61. Heirs of Sps.

Luciano Lim and Salud Nakpil Bautista v Presidint Judge of RTC, Quezon

Facts: On 9 September 1999, Amparo E. Caosa (respondent Caosa) filed a petition before the Regional Trial Court of
Quezon City seeking the reconstitution of the original Transfer Certificate of Title (TCT) No. 169395 of the Register of
Deeds of the same city. Due to the non-appearance of representatives from the Office of the Solicitor General and the
Office of the City Prosecutor, as well as the absence of all other oppositors, the trial court allowed the ex parte
presentation of evidence before the branch clerk of court. Convinced that the jurisdictional requirements were complied
with and finding merit in the petition, the trial court, on 29 December 1999, ordered the reconstitution of the original
and owners duplicate copy of TCT No. 169395.

On 24 March 2004, petitioners filed a verified petition for the annulment of the trial courts decision.[6] According to
petitioners, their parents, spouses Luciano P. Lim and Salud Nakpil Bautista, are the registered owners of a parcel of land
located in Old Balara, Quezon City which they acquired from Domingo L. Santos. The lot contained an area of 795 square
meters more or less and was covered by TCT No. 27997. Furthermore, they alleged that their parents had been in actual
physical possession of the property, which they continued after the death of their parents. When a fire allegedly razed
the Quezon City Hall in June 1988, among the records destroyed was the original copy of TCT No. 27997 and thus, one of
the petitioners applied for and was issued a reconstituted title, TCT No. RT-97223, in September 1994.

petitioners applied for and was issued a reconstituted title, TCT No. RT-97223, in September 1994.[7]
Petitioners claimed that when respondent Caosa filed a petition for the reconstitution of TCT No. 169395, covering
33,914 sq m on 9 September 1999, a portion thereof with an area of 795 sq m was already covered by TCT No. RT-97223.
In addition, they insisted that the petition for reconstitution did not comply with the requirements found in Sections 12
and 13 of Republic Act (R.A.) No. 26 as it failed to state specifically the boundaries of the property subject of the petition
as well as the names of the occupants or persons in possession of the property. Petitioners considered these
circumstances as extrinsic fraud, a ground for the annulment of the trial courts judgment.

For her part, respondent Caosa alleged that there was no fraud, that the title issued to petitioners predecessors-in-
interest was spurious because it emanated from Psd-17268 which covered a lot located in Nueva Ecija and not Quezon
City, and that the Assistant Director of Lands who signed the alleged plan was not an authorized signatory.

The Court of Appeals dismissed the petition in its 31 March 2006 Resolution. It found that the property claimed by
petitioners is entirely different and does not even form part of the land covered by TCT No. 169395 sought to be
reconstituted by private respondent. Question of ownership not proper subject matter of a petition for annulment of
judgment. MR was denied.

Now, petitioners, on the one hand, posit that the Court of Appeals erred when it made a finding of fact through a mere
physical comparison of the technical descriptions in the TCTs without first allowing the parties to vindicate their
respective claims, at least during the pre-trial or more properly, in a trial held for the purpose. They also question the
Court of Appeals refusal to resolve the issue of ownership of the subject lot, arguing that in a petition under Rule 47,
Section 6 of the Rules of Court, the appellate court is allowed to be a trier of facts.

Caosa, on the other hand, maintains that the Court of Appeals followed the correct procedure. She points out that
petitioners did not allege nor present anything that would contradict the technical description of the two titles. She adds
that the petition was already time-barred, and that the petition for annulment seeks the nullification of the
reconstituted title and thus constitutes a collateral attack on the title of her property, which is not allowed under the
law.

