees therein. Upon Loretos death on October 25, 1988, Atty. Teodorico A. Aquino filed a
petition for the probate of the will in the Regional Trial Court (RTC) of Quezon City. The case was
raffled to Branch 224 of the court and was docketed as Special Proceedings No. 98-36118.
While the petition was pending, Oscar Casa died intestate on May 24, 1999. The firm of Aquino,
Galang, Lucas, Espinoza, Miranda & Associates entered their appearance as counsel of Federico
Casa, Jr., who claimed to be one of the heirs of Oscar Casa and their representative.
On August 14, 2002, the probate court issued an Order denying the entry of appearance
of said law firm, considering that Federico Casa, Jr. was not the executor or administrator of the
estate of the devisee, hence, cannot be substituted for the deceased as his representative as
required by Section 16, Rule 3 of the Rules of Court. On November 22, 2002, the court issued an
order directing Aquino to secure the appointment of an administrator or executor of the estate of
Oscar Casa in order that the appointee be substituted in lieu of the said deceased.
On February 26, 2003, Aquino filed a pleading entitled Appointment of Administrator
signed by Candelaria, Jesus, Arlyn, Nestor, Edna, Benhur, Federico, Rafael and Ma. Eden, all
surnamed Casa, on February 24, 2003, praying that one of them, Federico Casa, Jr., be
designated as administrator of the estate of the deceased and that he be substituted for the
deceased.
NOW THEREFORE, in compliance with the ORDER of the Probate Court, cited
above, we, the legal heirs of the deceased OSCAR CASA, unanimously designate
and appoint FEDERICO CASA, JR., as the ADMINISTRATOR of the property to be
inherited by the deceased OSCAR CASA, in the WILL of the late LORETO SAMIA
SAN JUAN, considering that FEDERICO CASA, JR., is the nearest accessible heir
to attend the hearing of the probate of the will and is most competent to assume
the responsibilities and the duties of the ADMINISTRATOR. We authorize him to
represent us the heirs of the deceased OSCAR CASA, on the hearing of the
probate of the will of the testatrix and to perform such duties as might be
required by the Probate Court; to take possession of the properties designated
in the WILL upon distribution by the appointed ADMINISTRATOR of the Estate of
LORETO SAMIA SAN JUAN. (emphasis supplied)[3]
In compliance with the order of the court, Epifanio San Juan filed a Motion to Declare
Appointment of Administrator As Inadequate or Insufficient.[4] He maintained that the heirs should
present an administrator of the estate of Oscar Casa as the representative of the estate in the
case.
In his reply, Aquino stated that, under Section 16, Rule 3 of the Rules of Court, the heirs of Oscar
Casa may be substituted for the deceased without need for appointment of an administrator or
executor of the estate. He also claimed that the court is enjoined to require the representative to
appear before the court and be substituted within the prescribed period.
On December 2, 2003, the RTC issued an Order denying the motion of San
Juan. Contrary to its Order dated November 22, 2002, the court held that there was, after all, no
need for the appointment of an administrator or executor as substitute for the deceased
devisee. It is enough, the court declared, that a representative be appointed as provided in
Section 16, Rule 3 of the Rules of Court.[5]
San Juan received a copy of the December 2, 2003 Order on December 15, 2003 and
filed, on December 30, 2003, a motion for reconsideration thereof. Citing the ruling of this Court
in Lawas v. Court of Appeals,[6] he averred that, under Section 16, Rule 3 of the Rules of Court,
while the court may allow the heirs of the deceased to be substituted in cases of unreasonable
delay in the appointment of an executor or administrator, or where the heirs resort to an
extrajudicial settlement of the estate, priority is still given to the legal representative of the
deceased, that is, the executor or administrator of the estate. Moreover, in case the heirs of the
deceased will be substituted, there must be a prior determination by the probate court of who the
rightful heirs are. He opined that this doctrine is in line with Article 1058 of the New Civil Code,
and the provisions of Section 6, Rule 78 and Section 2, Rule 79 of the Rules of Court. In this case,
however, the alleged heirs of Oscar Casa did not file any petition for the appointment of an
administrator of his estate; hence, Federico Casa, Jr. is not qualified to be appointed as substitute
for the deceased devisee. San Juan pointed out that the December 2, 2003 Order of the probate
court contravened its August 14, 2002 and November 22, 2002 Orders.[7]
The motion for reconsideration was denied on February 27, 2004 where the probate court declared
that it had carefully evaluated the arguments raised by the parties and found no compelling
ground or cogent reason to set aside its December 2, 2003 Order.[8] Petitioner received a copy of
the Order on March 18, 2004.
