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EDWINO A. TORRES G. R. No. 177836 Occidental Mindoro, a Protest against Edwinos MSA No.

(IV-18)
(deceased), represented and 3780. Eugenio prayed, inter alia, for the cancellation of said MSA on the
substituted by ALFONSO P. Present: ground that the Affidavit of Relinquishment/Sale of Right, the very basis of the
TORRES III and FATIMA P. application, was a forged document. Eugenio insisted that Balligi never
TORRES, son and daughter, YNARES-SANTIAGO, J., entered into any sale of the subject property and house, much less signed the
respectively, of deceased Chairperson, purported Affidavit of Relinquishment/Sale of Right on 9 October 1989,
petitioner, CHICO-NAZARIO, considering that Balligi and her husband were in Saudi Arabia at that
Petitioners, VELASCO, JR., time. Eugenios Opposition to Edwinos MSA was docketed as DENR Case No.
NACHURA, and 5438.
PERALTA, JJ.
- versus - On 8 March 1993, Eugenio and his aunt, Inanama, filed an Amended
Promulgated: Protest against Edwinos MSA No. (IV-18) 3780. Attached to the Amended
Protest was a Special Power of Attorney, which Balligi executed in favor of
BALLIGI V. RODELLAS, Eugenio and Inanama, and acknowledged before Vice Consul Alimatar M.
Respondent. September 4, 2009 Garangan, Philippine Embassy, Riyadh, Kingdom of Saudi Arabia in January
x--------------------------------------------------x 1993.

DECISION In an Order[4] dated 4 June 1993, Antonio G. Principe, Regional Executive


Director, Regional Office (RO) No. IV, DENR, dismissed the protests
against Edwinos MSA No. (IV-18) 3780 for lack of merit, to wit:
CHICO-NAZARIO, J.:
WHEREFORE, in view of the foregoing, the Protest as well as the
Amended Protest is (sic) hereby as it is ordered DISMISSED for
lack of merit and whatever amount paid on account thereof is
Respondent Balligi V. Rodellas (Balligi) and her family began occupying the forfeited in favor of the government. The MSA No. (IV-18) 3780 of
subject property sometime in 1967. They built thereon a residential house (the Edwino A. Torres is hereby given further due course.
Rodellas house), initially made of light materials, but eventually renovated and
replaced using stronger materials.
According to DENR-RO No. IV, neither Eugenio nor Inanama had the
In October 1986, Balligi filed a Miscellaneous Sales Application (MSA) for the personality to represent Balligi. It credited no value to the Special Power of
subject property with the Department of Environment and Natural Resources Attorney in favor of Eugenio and Inanama, as the document itself was highly
(DENR). Said application was docketed as MSA No. (IV-18) 3524. questionable. Close scrutiny of the same shows that the authentication was
done on the 25th day of January 1993 [even] before the execution of the said
In 1989, Balligi and her family left Occidental Mindoro for Manila in order to document by Balligi Letty V. Rodellas on January 26, 1993.[5] DENR-RO No.
find work. On 1 October 1989, Balligi left the country to join her husband IV also mentioned in its Order that it was not in a position to determine and
in Saudi Arabia as an Overseas Filipino Worker (OFW). In the meantime, the resolve the genuineness and due execution of the Affidavit of
house built by Balligi and her family on the subject property was left in the care Relinquishment/Sale of Right presented by Edwino, the same being within the
and possession of her relatives, namely, her half-brother, Aster Vallejos; her jurisdiction of the courts.
sister, Bituin Vallejos; her cousin-in-law, Sonia Jaravata; her sister and
brother-in-law, spouses Inanama Vallejos (Inanama) and Oscar Gallardo; On 21 June 1993, Balligi, still through her son, Eugenio, filed a Request for
Milagros Olarte; and Ildefonso Ruiz and family. Extension of Time to file a motion for reconsideration of the 4 January
1993 Order of DENR-RO No. IV. However, DENR- RO No. IV, in an Order
Sometime thereafter, still in 1989, petitioner Edwino A. Torres (Edwino) and dated 10 September 1993, denied Balligis request for extension, because it
his spouse moved into the house on the subject property, occupying the was supposedly filed beyond the 15-day reglementary period within which to
portion vacated by Aster Vallejos. Edwino claimed that Balligi already sold him appeal the assailed order. The dispositive portion of the 10 September
the subject property and the house built thereon for P60,000.00, as evidenced 1993 Order reads:
by an Affidavit of Relinquishment/Sale of Right supposedly signed by the
parties thereto and notarized on 9 October 1989. From that time on, Edwino WHEREFORE, in view of the foregoing premises, the Motion for
collected monthly rental of P300.00 from the other occupants of the house. Reconsideration dated June 21, 1993 filed by herein [petitioner
Balligi], represented by Eugenio V. Rodellas, Jr. and Inanama V.
On the basis of the Affidavit of Relinquishment/Sale of Right, Edwino filed with Gallardo, is hereby as it is ordered DENIED for lack of merit.
the DENR an MSA in his own name for the subject property, docketed as MSA
No. (IV-18) 3780. Consequently thereto, the Order dated June 4, 1993 issued in the
above-entitled case is deemed final and executory.[6]
After conducting an investigation and ocular inspection, Wilfredo M. Paguia,
Land Investigator, DENR, issued a Report on 10 June 1991, recommending
that Edwinos MSA be given due course. On 15 July 1991, the Provincial Determined, respondent Balligi, who had arrived back in the Philippines,
Environment and Natural Resources Officer (PENRO) issued an Order 1) herself filed, on 15 April 1994, another Opposition/Protest against petitioner
rejecting Balligis MSA No. (IV-18) 3524; and 2) giving due course to Edwinos Edwinos MSA No. (IV-18) 3780.
MSA No. (IV-18) 3780.
On 6 June 1994, another Order was issued by the DENR-RO No. IV directing
In 1992, respondent Balligis son, Eugenio V. Rodellas, Jr. (Eugenio), returned the conduct of an investigation of the matters alleged in
to Occidental Mindoro. While there, he came to learn that Edwino claimed Balligis Opposition/Protest; and holding the processing of Edwinos MSA No.
ownership of the subject property and the house thereon by virtue of (IV-18) 3780 in abeyance.
the Affidavit of Relinquishment/Sale of Right.
After an evaluation of the record of the case, DENR-RO No. IV dismissed
On 8 December 1992, Eugenio, alleging to act on behalf of his mother, Balligi, respondent Balligis Opposition/Protest in an Order dated 13 December 1995,
but without presenting any written authority from the latter, filed before the the fallo of which states:
Community Environment and Natural Resources Office (CENRO), San Jose,
WHEREFORE, premises considered, the instant OPPOSITION WHEREFORE, the decision of the Acting
AND/OR PROTEST filed by Balligi V. Rodellas is hereby, as it is Secretary of Environment and Natural Resources dated
ordered, DISMISSED for lack of merit. Let the MSA No. (IV-18) September 19, 1997, and the order dated June 29,
3780 of Edwino A. Torres be now given further due course leading 1998, reiterating it, are hereby REVERSED and SET
to the issuance of patent therefor.[7] ASIDE. The Department of Environment and Natural
Resources is hereby ordered to reject the
Citing its 10 September 1993 Order, DENR-RO No. IV reasoned Miscellaneous Sales Application No. (IV-18) 3780 of
that Balligis Opposition/Protest was barred by res judicata. Edwino A. Torres and reinstate Miscellaneous Sales
Application No. (IV-18) 3524 of Balligi V. Rodellas, and
Balligi moved for the reconsideration of the Order dated 13 give due course thereto. All persons occupying the
December 1995 of DENR-RO No. IV before the Office of the DENR Secretary. subject property by virtue of the Miscellaneous Sales
Her Motion for Reconsideration, docketed as DENR Case No. 7771, was Application of Edwino A. Torres, his heirs and assigns,
denied by the DENR Secretary in an Order[8] dated 29 June 1998. The DENR are hereby ordered to vacate the same.[12]
Secretary held that there is no showing that she, [herein respondent Balligi]
Rodellas, ever filed a complaint with the proper forum, i.e., the Court, against
the herein [petitioner Edwino] involving the alleged falsified and spurious Atty. Alexander Restor (Atty. Restor), Edwinos counsel, received a
document. Mere allegation that such document is spurious and forged do not copy of the 5 August 2003 Decision of the Office of the President on 29 August
make such document spurious and a forgery.[9] 2003. On 15 September 2003, Atty. Restor filed a Motion for Reconsideration
of said Decision, and at the same time, manifested that his client, Edwino, had
Undaunted, Balligi filed an appeal with the Office of the President, since passed away, but without actually intimating the exact date of the latters
docketed as O.P. Case No. 98-8537. death.

In a Decision[10] promulgated on 5 August 2003, the Office of the In an Order dated 27 October 2003, the Office of the President
President reversed and set aside the assailed orders of the DENR Secretary ruled that the Motion for Reconsideration filed by Atty. Restor was
and the DENR-RO No. IV. The Office of the President adjudged that the
principle of res judicata was not applicable to the facts of O.P. Case No. 98- DISMISSED for being filed out of time and for lack of
8537, given that: personality of the movant.[13]

A careful review of the order of June 4, 1993,


which the DENR claims constitutes a bar to subsequent According to the Office of the President, Ewinos death extinguished
litigation, would reveal that the same does not comply his agency relationship with Atty. Restor. Hence, Atty. Restor had no more
with the third requisite enumerated above, that the authority to continue to act on Edwinos behalf. In addition, the Motion for
judgment must be on the merits. It will be recalled that Reconsideration was filed by Atty. Restor beyond the 15-day reglementary
the Regional Executive Director (RED) refused to rule period.
on the main issue raised in the protest, which is the
alleged forged and spurious Affidavit of On 16 November 2003, Edwinos representatives and legal heirs
Relinquishment/Sale of Right, claiming that his Office is executed a Letter of Appointment[14] [appointing] and [engaging] the legal
not in the position to determine and resolve the services of Atty. Alexander Restor in O.P. Case No. 988537 before the Office
genuineness and due execution of the aforesaid of the President and to further represent [them] in the event that the afore-
document; and claiming further that the said protest mentioned case is appealed to the Court of Appeals/Supreme Court.
should not have been entertained in the first place
considering that upon its filing, Eugenio V. Rodellas Jr. Subsequently, on 9 December 2003, Atty. Restor filed, on behalf of
has no personality to represent Balligi V. Rodellas. Edwino, represented and substituted by the latters son and daughter, Alfonso
P. Torres III (Alfonso) and Fatima P. Torres (Fatima), respectively, a Petition
for Review with the Court of Appeals, challenging the 5 August 2003 Decision
The Office of the President opined that the DENR should have and 27 October 2003 Order of the Office of the President. Their Petition was
applied res ipsa loquitur instead, since: docketed as CA-G.R. SP No. 81305.

It should have been very clear that the alleged Affidavit In a Resolution promulgated on 29 November 2006, the appellate
of Relinquishment/Sale of Right is nothing but a forgery. court dismissed the Petition in CA-G.R. SP No. 81305, thus:
[Respondent Balligi] was in the Kingdom of Saudi
Arabia at the time she was supposed to have executed IN VIEW OF THE FOREGOING, the petition
the document, as duly evidenced by the entries in her is hereby DISMISSED.[15]
passport. She left the Philippines on October 1, 1989,
while the Affidavit is dated October 9, 1989 x x x. In fact,
at the inception of the case, she was still there in Saudi The Court of Appeals affirmed the finding of the Office of the
Arabia, which was why the RED did not want to President that the 5 August 2003 Decision of the latter had long since attained
recognize the legal personality of her son to represent finality in view of the late filing of Edwinos Motion for Reconsideration of the
her. If the DENR knew that appellant was out of the same. Moreover, the appellate court agreed that Atty. Restor had no
country all along, how can it even entertain the thought personality to move for the reconsideration of the decision in question, and as
that she was the one who signed the document in a result, no motion for reconsideration of the August 5, 2003 Decision of the
Occidental Mindoro? It is important to note that [Edwino] Office of the President could have been considered filed.[16]
never questioned the veracity of the entries in [Balligi]s
passport.[11] As expected, Alfonso and Fatima filed a Motion for Reconsideration
of the 29 November 2006 Resolution of the Court of Appeals, arguing therein
that Atty. Restor had timely filed the Motion for Reconsideration of the 5
The Office of the President disposed: August 2003 Decision of the Office of the President. Atty. Restor received a
copy of the challenged Decision of the Office of the President on 29 August
2003, and the 15th day or last day for filing a motion for reconsideration of the
same, 13 September 2003, was a Saturday; hence, Atty. Restor was able to DENR CASE NO. IV-5438 IN FAVOR OF
file such a motion only on 15 September 2003, Monday, the next working day. PETITIONERS HAS LONG BECOME FINAL AND
EXECUTORY. AS SUCH, RESPONDENTS
In its Resolution dated 2 May 2007, the Court of Appeals SUBSEQUENT OPPOSITION AND/OR PROTEST
reconsidered its initial position on the point of the late filing of the Motion for DATED APRIL 15, 1994 DOCKETED AS DENR CASE
Reconsideration of the 5 August 2003 Decision of the Office of the President, NO. IV-B-5520 VIOLATES THE PRINCIPLE OF RES
conceding that: JUDICATA.

It is true, as [herein petitioners Alfonso and


Fatima] argue, that the Office of the President failed to At the crux of this Petition is the issue of whether the Court of
take into consideration that the 15th day fell on a Appeals erred in dismissing the Petition for Review of Edwinos legal heirs in
Saturday and therefore, the Motion for Reconsideration, CA-G.R. SP No. 81305 on the ground that the 5 August 2003 Decision of the
which was filed on the 17th day, cannot be said to have Office of the President in O.P. Case No. 98-8537, being assailed in the latter
been filed out of time.[17] Petition, had already attained finality.