Issue: WON the patitioners are the real party-in-interest

Held: No. We reviewed the titles presented by both parties in the proceedings below and arrived at the same conclusion
as that of the Court of Appeals.[24] Indeed, per their TCT, petitioners lot was derived from Lot-22-D-3, whereas
respondent Caosas covers the entire Lot 22-A. Simple logic dictates that Lot 22-A is different from Lot-22-D-3, and that
Lot -22-D-3 could not have been in Lot 22-A.
Petitioners are not real parties-in-interest because the reconstitution of the original and duplicate copy of TCT No.
169395 will have no effect on their property, the latter being different from, and not even a part of the property covered
by the reconstituted title. One having no right or interest of his own to protect cannot invoke the jurisdiction of the
court as a party plaintiff in an action, thus petitioners petition for annulment of judgment was rightfully dismissed.

The Court of Appeals did not dismiss the petition for annulment of judgment outright. In fact, it required respondent
Caosa to file her answer, and even allowed the filing of an amended answer─proof that it was predisposed to consider
the arguments of both parties before it even decided to finally dismiss the petition. Mere filing of a petition for
annulment of judgment does not guarantee the holding of trial or reception of evidence. A petition for annulment of
judgment may in fact be dismissed outright if it has no prima facie merit.

It is a well-settled doctrine that a certificate of title cannot be subject to collateral attack and can be altered, modified or
cancelled only in a direct proceeding in accordance with law. This is the very same reason why the Court of Appeals
could not, and did not deign to, resolve the matter of ownership. The Court of Appeals declaration that it is not a trier of
facts must be taken within this context.
62. Cornes v Leal Realty Centrum Co., Inc.,

Facts: The instant Petition traces its origins from four separate Complaints filed with the Provincial Adjudication Board,
Region III in Tarlac, Tarlac.
I.
The first Complaint[5] dated 19 August 1991, and docketed as DARAB Case No. 234-T'91 was filed by petitioners and
their predecessors-in interest Rodolfo Cornes, et al. against respondents Leal Realty Centrum Co., Inc. (LEAL REALTY),
Leal Haven, Inc. (LEAL HAVEN), their Managing Director Ernesto M. Legaspi, and all persons claiming rights under them
for maintenance of peaceful possession and for issuance of a writ of preliminary injunction.

Petitioners contended that they had been farmers and full- fledged tenants for more than 30 years of an agricultural
landholding which was previously owned and registered in the name of Josefina Roxas Omaña (JOSEFINA) under TCT No.
103275 of the Registry of Deeds of Tarlac. The subject landholding consists of at least 21 hectares and is principally
devoted to rice and sugar. According to petitioners, the subject landholding is covered by Republic Act No. 6657,[6] but
was sold by JOSEFINA to respondents in contravention of the law. Meanwhile, LEAL HAVEN converted a portion of the
subject landholding into a memorial park.

It is petitioners' stance that when respondents entered into a contract of sale with JOSEFINA, they were aware of the
tenancy relationship which existed between petitioners and JOSEFINA. Respondents purportedly negotiated with
petitioners to renounce their tenancy rights under the Comprehensive Agrarian Reform Law (CARL) in exchange for a
compensation package as a form of disturbance compensation. However, respondents failed to comply with the terms
and conditions thereof. For this reason, petitioners filed a complaint with the Municipal Agrarian Reform Officer (MARO)
in Victoria, Tarlac; but the conciliation efforts of the latter proved to be futile, prompting petitioners to move for their
termination. Petitioners further claim that in a letter[7] dated 16 February 1991, respondents admitted their inability to
pay the balance in the compensation package drawn between them and advised petitioners to continue working on the
subject landholding, and to continue to appropriate for themselves the fruits thereof until complete payment shall have
been made.

Finally, petitioners allege that they were residing in their respective homes made of strong materials built within the
premises of the subject landholding. However, they were threatened to be ousted and evicted by respondents who had
solicited the assistance of saboteurs and military officers to disturb their peaceful possession without any lawful order
from the courts. Petitioners sought an injunction against respondents, and prayed for the declaration of the landholding
as subject to the compulsory coverage of the CARL and their entitlement to the rights and privileges accorded thereby,
as well as for the payment of damages.