On May 7, 2004, San Juan filed a Motion to Admit his second motion for reconsideration
dated May 6, 2004, appending thereto the December 2, 2003 Order of the RTC.[9] He cited Torres,
Jr. v. Court of Appeals,[10] where it was held that the purpose behind the rule on substitution of
parties is the protection of the right of every party to due process, to ensure that the deceased
party would continue to be properly represented in the suit through the duly appointed legal
representative of his estate. The need for substitution of heirs is based on the right to due process
accruing to every party in any proceeding, and the exercise of judicial power to hear and
determine a cause presupposes that the trial court acquires jurisdiction over the persons of the
parties.
San Juan emphasized that it is only in the absence of an executor or administrator that the heirs
may be allowed by the court to substitute the
deceased party. He averred that the purported heirs simply agreed among themselves to appoint
a representative to be substituted for the deceased, which is contrary to the requirement of a
prior hearing for the court to ascertain who the rightful heirs are. The Orders of the Court
dated December 2, 2003 and February 27, 2004 may be used by purported heirs in order to
inherit properties from estates of deceased parties, which will then allow the rules of procedure
to be used as an instrument for fraud and undermining due process.[11] San Juan reiterated the
rulings of this Court in Dela Cruz v. Court of Appeals[12] and Lawas v. Court of Appeals,[13] that
court proceedings conducted or continued without a valid substitution of a deceased party cannot
be accorded validity and binding effect. He prayed that the February 27, 2004 Order be
reconsidered and a new order be issued as follows:
(a) declaring the Appointment of Administrator dated February 14,
2003 insufficient or inadequate compliance with the rules of procedure on
substitution of a deceased party;
(b) directing petitioner to secure from the appropriate court the appointment of
an administrator of the estate of the deceased Oscar Casa; and
 (c) directing that further proceedings in the case be deferred until after the
substitution of the deceased Oscar Casa by the court-appointed administrator or
executor of his estate.
Oppositor prays for other and further reliefs which may be just and equitable.[14]
On June 11, 2004, the probate court issued an order denying the second motion for
reconsideration of San Juan. It noted that the motion merely reiterated the same arguments in
his first motion for reconsideration which had already been passed upon. Citing the rulings
in Montaano v. Suesa[15] and Riera v. Palmanori,[16] it concluded that there was no need for the
appointment of an administrator of the estate of the deceased Oscar Casa at that stage of the
proceedings since a legatee is not considered either as an indispensable or necessary party in the
probate of a will.[17]
When San Juan received a copy of the June 11, 2004 Order of the trial court, he filed, on July 23,
2004, a motion for reconsideration thereof. He took exception to the probate courts reliance in
the Montaano and Riera cases, as claiming that said rulings were not relevant to the issue of the
validity of the appointment of Federico Casa Jr., by the alleged heirs of Oscar Casa, as
administrator and substitute for the deceased devisee. He insisted that the cases dealt only with
the question of whether or not the probate court can rule on the validity of the provisions of the
will; they do not involve the same issue presented by the oppositor, namely, whether or not a
substitution of a legatee under the will who died during the probate proceedings may be done by
simply submitting an Appointment of Administrator, or whether or not there is a need for a
deceased legatee to be substituted by his/her duly appointed legal representative or administrator
of his estate.
San Juan further posited that the estate court, sitting as a probate court, does not only decide on
the questions of identity and testamentary capacity of the testator and the due execution of the
will; it is likewise charged with the settlement of the estate of the testator after the will has been
approved. Thus, the probate court must not only determine the validity of the will, but also the
rightful heirs, legatees and devisees for the purpose of settling the estate of the testator.[18]
Aquino opposed the motion, contending that it was, in fact, a third motion for reconsideration, a
prohibited pleading under Section 3, Rule 37 of the 1997 Rules of Civil Procedure.[19]
On September 8, 2004, the probate court issued an Order sustaining Aquinos argument
and denied the motion for reconsideration of San Juan.[20]
San Juan, now petitioner, filed a petition for certiorari with the CA on November 22, 2004 for the
nullification of the orders issued by the probate court on the following grounds:
A. THE RESPONDENT REGIONAL TRIAL COURT OF QUEZON CITY GRAVELY
ABUSED ITS DISCRETION WHICH AMOUNTS TO LACK, OR IN EXCESS, OF
JURISDICTION IN RULING THAT THE APPOINTMENT OF ADMINISTRATOR DATED
FEBRUARY 14, 2003 MADE BY PRIVATE RESPONDENT IS IN ACCORDANCE WITH
THE RULES ON CIVIL PROCEDURE ON PROPER SUBSTITUTION OF PARTIES.