Alfonso and Fatima maintain that the Court of Appeals erred in


But the appellate court remained steadfast in its resolve that Atty. affirming the 27 October 2003 Order of the Office of the President which
Restor lacked the legal personality to file the Motion for Reconsideration of dismissed the Motion for Reconsideration filed by Atty. Restor based on a
the 5 August 2003 Decision of the Office of the President despite the Letter of misapplication of Section 16, Rule 3 of the Revised Rules of Court. They aver
Appointment, dated 16 November 2003, executed by Edwinos that the failure to comply with said procedural rule should not invalidate the
representatives and legal heirs in Atty. Restors favor. The Court of Appeals proceedings and the judgment rendered therein if the action survives the death
pronounced that: of the party to the case. The action in this case survives the death of Edwino
A. Torres as the subject of said action was ownership of real property and not
[T]he Letter of Appointment (citation omitted) appended some personal liability. Thus, Edwinos death did not extinguish his civil
by the petitioners to the Petition for Review cannot cure personality. Alfonso and Fatima argue further that their right to due process
Atty. Restors lack of authority in filing the Motion for would be violated if their motion for reconsideration would be brushed aside
Reconsideration before the Office of the President. Not just because counsel failed to move for a substitution of a party. x x x. In any
only was said letter not presented before the latter. It case, Atty. Restor submitted a Letter of Appointment appointing him as
was likewise executed only after the Office of the counsel which ratified his representation of petitioners.[20]
President issued the assailed Order. That being the
case, Atty. Restors lack of authority cannot be said to In defense of the assailed resolutions of the Court of Appeals,
have been cured.[18] Balligi contends that the arguments of Edwinos heirs are untenable as
[p]etitioners stand is premised on the assumption that the proceedings and the
judgment had before the Office of the President were invalid.[21] Quite the
In the end, the Court of Appeals concluded that: reverse, Balligi asserts that said proceedings stand for even petitioners
ADMITTED the non-personality of Atty. Restor under (sic) their Motion for
Thus, while the petition for review appears to Reconsideration before the Honorable Court of Appeals x x x.[22] That said,
have been filed on time, the fact is that the decision however, Balligi, through a new counsel, Atty. Amando S. Fabros, digressed
sought to be reviewed has already become final and from previous arguments. Balligi now claims that [t]he ruling of the Office of
executory. In view of said finality, this Court is without the President was not so much based on the failure of either Atty. Alfredo A.
authority to review said Decision anymore.[19] Castillo (Atty. Castillo) or Atty. Restor to give advice or information as to the
death of Edwino A. Torres but on the apparent non-withdrawal of Atty.
Castillo who was handling the appeal, and the unceremonious taking over of
Hence, this Petition for Review on Certiorari under Rule 45 of the said appeal by Atty. Restor without such withdrawal and written authority of
Revised Rules of Court bringing forth the following assignment of errors: petitioners.[23] She insists that what was invalidated or not given force and
effect was the Motion for Reconsideration filed by Atty. Restor without legal
I. authority or personality.[24] Balligi submits that if a party appears in an action
by attorney, he must be heard only through such attorney, who, so long as he
THE COURT OF APPEALS ERRED IN AFFIRMING remains the attorney of record, has the exclusive management and control of
THE RULING OF THE OFFICE OF THE PRESIDENT the action and of all steps and proceedings taken therein to enforce the rights
THAT ATTY. RESTOR, PETITIONERS FORMER and remedies of his client.[25]
COUNSEL, HAD NO LEGAL PERSONALITY TO FILE
THE MOTION FOR RECONSIDERATION BEFORE We agree with petitioners that the Office of the President
THE OFFICE OF THE PRESIDENT, IN VIEW OF misapplied the rule on substitution upon the death of a party litigant.
EDWINOS DEATH, PURSUANT TO SECTION 16,
RULE 3 OF THE RULES OF COURT AND ARTICLE Note that the rules and regulations governing appeals to the Office
1919(3) OF THE CIVIL CODE; of the President of the Philippines are embodied in Administrative Order No.
18, Series of 1987, entitled Prescribing Rules and Regulations Governing
II. Appeals to the Office of the President of the Philippines. Though nothing
therein provides for substitution of a party in case of death, the same states in
THE COURT OF APPEALS ERRED IN REFUSING TO its Section 9 that:
RULE ON THE PROPRIETY OF THE DISMISSAL OF
PETITIONERS MOTION FOR RECONSIDERATION SECTION 9. The Rules of Court shall apply
BY THE OFFICE OF THE PRESIDENT; and in a suppletory character whenever practicable.

III
Sec. 16, Rule 3 of the Revised Rules of Court, thus, finds
THE DECISION OF THE DENR REGIONAL application herein, in that it covers the situation in case of the death of a
EXECUTIVE DIRECTOR DATED JUNE 4, 1993 IN party. The rule provides:
Nowhere is it mentioned in the instant case when exactly Edwino
Section 16. Death of party; duty of died. Atty. Restor just informed the Office of the President of the fact of
counsel. Whenever a party to a pending action dies, Edwinos death in the Motion for Reconsideration of the 5 August 2003
and the claim is not thereby extinguished, it shall be Decision, which he filed on 15 September 2003 on behalf of his deceased
the duty of his counsel to inform the court within thirty client. With no exact date of Edwinos death, we have no basis for determining
(30) days after such death of the fact thereof, and to give whether Atty. Restor was able to inform the Office of the President of such fact
the name and address of his legal representative or within the requisite period of 30 days. Nevertheless, even assuming that Atty.
representatives. Failure of counsel to comply with his Restor belatedly notified the Office of the President of Edwinos death, Section
duty shall be a ground for disciplinary action. 16, Rule 3 of the Revised Rules of Court only provided that, in case of failure
of the counsel to comply with his duty as stated in the first paragraph thereof,
The heirs of the deceased may be allowed it would be a ground for disciplinary action against said counsel, not that
to be substituted for the deceased, without requiring he/she would already be without personality to appear as counsel in the
the appointment of an executor or administrator and the proceedings for the benefit of his/her client or the latters heirs.
court may appoint a guardian ad litem for the minor
heirs. Instructive herein is our ruling in Heirs of F. Nuguid Vda. de
Haberer v. Court of Appeals.[28] Florentina Nuguid Vda. de Haberer
The court shall forthwith order said legal (Florentina) was the appellant in the case still pending before the Court of
representative or representatives to appear and be Appeals when she died. Florentinas counsel, Attorneys Bausa, Ampil and
substituted within a period of thirty (30) days from Suarez, gave the Court of Appeals notice of their clients death and requested
notice. the suspension of the running of the period within which to file the appellant's
brief, pending the appointment by the probate court of an executor of the
If no legal representative is named by the latters estate. The Court of Appeals denied the motion for
counsel for the deceased party, or if the one so named extension/suspension of time to file appellants brief and dismissed the
shall fail to appear within the specified period, the court appeal. Florentinas counsels filed their urgent motion for reconsideration,
may order the opposing party, within a specified time, to explaining that their predicament over the requests for extension/suspension
procure the appointment of an executor or administrator of period to file a brief was due to the uncertainty of whether their services
for the estate of the deceased and the latter shall would still be retained by the heirs or legal representatives of their deceased
immediately appear for and on behalf of the deceased. client. Florentinas counsels still felt obligated, however, to preserve the right
The court charges in procuring such appointment, if of Florentinas heirs/successors to continue the appeal, pursuant to what is
defrayed by the opposing party, may be recovered as now Section 16, Rule 3 of the Revised Rules of Court, pending the settlement
costs. (Emphases ours.) of the question of who among such heirs/successors should be the executor
of the deceased's estate. Hence, Florentinas counsel presented, for
admission, the printed "brief for the appellant," the printing of which they had
Clear from the aforequoted provision that a deceased party may be deferred "for professional ethical considerations," pending action by the
substituted by his heirs, but it must be emphasized that substitution may only appellate court on their request for suspension of the period. Despite the
be allowed in actions that survive the death of a party thereto. In Gonzales v. foregoing explanation by Florentinas counsel, the Court of Appeals still
Philippine Amusement and Gaming Corporation,[26] citing Bonilla v. refused to reconsider its earlier dismissal of the appeal and to admit the
Barcena,[27] we declared that the determination of whether an action survives submitted appellants brief. In addition to invoking the general principle that
the death of a party depends on the nature of the action and the damage sued litigants have no right to assume that such extensions will be granted as a
for. We explicated: matter of course; the appellate court also cited the equally established
principle that the relation of attorney and client is terminated by the death of
In the causes of action which survive the wrong the client. In the absence of a retainer from the heirs or authorized
complained of affects primarily and principally property representatives of his deceased client, the attorney would thereafter have no
and property rights, the injuries to the person being further power or authority to appear or take any further action in the case, save
merely incidental, while in the causes of action which do to inform the court of the client's death and take the necessary steps to
not survive the injury complained of is to the person, the safeguard the deceased's rights in the case. Upon appeal to us, we found that
property and rights of property affected being incidental the Court of Appeals gravely erred in not following the Rule and requiring the
x x x. appearance of the legal representative of the deceased and instead
dismissing the appeal of the latter who had yet to be substituted in the pending
appeal.We held that:
In the case at bar, both parties accuse the other of unlawfully
depriving them of their respective rights to acquire the subject property, Respondent court therefore erred in ruling
together with the house built thereon, by means of an MSA grant from the that since upon the demise of the party-appellant, the
State. Evidently, what are primarily and principally affected herein are the attorney-client relationship between her and her
property and property rights of the parties, and any injuries to their persons counsels "was automatically severed and terminated,"
(i.e., damages) are only incidental. Such property and property rights survived whatever pleadings filed by said counsel with it after the
Edwinos death and may pass on by succession to his heirs. Therefore, the death of said appellant "are mere scraps of paper." If at
heirs must be allowed to continue any litigation to protect said property or all, due to said death on May 25, 1975 and severance
property rights and to substitute themselves for the deceased party in of the attorney-client relationship, further proceedings
accordance with appropriate rules. and specifically the running of the original 45-day period
for filing the appellant's brief should be legally deemed
According to Section 16, Rule 3 of the Revised Rules of Court, a as having been automatically suspended, until the
counsel, within 30 days from his clients death, is duty-bound to inform the court proper substitution of the deceased appellant by her
of such fact, and to submit the name/s and address/es of the deceased clients executor or administrator or her heirs shall have been
legal representative/s.Thereafter, the court shall order, forthwith, the effected within the time set by respondent court
appearance of and substitution by the deceased partys legal representative/s pursuant to the cited Rule.
within another period of 30 days from notice.
xxxx
Prescinding from the foregoing, justice and proceedings and to submit the Motion for Reconsideration of the 5 August
equity dictate under the circumstances of the case at 2003 Decision of the Office of the President.
bar that the rules, while necessary for the speedy and
orderly administration of justice, should not be applied Interestingly, if, as argued by the Office of the President and the
with the rigidity and inflexibility of respondent court's Court of Appeals, Atty. Restor no longer had the personality to represent
resolutions. What should guide judicial action is the Edwino upon the latters death, assuming he died prior to the rendition of the
principle that a party litigant is to be given the fullest decision of the Office of the President, should it not also follow that the sending
opportunity to establish the merits of his complaint or of a copy of the 5 August 2003 Decision of the Office of the President to Atty.
defense rather than for him to lose life, liberty, honor or Restor, as counsel of record, could no longer be deemed a notice to the party,
property on technicalities. x x x.[29] (Emphases and his receipt of the same could not have caused the commencement of the
supplied.) period within which to file a motion for reconsideration? As a consequence,
the reglementary period within which to move for reconsideration of the
assailed decision in O.P. Case No. 98-8537 had really not yet begun to toll.
In this case, Atty. Restor is in much the same situation as
Florentinas counsels. Though incomplete, the mention by Atty. Restor of Given the foregoing, the 5 August 2003 Decision of the Office of
Edwinos death in the Motion for Reconsideration effectively informed the the President could not have attained finality. It being partly responsible for the
Office of the President of the same. Having been apprised of the fact of non-substitution of the heirs for the deceased Edwino, the Office of the
Edwinos death, it was incumbent upon the Office of the President, even President could not dismiss the Motion for Reconsideration filed by Atty.
without Atty. Restors motion to such effect, to order the legal representative/s Restor, to the prejudice of said heirs. Justice and equity demand that Edwinos
of the deceased party to appear and be substituted; or, at the very least, to heirs be given the opportunity to contest the adverse judgment that affects the
direct the counsel to furnish the court with the names and addresses of such property and property rights to which they succeeded. A rule intended to
representative/s. protect due process cannot be invoked to defeat the same.
This having been said, we address the recent theory [35] of Atty.
Since Atty. Restor filed the Motion for Reconsideration within the Fabros, Balligis new counsel, that Atty. Restors lack of personality to file the
reglementary period and no longer requested for suspension/extension of time Motion for Reconsideration of the 5 August 2003 Decision of the Office of the
to do so, the Office of the President need not suspend the running of said President was due to the failure of Atty. Castillo, Edwinos previous counsel, to
reglementary period as in Heirs of F. Nuguid Vda. de Haberer, but it could formally withdraw as such, and of Atty. Restor to formally substitute for Atty.
have deferred any action on said Motion until a substitution had been effected Castillo. A thorough review of the Order dated 27 October 2003 of the Office
and it had ascertained that the substituted heirs chose to retain Atty. Restors of the President (dismissing the Motion for Reconsideration of the Decision
services as legal counsel. Conspicuously, the Office of the President dated 5 August 2003 filed by Atty. Restor, due to the latters lack of personality),
completely failed to act on the information that Edwino had died so as to effect and the Resolutions dated 29 November 2006 and 2 May 2007 of the Court of
proper substitution by the latters heirs, as set forth in Section 16, Rule 3 of the Appeals (affirming the dismissal by the Office of the President of said Motion
Revised Rules of Court. The only action the Office of the President took as for Reconsideration) reveal no such pronouncement. The plain reason for the
regards said information was to deny the Motion for Reconsideration filed by dismissal of the Motion for Reconsideration was that Atty. Restor had no more
Atty. Restor for his lack of personality, given his clients death.This we find personality to file the same, given that Edwinos death extinguished the
totally contrary to equity and fair play since Edwinos heirs were, in effect, attorney-client relationship between them.
deprived of their right to seek reconsideration or appeal of the adverse
decision of the Office of the President which was itself partly responsible for But even assuming, for the sake of argument, that the Office of the
their non-substitution. President and the Court of Appeals did find that Atty. Restor had no personality
to file the Motion for Reconsideration in question because Atty. Castillo had
We emphasize that the purpose behind Section 16, Rule 3 of the not withdrawn as Edwinos counsel and Atty. Restor had not substituted for
Revised Rules of Procedure is the protection of the right to due process of Atty. Castillo; such finding would have likewise been erroneous. A party may
every party to a litigation who may be affected by the intervening death. The have two or more lawyers working in collaboration in a given litigation,[36] but
deceased litigant is himself or herself protected, as he/she continues to be the fact that a second attorney enters his appearance for the same party does
properly represented in the suit through the duly appointed legal not necessarily raise the presumption that the authority of the first attorney has
representative of his estate.[30] The spirit behind the general rule requiring a been withdrawn.[37] The second counsel should only be treated as a
formal substitution of heirs is not really because substitution of heirs is a collaborating counsel despite his appearance as "the new counsel of record."
jurisdictional requirement, but because non-compliance therewith results in A lawyer is presumed to be properly authorized to represent any cause in
the undeniable violation of the right to due process of those who, though not which he appears;[38] the second counsel, in this case Atty. Restor, is
duly notified of the proceedings, are substantially affected by the decision presumed to have acted within his authority as collaborating counsel when he
rendered therein.[31] filed the Motion for Reconsideration of the 5 August 2003 Decision of the
It must also be remembered that, unless properly relieved, the Office of the President.
counsel is responsible for the conduct of the case;[32] he is obligated by his
client and the court to do what the interest of his client requires until the end Finally, we stop short of resolving the issue of whose MSA should
of litigation or his representation is terminated formally and there is a be given due course, because in order to do so, we must first make findings
termination of record.[33] And the only way the Office of the President could of fact concerning the authenticity and validity of the Affidavit of
have ascertained whether Atty. Restor still had the authority to file the Motion Relinquishment/Sale of Right dated 9 October 1989, allegedly executed by
for Reconsideration on behalf of Edwinos heirs, or otherwise had been Balligi in favor of Edwino. It must be noted that the DENR and the Office of the
relieved or his representation terminated, was by having Edwinos heirs come President made divergent findings thereon. We cannot, as of yet, make such
forth as the rules required. In fact, in the Letter of Appointment dated 16 findings given the derth of evidence on record. To arrive at an ultimate
November 2003, which was presented before the Court of Appeals, Alfonso determination, the remand of the case to the Court of Appeals is in order, so
and Fatima, as Edwinos legal representatives and heirs, explicitly retained the that it can give due course to the Petition for Review in CA-G.R. SP No.
services of Atty. Restor by [appointing] and [engaging] [his] legal services x x 81305. Time and again, we have stated that this Court is not a trier of fact or
x in O.P. Case No. 98-8537 before the Office of the President and to further otherwise structurally capacitated to receive and evaluate evidence de novo,
represent [them] in the event that the afore-mentioned case is appealed to the unlike the Court of Appeals. The Court of Appeals generally has the authority
Court of Appeals/Supreme Court.[34] Even though belatedly executed, such to review findings of fact, and even hold hearings for further reception of
Letter of Appointment demonstrates that if they were just given the opportunity evidence. Its conclusions as to findings of fact are generally accorded great
by the Office of the President, Alfonso and Fatima could have easily confirmed respect by this Court. It is a body that is fully capacitated and has a surfeit of
the authority of Atty. Restor to continue acting as their counsel in the experience in appreciating factual matters, including documentary evidence.
deceased party be for money, but it must arise from "contract express or
WHEREFORE, premises considered, the instant Petition implied", and these words (also used by the Rules in connection with
is PARTLY GRANTED. The assailed twin Resolutions dated 29 November attachments and derived from the common law) were construed in Leung Ben
2006 and 2 May 2007 of the Court of Appeals in CA-G.R. SP No. 81305 vs. O'Brien, 38 Phil., 182, 189-194.
are REVERSED and SET ASIDE, insofar as they affirmed the declarations of
the Office of the President in the latters Order dated 27 October 2003 in O.P. to include all purely personal obligations other than those which
Case No. 98-8537 that, given the death of his client, Edwino A. Torres, Atty. have their source in delict or tort.
Alexander Restor lacked the personality to file the Motion for Reconsideration
of the Decision dated 5 August 2003; and that, since no motion for
reconsideration or appeal had been timely filed, the said Decision dated 5 Upon the other hand, Rule 88, section 1, enumerates actions that survive
August 2003 of the Office of the President had become final and executory. against a decedent's executors or administrators, and they are: (1) actions to
recover real and personal property from the estate; (2) actions to enforce a
The case is hereby REMANDED to the Court of Appeals, which lien thereon; and (3) actions to recover damages for an injury to person or
is ORDERED to give due course to the Petition for Review filed in CA-G.R. SP property. The present suit is one for damages under the last class, it having
No. 81305 and to hold further proceedings in accordance with this Decision. been held that "injury to property" is not limited to injuries to specific property,
but extends to other wrongs by which personal estate is injured or diminished
(Baker vs. Crandall, 47 Am. Rep. 126; also 171 A.L.R., 1395). To maliciously
cause a party to incur unnecessary expenses, as charged in this case, is
certainly injurious to that party's property (Javier vs. Araneta, L-4369, Aug. 31,
MARIA G. AGUAS, FELIX GUARDINO and FRANCISCO 1953).
SALINAS, plaintiffs-appellants,
vs.
Be that as it may, it now appears from a communication from the Court of First
HERMOGENES LLEMOS, deceased defendant substituted by his
Instance of Samar that the parties have arrived at an amicable settlement of
representatives,
their differences, and that they have agreed to dismiss this appeal. The
PERPETUA YERRO-LLEMOS, HERMENEGILDO LLEMOS, FELINO
settlement has been approved and embodied in an order of the Court of First
LLEMOS and AMADO LLEMOS,defendants-appellees.
Instance.