II.
The second Complaint,[8] dated 2 March 1993, docketed as DARAB Case No. 396-T'93 was filed by petitioners against
respondent LEAL REALTY and Spouses William Tugadi, for violation of Republic Act No. 6657, annulment of documents,
title and damages, reiterating their averments in DARAB Case No. 396-T'93. In addition, petitioners posited that LEAL
REALTY executed a Deed of Absolute Sale in favor of the SPS. TUGADI without proper conversion of the lot from
agricultural to non- agricultural in breach of the CARL. Petitioners contended that LEAL REALTY, without proper authority,
caused the subdivision of the subject landholding into smaller lots. One of such lots is Lot No. 1961-B-3-B which was
transferred by LEAL REALTY in favor of the SPS. TUGADI. Petitioners impugned the subdivision as having been done
without the approval of the Housing and Land Use Regulatory Board (HLURB).

III.
also dated 2 March 1993, and docketed as DARAB Case No. 397-T'93 was filed by petitioners against respondent LEAL
REALTY and Spouses Romeo Alcazaren and Juliet Astrero-Alcazaren (SPS. ALCAZAREN) for violation of Republic Act No.
6657, annulment of documents, title and damages. In like manner, as with their prior Complaints, petitioners questioned
the subdivision of the subject landholding into smaller lots as contrary to law. In particular, petitioners contested the
issuance of TCT No. T-237899 of the Register of Deeds of Tarlac over Lot No. 1961-B-1-A in favor of the SPS. ALCAZAREN.
As with their prior two Complaints, petitioners prayed for the declaration of nullity of the transfer of the subject
landholding from JOSEFINA to LEAL REALTY, including the nullity of TCT No. T-237899 in the name of the SPS.
ALCAZAREN.

IV.
On 17 March 1995, respondent LEAL REALTY, represented by its Manager, Ernesto Legaspi, filed a Complaint[10] with
the Provincial Adjudication Board, Region III in Tarlac against petitioner Nita Cornes-Valenzuela (VALENZUELA), docketed
as DARAB Case No. 827-T'95 for injunction with prayer for temporary restraining order and preliminary injunction. LEAL
REALTY alleged that sometime in February 1995, despite its objection, VALENZUELA constructed a residential house
within the premises of the subject landholding; hence, it prayed for the removal of the construction at VALENZUELA's
expense.

The Ruling of the Provincial Adjudicator

The Complaints filed by petitioners, i.e., DARAB Cases No. 234-T'91, No. 396-T'93, and No. 397-T'93 were ordered
dismissed. On the other hand, the prayer of respondent LEAL REALTY in the fourth Complaint, DARAB Case No. 329- T'95
was granted.

The Provincial Adjudicator found that there was no tenancy relationship which existed between the parties. He
maintained that no convincing evidence was established to prove the tenancy arrangement other than petitioners' self-
serving declaration. The Provincial Adjudicator ruled that Jacinto Cornes (JACINTO), the father and predecessor-in-
interest of the petitioners Cornes, declared that he was a hired laborer in the subject landholding.[11] Petitioners' other
predecessors-in-interest,[12] namely, Pablo Cornes (PABLO), Francisco Gadiano (FRANCISCO), Domingo Pagarigan
(DOMINGO), and Juanito Robles (JUANITO), were also found to have worked as hired hands.

Further, the Provincial Adjudicator declared that a tenancy relationship cannot be inferred from the alleged
compensation package entered into by petitioners and their predecessors-in-interest with respondent LEAL REALTY in
the amount of P114,000.00, leaving an unpaid balance of P46,000.00. At best, it was deemed as a gesture of compassion
akin to a pabuya upon the instruction of JOSEFINA, the former landowner, to respondent LEAL REALTY.

Declared sale in favor if Josefina was valid, for being made before the effectivity of RA 6657.