B. THE RESPONDENT REGIONAL TRIAL COURT OF QUEZON CITY GRAVELY
ABUSED ITS DISCRETION WHICH AMOUNTS TO LACK, OR IN EXCESS, OF
JURISDICTION IN DENYING DUE COURSE TO PETITIONERS MOTION FOR
RECONSIDERATION ON THE GROUND THAT SAID MOTION IS A THIRD MOTION
FOR RECONSIDERATION WHICH IS A PROHIBITED PLEADING UNDER SEC. 5,
RULE 37 OF THE RULES OF COURT.[21]
On December 1, 2004, the CA dismissed the petition on the ground that it was filed beyond the
60-day period counted from notice to petitioner of the trial courts February 27, 2004 Order. The
appellate court declared that the May 6, 2004 motion for reconsideration of petitioner was a pro
forma motion because it was a second motion for reconsideration which sought the same relief
as the first motion, hence, did not toll the running of the 60-day period.[22] The appellate court
cited the ruling of this Court in University of Immaculate Concepcion v. Secretary of Labor and
Employment.[23]
Petitioner filed a motion for reconsideration of the resolution of the CA, contending that
the orders sought to be reconsidered by him were interlocutory, hence, cannot be considered pro
forma or forbidden by the Rules of Court. He cited the rulings of this Court in Dizon v. Court of
Appeals,[24] Philgreen Trading Construction Corporation v. Court of Appeals,[25] and the cases cited
in the latter decision.[26] However, on February 24, 2005, the CA resolved to deny the motion of
petitioner.[27]
Petitioner now seeks relief from this Court, via a petition for review on certiorari, for the reversal
of the resolutions of the appellate court. He raises the following issues:
(A)
WHETHER OR NOT THE SIXTY-DAY PERIOD FOR FILING A PETITION
FOR CERTIORARI UNDER RULE 65 OF THE RULES OF COURT IS RECKONED
FROM NOTICE OF DENIAL OF THE FIRST MOTION FOR RECONSIDERATION OF
AN INTERLOCUTORY ORDER EVEN THOUGH A SECOND AND THIRD MOTION FOR
RECONSIDERATION (WHICH ARE NOT PROHIBITED MOTIONS) OF THE SAME
INTERLOCUTORY ORDER HAD BEEN FILED AND WERE LATER DENIED.
(B)
WHETHER OR NOT A PERSON NOMINATED AS ADMINISTRATOR BY PURPORTED
HEIRS OF A DEVISEE OR LEGATEE IN A WILL UNDER PROBATE MAY VALIDLY
SUBSTITUTE FOR THAT DEVISEE OR LEGATEE IN THE PROBATE PROCEEDINGS
DESPITE THE FACT THAT SUCH ADMINISTRATOR IS NOT THE COURT-
APPOINTED ADMINISTRATOR OF THE ESTATE OF THE DECEASED DEVISEE OR
LEGATEE.[28]
On the first issue, petitioner avers that the reckoning of the 60-day period for filing a petition
for certiorari under Rule 65 of the Rules of Court from the notice of denial of the first motion for
reconsideration is applicable only if the subject of the petition is a judgment, final resolution, or
order. It does not apply if the subject of the petition is merely an interlocutory order. He points
out that the reason for this is that only one motion for reconsideration of a judgment or final order
is allowed under Section 5, Rule 37 of the Rules of Court. A second motion for reconsideration of
a
judgment or final order is a prohibited pleading; hence, the period for filing a petition
for certiorari may not be reckoned from notice of denial of such second and prohibited motion for
reconsideration. Petitioner asserts that a second (or even a third) motion for reconsideration of
an interlocutory order is not prohibited; hence, the 60-day period for filing a petition
for certiorari may be reckoned from notice of denial of subsequent motions for reconsideration.