Jesus M. Aguas for plaintiffs-appellants.


The case having thus become moot, it becomes unnecessary to resolve the
Serafin P. Ramento for defendants-appellees.
questions raised therein. This appeal is, therefore, ordered dismissed, without
special pronouncement as to costs.
REYES, J.B.L., J.:
SPOUSES ANTONIO F. ALGURA G.R. No. 150135
On 14 March 1960, Francisco Salinas and the spouses Felix Guardino and and LORENCITA S.J. ALGURA,
Maria Aguas jointly filed an action in the Court of First Instance of Catbalogan, Petitioners,
Samar (Civil Case No. 4824), to recover damages from Hermogenes Llemos, Present:
averring that the latter had served them by registered mail with a copy of a - versus - QUISUMBING, J., Chairperson,
petition for a writ of possession, with notice that the same would be submitted CARPIO,
to the said court of Samar on February 23, 1960 at 8: 00 a.m.; that in view of CARPIO MORALES,
the copy and notice served, plaintiffs proceeded to the court from their THE LOCAL GOVERNMENT TINGA, and
residence in Manila accompanied by their lawyers, only to discover that no UNIT OF THE CITY OF NAGA, VELASCO, JR., JJ.
such petition had been filed; and that defendant Llemos maliciously failed to ATTY. MANUEL TEOXON,
appear in court, so that plaintiffs' expenditure and trouble turned out to be in ENGR. LEON PALMIANO,
vain, causing them mental anguish and undue embarrassment. NATHAN SERGIO and Promulgated:
BENJAMIN NAVARRO, SR.,
On 1 April 1960, before he could answer the complaint, the defendant died. Respondents. October 30, 2006
Upon leave of court, plaintiffs amended their complaint to include the heirs of
the deceased. On 21 July 1960, the heirs filed a motion to dismiss, and by x-----------------------------------------------------------------------------------------x
order of 12 August 1960, the court below dismissed it, on the ground that the
legal representative, and not the heirs, should have been made the party
defendant; and that anyway the action being for recovery of money, testate or DECISION
intestate proceedings should be initiated and the claim filed therein (Rec. on VELASCO, JR., J.:
Appeal, pp. 26-27).
Anyone who has ever struggled with poverty
Motion for reconsideration having been denied, the case was appealed to us knows how extremely expensive it is to be poor.
on points of law.1äwphï1.ñët
James Baldwin
Plaintiffs argue with considerable cogency that contrasting the correlated The Constitution affords litigantsmoneyed or poorequal access to
provisions of the Rules of Court, those concerning claims that are barred if not the courts; moreover, it specifically provides that poverty shall not bar any
filed in the estate settlement proceedings (Rule 87, sec. 5) and those defining person from having access to the courts.[1] Accordingly, laws and rules must
actions that survive and may be prosecuted against the executor or be formulated, interpreted, and implemented pursuant to the intent and spirit
administrator (Rule 88, sec. 1), it is apparent that actions for damages caused of this constitutional provision. As such, filing fees, though one of the essential
by tortious conduct of a defendant (as in the case at bar) survive the death of elements in court procedures, should not be an obstacle to poor litigants
the latter. Under Rule 87, section 5, the actions that are abated by death are: opportunity to seek redress for their grievances before the courts.
(1) claims for funeral expenses and those for the last sickness of the decedent; The Case
(2) judgments for money; and (3) "all claims for money against the
decedent, arising from contract express or implied". None of these includes This Petition for Review on Certiorari seeks the annulment of the September
that of the plaintiffs-appellants; for it is not enough that the claim against the 11, 2001 Order of the Regional Trial Court (RTC) of Naga City, Branch 27, in
Civil Case No. 99-4403 entitled Spouses Antonio F. Algura and Lorencita S.J. for exemption from payment of legal fees and to comply with the third
Algura v. The Local Government Unit of the City of Naga, et al., dismissing the paragraph of Rule 141, Section 18 of the Revised Rules of Courtdirecting them
case for failure of petitioners Algura spouses to pay the required filing to pay the requisite filing fees.[13]
fees.[2] Since the instant petition involves only a question of law based on facts
established from the pleadings and documents submitted by the parties,[3] the On April 28, 2000, petitioners filed a Motion for Reconsideration of the April
Court gives due course to the instant petition sanctioned under Section 2(c) of 14, 2000 Order. On May 8, 2000, respondents then filed their
Rule 41 on Appeal from the RTCs, and governed by Rule 45 of the 1997 Rules Comment/Objections to petitioners Motion for Reconsideration.
of Civil Procedure.
On May 5, 2000, the trial court issued an Order[14] giving petitioners
The Facts the opportunity to comply with the requisites laid down in Section 18, Rule 141,
for them to qualify as indigent litigants.
On September 1, 1999, spouses Antonio F. Algura and Lorencita S.J. Algura
filed a Verified Complaint dated August 30, 1999[4] for damages against the On May 13, 2000, petitioners submitted their Compliance[15] attaching the
Naga City Government and its officers, arising from the alleged illegal affidavits of petitioner Lorencita Algura[16]and Erlinda Bangate,[17] to comply
demolition of their residence and boarding house and for payment of lost with the requirements of then Rule 141, Section 18 of the Rules of Court and
income derived from fees paid by their boarders amounting to PhP 7,000.00 in support of their claim to be declared as indigent litigants.
monthly.
In her May 13, 2000 Affidavit, petitioner Lorencita Algura claimed
Simultaneously, petitioners filed an Ex-Parte Motion to Litigate as Indigent that the demolition of their small dwelling deprived her of a monthly income
Litigants,[5] to which petitioner Antonio Alguras Pay Slip No. 2457360 (Annex amounting to PhP 7,000.00. She, her husband, and their six (6) minor children
A of motion) was appended, showing a gross monthly income of Ten had to rely mainly on her husbands salary as a policeman which provided them
Thousand Four Hundred Seventy Four Pesos (PhP 10,474.00) and a net pay a monthly amount of PhP 3,500.00, more or less. Also, they did not own any
of Three Thousand Six Hundred Sixteen Pesos and Ninety Nine Centavos real property as certified by the assessors office of Naga City. More so,
(PhP 3,616.99) for [the month of] July 1999.[6] Also attached as Annex B to the according to her, the meager net income from her small sari-sari store and the
motion was a July 14, 1999 Certification[7] issued by the Office of the City rentals of some boarders, plus the salary of her husband, were not enough to
Assessor of Naga City, which stated that petitioners had no property declared pay the familys basic necessities.
in their name for taxation purposes.
To buttress their position as qualified indigent litigants, petitioners also
Finding that petitioners motion to litigate as indigent litigants was meritorious, submitted the affidavit of Erlinda Bangate, who attested under oath, that she
Executive Judge Jose T. Atienza of the Naga City RTC, in the September 1, personally knew spouses Antonio Algura and Lorencita Algura, who were her
1999 Order,[8] granted petitioners plea for exemption from filing fees. neighbors; that they derived substantial income from their boarders; that they
lost said income from their boarders rentals when the Local Government Unit
Meanwhile, as a result of respondent Naga City Governments of the City of Naga, through its officers, demolished part of their house
demolition of a portion of petitioners house, the Alguras allegedly lost a because from that time, only a few boarders could be accommodated; that the
monthly income of PhP 7,000.00 from their boarders rentals. With the loss of income from the small store, the boarders, and the meager salary of Antonio
the rentals, the meager income from Lorencita Alguras sari-sari store and Algura were insufficient for their basic necessities like food and clothing,
Antonio Alguras small take home pay became insufficient for the expenses of considering that the Algura spouses had six (6) children; and that she knew
the Algura spouses and their six (6) children for their basic needs including that petitioners did not own any real property.
food, bills, clothes, and schooling, among others.
Thereafter, Naga City RTC Acting Presiding Judge Andres B. Barsaga, Jr.
On October 13, 1999, respondents filed an Answer with Counterclaim issued his July 17, 2000[18] Order denying the petitioners Motion for
dated October 10, 1999,[9] arguing that the defenses of the petitioners in the Reconsideration.
complaint had no cause of action, the spouses boarding house blocked the
road right of way, and said structure was a nuisance per se. Judge Barsaga ratiocinated that the pay slip of Antonio F. Algura
showed that the GROSS INCOME or TOTAL EARNINGS of plaintiff Algura
Praying that the counterclaim of defendants (respondents) be dismissed, [was] ₧10,474.00 which amount [was] over and above the amount mentioned
petitioners then filed their Reply with Ex-ParteRequest for a Pre-Trial in the first paragraph of Rule 141, Section 18 for pauper litigants residing
Setting[10] before the Naga City RTC on October 19, 1999. On February 3, outside Metro Manila.[19] Said rule provides that the gross income of the litigant
2000, a pre-trial was held wherein respondents asked for five (5) days within should not exceed PhP 3,000.00 a month and shall not own real estate with
which to file a Motion to Disqualify Petitioners as Indigent Litigants. an assessed value of PhP 50,000.00. The trial court found that, in Lorencita
On March 13, 2000, respondents filed a Motion to Disqualify the Plaintiffs for S.J. Alguras May 13, 2000 Affidavit, nowhere was it stated that she and her
Non-Payment of Filing Fees dated March 10, 2000.[11] They asserted that in immediate family did not earn a gross income of PhP 3,000.00.
addition to the more than PhP 3,000.00 net income of petitioner Antonio The Issue
Algura, who is a member of the Philippine National Police, spouse Lorencita
Algura also had a mini-store and a computer shop on the ground floor of their Unconvinced of the said ruling, the Alguras instituted the instant petition
residence along Bayawas St., Sta. Cruz, Naga City. Also, respondents raising a solitary issue for the consideration of the Court: whether petitioners
claimed that petitioners second floor was used as their residence and as a should be considered as indigent litigants who qualify for exemption from
boarding house, from which they earned more than PhP 3,000.00 a month. In paying filing fees.
addition, it was claimed that petitioners derived additional income from their
computer shop patronized by students and from several boarders who paid The Ruling of the Court
rentals to them. Hence, respondents concluded that petitioners were not
indigent litigants. The petition is meritorious.

On March 28, 2000, petitioners subsequently interposed their Opposition to A review of the history of the Rules of Court on suits in forma pauperis (pauper
the Motion[12] to respondents motion to disqualify them for non-payment of litigant) is necessary before the Court rules on the issue of the Algura spouses
filing fees. claim to exemption from paying filing fees.