Department of Agrarian Reform (DAR) was, thus, duty-bound to look into the petitioners' qualification as prospective
farmer-beneficiaries, notwithstanding the fact that they were found to be hired laborers.

LEAL REALTY violated Republic Act No. 6657 when it subdivided and inter-subdivided the subject landholding and sold
portions thereof to the SPS. TUGADI and SPS. ALCAZAREN. Both sales were found to have been made after the
effectivity of the said Act. However, it denied jurisdiction thereon on the ground that the matter was within the
cognizance of the Regional Trial Court. Also, anent the fourth Complaint which was filed by LEAL REALTY against
petitioner VALENZUELA, the Provincial Adjudicator found that VALENZUELA constructed the improvements on the
portion of the landholding in question as an extension of the house of her father and predecessor-in-interest Pablo
Cornes. As the latter cannot be said to be a bona fide tenant, VALENZUELA was ordered to have the said improvements
removed.

The Ruling of the DARAB

Reversed the appealed decision. The DARAB held that the right to security of tenure does not only apply to bona fide
tenants; but also to actual tillers of the land. It also declared that there was an implied tenancy between the parties. The
DARAB ruled that for more than 30 years, the petitioners were deemed tenants of the subject landholding. MR was
denied.

The Ruling of the Court of Appeals

Granted respondents' Petition for Review. Vacated DARAB’s decision. Essentially, the Court of Appeals sided with the
findings of the Provincial Adjudicator. It was adamant in ruling that for a tenancy relationship to exist, there must be a
concurrence of the six requisites, i.e., (i) the parties are the landowner and the tenant; (ii) the subject is agricultural land;
(iii) there is consent by the landowner; (iv) the purpose is agricultural production; (v) there is personal cultivation; and (vi)
there is sharing of the harvest. However, it opined that notwithstanding the lack of tenancy relationship between the
parties, the compensation agreement package entered into between LEAL REALTY and petitioners must be respected.

The Court of Appeals also pronounced the sale of the subject landholding to LEAL REALTY as valid for the reason that it
was entered into before the effectivity of Republic Act No. 6657.

Petitioners' Motion for Reconsideration of the 31 March 2005 Decision was denied by the Court of Appeals in a
Resolution dated 5 April 2005.

Issue: Whether petitioners and their predecessors-in-interest are tenants de jure of the subject landholding

Held: A. Tenancy Relationship

It must be initially emphasized that for the DARAB to have jurisdiction over a case, there must be a tenancy relationship
between the parties.[25] We stress that a tenancy relationship cannot be presumed.[26] In order for a tenancy
agreement to arise, it is essential to establish all its indispensable elements, viz: 1) the parties are the landowner and the
tenant or agricultural lessee; 2) the subject matter of the relationship is an agricultural land; 3) there is consent between
the parties to the relationship; 4) the purpose of the relationship is to bring about agricultural production; 5) there is
personal cultivation on the part of the tenant or agricultural lessee; and 6) the harvest is shared between the landowner
and the tenant or agricultural lessee.

Tenants are defined as persons who - in themselves and with the aid available from within their immediate farm
households - cultivate the land belonging to or possessed by another, with the latter's consent, for purposes of
production, sharing the produce with the landholder under the share tenancy system, or paying to the landholder a
price certain or ascertainable in produce or money or both under the leasehold tenancy system.

Generally, this court, under Rule 45, cannot be a trier of facts. The exceptions being: unless: (1) the conclusion is a
finding grounded entirely on speculation, surmise and conjecture; (2) the inference made is manifestly mistaken; (3)
there is a grave abuse of discretion; (4) the judgment is based on a misapprehension of facts; (5) the findings of fact are
conflicting; (6) the Court of Appeals went beyond the issues of the case and its findings are contrary to the admissions of
both appellant and appellee; (7) the findings of fact of the Court of Appeals are contrary to those of the trial court; (8)
said findings of fact are conclusions without citation of specific evidence on which they are based; (9) the facts set forth
in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondents; and (10) the
findings of fact of the Court of Appeals are premised on the supposed absence of evidence and contradicted by the
evidence on record.