Petitioner further claims that the Orders dated December 2, 2003, February 27, 2004, June 11,
2004 and September 8, 2004 issued by the RTC are only interlocutory orders. They deal solely
with the issue concerning the proper substitution of the deceased Oscar Casa who is one of the
devisees and legatees named in the purported will of the testatrix, Loreto San Juan, which is the
subject matter of the probate proceedings pending with the respondent court. Said orders did not
terminate or finally dispose of the case but left something to be done by the respondent court
before the case is finally decided on the merits. The assailed orders do not go into the merits of
the probate case, particularly on the due execution and validity of the will. It pertains only to the
proper substitution of the parties. Thus, the orders are not final orders from which no second or
third motion for reconsideration may be filed.[29] It cannot also be said that the second motion for
reconsideration did not toll the running of the reglementary period for filing a petition
for certiorari, considering that there is no prohibition in the filing of a second motion for
reconsideration of an interlocutory order. Furthermore, there is no intention on the part of
petitioner to delay proceedings before the lower court when he filed the third motion for
reconsideration, as he only sought to correct the probate courts patently erroneous application of
the law. Petitioner emphasizes that he filed the petition for certiorari with the CA in view of the
grave abuse of discretion which amounted to lack of or excess of jurisdiction committed by
respondent trial court when it wrongfully assumed in its Order denying the
third motion for reconsideration that the order sought to be reconsidered is a final order on the
merits of the case and that the motion for reconsideration is a third motion for reconsideration of
a final order.[30]
The petition is denied for lack of merit.
We agree with the ruling of the CA that the petition for certiorari filed by petitioner in the appellate
court was time-barred. However, the raison detre for its ruling is incorrect.
Contrary to the ruling of the CA, the proscription against a pro forma motion applies only
to a final resolution or order and not to an interlocutory one. The ruling of this Court in University
of Immaculate Concepcion v. Secretary of Labor and Employment[31] involved a final order of the
NLRC and not an interlocutory order.
In this case, the December 2, 2003 Order of the trial court denying the motion of petitioner to
consider insufficient or inadequate respondents compliance with its November 22, 2002 Order is
interlocutory. The order does not finally dispose of the case, and does not end the task of the
court of adjudicating the parties contentions and determining their rights and liabilities as regards
each other but obviously indicates that other things remain to be done. Such order may not be
questioned except only as part of an appeal that may eventually be taken from the final judgment
rendered in the case.[32] It bears stressing however that while the motion for reconsideration filed
by petitioner assailing the December 2, 2003 Order of the trial court based on the same grounds
as those alleged in his first motion is not pro forma, such second motion for reconsideration can
nevertheless be denied on the ground that it is merely a rehash or a mere reiteration of grounds
and arguments already passed upon and resolved by the court. Such
a motion cannot be rejected on the ground that a second motion for reconsideration of an
interlocutory order is forbidden by law or by the Rules of Court.[33]
Section 4, Rule 65 of the Rules of Civil Procedure as amended by the resolution of the Court in
Bar Matter No. 00-2-03-SC which took effect on September 1, 2000, reads:
Sec. 4. Where and when petition filed. The petition shall be filed not later than
sixty (60) days from notice of the judgment, order or resolution. In case a motion
for reconsideration or new trial is timely filed, whether such motion is required
or not, the sixty (60) day period shall be counted from notice of the denial of the
said motion.
The petition shall be filed in the Supreme Court or, if it relates to the acts or
omissions of a lower court or of a corporation, board, officer or person, in the
Regional Trial Court exercising jurisdiction over the territorial area as defined by
the Supreme Court. It may also be filed in the Court of Appeals whether or not
the same is in the aid of its appellate jurisdiction, or in the Sandiganbayan if it
is in aid of its appellate jurisdiction. If it involves the acts or omissions of a quasi-
judicial agency, unless otherwise provided by law or these rules, the petition
shall be filed in and cognizable only by the Court of Appeals.
No extension of time to file the petition shall be granted except for compelling
reason and in no case exceeding fifteen (15) days.
Thus, there are three essential dates that must be stated in a petition for certiorari brought under
Rule 65 of the Rules of Court for the nullification of a judgment, resolution or order: (1) the date
when notice of the judgment, resolution or order was received; (2) when a motion for a new trial
or reconsideration of the judgment, order or resolution was submitted; and (3) when notice of
the denial thereof was received by petitioner.
The requirement of setting forth the three (3) dates in a petition for certiorari under Rule 65 of
the Rules of Court is for the purpose of determining its timeliness, considering that a petition is
required to be filed not later than 60 days from notice of the judgment, order or resolution sought
to be nullified.[34]
We agree with the ruling of the CA that the petition for certiorari filed by petitioner with the CA
on November 22, 2004 was filed beyond the 60-day period therefor. Petitioner received, on March
18, 2004, the February 27, 2004 Order of the court denying his motion for reconsideration of
the December 2, 2003 Order. Petitioner had 60 days from March 18, 2004 or until May 17,
2004 within which to file his petition for certiorari. However, petitioner filed his petition
for certiorari with the CA only on November 22, 2004.