On April 14, 2000, the Naga City RTC issued an Order disqualifying petitioners When the Rules of Court took effect on January 1, 1964, the rule on pauper
as indigent litigants on the ground that they failed to substantiate their claim litigants was found in Rule 3, Section 22 which provided that:
Such authority shall include an exemption from
SECTION 22. Pauper litigant.Any court may payment of docket and other lawful fees, and
authorize a litigant to prosecute his action or of transcripts of stenographic notes which the
defense as a pauper upon a proper showing court may order to be furnished him. The
that he has no means to that effect by amount of the docket and other lawful fees
affidavits, certificate of the corresponding which the indigent was exempted from paying
provincial, city or municipal treasurer, or shall be a lien on any judgment rendered in the
otherwise. Such authority[,] once given[,] shall case favorable to the indigent, unless the court
include an exemption from payment of legal otherwise provides.
fees and from filing appeal bond, printed record
and printed brief. The legal fees shall be a lien Any adverse party may contest the grant of
to any judgment rendered in the case such authority at any time before judgment is
[favorable] to the pauper, unless the court rendered by the trial court. If the court should
otherwise provides. determine after hearing that the party declared
as an indigent is in fact a person with sufficient
income or property, the proper docket and
From the same Rules of Court, Rule 141 on Legal Fees, on the other lawful fees shall be assessed and
other hand, did not contain any provision on pauper litigants. collected by the clerk of court. If payment is not
made within the time fixed by the court,
On July 19, 1984, the Court, in Administrative Matter No. 83-6-389-0 (formerly execution shall issue for the payment thereof,
G.R. No. 64274), approved the recommendation of the Committee on the without prejudice to such other sanctions as
Revision of Rates and Charges of Court Fees, through its Chairman, then the court may impose.
Justice Felix V. Makasiar, to revise the fees in Rule 141 of the Rules of Court
to generate funds to effectively cover administrative costs for services
rendered by the courts.[20] A provision on pauper litigants was inserted which At the time the Rules on Civil Procedure were amended by the Court in Bar
reads: Matter No. 803, however, there was no amendment made on Rule 141,
Section 16 on pauper litigants.
SECTION 16. Pauper-litigants exempt from On March 1, 2000, Rule 141 on Legal Fees was amended by the Court in A.M.
payment of court fees.Pauper-litigants include No. 00-2-01-SC, whereby certain fees were increased or adjusted. In this
wage earners whose gross income do not Resolution, the Court amended Section 16 of Rule 141, making it Section 18,
exceed P2,000.00 a month or P24,000.00 a which now reads:
year for those residing in Metro Manila, and
P1,500.00 a month or P18,000.00 a year for SECTION 18. Pauper-litigants exempt from
those residing outside Metro Manila, or those payment of legal fees.Pauper litigants (a)
who do not own real property with an assessed whose gross income and that of their
value of not more than P24,000.00, or not more immediate family do not exceed four thousand
than P18,000.00 as the case may be. (P4,000.00) pesos a month if residing in Metro
Such exemption shall include exemption from Manila, and three thousand (P3,000.00) pesos
payment of fees for filing appeal bond, printed a month if residing outside Metro Manila, and
record and printed brief. (b) who do not own real property with an
assessed value of more than fifty thousand
The legal fees shall be a lien on the monetary (P50,000.00) pesos shall be exempt from the
or property judgment rendered in favor of the payment of legal fees.
pauper-litigant.
The legal fees shall be a lien on any judgment
To be entitled to the exemption herein rendered in the case favorably to the pauper
provided, the pauper-litigant shall execute an litigant, unless the court otherwise provides.
affidavit that he does not earn the gross
income abovementioned, nor own any real To be entitled to the exemption herein
property with the assessed value afore- provided, the litigant shall execute an affidavit
mentioned [sic], supported by a certification to that he and his immediate family do not earn
that effect by the provincial, city or town the gross income abovementioned, nor do they
assessor or treasurer. own any real property with the assessed value
aforementioned, supported by an affidavit of a
disinterested person attesting to the truth of the
When the Rules of Court on Civil Procedure were amended by the 1997 Rules litigants affidavit.
of Civil Procedure (inclusive of Rules 1 to 71) in Supreme Court Resolution in
Bar Matter No. 803 dated April 8, 1997, which became effective on July 1, Any falsity in the affidavit of a litigant or
1997, Rule 3, Section 22 of the Revised Rules of Court was superseded by disinterested person shall be sufficient cause
Rule 3, Section 21 of said 1997 Rules of Civil Procedure, as follows: to strike out the pleading of that party, without
prejudice to whatever criminal liability may
SECTION 21. Indigent party.A party may be have been incurred.
authorized to litigate his action, claim or
defense as an indigent if the court, upon an ex
parte application and hearing, is satisfied that It can be readily seen that the rule on pauper litigants was inserted in Rule
the party is one who has no money or property 141 without revoking or amending Section 21 of Rule 3, which provides for
sufficient and available for food, shelter and the exemption of pauper litigants from payment of filing fees. Thus, on March
basic necessities for himself and his family. 1, 2000, there were two existing rules on pauper litigants; namely, Rule 3,
Section 21 and Rule 141, Section 18.
on Pauper Litigants which became effective on July 19, 1984 up to February
On August 16, 2004, Section 18 of Rule 141 was further amended in 28, 2000.
Administrative Matter No. 04-2-04-SC, which became effective on the same
date. It then became Section 19 of Rule 141, to wit: The old Section 16, Rule 141 requires applicants to file an ex-parte motion to
litigate as a pauper litigant by submitting an affidavit that they do not have a
gross income of PhP 2,000.00 a month or PhP 24,000.00 a year for those
residing in Metro Manila and PhP 1,500.00 a month or PhP 18,000.00 a year
SEC. 19. Indigent litigants exempt from for those residing outside Metro Manila or those who do not own real property
payment of legal fees.INDIGENT LITIGANTS with an assessed value of not more than PhP 24,000.00 or not more than PhP
(A) WHOSE GROSS INCOME AND THAT OF 18,000.00 as the case may be. Thus, there are two requirements: a) income
THEIR IMMEDIATE FAMILY DO NOT requirementthe applicants should not have a gross monthly income of more
EXCEED AN AMOUNT DOUBLE THE than PhP 1,500.00, and b) property requirementthey should not own property
MONTHLY MINIMUM WAGE OF AN with an assessed value of not more than PhP 18,000.00.
EMPLOYEE AND (B) WHO DO NOT OWN
REAL PROPERTY WITH A FAIR MARKET In the case at bar, petitioners Alguras submitted the Affidavits of petitioner
VALUE AS STATED IN THE CURRENT TAX Lorencita Algura and neighbor Erlinda Bangate, the pay slip of petitioner
DECLARATION OF MORE THAN THREE Antonio F. Algura showing a gross monthly income of PhP 10,474.00, [21] and
HUNDRED THOUSAND (P300,000.00) a Certification of the Naga City assessor stating that petitioners do not have
PESOS SHALL BE EXEMPT FROM property declared in their names for taxation.[22] Undoubtedly, petitioners do
PAYMENT OF LEGAL FEES. not own real property as shown by the Certification of the Naga City assessor
and so the property requirement is met. However with respect to the income
The legal fees shall be a lien on any judgment requirement, it is clear that the gross monthly income of PhP 10,474.00 of
rendered in the case favorable to the indigent petitioner Antonio F. Algura and the PhP 3,000.00 income of Lorencita Algura
litigant unless the court otherwise provides. when combined, were above the PhP 1,500.00 monthly income threshold
prescribed by then Rule 141, Section 16 and therefore, the income
To be entitled to the exemption herein requirement was not satisfied. The trial court was therefore correct in
provided, the litigant shall execute an disqualifying petitioners Alguras as indigent litigants although the court should
affidavit that he and his immediate family have applied Rule 141, Section 16 which was in effect at the time of the filing
do not earn a gross income of the application on September 1, 1999. Even if Rule 141, Section 18 (which
abovementioned, and they do not own any superseded Rule 141, Section 16 on March 1, 2000) were applied, still the
real property with the fair value application could not have been granted as the combined PhP 13,474.00
aforementioned, supported by an affidavit income of petitioners was beyond the PhP 3,000.00 monthly income threshold.
of a disinterested person attesting to the
truth of the litigants affidavit.The current tax Unrelenting, petitioners however argue in their Motion for Reconsideration of
declaration, if any, shall be attached to the the April 14, 2000 Order disqualifying them as indigent litigants[23] that the
litigants affidavit. rules have been relaxed by relying on Rule 3, Section 21 of the 1997 Rules of
Civil procedure which authorizes parties to litigate their action as indigents if
Any falsity in the affidavit of litigant or the court is satisfied that the party is one who has no money or property
disinterested person shall be sufficient cause sufficient and available for food, shelter and basic necessities for himself and
to dismiss the complaint or action or to strike his family. The trial court did not give credence to this view of petitioners and
out the pleading of that party, without prejudice simply applied Rule 141 but ignored Rule 3, Section 21 on Indigent Party.
to whatever criminal liability may have been
incurred.(Emphasis supplied.) The position of petitioners on the need to use Rule 3, Section 21 on their
application to litigate as indigent litigants brings to the fore the issue on
whether a trial court has to apply both Rule 141, Section 16 and Rule 3,
Amendments to Rule 141 (including the amendment to Rule 141, Section 18) Section 21 on such applications or should the court apply only Rule 141,
were made to implement RA 9227 which brought about new increases in filing Section 16 and discard Rule 3, Section 21 as having been superseded by Rule
fees. Specifically, in the August 16, 2004 amendment, the ceiling for the gross 141, Section 16 on Legal Fees.
income of litigants applying for exemption and that of their immediate family
was increased from PhP 4,000.00 a month in Metro Manila and PhP 3,000.00 The Court rules that Rule 3, Section 21 and Rule 141, Section 16 (later
a month outside Metro Manila, to double the monthly minimum wage of an amended as Rule 141, Section 18 on March 1, 2000 and subsequently
employee; and the maximum value of the property owned by the applicant was amended by Rule 141, Section 19 on August 16, 2003, which is now the
increased from an assessed value of PhP 50,000.00 to a maximum market present rule) are still valid and enforceable rules on indigent litigants.
value of PhP 300,000.00, to be able to accommodate more indigent litigants
and promote easier access to justice by the poor and the marginalized in the For one, the history of the two seemingly conflicting rules readily reveals that
wake of these new increases in filing fees. it was not the intent of the Court to consider the old Section 22 of Rule 3, which
took effect on January 1, 1994 to have been amended and superseded by
Even if there was an amendment to Rule 141 on August 16, 2004, there was Rule 141, Section 16, which took effect on July 19, 1984 through A.M. No. 83-
still no amendment or recall of Rule 3, Section 21 on indigent litigants. 6-389-0. If that is the case, then the Supreme Court, upon the
recommendation of the Committee on the Revision on Rules, could have
With this historical backdrop, let us now move on to the sole issuewhether already deleted Section 22 from Rule 3 when it amended Rules 1 to 71 and
petitioners are exempt from the payment of filing fees. approved the 1997 Rules of Civil Procedure, which took effect on July 1,
1997. The fact that Section 22 which became Rule 3, Section 21 on indigent
It is undisputed that the Complaint (Civil Case No. 99-4403) was filed litigant was retained in the rules of procedure, even elaborating on the
on September 1, 1999. However, the Naga City RTC, in its April 14, 2000 and meaning of an indigent party, and was also strengthened by the addition of a
July 17, 2000 Orders, incorrectly applied Rule 141, Section 18 on Legal third paragraph on the right to contest the grant of authority to litigate only goes
Fees when the applicable rules at that time were Rule 3, Section 21 on to show that there was no intent at all to consider said rule as expunged from
Indigent Party which took effect on July 1, 1997 and Rule 141, Section 16 the 1997 Rules of Civil Procedure.
Furthermore, Rule 141 on indigent litigants was amended property requirements, the authority to litigate as indigent litigant is
twice: first on March 1, 2000 and the second on August 16, 2004; and yet, automatically granted and the grant is a matter of right.
despite these two amendments, there was no attempt to delete Section 21
from said Rule 3. This clearly evinces the desire of the Court to maintain the However, if the trial court finds that one or both requirements have not been
two (2) rules on indigent litigants to cover applications to litigate as an indigent met, then it would set a hearing to enable the applicant to prove that the
litigant. applicant has no money or property sufficient and available for food, shelter
and basic necessities for himself and his family. In that hearing, the adverse
It may be argued that Rule 3, Section 21 has been impliedly repealed by the party may adduce countervailing evidence to disprove the evidence presented
recent 2000 and 2004 amendments to Rule 141 on legal fees. This position is by the applicant; after which the trial court will rule on the application
bereft of merit. Implied repeals are frowned upon unless the intent of the depending on the evidence adduced. In addition, Section 21 of Rule 3 also
framers of the rules is unequivocal. It has been consistently ruled that: provides that the adverse party may later still contest the grant of such
authority at any time before judgment is rendered by the trial court, possibly
(r)epeals by implication are not favored, and based on newly discovered evidence not obtained at the time the application
will not be decreed, unless it is manifest that was heard. If the court determines after hearing, that the party declared as an
the legislature so intended. As laws are indigent is in fact a person with sufficient income or property, the proper docket
presumed to be passed with deliberation and and other lawful fees shall be assessed and collected by the clerk of court. If
with full knowledge of all existing ones on the payment is not made within the time fixed by the court, execution shall issue
subject, it is but reasonable to conclude that in or the payment of prescribed fees shall be made, without prejudice to such
passing a statute[,] it was not intended to other sanctions as the court may impose.
interfere with or abrogate any former law The Court concedes that Rule 141, Section 19 provides specific standards
relating to same matter, unless the while Rule 3, Section 21 does not clearly draw the limits of the entitlement to
repugnancy between the two is not only the exemption. Knowing that the litigants may abuse the grant of authority, the
irreconcilable, but also clear and convincing, trial court must use sound discretion and scrutinize evidence strictly in granting
and flowing necessarily from the language exemptions, aware that the applicant has not hurdled the precise standards
used, unless the later act fully embraces the under Rule 141. The trial court must also guard against abuse and misuse of
subject matter of the earlier, or unless the the privilege to litigate as an indigent litigant to prevent the filing of exorbitant
reason for the earlier act is beyond claims which would otherwise be regulated by a legal fee requirement.
peradventure removed. Hence, every effort
must be used to make all acts stand and if, Thus, the trial court should have applied Rule 3, Section 21 to the application
by any reasonable construction they can of the Alguras after their affidavits and supporting documents showed that
be reconciled, the later act will not operate as petitioners did not satisfy the twin requirements on gross monthly income and
a repeal of the earlier.[24] (Emphasis supplied). ownership of real property under Rule 141. Instead of disqualifying the Alguras
as indigent litigants, the trial court should have called a hearing as required by
Rule 3, Section 21 to enable the petitioners to adduce evidence to show that
Instead of declaring that Rule 3, Section 21 has been superseded and they didnt have property and money sufficient and available for food, shelter,
impliedly amended by Section 18 and later Section 19 of Rule 141, the Court and basic necessities for them and their family.[27] In that hearing, the
finds that the two rules can and should be harmonized. respondents would have had the right to also present evidence to refute the
allegations and evidence in support of the application of the petitioners to
The Court opts to reconcile Rule 3, Section 21 and Rule 141, Section 19 litigate as indigent litigants. Since this Court is not a trier of facts, it will have
because it is a settled principle that when conflicts are seen between two to remand the case to the trial court to determine whether petitioners can be
provisions, all efforts must be made to harmonize them. Hence, every statute considered as indigent litigants using the standards set in Rule 3, Section 21.
[or rule] must be so construed and harmonized with other statutes [or rules] as
to form a uniform system of jurisprudence.[25] Recapitulating the rules on indigent litigants, therefore, if the applicant for
exemption meets the salary and property requirements under Section 19 of
In Manila Jockey Club, Inc. v. Court of Appeals, this Court enunciated that in Rule 141, then the grant of the application is mandatory. On the other hand,
the interpretation of seemingly conflicting laws, efforts must be made to first when the application does not satisfy one or both requirements, then the
harmonize them. This Court thus ruled: application should not be denied outright; instead, the court should apply the
indigency test under Section 21 of Rule 3 and use its sound discretion in
Consequently, every statute should be determining the merits of the prayer for exemption.
construed in such a way that will harmonize it
with existing laws. This principle is expressed Access to justice by the impoverished is held sacrosanct under Article III,
in the legal maxim interpretare et concordare Section 11 of the 1987 Constitution. The Action Program for Judicial Reforms
leges legibus est optimus interpretandi, that is, (APJR) itself, initiated by former Chief Justice Hilario G. Davide, Jr., placed
to interpret and to do it in such a way as to prime importance on easy access to justice by the poor as one of its six major
harmonize laws with laws is the best method of components. Likewise, the judicial philosophy of Liberty and Prosperity of
interpretation.[26] Chief Justice Artemio V. Panganiban makes it imperative that the courts shall
not only safeguard but also enhance the rights of individualswhich are
considered sacred under the 1987 Constitution. Without doubt, one of the
In the light of the foregoing considerations, therefore, the two (2) rules can most precious rights which must be shielded and secured is the unhampered
stand together and are compatible with each other. When an application to access to the justice system by the poor, the underprivileged, and the
litigate as an indigent litigant is filed, the court shall scrutinize the affidavits and marginalized.
supporting documents submitted by the applicant to determine if the applicant WHEREFORE, the petition is GRANTED and the April 14, 2000 Order
complies with the income and property standards prescribed in the present granting the disqualification of petitioners, the July 17, 2000 Order denying
Section 19 of Rule 141that is, the applicants gross income and that of the petitioners Motion for Reconsideration, and the September 11, 2001 Order
applicants immediate family do not exceed an amount double the monthly dismissing the case in Civil Case No. RTC-99-4403 before the Naga City RTC,
minimum wage of an employee; and the applicant does not own real property Branch 27 are ANNULLED and SET ASIDE.Furthermore, the Naga City RTC
with a fair market value of more than Three Hundred Thousand Pesos (PhP is ordered to set the Ex-Parte Motion to Litigate as Indigent Litigants for
300,000.00). If the trial court finds that the applicant meets the income and hearing and apply Rule 3, Section 21 of the 1997 Rules of Civil Procedure to
determine whether petitioners can qualify as indigent litigants.
In addition, this law deals mainly with individual indigent and it does
No costs. not include Foundations or Associations that work with and for the
SO ORDERED. most Indigent persons. As seen in our Article of Incorporation,
since 1985 the Good Shepherd Foundation, Inc. reached-out to the
RE: QUERY OF MR. ROGER A. M. No. 09-6-9-SC
poorest among the poor, to the newly born and abandoned babies,
C. PRIORESCHI RE
to children who never saw the smile of their mother, to old people
EXEMPTION FROM LEGAL
who cannot afford a few pesos to pay for common prescriptions, to
AND FILING FEES OF THE
Present: broken families who returned to a normal life. In other words, we
GOOD SHEPHERD
have been working hard for the very Filipino people, that the
FOUNDATION, INC.
Government and the society cannot reach to, or have rejected or
abandoned them.
PUNO, CJ,