We find herein a proper application of the exception to the rule. In the case at bar, the findings of fact are conflicting.
The Provincial Adjudicator and the Court of Appeals were in concurrence that no tenancy relationship existed between
the parties. In contrast, the DARAB ruled that petitioners are bona fide tenants of the subject landholding.

After a thorough evaluation of the records, we conclude that petitioners failed to adduce substantial evidence to show
the existence of all the indispensable requisites for the constitution of a tenancy relationship. At the outset, the parties
do not appear to be the landowner and the tenants.

All the requisites[46] must concur in order to create a tenancy relationship between the parties and the absence of one
or more requisites is fatal to petitioners' cause. It cannot even make the alleged tenant a de facto tenant as
contradistinguished from a de jure tenant.[47] This is so because unless a person has established his status as a de jure
tenant, he is not entitled to security of tenure nor is he covered by the Land Reform Program of the Government under
existing tenancy laws.

B. Compensation Package Agreement

We affirm the ruling of the Court of Appeals that the compensation package agreement must be respected.
Finally, anent the question on the coverage of the subject landholding under the CARP, it pays well to heed that the
jurisdiction over the aforesaid issue is within the proper confines of the DAR Secretary, pursuant to DARAB Revised Rules,
Rule II, Section 1(g), as well as Section 2 of Administrative Order No. 06-00, providing for the Rules of Procedure for
Agrarian Law Implementation Cases, granting exclusive jurisdiction to the DAR Secretary in matters involving the
classification and identification of landholdings for coverage under the CARP, including the identification, qualification or
disqualification of potential farmer-beneficiaries.
63. Santos v Heirs of Lustre

Facts: Dominga Lustre, who died on October 15, 1989, owned a residential lot which is located in San Antonio, Nueva
Ecija, with an area of 390 square meters, and covered by Transfer Certificate of Title (TCT) No. NT-50384. On September
20, 1974, Dominga Lustre mortgaged the lot to spouses Sofronio and Natividad Santos (spouses Santos) for P38,000.00.

On May 16, 1976, Dominga Lustre sold the property to Natividad M. Santos for P15,000.00 through a Deed of Absolute
Sale.[3] The mortgage appears to have been canceled on March 20, 1976.[4] The cancellation of the mortgage and the
sale of the property were both inscribed at the back of TCT No. NT-50384 on April 17, 1984.

TCT No. NT-183029 was issued in the name of the spouses Santos. Subsequently, the latter executed a Deed of Sale
transferring the property to their son, Froilan M. Santos (petitioner). By virtue of this deed, TCT No. NT-183029 was
canceled and TCT No. 193973[5] issued in the name of Froilan Santos.

On April 14, 1994, Cecilia Macaspac (also a petitioner) and Tarcisio Maniquiz, both heirs of Dominga Lustre, filed with
the Regional Trial Court (RTC) of Gapan, Nueva Ecija, a Complaint for Declaration of the Inexistence of Contract,
Annulment of Title, Reconveyance and Damages[6] against Froilan M. Santos. That case was docketed as Civil Case No.
1330. Later, the plaintiffs sought the amendment of the complaint to include Eusebio Maniquiz as plaintiff and to
include a certification against forum shopping. However, the records in this case are bereft of any information as to
whether the same was allowed by the trial court.[7] We note, however, that only Cecilia Macaspac executed a
Verification and Certification against Forum Shopping[8] in that case.