The 60-day period should not be reckoned from petitioners receipt on June 11, 2004 of
the denial of his May 7, 2004 second motion for reconsideration. The 60-day period shall be
reckoned from the trial courts denial of his first motion for reconsideration, otherwise indefinite
delays will ensue.[35]
We note that the parties articulated their stance in their respective pleadings not only on the
timeliness of the petition for certiorari in the CA but also on the validity of the assailed December
2, 2003 Order of the trial court. Ordinarily, in view of the dismissal of the petition because it was
time-barred, the Court will no longer delve into and resolve the other issues raised in the
petition. However, in this case, we find it appropriate and necessary to resolve once and for all
the issue of whether there is a need for the appointment of an administrator of the estate of Oscar
Casa, or whether it is enough that he be substituted by his heirs.
Section 16, Rule 3 of the 1997 Rules of Civil Procedure reads:
Sec. 16. Death of party; duty of counsel. Whenever a party to a pending action
dies, and the claim is not thereby extinguished, it shall be the duty of his counsel
to inform the court within thirty (30) days after such death of the fact thereof,
and to give the name and address of his legal representative or
representatives. Failure of counsel to comply with this duty shall be a ground for
disciplinary action.

The heirs of the deceased may be allowed to be substituted for the deceased,
without requiring the appointment of an executor or administrator and the court
may appoint a guardian ad litem for the minor heirs.
The court shall forthwith order said legal representative or representatives to
appear and be substituted within a period of thirty (30) days from notice.
If no legal representative is named by the counsel for the deceased party, or if
the one so named shall fail to appear within the specified period, the court may
order the opposing party, within a specified time, to procure the appointment of
an executor or administrator for the estate of the deceased and the latter shall
immediately appear for and on behalf of the deceased. The court charges in
procuring such appointment, if defrayed by the opposing party, may be
recovered as costs.
The rule is a revision of Section 17, Rule 3 of the Rules of Court which reads:
Death of party. After a party dies and the claim is not thereby extinguished, the
court shall order, upon proper notice, the legal representative of the deceased
to appear and to be substituted for the deceased, within a period of thirty (30)
days, or within such time as may be granted. If the legal representative fails to
appear within said time, the court may order the opposing party to procure the
appointment of a legal representative of the deceased within a time to be
specified by the court, and the representative shall immediately appear for and
on behalf of the interest of the deceased. The court charges involved in procuring
such appointment, if defrayed by the opposing party, may be recovered as
costs. The heirs of the deceased may be allowed to be substituted for the
deceased, without requiring the appointment of an executor or administrator and
the court may appoint guardian ad litem for the minor heirs.[36]
The second paragraph of the rule is plain and explicit: the heirs may be allowed to be
substituted for the deceased without requiring the appointment of an administrator or
executor. However, if within the specified period a legal representative fails to appear, the court
may order
the opposing counsel, within a specified period, to process the appointment of an administrator
or executor who shall immediately appear for the estate of the deceased.[37] The pronouncement
of this Court in Lawas v. Court of Appeals[38] (relied upon by petitioner), that priority is given to
the legal representative of the deceased (the executor or administrator) and that it is only in case
of unreasonable delay in the appointment of an executor or administrator, or in cases where the
heirs resort to an extrajudicial settlement of the estate that the court may adopt the alternative
of allowing the heirs of the deceased to be substituted for the deceased, is no longer
true.[39] In Gochan v. Young,[40] a case of fairly recent vintage, the Court ruled as follows:
The above-quoted rules, while permitting an executor or administrator to
represent or to bring suits on behalf of the deceased, do not prohibit the heirs
from representing the deceased. These rules are easily applicable to cases in
which an administrator has already been appointed. But no rule categorically
addresses the situation in which special proceedings for the settlement of an
estate have already been instituted, yet no administrator has been appointed. In
such instances, the heirs cannot be expected to wait for the appointment of an
administrator; then wait further to see if the administrator appointed would care
enough to file a suit to protect the rights and the interests of the deceased; and
in the meantime do nothing while the rights and the properties of the decedent
are violated or dissipated.