QUISUMBING*, Can the Courts grant to our Foundation who works for indigent and
underprivileged people, the same option granted to indigent
YNARES-SANTIAGO*, people?

CARPIO, The two Executive Judges, that we have approached, fear


accusations of favoritism or other kind of attack if they approve
CORONA, something which is not clearly and specifically stated in the law or
approved by your HONOR.
CARPIO MORALES,

CHICO-NAZARIO, Can your Honor help us once more?

VELASCO, JR., Grateful for your understanding, God bless you


and your undertakings.
NACHURA,
We shall be privileged if you find time to visit our
LEONARDO-DE CASTRO,
orphanage the Home of Love and
BRION, the Spiritual Retreat Center in Antipolo City.

PERALTA,
To answer the query of Mr. Prioreschi, the Courts cannot grant to
BERSAMIN, foundations like the Good Shepherd Foundation, Inc. the same exemption
from payment of legal fees granted to indigent litigants even if the foundations
DEL CASTILLO**, and are working for indigent and underprivileged people.
ABAD**, JJ.
The basis for the exemption from legal and filing fees is the free
Promulgated:
access clause, embodied in Sec. 11, Art. III of the 1987 Constitution, thus:
August 19, 2009
Sec. 11. Free access to the courts and quasi judicial
bodies and adequate legal assistance shall not be
denied to any person by reason of poverty.
x-----------------------------------------------------------------------------------------x The importance of the right to free access to the courts and quasi
judicial bodies and to adequate legal assistance cannot be denied. A move to
remove the provision on free access from the Constitution on the ground that
it was already covered by the equal protection clause was defeated by
RESOLUTION the desire to give constitutional stature to such specific protection of the
poor.[1]

BERSAMIN, J.:
In implementation of the right of free access under the Constitution, the
Supreme Court promulgated rules, specifically, Sec. 21, Rule 3, Rules of
In his letter dated May 22, 2009 addressed to the Chief Justice, Mr. Roger C. Court,[2] and Sec. 19, Rule 141, Rules of Court,[3] which respectively state
Prioreschi, administrator of the Good Shepherd Foundation, Inc., wrote: thus:

The Good Shepherd Foundation, Inc. is very grateful for your 1rst. Sec. 21. Indigent party. A party may be
Indorsement to pay a nominal fee of Php 5,000.00 and the balance authorized to litigate his action, claim or defense as an
upon the collection action of 10 million pesos, thus giving us access indigent if the court, upon an ex parte application and
to the Justice System previously denied by an up-front excessive hearing, is satisfied that the party is one who has no
court fee. money or property sufficient and available for food,
shelter and basic necessities for himself and his family.
The Hon. Court Administrator Jose Perez pointed out to the need
of complying with OCA Circular No. 42-2005 and Rule 141 that
reserves this privilege to indigent persons. While judges are Such authority shall include an exemption from
appointed to interpret the law, this type of law seems to be payment of docket and other lawful fees, and of
extremely detailed with requirements that do not leave much room transcripts of stenographic notes which the court may
for interpretations. order to be furnished him. The amount of the docket and
other lawful fees which the indigent was exempted from
paying shall be a lien on any judgment rendered in the documentation requirements may prove too time-consuming and wasteful for
case favorable to the indigent, unless the court the courts.
otherwise provides.

IN VIEW OF THE FOREGOING, the Good Shepherd Foundation, Inc. cannot


Any adverse party may contest the grant of be extended the exemption from legal and filing fees despite its working for
such authority at any time before judgment is rendered indigent and underprivileged people.
by the trial court. If the court should determine after
hearing that the party declared as an indigent is in fact SO ORDERED.
a person with sufficient income or property, the proper
docket and other lawful fees shall be assessed and Marcos-Araneta v CA (Venue)
collected by the clerk of court. If payment is not made
within the time fixed by the court, execution shall issue The Facts
for the payment thereof, without prejudice to such other
 Sometime in 1968 and 1972, Ambassador Roberto S.
sanctions as the court may impose. (22a)
Benedicto, now deceased, and his business associates
(Benedicto Group) organized Far East Managers and
Investors, Inc. (FEMII) and Universal Equity Corporation
Sec. 19. Indigent litigants exempt from (UEC), respectively.
payment of legal fees. Indigent litigants (a) whose gross
 Irene Marcos-Araneta would later allege, both
income and that of their immediate family do not exceed
an amount double the monthly minimum wage of an corporations were organized pursuant to a contract
employee and (b) who do not own real property with a whereby Benedicto, as trustor, placed in his name and in
fair market value as stated in the current tax declaration the name of his associates, as trustees, the shares of stocks
of more than three hundred thousand (P300,000.00) of FEMII and UEC with the obligation to hold those shares
pesos shall be exempt from payment of legal fees. and their fruits in trust and for the benefit of Irene to the
extent of 65% of such shares. Several years after, Irene
The legal fees shall be a lien on any judgment demanded the reconveyance of said 65% stockholdings,
rendered in the case favorable to the indigent litigant but the Benedicto Group refused to oblige.
unless the court otherwise provides.  In March 2000, Irene filed before the RTC two similar
complaints for conveyance of shares of stock, accounting
To be entitled to the exemption herein provided, and receivership against the Benedicto Group with prayer
the litigant shall execute an affidavit that he and his for the issuance of a temporary restraining order (TRO).
immediate family do not earn a gross income
 In a consolidated opposition, Benedicto, moved to dismiss
abovementioned, and they do not own any real property
on 5 grounds, among which were: (2) venue was
with the fair value aforementioned, supported by an
affidavit of a disinterested person attesting to the truth improperly laid
of the litigants affidavit. The current tax declaration, if  During the preliminary proceedings on their motions to
any, shall be attached to the litigants affidavit. dismiss, Benedicto presented the Joint Affidavit of Gilmia
B. Valdez, Catalino A. Bactat, and Conchita R. Rasco who all
Any falsity in the affidavit of litigant or attested being employed as household staff at the Marcos’
disinterested person shall be sufficient cause to dismiss Mansion in Brgy. Lacub, Batac, Ilocos Norte and that Irene
the complaint or action or to strike out the pleading of did not maintain residence in said place as she in fact only
that party, without prejudice to whatever criminal liability visited the mansion twice in 1999; that she did not vote in
may have been incurred. Batac in the 1998 national elections; and that she was
staying at her husband’s house in Makati City.
 Irene presented her community tax certificateissued on
The clear intent and precise language of the aforequoted
provisions of the Rules of Court indicate that only a natural party litigant may “11/07/99” in Curimao, Ilocos Norte to support her claimed
be regarded as an indigent litigant. The Good Shepherd Foundation, Inc., residency in Batac, Ilocos Norte.
being a corporation invested by the State with a juridical personality separate  RTC dismissed both complaints, stating that these partly
and distinct from that of its members,[4] is a juridical person. Among others, it constituted “real action,” and that Irene did not actually
has the power to acquire and possess property of all kinds as well as incur reside in Ilocos Norte, and, therefore, venue was
obligations and bring civil or criminal actions, in conformity with the laws and improperly laid.
regulations of their organization.[5] As a juridical person, therefore, it cannot be  The RTC eventually entertained an amended complaint
accorded the exemption from legal and filing fees granted to indigent litigants. filed by Irene, dispositively stating: (1) Irene may opt to file,
as a matter of right, an amended complaint. (2) The
That the Good Shepherd Foundation, Inc. is working for indigent and
inclusion of additional plaintiffs, one of whom was a Batac,
underprivileged people is of no moment. Clearly, the Constitution has explicitly
an Ilocos Norte resident, in the amended complaint setting
premised the free access clause on a persons poverty, a condition that only a
natural person can suffer. out the same cause of action cured the defect of improper
venue. (3) Secs. 2 and 3 of Rule 3 in relation to Sec. 2 of Rule
4 allow the filing of the amended complaint in question in
the place of residence of any of Irene’s co-plaintiffs.
There are other reasons that warrant the rejection of the request  The Benedictos filed on April 10, 2001 their Answer to the
for exemption in favor of a juridical person. For one, extending the exemption
amended complaint but also went the CA via a petition for
to a juridical person on the ground that it works for indigent and underprivileged
certiorari, seeking to nullify the following RTC orders. The
people may be prone to abuse (even with the imposition of rigid documentation
requirements), particularly by corporations and entities bent on circumventing CA rendered a Decision, setting aside the assailed RTC
the rule on payment of the fees. Also, the scrutiny of compliance with the
orders and dismissing the amended complaints in Civil Case SC: Irene, as categorically and peremptorily found by the RTC after a
Nos. 3341-17 and 3342-17. hearing, is not a resident of Batac, Ilocos Norte, as she claimed.
Accordingly, Irene cannot, in a personal action, contextually opt for
Issue/s on Venue Batac as venue of her reconveyance complaint. As to her, Batac, Ilocos
Norte is not what Sec. 2, Rule 4 of the Rules of Court adverts to as the
(4) Did the respondents (Benedictos) waive improper venue by their place “where the plaintiff or any of the principal plaintiffs resides” at
subsequent acts of filing numerous pleadings; and (5) Was Irene a the time she filed her amended complaint. That Irene holds CTC No.
resident of Batac, Ilocos Norte and if any of the principal parties are 17019451[41] issued sometime in June 2000 in Batac, Ilocos Norte and
residents of Ilocos Norte? in which she indicated her address as Brgy. Lacub, Batac, Ilocos is
Held: SC affirms, but not for all the reasons set out in, the CA’s really of no moment since it can easily be procured from the BIR with
decision. the necessary desired information.

Fourth Issue: Private Respondents did not Waive Improper Venue Petitioners, in an attempt to establish that the RTC in Batac, Ilocos
Norte is the proper court venue, asseverate that Batac, Ilocos Norte
Venue essentially concerns a rule of procedure which, in personal is where the principal parties reside. Pivotal to the resolution of the
actions, is fixed for the greatest convenience possible of the plaintiff venue issue is a determination of the status of Irene’s co-plaintiffs in
and his witnesses. The ground of improperly laid venue must be the context of Secs. 2 and 3 of Rule 3 in relation to Sec. 2 of Rule 4,
raised seasonably, else it is deemed waived. Where the defendant
failed to either file a motion to dismiss on the ground of improper Venue is Improperly Laid
venue or include the same as an affirmative defense, he is deemed to There can be no serious dispute that the real party-in-interest
have waived his right to object to improper venue. In the case at plaintiff is Irene. As self-styled beneficiary of the disputed trust, she
bench, Benedicto and Francisca raised at the earliest time possible, stands to be benefited or entitled to the avails of the present suit. It
meaning “within the time for but before filing the answer to the is undisputed too that petitioners Daniel Rubio, Orlando G. Reslin,
complaint,” the matter of improper venue. They would thereafter and Jose G. Reslin, all from Ilocos Norte, were included as co-plaintiffs
reiterate and pursue their objection on venue, first, in their answer to in the amended complaint as Irene’s new designated trustees. As
the amended complaints and then in their petition for certiorari trustees, they can only serve as mere representatives of Irene.
before the CA. Any suggestion, therefore, that Francisca and
Benedicto or his substitutes abandoned along the way improper Sec. 2 of Rule 4 indicates quite clearly that when there is more than
venue as ground to defeat Irene’s claim before the RTC has to be one plaintiff in a personal action case, the residences of
rejected. the principal parties should be the basis for determining proper
venue. Before the RTC in Batac, in Civil Case Nos. 3341-17 and 3342-
Fifth Issue: The RTC Has No Jurisdiction on the Ground of Improper 17, Irene stands undisputedly as the principal plaintiff, the real party-
Venue in-interest. Following Sec. 2 of Rule 4, the subject civil cases ought to
Subject Civil Cases are Personal Actions be commenced and prosecuted at the place where Irene resides.