On May 14, 1999, while Civil Case No. 1330 was still pending, Dominga Lustres other heirs, namely, Eusebio Maniquiz,
Teresita Burgos, Tarcisio Maniquiz, Florita M. Reyes and Lermie Maniquiz filed a Complaint for Annulment of Transfer
Certificate of Title and Deed of Absolute Sale[11] against spouses Sofronio and Natividad Santos, Froilan Santos, Cecilia
M. Macaspac, R Transport Corporation, and the Register of Deeds of Cabanatuan City, with the same RTC. The case was
docketed as Civil Case No. 2115 and was raffled to Branch 34.

Alleging that the plaintiffs right of action for annulment of the Deed of Sale and TCT Nos. 183029 and 193973 had long
prescribed and was barred by laches, petitioners filed a Motion to Dismiss Civil Case. No. 2115.[13] They later filed an
Omnibus/Supplemental Motion to Dismiss on the ground of litis pendentia.

On January 11, 2000, the RTC denied the Motion to Dismiss as well as the Supplemental Motion to Dismiss for lack of
merit.[15] On April 5, 2000, the RTC denied the Joint Motion for Reconsideration filed by petitioners.[16] Petition for
certiorari with CA was denied, as wel as the Mr.

Syllabi:

Forum Shopping; Forum shopping exists when the elements of litis pendentia are present or when a final judgment in
one case will amount to res judicata in the other.—Forum shopping exists when the elements of litis pendentia are
present or when a final judgment in one case will amount to res judicata in the other. Among its elements are identity of
the parties, identity of the subject matter and identity of the causes of action in the two cases.

Civil Procedure; Causes of Action; There is identity of causes of action if the same evidence needed in the first case will
sustain the second action, and this principle applies even if the reliefs sought in the two cases are different.—The causes
of action in Civil Case No. 1330 and Civil Case No. 2115 are identical. There is identity of causes of action if the same
evidence needed in the first case will sustain the second action, and this principle applies even if the reliefs sought in the
two cases are different. Without a doubt, the same evidence will be necessary to sustain the causes of action in these
two cases which are substantially based on the same series of transactions. In fact, similar reliefs are prayed for in the
two cases. Both complaints ultimately seek the cancellation of the title of the alleged transferees and the recovery of
the subject property.
Ownership; The fact of being a co-owner does not necessarily mean that a plaintiff is acting for the benefit of the co-
ownership when he files an action respecting the co-owned property.—As pointed out by petitioners, plaintiffs in both
cases are the heirs of Dominga Lustre; they are therefore co-owners of the property. However, the fact of being a co-
owner does not necessarily mean that a plaintiff is acting for the benefit of the co-ownership when he files an action
respecting the co-owned property. Co-owners are not parties inter se in relation to the property owned in common. The
test is whether the “additional” party, the co-owner in this case, acts in the same capacity or is in privity with the parties
in the former action.

Parties; The issue of whether the additional parties are indispensable parties or not acquires real significance only when
considering the validity of the judgment that will be rendered in the earlier case.—The determination of whether there
is identity of parties rests on the commonality of the parties’ interest, regardless of whether they are indispensable
parties or not. The issue of whether the additional parties are indispensable parties or not acquires real significance only
when considering the validity of the judgment that will be rendered in the earlier case. This is so, because if the
additional parties are indispensable parties, then no valid judgment can be rendered against them in the earlier case in
which they did not participate, and this will foreclose the application of res judicata which requires the existence of a
final judgment.