The Rules are to be interpreted liberally in order to promote their objective of
securing a just, speedy and inexpensive disposition of every action and
proceeding. They cannot be interpreted in such a way as to unnecessarily put
undue hardships on litigants. For the protection of the interests of the decedent,
this Court has in previous instances recognized the heirs as proper
representatives of the decedent, even when there is already an administrator
appointed by the court. When no administrator has been appointed, as in this
case, there is all the more reason to recognize the heirs as the proper
representatives of the deceased. Since the Rules do not specifically prohibit them
from representing the deceased, and since no administrator had as yet been
appointed at the time of the institution of the Complaint with the SEC, we see
nothing wrong with the fact that it was the heirs of John D. Young, Sr. who
represented his estate in the case filed before the SEC. (Emphasis supplied)[41]
The heirs of the estate of Oscar Casa do not need to first secure the appointment of an
administrator of his estate, because from the very moment of his death, they stepped into his
shoes and acquired his rights as devisee/legatee of the deceased Loreto San Juan. Thus, a prior
appointment of an administrator or executor of the estate of Oscar Casa is not necessary for his
heirs to acquire legal capacity to be substituted as representatives of the estate.[42] Said heirs
may designate one or some of them as their representative before the trial court.
Hence, even on the threshold issue raised in the RTC and in the petition for certiorari in the CA,
the assailed order of the RTC is correct.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. Costs against petitioner.
SO ORDERED.
G.R. No. 198226 July 18, 2014
ABOITIZ TRANSPORT SYSTEM CORPORATION and ABOITIZ SHIPPING
CORPORATION, Petitioners,
vs.
CARLOS A. GOTHONG LINES, INC. and VICTOR S. CHIONGBIAN, Respondents.
x-----------------------x
12 - G.R. No. 198228
ABOITIZ TRANSPORT SYSTEM CORPORATION, Petitioner,
vs.
CARLOS A. GOTHONG LINES, INC. and VICTOR S. CHIONGBIAN, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in these petitions for review on certiorari1 are the Orders dated August 13, 2010,2 April
15, 2011,3 and July 6, 20114 of the Regional Trial Court of Cebu City, Branch 20 (RTC) in Civil
Case No. CEB-34951, which confirmed the notice of dismissal filed by respondent Carlos A.
Gothong Lines, Inc. (CAGLI) and, consequently, dismissed the case without prejudice, denied
petitioners Aboitiz Transport System Corporation (ATSC) and Aboitiz Shipping Corporation’s
(ASC) motion for reconsideration, and deemed ATSC’s motion to exclude respondent Victor S.
Chiongbian (respondent Chiongbian) from arbitration moot and academic, respectively.
The Facts
ASC, CAGLI, and William Lines, Inc. (WLI), principally owned by the Aboitiz, Gothong, and
Chiongbian families, respectively, entered into an Agreement5 dated January 8, 1996, which
was signed by Jon Ramon Aboitiz for ASC, Benjamin D. Gothong (Gothong) for CAGLI, and
respondent Chiongbian for WLI. In the said Agreement, ASC and CAGLI agreed to transfer their
shipping assets to WLI inexchange for the latter’s shares of capital stock. The parties likewise
agreed that WLI would run the merged shipping business and be renamed "WG&A, Inc."
Pertinently, Section 11.06 of the Agreement provides that all disputes arising out of or in
connection with the Agreement shall be finally settled by arbitration in accordance with Republic
Act No. (RA) 876, otherwise known as "The Arbitration Law,"6 and that each of the parties shall
appoint one arbitrator, and the three arbitrators would then appoint the fourth arbitrator who
shall act as Chairman.
Among the attachments to the Agreement was a letter7 dated January 8, 1996 written by
respondent Chiongbian and addressed to Gothong, stating that WLI committed to acquire from
CAGLI’s inventory certain spare parts and materials not exceeding ₱400 Million. In this relation,
a valuation of CAGLI’s inventory was conducted wherein it was shown that the same amounted
to ₱514 Million.8 Thereafter, WLI received inventory valued at ₱558.89 Million, but only paid
CAGLI the amount of ₱400 Million as agreed upon in the Agreement.9 Dissatisfied, CAGLI sent
to WLI various letters in 2001, demanding that the latter pay or return the inventory that it
received in excess of ₱400 Million.10
Sometime in 2002, the Chiongbian and Gothong families decided to sell their respective
interests in WLI/WG&A to the Aboitiz family. This resulted in the execution of a Share Purchase
Agreement11 whereby Aboitiz Equity Ventures (AEV) agreed to purchase and acquire the
WLI/WG&A shares of the Chiongbian and Gothong families. Thereafter, the corporate name of
WLI/WG&A was changed to ATSC.12
Six (6) years later, or in 2008, CAGLI sent a letter13 dated February 14, 2008 to ATSC
demanding that the latter pay the excess inventory it delivered to WLI amounting to
158,399,700.00. CAGLI likewise demanded AEV and respondent Chiongbian that they refer their
dispute to arbitration.14 In response, AEV countered that the excess inventory had already been
returned to CAGLI and that it should not be included in the dispute, considering that it is an
entity separate and distinct from ATSC.15 Thus, CAGLI was constrained to file a
complaint16 before the RTC against Chiongbian, ATSC, ASC, and AEV to compel them to submit
to arbitration.