According to the Benedictos, venue was in this case improperly laid Principal Plaintiff not a Resident in Venue of Action
since the suit in question partakes of a real action involving real As earlier stated, no less than the RTC in Batac declared Irene as not
properties located outside the territorial jurisdiction of the RTC in a resident of Batac, Ilocos Norte. Withal, that court was an improper
Batac. venue for her conveyance action. The Court can concede that Irene’s
This contention is not well-taken. In a personal action, the plaintiff three co-plaintiffs are all residents of Batac, Ilocos Norte. But it ought
seeks the recovery of personal property, the enforcement of a to be stressed in this regard that not one of the three can be
contract, or the recovery of damages. Real actions, on the other hand, considered as principal party-plaintiffs . In the final analysis, the
are those affecting title to or possession of real property, or interest residences of Irene’s co-plaintiffs cannot be made the basis in
therein. In accordance with the wordings of Sec. 1 of Rule 4, the determining the venue of the subject suit. Irene was a resident during
venue of real actions shall be the proper court which has territorial the period material of Forbes Park, Makati City. She was not a
jurisdiction over the area wherein the real property involved, or a resident of Brgy. Lacub, Batac, Ilocos Norte, although
portion thereof, is situated. The venue of personal actions is the jurisprudence[44] has it that one can have several residences, if such
court where the plaintiff or any of the principal plaintiffs resides, or were the established fact. The Court will not speculate on the reason
where the defendant or any of the principal defendants resides, or in why petitioner Irene, for all the inconvenience and expenses she and
the case of a non-resident defendant where he may be found, at the her adversaries would have to endure by a Batac trial, preferred that
election of the plaintiff. her case be heard and decided by the RTC in Batac. On the heels of
the dismissal of the original complaints on the ground of improper
Irene seeks to compel recognition of the trust arrangement she has venue, three new personalities were added to the complaint
with the Benedicto Group. The amended complaint is an action in doubtless to insure, but in vain as it turned out, that the case stays
personam, it being a suit against Francisca and the late Benedicto with the RTC in Batac.
(now represented by Julita and Francisca), on the basis of their alleged
personal liability to Irene upon an alleged trust constituted in 1968 ANG v. ANG
and/or 1972. They are not actions in rem where the actions are
GR No. 186993 – August 22, 2012
against the real properties instead of against persons.
Reyes
Interpretation of Secs. 2 and 3 of Rule 3; and Sec. 2 of Rule 4
SUBJECT:
FACTS: nterest within the meaning of the Rules of Court means material
interest or an interest in issue to be affected by the decree or
 Spouses Alan & Em Ang (respondents) obtained a loan judgment of the case, as distinguished from mere curiosity about
($300k) from Theodore & Nancy Ang (petitioners), also, the question involved. A real party in interest is the party who, by
a promissory note was executed in favor of the the substantive law, has the right sought to be enforced.
petitioners wherein they promised to pay the latter the
said amount, with interest at the rate of 10% per year, At this juncture, it bears stressing that the rules on venue, like the
upon demand. other procedural rules, are designed to insure a just and orderly
 However, despite repeated demands, the respondents administration of justice or the impartial and even-handed
failed to pay the petitioners. determination of every action and proceeding. Obviously, this
 Since the loan already amounted to almost $720k, objective will not be attained if the plaintiff is given unrestricted
inclusive of interest, petitioner, who were then resident freedom to choose the court where he may file his complaint or
in LA, executed their SPA in favor of Atty. Aceron for the petition. The choice of venue should not be left to the plaintiff's
purpose of filing an action in court against the whim or caprice. He may be impelled by some ulterior motivation
respondents. in choosing to file a case in a particular court even if not allowed
 A complaint for collection of sum of money was then filed by the rules on venue.
with the RTC-QC.
 Respondent moved for the dismissal of the complaint in
Facts:
the grounds of improper venue and prescription
asserting that the complaint against them may only be
Universal Robina Corporation (URC) sold to Lim grocery products.
filed in the court of the place where either they or the
After partial payment, Lim defaulted in his obligation. Thus, URC
petitioners reside. Respondent reside in Bacolod while filed a complaint for sum of money before the RTC of Quezon City.
petitioner reside in LA. The RTC dismissed the complaint motu proprio on grounds of lack of
jurisdiction and improper venue considering that URC's principal
RTC: denied respondent’s motion to dismiss. Since Atty. Aceron is place of business is in Pasig City while Lim's residence is in Laoag
the duly appointed attorney-in-fact of petitioners, venue of the City.
action may lie where re resides as provided in Sec. 2, Rule 4, of the
1997 RoC.
Issue:
 Respondents claim that Atty. Aceron, being merely a
representative of the petitioners, is not a real party in May the court dismiss the complaint motu proprio on the ground of
interest in the case; hence, his residence should not be improper venue?
considered in determining the proper venue of the said
complaint.
CA: Complaint should have been filed in Bacolod City. Held:

No. Sections 2 and 4, Rule 4 of the Rules provide:

ISSUE: WON the complaint must be dismissed on the ground that Sec. 2. Venue of personal actions. All other actions may be commenced
venue was not proper. and tried where the plaintiff or any of the principal plaintiffs resides,
or where the defendant or any of the principal defendants resides, or
in the case of a non-resident defendant where he may be found, at the
election of the plaintiff.
HELD: Yes.

It is a legal truism that the rules on the venue of personal actions Sec. 4. When Rule not applicable. This Rule shall not apply
are fixed for the convenience of the plaintiffs and their witnesses. (a) In those cases where a specific rule or law provides otherwise; or
Equally settled, however, is the principle that choosing the venue (b) Where the parties have validly agreed in writing before the filing
of the action on the exclusive venue thereof.
of an action is not left to a plaintiff’s caprice; the matter is
regulated by the Rules of Court. The petitioners’ complaint for
Clearly, in personal actions, the plaintiff may commence an action
collection of sum of money against the respondents is a personal
either in the place of his or her residence or the place where the
action as it primarily seeks the enforcement of a contract. The
defendant resides. However, the parties may agree to a specific venue
Rules give the plaintiff the option of choosing where to file his
which could be in a place where neither of them resides.
complaint. He can file it in the place (1) where he himself or any of
them resides, or (2) where the defendant or any of the defendants
Corollarily, Section 1, Rule 9 of the same Rules provides for the
resides or may be found. The plaintiff or the defendant must be instances when the trial court may motu proprio dismiss a claim, thus:
residents of the place where the action has been instituted at the
time the action is commenced. Section 1. Defenses and objections not pleaded. Defenses and
objections not pleaded either in a motion to dismiss or in the answer
If the plaintiff does not reside in the Philippines, the complaint in are deemed waived. However, when it appears from the pleadings or
such case may only be filed in the court of the place where the the evidence on record that the court has no jurisdiction over the
defendant resides. In Cohen and Cohen v. Benguet Commercial Co., subject matter, that there is another action pending between the same
Ltd., 34 Phil. 526 (1916), this Court held that there can be no parties for the same cause, or that the action is barred by a prior
election as to the venue of the filing of a complaint when the judgment or by statute of limitations, the court shall dismiss the claim.
plaintiff has no residence in the Philippines. In such case, the
complaint may only be filed in the court of the place where the Implicit from the above provision is that improper venue not
defendant resides. impleaded in the motion to dismiss or in the answer is deemed waived.
Thus, a court may not dismiss an action motu proprio on the ground of
improper venue as it is not one of the grounds wherein the court may Before Us is a Petition for Review on Certiorari[1] assailing
dismiss an action motu proprio on the basis of the the Decision[2] dated 31 July 2002 of the Court of Appeals in CA-
pleadings. (Universal Robina Corporation vs. Lim, G.R. No. 154338, G.R. SP No. 62625, the decretal portion of which reads:
October 5, 2007)
Universal Robina Corporation vs. Alberto Lim WHEREFORE, the petition is GRANTED and the assailed orders
GR No. 154338, October 5, 2007 dated June 7, 2000, August 9, 2000 and November 8, 2000 are SET
ASIDE.
FACTS:
A contract of sale was made between petitioner Universal Respondent judge is directed to DISMISS Civil Case No. 67878 on the
Robina Corporation and respondent Albert Lim. In the contract, ground of improper venue.[3]
petitioner sold to respondent grocery products in the amount of
P808,060. After tendering partial payments, respondent Lim refused Petitioner Jimmy T. Go and Alberto T. Looyuko are co-
to settle his obligation despite petitioner’s repeated demands. For owners of Noahs Ark International, Noahs Ark Sugar Carriers,
this reason, petitioner filed a complaint in the Regional Trial Court of Noahs Ark Sugar Truckers, Noahs Ark Sugar Repacker, Noahs
Quezon City. However, the complaint was dismissed motu proprio on Ark Sugar Insurers, Noahs Ark Sugar Terminal, Noahs Ark
grounds of lack of jurisdiction and improper venue because both Sugar Building, and Noahs Ark Sugar Refinery.[4]
parties are not from Quezon City. Plaintiff corporation’s principal
office is in Pasay City and defendant is from Laoag City. Petitioner Sometime in August 1996, petitioner Jimmy T. Go and
then filed a motion for reconsideration and an amended complaint Alberto T. Looyuko applied for an Omnibus Line accommodation
averring that both parties agreed that Quezon City is the proper with respondent United Coconut Planters Bank (UCPB) in the
amount of Nine Hundred Million (P900,000,000) Pesos,[5] and
venue for the dispute. The trial court granted the motion and
was favorably acted upon by the latter.
accepted their amended complaint. Summons was served upon
respondent. Afterwards, he was declared by the court in default for The transaction was secured by Real Estate Mortgages
his failure to file an answer on time. The court allowed petitioner to over parcels of land, covered by Transfer Certificate of Title
present its own evidence. (TCT) No. 64070, located at Mandaluyong City with an area of
24,837 square meters, and registered in the name of Mr.
The court directed petitioner to file a memorandum of Looyuko; and TCT No. 3325, also located at Mandaluyong City
authorities because it is still unsure whether it is the proper venue for with an area of 14,271 square meters, registered in the name of
the case. Subsequently, the trial court again dismissed the complaint Noahs Ark Sugar Refinery.
on the ground of improper venue because it did not find any
connection between Quezon City and the parties, and said venue was On 21 July 1997, the approved Omnibus Line
accommodation granted to petitioner was subsequently
not even stated in the complaint. Petitioner again filed a motion for
cancelled[6] by respondent UCPB. As a consequence, petitioner
reconsideration but it was denied by the trial court.
Jimmy T. Go demanded from UCPB the return of the two (2)
ISSUE: TCTs (No. 64070 and No. 3325) covered by Real Estate
Is it correct for the trial court to dismiss motu proprio Mortgages earlier executed. UCPB refused to return the same
and proceeded to have the two (2) pre-signed Real Estate
petitioner’s complaint on the ground of improper venue?
Mortgages notarized on 22 July 1997 and caused the
registration thereof before the Registry of Deeds of
DECISION: Mandaluyong City on 02 September 1997.
NO. It is not correct for the trial court to dismiss motu
proprio petitioner’s complaint on the ground of improper venue On 15 June 1999, respondent UCPB filed with the Office
because under Section 1, Rule 9 of the Rules of Court, it only provides of the Clerk of Court and Ex-Officio Sheriff of Mandaluyong City
four grounds for dismissal: (1) when the court has no jurisdiction over an extrajudicial foreclosure of real estate mortgage[7] covered by
the subject matter; (2) when there is pendency of another action TCT No. 64070, for nonpayment of the obligation secured by
between the same parties for the same cause; (3) when the action is said mortgage. As a result, the public auction sale of the
barred by prior judgment; or (4) by statute of limitations. It is also mortgaged property was set on 11 April 2000 and 03 May 2000.
implicit from the provision that improper venue not impleaded in the To protect his interest, petitioner Jimmy T. Go filed a
motion to dismiss or in the answer is deemed waived. Thus, a court complaint for Cancellation of Real Estate Mortgage and
may not dismiss an action motu proprio on the ground of improper damages, with prayer for temporary restraining order and/or writ
venue as it is not one of the grounds where the court may dismiss an of preliminary injunction, against respondent bank and its
action motu proprio on the basis of the pleadings. The court should officers, namely, Angelo V. Manahan, Francisco C. Zarate,
have waited for a motion to dismiss or a responsive pleading from the Perlita A. Urbano and Atty. Edward E. Martin, together with Ex-
respondent that raises the objection or affirmative defense of Officio Sheriff Lydia G. San Juan and Sheriff IV Helder A.
improper venue, before dismissing the petition. Dyangco, with the Regional Trial Court of Pasig City, Branch
266, docketed as Civil Case No. 67878. The complaint was
JIMMY T. GO, petitioner, vs. UNITED COCONUT PLANTERS subsequently amended[8] on 22 May 2000. The amended
BANK, ANGELO V. MANAHAN, FRANCISCO C. complaint alleged, among other things, the following: that
ZARATE, PERLITA A. URBANO and ATTY. petitioner Jimmy T. Go is a co-owner of the property covered by
EDWARD MARTIN, respondents. TCT No. 64070, although the title is registered only in the name
of Looyuko; that respondent bank was aware that he is a co-
owner as he was asked to sign two deeds of real estate
DECISION
mortgage covering the subject property; that the approved
CHICO-NAZARIO, J.: omnibus credit line applied for by him and Looyuko did not
materialize and was cancelled by respondent bank on 21 July
1997, so that the pre-signed real estate mortgages were
likewise cancelled; that he demanded from respondent bank
that TCTs No. 64070 and No. 3325 be returned to him, but
respondent bank refused to do so; that despite the cancellation In a real action, the plaintiff seeks the recovery of real
of the omnibus credit line on 21 July 1997, respondent bank had property, or as provided for in Section 1, Rule 4,[20] a real action
the two deeds of real estate mortgage dated and notarized on is an action affecting title to or possession of real property, or
22 July 1997 and caused the extrajudicial foreclosure of interest therein. These include partition or condemnation of, or
mortgage constituted on TCT No. 64070; that the auction sale foreclosure of mortgage on, real property. The venue for real
scheduled on 11 April 2000 and 03 May 2000 be enjoined; that actions is the same for regional trial courts and municipal trial
the two real estate mortgages be cancelled and TCTs No. 64070 courts -- the court which has territorial jurisdiction over the area
and No. 3325 be returned to him; and that respondent bank and where the real property or any part thereof lies.[21]
its officers be ordered to pay him moral and exemplary damages
and attorneys fees. Personal action is one brought for the recovery of personal
property, for the enforcement of some contract or recovery of
On 07 June 2000, respondent bank, instead of filing an damages for its breach, or for the recovery of damages for the
answer, filed a motion to dismiss[9] based on the following commission of an injury to the person or property.[22] The venue
grounds: 1) that the court has no jurisdiction over the case due for personal actions is likewise the same for the regional and
to nonpayment of the proper filing and docket fees; 2) that the municipal trial courts -- the court of the place where the plaintiff
complaint was filed in the wrong venue; 3) an indispensable or any of the principal plaintiffs resides, or where the defendant
party/real party in interest was not impleaded and, therefore, the or any of the principal defendants resides, at the election of the
complaint states no cause of action; 4) that the complaint was plaintiff, as indicated in Section 2 of Rule 4.[23]
improperly verified; and 5) that petitioner is guilty of forum
shopping and submitted an insufficient and false certification of It is quite clear then that the controlling factor in
non-forum shopping. determining venue for cases of the above nature is the primary
objective for which said cases are filed. Thus:
On 07 June 2000, the trial court issued an order [10] granting
petitioners application for a writ of preliminary injunction. 1. In Commodities Storage & Ice Plant Corp. v.
Correspondingly, the auction sale, scheduled on 11 April 2000 Court of Appeals,[24] this Court ruled that an
and 03 May 2000, was enjoined. action to redeem by the mortgage debtor affects
his title to the foreclosed property. If the action is
On 09 August 2000, the trial court denied[11] respondent seasonably made, it seeks to erase from the title
banks motion to dismiss Civil Case No. 67878. A motion for of the judgment or mortgage debtor the lien
reconsideration[12] was filed, but the same was likewise denied created by registration of the mortgage and sale.
in an Order[13] dated 08 November 2000. If not made seasonably, it may seek to recover
ownership to the land since the purchasers
Respondent bank questioned said orders before the Court inchoate title to the property becomes
of Appeals via a petition for certiorari[14] dated 03 January 2001, consolidated after [the] expiration of the
alleging that the trial court acted without or in excess of redemption period. Either way, redemption
jurisdiction or with grave abuse of discretion in issuing an order involves the title to the foreclosed property. It is a
denying the motion to dismiss and the motion for real action.
reconsideration thereof.
2. In Fortune Motors, (Phils.), Inc., v. Court of
On 31 July 2002, the Court of Appeals [15] set aside the Appeals,[25] this Court quoting the decision of the
Orders dated 07 June 2000, 09 August 2000 and 08 November Court of Appeals ruled that since an extrajudicial
2000 issued by the trial court and directed the trial court to foreclosure of real property results in a
dismiss Civil Case No. 67878 on the ground of improper venue. conveyance of the title of the property sold to the
A motion for reconsideration was filed by highest bidder at the sale, an action to annul the
petitioner,[16] which was denied in an order dated 14 November foreclosure sale is necessarily an action affecting
2002.[17] the title of the property sold. It is therefore a real
action which should be commenced and tried in
Hence, this petition for review on certiorari.[18] the province where the property or part thereof
lies.
On 16 June 2003, the Court gave due course to the
petition, and required[19] the parties to file their respective 3. In Punsalan, Jr. v. Vda. de Lacsamana,[26] this
memoranda. Respondents filed their Joint Memorandum on 27 court ruled that while it is true that petitioner does
August 2003, while petitioner filed his on 25 September 2003 not directly seek the recovery . . . of the property
upon prior leave of court for extension. With leave of this Court, in question, his action for annulment of sale and
private respondents filed their reply to petitioners memorandum. his claim for damages are closely intertwined with
the issue of ownership of the building which,
In his memorandum, petitioner raised a lone issue: under the law, is considered immovable property,
the recovery of which is petitioners primary
WHETHER OR NOT THE COURT OF objective. The prevalent doctrine is that an action
APPEALS COMMITTED REVERSIBLE ERROR WHEN for the annulment or rescission of a sale of real
IT FAILED TO APPLY THE LAW AND ESTABLISHED property does not operate to efface the
JURISPRUDENCE ON THE MATTER BY ISSUING THE fundamental and prime objective and nature of
QUESTIONED RESOLUTIONS FINDING THAT THE the case, which is to recover said real property. It
CASE A QUO IS A REAL ACTION. is a real action. Respondent Court, therefore, did
not err in dismissing the case on the ground of
improper venue which was timely raised.
Simply put, the issue to be resolved in this case is whether
petitioners complaint for cancellation of real estate mortgage is 4. In Ruiz v. J. M. Tuason Co., Inc., et al.,[27] the
a personal or real action for the purpose of determining venue. court ruled that although [a] complaint is entitled
to be one for specific performance, yet the fact
that [complainant] asked that a deed of sale of a
parcel of land . . . be issued in his favor and that by alluding to the case of Francisco S. Hernandez v. Rural Bank
a transfer certificate of title covering said land be of Lucena.[32]
issued to him, shows that the primary objective
and nature of the action is to recover the parcel Petitioners reliance in the case of Francisco S. Hernandez
of land itself because to execute in favor of v. Rural Bank of Lucena[33] is misplaced. Firstly, said case was
complainant the conveyance requested there is primarily an action to compel the mortgagee bank to accept
need to make a finding that he is the owner of the payment of the mortgage debt and to release the mortgage. That
land which in the last analysis resolves itself into action, which is not expressly included in the enumeration found
an issue of ownership. Hence, the action must be in Section 2(a) of Rule 4 of the Old Civil Procedure and now
commenced in the province where the property is under Section 1, Rule 4 of the 1997 Rules of Civil Procedure,
situated . . . ." does not involve titles to the mortgaged lots. It is a personal
action and not a real action. The mortgagee has not foreclosed
5. In Dr. Antonio A. Lizares, Inc. v. Hon. the mortgage. The plaintiffs title is not in question. They are in
Hermogenes Caluag,[28] this Court ruled that an possession of the mortgaged lots. Hence, the venue of the
action praying that defendant be ordered `to plaintiffs personal action is the place where the defendant or any
accept the payment being made by plaintiff for the of the defendants resides or may be found, or where the plaintiff
lot which the latter contracted to buy on or any of the plaintiffs resides, at the election of the plaintiff. In
installment basis from the former, to pay plaintiff the case at bar, the action for cancellation of real estate
compensatory damages and attorneys fees and mortgage filed by herein petitioner was primarily an action to
to enjoin defendant and his agents from compel private respondent bank to return to him the properties
repossessing the lot in question, is one that covered by TCTs No. 64070 and No. 3325 over which the bank
affects title to the land under Section 3 of Rule 5, had already initiated foreclosure proceedings because of the
of the Rules of Court, and shall be commenced cancellation by the said respondent bank of the omnibus credit
and tried in the province where the property or line on 21 July 1997. The prime objective is to recover said real
any part thereof lies, because, although the properties. Secondly, Carandang distinctly articulated that the
immediate remedy is to compel the defendant to ruling in Hernandez does not apply where the mortgaged
accept the tender of payment allegedly made, it property had already been foreclosed. Here, and as correctly
is obvious that this relief is merely the first step to pointed out by the appellate court, respondent bank had already
establish plaintiffs title to [the] real property. initiated extrajudicial foreclosure proceedings, and were it not for
the timely issuance of a restraining order secured by petitioner
6. In Land Tenure Administration, et al. v. The Go in the lower court, the same would have already been sold
Honorable Higinio B. Macadaeg and Alejandro T. at a public auction.
Lim,[29] this Court ruled that where the lessee
seeks to establish an interest in an hacienda that In a relatively recent case, Asset Privatization Trust v.
runs with the land and one that must be respected Court of Appeals,[34] it was succinctly stated that the prayer for
by the purchaser of the land even if the latter is the nullification of the mortgage is a prayer affecting real
not a party to the original lease contract, the property, hence, is a real action.
question of whether or not the standing crop is
immovable property become[s] irrelevant, for In sum, the cancellation of the real estate mortgage,
venue is determined by the nature of the principal subject of the instant petition, is a real action, considering that a
claim. Since the lessee is primarily interested in real estate mortgage is a real right and a real property by
establishing his right to recover possession of the itself.[35] An action for cancellation of real estate mortgage is
land for the purpose of enabling him to gather his necessarily an action affecting the title to the property. It is,
share of the crops, his action is real and must be therefore, a real action which should be commenced and tried
brought in the locality where the land is situated. in Mandaluyong City, the place where the subject property lies.