Same; A co-owner may bring an action to recover the co-owned property without the necessity of joining all the other
co-owners as co-plaintiff because the suit is deemed to be instituted for the benefit of all.—Without question, a co-
owner may bring an action to recover the co-owned property without the necessity of joining all the other co-owners as
co-plaintiffs because the suit is deemed to be instituted for the benefit of all. In such case, the other heirs are merely
necessary parties. Parenthetically, the inclusion among the defendants of Cecilia Macaspac, who refused to join the
other heirs as plaintiffs in Civil Case No. 2115, was not actually necessary.
Same; The absence of an indispensable party renders all subsequent actions of the court null and void for want of
authority to act, not only as to the absent parties but even as to those present.—If the action is for the benefit of the
plaintiff alone, as in Civil Case No. 1330, the action will not prosper unless he impleads the other co-owners who are
indispensable parties. The absence of an indispensable party renders all subsequent actions of the court null and void
for want of authority to act, not only as to the absent parties but even as to those present. The trial court does not
acquire jurisdiction over the indispensable parties who are not impleaded in the case, and judgment thereon cannot be
valid and binding against them. A decision that is null and void for want of jurisdiction on the part of the trial court is not
a decision in contemplation of law; hence, it can never become final and executory.
Same; Worth mentioning is the doctrine that any adverse ruling in the earlier case will not, in any way, prejudice the
heirs who did not join, even if such case was actually filed in behalf of all the co-owners.—Worth mentioning is the
doctrine that any adverse ruling in the earlier case will not, in any way, prejudice the heirs who did not join, even if such
case was actually filed in behalf of all the co-owners. In fact, if an action for recovery of property is dismissed, a
subsequent action by a co-heir who did not join the earlier case should not be barred by prior judgment. Any judgment
of the court in favor of the co-owner will benefit the others, but if the judgment is adverse, the same cannot prejudice
the rights of the unimpleaded co-owners.

Land Titles; Reconveyance; The action for reconveyance on the ground that the certificate of title was obtained by
means of a fictitious deed of sale is virtually an action for the declaration of its nullity, which does not prescribe.—On
the issue of prescription and laches, we fully agree with the CA. The action for reconveyance on the ground that the
certificate of title was obtained by means of a fictitious deed of sale is virtually an action for the declaration of its nullity,
which does not prescribe. Moreover, a person acquiring property through fraud becomes, by operation of law, a trustee
of an implied trust for the benefit of the real owner of the property. An action for reconveyance based on an implied
trust prescribes in ten years. And in such case, the prescriptive period applies only if there is an actual need to reconvey
the property as when the plaintiff is not in possession of the property. Otherwise, if plaintiff is in possession of the
property, prescription does not commence to run against him. Thus, when an action for reconveyance is nonetheless
filed, it would be in the nature of a suit for quieting of title, an action that is imprescriptible.
Same; Same; It is true that an action for reconveyance will not prosper when the property to be reconveyed is in the
hands of an innocent purchaser for value.—It is true that an action for reconveyance will not prosper when the property
sought to be reconveyed is in the hands of an innocent purchaser for value. In this case, however, the protection of the
rights of any alleged innocent purchaser isa matter that should be threshed out in the main case and not in these
proceedings.
64. Auto Corp Group v Intra Strata Assurance Corporation

Facts: On 19 August 1990, petitioner Autocorp Group, represented by its President, petitioner Peter Y. Rodriguez,
secured an ordinary re-export bond, Instrata Bond No. 5770, from private respondent Intra Strata Assurance
Corporation (ISAC) in favor of public respondent Bureau of Customs (BOC), in the amount of P327,040.00, to guarantee
the re-export of one unit of Hyundai Excel 4-door 1.5 LS and/or to pay the taxes and duties thereon.

On 21 December 1990, petitioners obtained another ordinary re-export bond, Instrata Bond No. 7154, from ISAC in
favor of the BOC, in the amount of P447,671.00, which was eventually increased to P707,609.00 per Bond Endorsement
No. BE-0912/91 dated 10 January 1991, to guarantee the re-export of one unit of Hyundai Sonata 2.4 GLS and/or to pay
the taxes and duties thereon.

Petitioners executed and signed two Indemnity Agreements with identical stipulations in favor of ISAC, agreeing to act
as surety of the subject bonds. Petitioner Rodriguez signed the Indemnity Agreements both as President of the Autocorp
Group and in his personal capacity.

In sum, ISAC issued the subject bonds to guarantee compliance by petitioners with their undertaking with the BOC to re-
export the imported vehicles within the given period and pay the taxes and/or duties due thereon. In turn, petitioners
agreed, as surety, to indemnify ISAC for the liability the latter may incur on the said bonds.