For their part, ATSC and AEV moved for the dismissal of the case, contending that CAGLI did
not have a cause of action for arbitration since its claim had already been paid or otherwise,
extinguished, and, in any event, said action had already prescribed.17
The RTC Proceedings
In an Order18 dated December 4, 2009, the RTC dismissed the complaint only with respect to
AEV for lack of cause of action,19 but not as to the other defendants. Thereafter, the RTC issued
an Order20 dated February 26, 2010, directing CAGLI, respondent Chiongbian, ATSC, and ASC
to proceed to arbitration, and accordingly, the parties appointed their respective arbitrators,
with ATSC and ASC doing so only on an ad cautelam basis.21
Meanwhile, ATSC filed a Motion for Reconsideration/To Exclude22 dated March 25, 2010 praying
that respondent Chiongbian be excluded from the arbitration proceedings since the latter was
not a party to the Agreement. Pending resolution of the said motion, CAGLI filed a Notice of
Dismissal23 dated July 8, 2010, averring that it has decided to withdraw its complaint in view of
the fact that the opposing parties had not filed their respective responsive pleadings.
In an Order24 dated August 13, 2010, the RTC found CAGLI’s Notice of Dismissal meritorious,
and, thus, confirmed the same and ordered the case dismissed without prejudice. Dissatisfied,
ATSC and ASC moved for reconsideration25 which was, however, denied in an Order26 dated
April 15, 2011. In said Order, the RTC cited Section 1 of Rule 17 of the Rules of Court which
allows the plaintiff to file a notice of dismissal of the complaint as a matter of right "before
service of the answer or a motion for summary judgment." It further ruled that, save for the
condition that no answer or motion for summary judgment had been priorly filed, nothing in the
rules or law expressly prohibits or restricts the right of the plaintiff to withdraw the complaint by
mere notice of dismissal at any stage of the proceedings.27
Separately, the RTC issued an Order28 dated July 6, 2011, denying ATSC’s Motion for
Reconsideration/To Exclude, holding that the issue raised in the said motion has been rendered
moot and academic in view of the confirmation of CAGLI’s notice of dismissal.
Hence, the instant petitions.
The Issues Before the Court
The issues for the Court’s resolution are as follows: (a) whether or not the RTC was correct in
confirming CAGLI’s notice of dismissal and, consequently, dismissing the case without
prejudice; and (b) whether or not respondent Chiongbian should be excluded from the
arbitration proceedings.
The Court’s Ruling
The petition is meritorious.
A. Propriety of CAGLI’s Notice of Dismissal.
At the outset, the Court notes that the nature of the complaint filed by CAGLI before the RTC is
for the enforcement of an arbitration agreement, governed by Section 6 of RA 876, viz.:
Section 6. Hearing by court. – A party aggrieved by the failure, neglect or refusal of another to
perform under an agreement in writing providing for arbitration may petition the court for an
order directing that such arbitration proceed in the manner provided for in such agreement. Five
days notice in writing of the hearing of such application shall be served either personally or by
registered mail upon the party in default. The court shall hear the parties, and upon being
satisfied that the making of the agreement or such failure to comply therewith is not in issue,
shall make an order directing the parties to proceed to arbitration in accordance with the terms
of the agreement. If the making of the agreement or default be in issue the court shall proceed
to summarily hear such issue. If the finding be that no agreement in writing providing for
arbitration was made, or that there is no default in the proceeding thereunder, the proceeding
shall be dismissed. Ifthe finding be that a written provision for arbitration was made and there
is a default in proceeding thereunder, an order shall be made summarily directing the parties to
proceed with the arbitration in accordance with the terms thereof.