7. In Espineli & Mojica v. Hon. Santiago and Vda. WHEREFORE, the instant petition is DENIED for lack of
de Ramirez,[30] the court ruled that although the merit. The assailed decision dated 31 July 2002 and the Order
main relief sought in the case at bar was the dated 14 November 2002 denying the motion for
delivery of the certificate of title, said relief, in turn, reconsideration are hereby AFFIRMED. With costs.
entirely depended upon who, between the SO ORDERED.
parties, has a better right to the lot in question. As
it is not possible for the court to decide the main
relief, without passing upon the claim of the
parties with respect to the title to and possession
of the lot in question, the claim shall be
determined x x x in the province where [the] said HOECHST PHILIPPINES, INC., petitioner,
property or any part thereof lies. vs.
FRANCISCO TORRES and the Honorable PROCORO J.
The case of Carandang v. Court of Appeals,[31] is more DONATO, Judge of the Court of First Instance of
particularly instructive. There, we held that an action for Isabela, respondents.
nullification of the mortgage documents and foreclosure of the
mortgaged property is a real action that affects the title to the Manuel S. Fornacier, Jr., for petitioner.
property. Thus, venue of the real action is before the court
having jurisdiction over the territory in which the property lies,
which is the Court of First Instance of Laguna. Melanio T. Singson for private respondent.

Petitioner in this case contends that a case for cancellation


of mortgage is a personal action and since he resides at Pasig
City, venue was properly laid therein. He tries to make a point
BARREDO, J.:
Petition for certiorari and prohibition to declare respondent court the parties as to venue, as authorized by Section 3, Rule 4, is
without authority to take cognizance of private respondent's not only binding between the parties but also enforceable by the
action for "Breach of Contract with Preliminary Injunction" and to courts. 1 It is only after the action has been filed already that
enjoin said court from further taking any action in said case upon change or transfer of venue by agreement of the parties is
the ground of improper laying of the venue. understandably controllable in the discretion of the court. 2

On April 8, 1976, private respondent, Francisco Torres, filed with The agreement in this case was entered into long before the
respondent Court of First Instance of Isabela complaint in Civil petitioner's action was filed. It is clear and unequivocal. The
Case No. V-296 alleging breach of a distributorship contract on parties therein stipulated that "(I)n case of any litigation arising
the part of petitioner, Hoechst Philippines, Inc. On April 14, out of this agreement, the venue of any action shall be in the
1976, petitioner filed a motion to dismiss said complaint based competent courts of the Province of Rizal." No further
on the ground that as the contract, the very actionable document stipulations are necessary to elicit the thought that both parties
invoked in the complaint, provides that "(I)n case of any litigation agreed that any action by either of them would be filed only in
arising out of this agreement, the venue of any action shall be in the competent courts of Rizal province exclusively.
the competent courts of the Province of Rizal", venue has been
improperly laid in respondent court, petitioner citing in his said Respondent judge rather vehemently argues, however, that
motion principally the ruling of this Supreme Court in Bautista under the circumstances obtaining between the parties, as
vs. De Borja, 18 SCRA 474. earlier stated in this decision, it is permissible, notwithstanding
Our ruling in Bautista, supra, that the word "shall" in the
Respondent court nevertheless denied the said motion to agreement in question be construed as "may", hence not strictly
dismiss as well as the motion for reconsideration of that denial, obligatory. Private respondent points out that he had no choice
hence the present petition. Respondent do not deny in their but to sign the "Distributorship Agreement" in question, he being
respective answers the clear tenor of the above-quoted practically at the mercy of petitioner company which is allegedly
stipulation as to venue in the contract in dispute. It is the position a multinational corporation. He maintains that to enforce the
of respondent judge, however, that inasmuch as the contract agreement literally would amount to a denial to him, and to other
was "a prepared standard form for the defendant-company, distributors similarly situated, of the opportunity to file any suit
wherein blanks were merely filled up after the party-distributor against petitioner.
agreed on the valuation of products which he may order from
the company for one year" and "all stipulations were standard We have given due attention to this posture of respondents.
and pre-made by the company, prepared by, as your Indeed, there may be instances when an agreement as to venue
Respondent can safely and rightly assume, its legal department" may be so oppressive as to effectively deny to the party
and "it (only) remains upon party-distributor to stamp his concerned access to the courts by reason of poverty. The
approval to the whole contract", hence "plaintiff distributor was difficulties pictured y respondents that a poor plaintiff from a
given no option whatsoever except 'to take it or leave it ", the distant province may have to encounter in filing suit in a
word "shall" in the stipulation in question should be construed to particular place ran indeed happen. In such an eventuality and
be merely permissive and not mandatory. It is argued that this depending on the peculiar circumstances of the case, the Court
construction serves not only the exclusive interests o petitioner may declare the agreement as to venue to be in effect contrary
but also that of private respondent. to public policy, — despite that in general, changes and transfers
of venue by written agreement of the parties is allowable —
It is further contended in said answer that reading the terms of whenever it is shown that a stipulation as to venue works
the contract, it can be gathered that most likely, it would be injustice by practically denying to the party concerned a fair
petitioner who would have to sue private respondent, and, opportunity to file suit in the place designated by the rules.
therefore, the stipulation as to venue was meant to apply only to
suits to be filed by petitioner. Finally, it is maintained that there But a cursory inquiry into the respective economic conditions of
are no words in the contract expressly restricting the venue to the parties herein as reflected in the record before Us does not
the courts of Rizal. show that private respondent Francisco Torres is really in no
position to carry on a litigation in the Province of Rizal, because
Upon the other hand, in the answer of private respondent, he of his residence or place of business being in Isabela province.
capitalizes on theory that inasmuch as petitioner is a The volume of business covered by the Distributorship
multinational company, it is against public policy for it to stipulate Agreement in question, Annex C of the Petition, and to be
in any contract that the venue of actions thereunder should be handled by private respondent Torres is P700,000. The amount
in any particular place, much less its place of residence, to the sought to he recovered by said respondent in his complaint,
prejudice of small-time distributors, the private respondent. It is Annex A of the Petition, totals more than P300,000. These
urged that to give effect to the stipulation in controversy "is to circumstances preclude, in Our view, the need to apply
serve the convenience and the purpose of the petitioner only; its equitable considerations to the case of respondent Torres. It is
effect is to discourage, to deter to render expensive and quite obvious that his economic condition does not warrant non-
uneconomical and filing of suits by small-time company enforcement of the stipulation as to venue that he has agreed
distributors against the petitioner even for extremely meritorious to. We are persuaded that his pretension that he had no
cases of latter's breach or violation of such distribution alternative but to agree, even if true, does not merit relief.
agreement. " Considering the nature and volume of the business he has with
petitioner, there is nothing oppressive in his being required to
The pose taken by respondents does evoke sympathy, but it can litigate out of his province. After all, for practical reasons, there
hardly carry the day for them. Change or transfer of venue from seems to justification also for petitioner to see to it that all suits
that fixed in the rules may be effected upon written agreement against it be concentrated in the Province of Rizal, as otherwise,
of the parties not only before the actual filing of the action but considering the nationwide extent of its business, it would be
even after the same has been filed. The settled rule of greatly inconvenienced if it has to appear in so many provinces
jurisprudence in this jurisdiction is that a written agreement of everytime an action is filed against it. We are convinced both
parties agreed to the venue in controversy with eyes wide open.
IN VIEW OF ALL THE FOREGOING, the petition is granted, the [Respondents] moved to dismiss the complaint on the ground of
orders of respondent judge of May 13, 1976 and July 12, 1976 improper venue, invoking the stipulation contained in the last
are hereby set aside, and petitioner's motion to dismiss private paragraph of the promissory note with respect to the
respondent's complaint in question is granted. Costs against restrictive/exclusive venue. [The trial court] denied said motion
private respondent Francisco Torres. asseverating that [petitioner] ha[d] separate causes of action arising
from the promissory note and the continuing surety agreement. Thus,
[under] Rule 4, Section 2, of the 1997 Rules of Civil Procedure, as
PHILIPPINE BANK OF, COMMUNICATIONS, petitioner, amended, x x x venue was properly laid in Manila. [The trial court]
vs. ELENA LIM, RAMON CALDERON, and TRI-ORO supported [its] order with cases where venue was held to be merely
INTERNATIONAL TRADING & MANUFACTURING permissive. A motion for reconsideration of said order was likewise
CORPORATION, respondents. denied.[4]

DECISION
PANGANIBAN, J.: Ruling of the Court of Appeals

A restrictive stipulation on the venue of actions contained


in a promissory note applies to the surety agreement supporting On appeal, the CA ruled that respondents alleged debt
it, because the nature of the two contracts and the factual was based on the Promissory Note, which had provided an
circumstances surrounding their execution are intertwined or exclusionary stipulation on venue to the exclusion of all other
interconnected. The surety agreement is merely an accessory courts.[5] The parties Surety Agreement, though silent as to
to the principal loan agreement embodied in the promissory venue, was an accessory contract that should have been
note. Hence, the enforcement of the former depends upon the interpreted in consonance with the Promissory Note.[6]
latter.
Hence, this Petition.[7]

The Case
The Issue

Before us is a Petition for Review[1] under Rule 45 of the


Petitioner raises the following issue for our consideration:
Rules of Court, assailing the April 29, 2003 Decision [2] of the
Court of Appeals (CA) in CA-GR SP No. 69786. The challenged
Decision disposed as follows: Whether or not the Honorable Court of Appeals had decided the issue
of venue in a way not in accord with law and applicable decisions of
this Honorable Court and had thereby departed from the accepted and
WHEREFORE, based on the foregoing, the instant petition is
usual course of judicial proceedings, as to call for this Honorable
hereby GRANTED. The assailed Orders dated June 9, 2000 and
Supreme Courts power of supervision and appellate review.[8]
January 9, 2002 are hereby ANNULED and SET ASIDE. Civil Case
No. 99-94976 is hereby ordered DISMISSED without prejudice to
the filing thereof in the venue exclusively stipulated by the parties. [3]
The Courts Ruling

The Facts
The Petition is unmeritorious.