Petitioner Autocorp Group failed to re-export the items guaranteed by the bonds and/or liquidate the entries or cancel
the bonds, and pay the taxes and duties pertaining to the said items despite repeated demands made by the BOC, as
well as by ISAC. By reason thereof, the BOC considered the two bonds, with a total face value of P1,034,649.00, forfeited.

Failing to secure from petitioners the payment of the face value of the two bonds, despite several demands sent to each
of them as surety under the Indemnity Agreements, ISAC filed with the RTC on 24 October 1995 an action against
petitioners to recover the sum of P1,034,649.00, plus 25% thereof or P258,662.25 as attorneys fees. ISAC impleaded the
BOC as a necessary party plaintiff in order that the reward of money or judgment shall be adjudged unto the said
necessary plaintiff.[4] The case was docketed as Civil Case No. 95-1584.

The RTC, in an Order[5] dated 27 February 1996, denied petitioners Motion to Dismiss. Petitioners thus filed their
Answer to the Complaint, claiming that they sought permission from the BOC for an extension of time to re-export the
items covered by the bonds; that the BOC has yet to issue an assessment for petitioners alleged default; and that the
claim of ISAC for payment is premature as the subject bonds are not yet due and demandable.

During the pre-trial conference, petitioners admitted the genuineness and due execution of Instrata Bonds No. 5770 and
No. 7154, but specifically denied those of the corresponding Indemnity Agreements. The parties agreed to limit the issue
to whether or not these bonds are now due and demandable.

On 16 September 1998, the RTC rendered its Decision ordering petitioners to pay ISAC and/or the BOC the face value of
the subject bonds in the total amount of P1,034,649.00, and to pay ISAC P258,662.25 as attorneys fees

Petitioners Motion for Reconsideration was denied by the RTC in a Resolution dated 15 January 1999.[7]

Petitioners appealed to the Court of Appeals. On 30 June 2004, the Court of Appeals rendered its Decision affirming the
RTC Decision, only modifying the amount of the attorneys fees awarded

Issue:

Held:
Absence of actual forfeiture of the subject bonds
Petitioners contend that their obligation to ISAC is not yet due and demandable. They cannot be made liable by ISAC in
the absence of an actual forfeiture of the subject bonds by the BOC and/or an explicit pronouncement by the same
bureau that ISAC is already liable on the said bonds. In this case, there is yet no actual forfeiture of the bonds, but
merely a recommendation of forfeiture, for no writ of execution has been issued against such bonds.[10] Hence, Civil
Case No. 95-1584 was prematurely filed by ISAC.

The Indemnity Agreements, therefore, give ISAC the right to recover from petitioners the face value of the subject bonds
plus attorneys fees at the time ISAC becomes liable on the said bonds to the BOC, regardless of whether the BOC had
actually forfeited the bonds, demanded payment thereof and/or received such payment. It must be pointed out that the
Indemnity Agreements explicitly provide that petitioners shall be liable to indemnify ISAC whether or not payment has
actually been made by the [ISAC] and ISAC may proceed against petitioners by court action or otherwise even prior to
making payment to the [BOC] which may hereafter be done by [ISAC].

Petitioners also invoke the alleged lack of demand on the part of ISAC on petitioners as regards Instrata Bond No. 5770
before it instituted Civil Case No. 95-1584. Even if proven true, such a fact does not carry much weight considering that
demand, whether judicial or extrajudicial, is not required before an obligation becomes due and demandable. A demand
is only necessary in order to put an obligor in a due and demandable obligation in delay,[14] which in turn is for the
purpose of making the obligor liable for interests or damages for the period of delay.[15] Thus, unless stipulated
otherwise, an extrajudicial demand is not required before a judicial demand, i.e., filing a civil case for collection, can be
resorted to.