x x x x (Emphasis supplied)
In the case of Gonzales v. Climax Mining, Ltd. (Gonzales),29 the Court had instructed that the
special proceeding under the above-quoted provision is the procedural mechanism for the
enforcement of the contract to arbitrate.30 RA 876 explicitly confines the court’s authority only
to pass upon the issue of whether there is or there is no agreement in writing providing for
arbitration. If there is such agreement, the court shall issue an order summarily directing the
parties to proceed with the arbitration in accordance with the terms thereof; otherwise, the
proceeding shall be dismissed.31 To stress, such proceeding is merely a summary remedy to
enforce the agreement to arbitrate and the duty of the court is not to resolve the merits of the
parties’ claims but only to determine if they should proceed to arbitration or not.32
In the present case, the records show that the primary relief sought for in CAGLI’s complaint,
i.e., to compel the parties to submit to arbitration,33 had already been granted by the RTC
through its Order34 dated February 26, 2010. Undeniably, such Order partakes of a judgment on
the merits of the complaint for the enforcement of the arbitration agreement.
At this point, although no responsive pleading had been filed by ATS C,35 it is the rules on
appeal, or other proceedings after rendition of a judgment or final order – no longer those on
notice of dismissal – that come into play. Verily, upon the rendition of a judgment or final
order,36 the period "before service of the answer or of a motion for summary judgment,"
mentioned in Section 137 of Rule 17 of the Rules of Court when a notice of dismissal may be
filed by the plaintiff, no longer applies. As a consequence, a notice of dismissal filed by the
plaintiff at such judgment stage should no longer be entertained or confirmed.1âwphi1
In view of the foregoing, it was an error on the part of the RTC to have confirmed the notice of
dismissal and to have dismissed the complaint without prejudice.
B. Parties covered by Arbitration Proceedings.
Section 2 of RA 876 specifies who may be subjected to arbitration, to wit:
Sec. 2. Persons and matters subject to arbitration. – Two or more persons or parties may
submit to the arbitration of one or more arbitrators any controversy existing between them at
the time of the submission and which may be the subject of an action, or the parties to any
contract may in such contract agree to settle by arbitration a controversy thereafter arising
between them. Such submission or contract shall be valid, enforceable and irrevocable, save
upon such grounds as exist at law for the revocation of any contract.
xxxx
In Gonzales, the Court explained that "[d]isputes do not go to arbitration unless and until the
parties have agreed to abide by the arbitrator’s decision. Necessarily, a contract is required for
arbitration to take place and to be binding."38Furthermore, in Del Monte Corporation – USA v.
Court of Appeals,39 the Court stated that "[t]he provision to submit to arbitration any dispute
arising therefrom and the relationship of the parties is part of that contract. As a rule, contracts
are respected as the law between the contracting parties and produce effect as between them,
their assigns and heirs."40 Succinctly put, only those parties who have agreed to submit a
controversy to arbitration who, as against each other, may be compelled to submit to
arbitration. In the present case, Section 11.06 of the Agreement, which embodies the
Arbitration Agreement among the parties, provides:
All disputes arising out of or in connection with this Agreement including any issue as to this
Agreement's validity or enforceability, which cannot be settled amicably among the parties,
shall be finally settled by arbitration in accordance with the Arbitration Law (Republic Act No.
876) by an arbitration tribunal composed of four (4) arbitrators. Each of the parties shall
appoint one (1) arbitrator, the three (3) to appoint the fourth arbitrator who shall act as
Chairman. Any award by the arbitration tribunal shall be final and binding upon the parties and
shall be enforced by judgment of the Courts of Cebu or Metro Manila.41
The three parties to the Agreement and necessarily to the arbitration agreement embodied
therein are: (a) ASC, (b) CAGLI, and (c) WLI/WG&A/ATSC. Contracts, like the subject
arbitration agreement, take effect only between the parties, their assigns and
heirs.42 Respondent Chiongbian, having merely physically signed the Agreement as a
representative of WLI, is not a party thereto and to the arbitration agreement contained
therein. Neither is he an assignee or an heir of any of the parties to the arbitration agreement.
Hence, respondent Chiongbian cannot be included in the arbitration proceedings.
WHEREFORE, the petitions are GRANTED. The Orders dated August 13, 2010, April 15, 2011,
and July 6, 2011 of the Regional Trial Court of Cebu City, Branch 20 (RTC) in Civil Case No.
CEB-34951 are hereby REVERSED and SET ASIDE. The Order dated February 26, 2010 of the
RTC is REINSTATED with MODIFICATION excluding Victor S. Chiongbian from the arbitration
proceedings.
SO ORDERED.