The facts are related by the CA as follows: Sole Issue:


Venue
On September 3, 1999, the Philippine Bank of Communications
At the outset, this Court observes that petitioner took
(hereinafter [petitioner]) filed a complaint against [Respondents
liberties with the stipulated facts to suit its allegations in the
Elena Lim, Ramon Calderon and Tri-Oro International Trading &
present Petition. In its Complaint, petitioner bank averred that
Manufacturing Corporation (Tri-Oro for brevity)] with the Regional
respondents had entered into the Surety Agreement (SA) to
Trial Court of Manila for the collection of a deficiency amounting
guarantee existing and future credit facilities, and that they had
to P4,014,297.23 exclusive of interest. [Petitioner] alleged therein
executed the Promissory Note (PN) to document their
that [respondents] obtained a loan from it and executed a continuing
loan.[9] Now, the bank is claiming that Tri-Oro issued the PN on
surety agreement dated November 16, 1995 in favor of [petitioner]
which the other respondents should be made liable as
for all loans, credits, etc., that were extended or may be extended in
sureties.[10]
the future to [respondents]. [Petitioner] granted a renewal of said loan
upon [respondents] request, the most recent being on January 21, This strategy is obviously intended to disconnect the SA
1998 as evidenced by Promissory Note Renewal BD-Variable No. from the PN and to support the claim of petitioner that the
8298021001 in the amount of P3,000,000.00. It was expressly stipulation on venue does not apply to the SA. However, as will
stipulated therein that the venue for any legal action that may arise be discussed below, the cause of action to recover on the basis
out of said promissory note shall be Makati City, to the exclusion of of the SA is inseparable from that which is based on the PN.
all other courts x x x. [Respondents allegedly] failed to pay said
obligation upon maturity. Thus, [petitioner] foreclosed the real estate
mortgage executed by [respondents] valued at P1,081,600.00 leaving
a deficiency balance of P4,014,297.23 as of August 31, 1999. Rule on Venue
Section 2 of Rule 4 of the Rules of Court provides that The aforementioned doctrine is applicable to the present
personal actions[11] must be commenced and tried (1) in the case. Incapable of standing by itself, the SA can be enforced
place where the plaintiff resides, or (2) where the defendant only in conjunction with the PN. The latter documents the debt
resides, or (3) in case of non-resident defendants, where they that is sought to be collected in the action against the sureties.
may be found, at the choice of the plaintiff.[12] This rule on venue
does not apply when the law specifically provides otherwise, or The factual milieu of the present case shows that the SA
when -- before the filing of the action -- the contracting parties was entered into to facilitate existing and future loan
agree in writing on the exclusive venue thereof. [13] Venue is not agreements. Petitioner approved the loan covered by the PN,
jurisdictional and may be waived by the parties. [14] partly because of the SA that assured the payment of the
principal obligation. The circumstances that related to the
A stipulation as to venue does not preclude the filing of the issuance of the PN and the SA are so intertwined that neither
action in other places, unless qualifying or restrictive words are one could be separated from the other. It makes no sense to
used in the agreement.[15] argue that the parties to the SA were not bound by the
stipulations in the PN.
In the instant case, the stipulation on the exclusivity of the
venue as stated in the PN is not at issue. What petitioner claims Notably, the PN was a contract of adhesion that petitioner
is that there was no restriction on the venue, because none was required the principal debtor to execute as a condition of the
stipulated in the SA on which petitioner had allegedly based its approval of the loan. It was made in the form and language
suit.[16] Accordingly, the action on the SA may be filed in Manila, prepared by the bank. By inserting the provision that Makati City
petitioners place of residence. would be the venue for any legal action [that] may arise out of
[the] Promissory Note,[26] petitioner also restricted the venue of
Petitioner adds that its Complaint filed in the trial court had actions against the sureties. The legal action against the
two causes of action: the first was founded on a breach of the sureties arose not only from the SA, but also from the PN.
PN; and the second, on a violation of the SA.[17] Consequently,
it was allegedly correct to join the causes of action and to file the
case in Manila, per Section 5 of Rule 2 of the Rules of Court,
which reads:[18] Cause of Action

Section 5. Joinder of Causes of Action. A party may in one pleading


assert, in the alternative or otherwise, as many causes of action as he Petitioner correctly argues that there are two causes of
may have against an opposing party, subject to the following action contained in its Complaint. A cause of action is a partys
conditions: act or omission that violates the rights of the other. [27] Only one
suit may be commenced for a single cause of action.[28] If two or
more suits are instituted on the basis of the same cause of
xxxxxxxxx
action, only one case should remain and the others must be
dismissed.[29]
(c) Where the causes of action are between the same parties but
pertain to different venue or jurisdictions, the joinder may be allowed As against Tri-Oro International Trading & Manufacturing
in the Regional Trial Court provided one of the causes of action falls Corporation, petitioners cause of action is the alleged failure to
within the jurisdiction of the said court and venue lies therein. [19] pay the debt in violation of the PN; as against Elena Lim and
Ramon Calderon, in violation of the SA.
Because of the variance between the causes of action,
Surety Agreement petitioner could have filed separate actions against respondents
to recover the debt, on condition that it could not recover twice
from the same cause. It could have proceeded against only one
Suretyship arises upon the solidary binding of a person -- or all of them,[30] as full payment by any one of them would have
deemed the surety -- with the principal debtor, for the purpose extinguished the obligation.[31] By the same token, respondents
of fulfilling an obligation.[20] The prestation is not an original and could have been joined as defendants in one suit, because
direct obligation for the performance of the suretys own act, but petitioners alleged right of relief arose from the same transaction
merely accessory or collateral to the obligation contracted by the or series of transactions that had common questions of
principal.[21] Although the surety contract is secondary to the fact.[32] To avoid a multiplicity of suits, joinder of parties is
principal obligation, the surety assumes liability as a regular encouraged by the law.
party to the undertaking.[22] The cause of action, however, does not affect the venue of
In enforcing a surety contract, the complementary- the action. The vital issue in the present case is whether the
contracts-construed-together doctrine finds action against the sureties is covered by the restriction on venue
application.[23] According to this principle, an accessory contract stipulated in the PN. As earlier stated, the answer is in the
must be read in its entirety and together with the principal affirmative. Since the cases pertaining to both causes of action
agreement.[24] This principle is used in construing contractual are restricted to Makati City as the proper venue, petitioner
stipulations in order to arrive at their true meaning; certain cannot rely on Section 5 of Rule 2 of the Rules of Court.
stipulations cannot be segregated and then made to
control.[25] This no-segregation principle is based on Article 1374
of the Civil Code, which we quote: Liberal Construction

Art. 1374. The various stipulations of a contract shall be interpreted


together, attributing to the doubtful ones that sense which may result Petitioners final plea for liberality in applying the rules on
from all of them taken jointly. venue must be rejected. As earlier discussed, the PN was a
contract of adhesion. Ambiguities therein are to be construed
against the party that prepared the contract. [33] On the same
principle, petitioner can no longer disavow the stipulation on 11. A subsequent motion for reconsideration by YASCO
venue, considering that it drafted the Surety Agreement. was to no avail. YASCO and Garcia filed the petition.
Besides, this alleged technicality caused no miscarriage of
substantial justice, as petitioner may refile the case. [34] The
inconveniences brought about by its failure to observe the rules Issue: Whether the venue for the case against YASCO and
on venue sprang from its own acts. Hence, it cannot blame the Garcia in Cebu City was improperly laid.
courts or anyone else for the resulting delay in the adjudication
of the merits of its cause. Held: A corporation has no residence in the same sense in
which this term is applied to a natural person. But for practical
WHEREFORE, the Petition is DENIED and the assailed purposes, a corporation is in a metaphysical sense a resident of
Decision AFFIRMED. the place where its principal office is located as stated in the
Costs against petitioner. articles of incorporation. The Corporation Code precisely
requires each corporation to specify in its articles of
SO ORDERED. incorporation the "place where the principal office of the
corporation is to be located which must be within the
Young Auto Supply Co. vs. Court of Appeals Philippines." The purpose of this requirement is to fix the
residence of a corporation in a definite place, instead of allowing
Facts: it to be ambulatory. Actions cannot be filed against a corporation
in any place where the corporation maintains its branch offices.
1. Young Auto Supply Co Inc. (YASCO) represented by The Court ruled that to allow an action to be instituted in any
Nemesio Garcia, its president, Nelson Garcia and place where the corporation has branch offices, would create
Vicente Sy, sold all of their shares of stock in confusion and work untold inconvenience to said entity. By the
Consolidated Marketing & Development Corporation same token, a corporation cannot be allowed to file personal
(CMDC) to Roxas. actions in a place other than its principal place of business
Purchase Price: 8M; Downpayment: 4M; unless such a place is also the residence of a co-plaintiff or a
Balance: 4M in four postdated checks of 1M defendant. With the finding that the residence of YASCO for
each. purposes of venue is in Cebu City, where its principal place of
2. After the execution of the agreement, Roxas took full business is located, it becomes unnecessary to decide whether
control of the four markets of CMDC. However, the Garcia is also a resident of Cebu City and whether Roxas was
vendors held on to the stock certificates of CMDC as in estoppel from questioning the choice of Cebu City as the
security pending full payment of the balance of the venue. The decision of the Court of Appeals was set aside.
purchase price.
3. The first check representing the downpayment was Facts: On 28 October 1987, Young Auto Supply Co. Inc.
honored by the drawee bank but the four other checks (YASCO) represented by Nemesio Garcia, its president, Nelson
representing the balance of 4M was dishonored. In Garcia and Vicente Sy, sold all of their shares of stock in
the meantime, Roxas sold one of the markets to a Consolidated Marketing & Development Corporation (CMDC) to
third party for the amount of 600K, leaving a balance George C. Roxas. The purchase price was P8,000,000.00
of 3.4M. payable as follows: a down payment of P4,000,000.00 and the
4. Nelson Garcia and Vicente Sy assigned all their rights balance of P4,000,000.00 in four postdated checks of
and title to the proceeds of the sale of CMDC shares P1,000,000.00 each. Immediately after the execution of the
to Nemesio Garcia. agreement, Roxas took full control of the four markets of CMDC.
5. Petitioners filed a complaint against Roxas in the RTC However, the vendors held on to the stock certificates of CMDC
praying that Roxas be ordered to pay petitioners the as security pending full payment of the balance of the purchase
sum of 3.4M or that full control of the three markets price. The first check of P4,000,000.00, representing the down
be turned over to YASCO and Garcia. The complaint payment, was honored by the drawee bank but the four other
also prayed for the forfeiture of the partial payment of checks representing the balance of P4,000,000.00 were
P4,600,000.00 and the payment of attorney's fees dishonored. In the meantime, Roxas sold one of the markets to
and costs. a third party. Out of the proceeds of the sale, YASCO received
6. Failing to submit his answer, the trial court declared P600,000.00, leaving a balance of P3,400,000.00.
Roxas in default. The order of default was, however,
lifted upon motion of Roxas. Subsequently, Nelson Garcia and Vicente Sy assigned all their
7. Roxas filed a motion to dismiss. After a hearing, rights and title to the proceeds of the sale of the CMDC shares
wherein testimonial and documentary evidence were to Nemesio Garcia. On 10 June 1988, YASCO and Garcia filed
presented by both parties, the trial court denied a complaint against Roxas in the Regional Trial Court, Branch
Roxas' motion to dismiss. 11, Cebu City, praying that Roxas be ordered to pay them the
8. After receiving said order, Roxas filed another motion sum of P3,400,000.00 or that full control of the three markets be
for extension of time to submit his answer. He also turned over to YASCO and Garcia. The complaint also prayed
filed a motion for reconsideration, which the trial court for the forfeiture of the partial payment of P4,600,000.00 and the
denied for being pro-forma. payment of attorney's fees and costs. Failing to submit his
9. Roxas was again declared in default, on the ground answer, and on 19 August 1988, the trial court declared Roxas
that his motion for reconsideration did not toll the in default. The order of default was, however, lifted upon motion
running of the period to file his answer. of Roxas. On 22 August 1988, Roxas filed a motion to dismiss.
10. On 3 May 1991, Roxas filed an unverified Motion to After a hearing, wherein testimonial and documentary evidence
Lift the Order of Default which was not accompanied were presented by both parties, the trial court in an Order dated
with the required affidavit of merit. But without waiting 8 February 1991 denied Roxas' motion to dismiss. After
for the resolution of the motion, he filed a petition for receiving said order, Roxas filed another motion for extension of
certiorari with the Court of Appeals. The Court of time to submit his answer. He also filed a motion for
Appeals dismissal of the complaint on the ground of reconsideration, which the trial court denied in its Order dated
improper venue. 10 April 1991 for being pro-forma. Roxas was again declared in
default, on the ground that his motion for reconsideration did not
toll the running of the period to file his answer. On 3 May 1991,
Roxas filed an unverified Motion to Lift the Order of Default
which was not accompanied with the required affidavit of merit.
But without waiting for the resolution of the motion, he filed a
petition for certiorari with the Court of Appeals. The Court of
Appeals dismissal of the complaint on the ground of improper
venue. A subsequent motion for reconsideration by YASCO was
to no avail. YASCO and Garcia filed the petition.

Issue: Whether the venue for the case against YASCO and
Garcia in Cebu City was improperly laid.

Held: A corporation has no residence in the same sense in


which this term is applied to a natural person. But for practical
purposes, a corporation is in a metaphysical sense a resident of
the place where its principal office is located as stated in the
articles of incorporation. The Corporation Code precisely
requires each corporation to specify in its articles of
incorporation the "place where the principal office of the
corporation is to be located which must be within the
Philippines." The purpose of this requirement is to fix the
residence of a corporation in a definite place, instead of allowing
it to be ambulatory. Actions cannot be filed against a corporation
in any place where the corporation maintains its branch offices.
The Court ruled that to allow an action to be instituted in any
place where the corporation has branch offices, would create
confusion and work untold inconvenience to said entity. By the
same token, a corporation cannot be allowed to file personal
actions in a place other than its principal place of business
unless such a place is also the residence of a co-plaintiff or a
defendant. With the finding that the residence of YASCO for
purposes of venue is in Cebu City, where its principal place of
business is located, it becomes unnecessary to decide whether
Garcia is also a resident of Cebu City and whether Roxas was
in estoppel from questioning the choice of Cebu City as the
venue. The decision of the Court of Appeals was set aside.